Greece (2008) – Capital Injections

In October 2008, in the midst of the Global Financial Crisis (2007–09), the Greek government announced a €28 billion (36 billion) government package. Greek Law 3723/2008, “Enhancement of Liquidity in the Economy in Response to the Impact of the International Financial Crisis, ” was passed and approved under European Union State Aid rules. The Greek law provided for three voluntary programs: recapitalizations (€5 billion), guarantees (€15 billion), and securities (€8 billion). This case study exclusively examines the recapitalization program. In this program, the Greek government acquired convertible preferred shares in banks in order to build and maintain banks’ Tier 1 capital at a minimum of 8% of risk-weighted assets. By July 2009, 10 banks had received capital injections for a total of €3. 8 billion.