13 Jul 2015

Restructuring the Greek banking sector with an empty purse

Daniel Gros / Willem Pieter De Groen

0
Download Publication

2591 Downloads

Greek banks are close to collapse, even if a new bail-out programme is agreed soon. The deterioration of the economy means that their fragile capital position is deteriorating further. In this CEPS Commentary, Daniel Gros observes that any new programme needs to include recapitalisation, comprising possibly a bail-in and restructuring to get the banking system working again. With only a small part of the assets unencumbered and a government with empty pockets, the depositors might have to take a large part of the burden. As private investors are unlikely to participate in a recapitalisation, foreign official funds will be needed. A direct equity investment by the EIB or the EBRD could be used to transfer control rights, and special ESM bonds could be used to provide additional capital without entailing additional risk to the creditors.

Daniel Gros is Director of CEPS. Willem Pieter De Groen is Research Fellow in the Economy and Finance research area at CEPS.

Related Publications

Browse through the list of related publications.

A renewed EU approach for Jobs and Skills

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

Competition Policy and State Aid: Defining a sustainable path for Europe’s recovery

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

Healthcare and Pharmaceuticals

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

The Digital Transition

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

Strategic Value Chains

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

European Green Deal

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

Basel III Finalisation

The impact on EU banks and the real economy across scenarios

Managed Expectations

EU Member States’ Views on the Conference on the Future of Europe

Digital labour platforms in the EU

Mapping and business models