In response to the recent media coverage regarding the return of the unutilized EFSF bonds, the HFSF wishes to provide the following clarifications.
The HFSF was founded in 2010 in the context of the Economic Adjustment Programme for Greece and received an initial capital of €1,500 m in cash. Following the Eurogroup decision of 21 February 2012, EFSF contributed to HFSF a total of €48,200 m in the form of EFSF bonds.
In addition to the capital contributions, HFSF has received cash inflows of €2,124 m from: (i) underwriting fees from the banks, (ii) interest from deposits with the Bank of Greece, (iii) coupon payments from EFSF bonds, (iv) exercise of warrants from investors, (v) proceeds from liquidations and (vi) a one-off fee paid by the Greek systemic banks.
In accordance with its scope, HFSF has used for bank recapitalisation and resolution purposes a total of €39,952 m, of which: €37,267 m in bonds, €1,500 m in cash from its original paid-in capital and €1,185 m from its own cash inflows.
HFSF’s Sources & Uses of funds since inception – until 26.03.2015 (figures in € mn)
SOURCES USES
Capital injection in cash 1,500 Greek banks – cash from capital 1,500
Cash inflows 1,568 Greek banks – cash from other sources 1,185
One-off Fee 556 One-off Fee paid to the State 556
Operating expenses 39
HFSF cash account 344
Total Cash Inflows 3,624 Total Cash Outflows 3,624
Capital injection in EFSF bonds 48,200 Greek banks – EFSF bonds used 37,267
EFSF bonds redelivered 10,933
Total Sources 51,824 Total Uses 51,824
At the Eurogroup of 20 February 2015, it was decided that all unutilized EFSF bonds held by
the HFSF had to be returned to EFSF. The amount of these unutilized bonds was €10,933 m
(the difference between €48,200 m of EFSF received and €37,267 m of EFSF bonds used).
The MFFA was amended on 27 February 2015 upon execution of the Third Amendment
Agreement to give effect to the aforementioned Eurogroup decision. HFSF was therefore
obliged to deliver all unutilized EFSF bonds to the EFSF by 28 February 2015. The delivery of
anything less than the full amount of €10,933 m would have been a material breach of the
MFFA and the Eurogroup decision.
The CEO of the HFSF, Ms A. Sakellariou, stated that “the allocation of the HFSF’s resources
was appropriate based on prudent treasury management practices, given the coupon
payments received from the EFSF bonds versus the low or zero interest income from
deposits at the Bank of Greece. The return of the unutilized bonds was an explicit Eurogroup
requirement which reduced by the same amount State debt whilst maintaining the ability to
re-borrow this amount for the same purpose, namely bank recapitalisation and resolution.
Given their exclusive use, the return of the unutilized bonds has not reduced the availability
of resources for bank recapitalisation and resolution. Within the context of the mandatory
return of the bonds and with due regard to public interest, we have brought to the attention
of the EFSF that the unutilized bonds exceeded in value the difference between the total
capital contributed and the total funds used for bank recapitalisation and resolution.
Consequently, a legitimate request has been put forward for differentiating and reinstating
the amount of €1.185 m that would re-enact the situation that would have resulted if the
relevant disbursements had been funded using exclusively EFSF bonds.”