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Document Type

Case Study

Case Series

Resolution and Restructuring

JEL Codes

G01, G29

Abstract

The Agricultural Bank of Greece (ATE Bank) faced serious difficulties throughout 2008, 2009, and 2010. In 2011 and 2012, ATE Bank’s capital situation deteriorated further because of its exposure to the Greek sovereign debt crisis and the 50% haircut of privately held Greek bonds. In March 2012, the Bank of Greece conducted a viability assessment of ATE Bank and submitted a report to the Greek authorities recommending the resolution of ATE Bank through the purchase and assumption of specific assets and liabilities by another bank and the resolution of remaining nonperforming assets and liabilities through a bad bank. This assessment was part of a larger viability assessment of the entire Greek banking sector with the aim of determining which banks were viable and therefore eligible for potential state support. Banks deemed not viable were given the opportunity to raise the necessary capital privately. If a bank required capital that it was unable to raise, it would then be resolved or liquidated. The assessment took into consideration how likely each bank would be to repay funds if given them. In July 2012, ATE Bank’s viable activities were purchased by Piraeus Bank, one of the four largest banks in Greece, for a payment of EUR 95 million to the bad bank. The European Financial Stability Facility (EFSF) lent the Hellenic Financial Stability Fund (HFSF) EUR 8 billion to fund the transaction. In 2012, the HFSF reported a receivable of EUR 6.68 billion from the liquidation of ATE Bank but expected to recover only EUR 1.97 billion, resulting in an impairment charge of EUR 4.71 billion. As of 2021, the HFSF had recouped EUR 550 million from the liquidation of ATE Bank and estimated they could still receive an additional EUR 658 million. At that point, the HFSF’s losses on ATE Bank totaled EUR 6.26 billion.

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