Involvement of TEKE in bank resolution

Resolution Scheme

TEKE’s Resolution Scheme is appointed the resolution fund for credit institutions, while the Resolution Scheme of the Athens Stock Exchange Members’ Guarantee Fund is appointed the resolution fund for investment firms. The use of the resolution funds is dependent upon a decision by the resolution authority which, for credit institutions, is the Resolution Department of the Bank of Greece.

The Resolution Scheme is used by the resolution authority only to the extent necessary to ensure the effective application of the resolution tools, for the following purposes:

a) to guarantee the assets or the liabilities of the institution under resolution, its subsidiaries, a bridge institution or an asset management vehicle
b) to make loans to the institution under resolution, its subsidiaries, a bridge institution or an asset management vehicle,
c) to purchase assets of the institution under resolution,
d) to make contributions to a bridge institution and an asset management vehicle, among others, by providing guarantees or contributing to their capital,
e) to pay compensation to shareholders or creditors if during the implementation of resolution measures they have incurred greater losses than they would have incurred in winding up under normal insolvency proceedings,
f) to make a contribution to the institution under resolution in lieu of the write down or conversion of liabilities of certain creditors, when the bail-in tool is applied and the resolution authority decides to exclude certain creditors from the scope of bail- in,
g) to lend to other resolution funds on a voluntary basis,
h) to take any combination of actions referred to in points (a) to (g)

The Resolution Scheme can make a contribution to the purchaser when transfer order or bridge bank measures are applied, in covering the difference between the value of transferred liabilities and transferred assets, when it is essential for transferring liabilities which the resolution authority decides that should be transferred. In cases of temporary initial valuation of the assets and liabilities of a credit institution, two thirds of the temporarily valuation of the difference are paid immediately whereas the remaining is paid when the valuation is finalized.

 

Deposit Cover Scheme

TEKE Deposit Cover Scheme (DCS) participates in the financing of resolution measures as follows:

a) when the bail-in tool is applied, the amount by which covered deposits would have been written down in order to absorb the losses in the institution, had covered deposits been included within the scope of bail-in and been written down to the same extent as creditors with the same level of priority under the national law governing normal insolvency proceedings

b) when one or more resolution tools other than the bail-in tool is applied, the amount of losses that covered depositors would have suffered, had covered depositors suffered losses in proportion to the losses suffered by creditors with the same level of priority under the national law governing normal insolvency proceedings.

In all cases, TEKE DCS participation cannot be greater than the amount of losses that it would have had to bear had the institution been wound up under normal insolvency proceedings, as determined in accordance to law 4370/2016. If determined that the DCS contribution to resolution was greater than the amount of losses had it been activated for payout, the DCS is entitled to recover the difference from the Resolution Scheme.