EU Commission extends Greek bank guarantee scheme

FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, December 19, 2019. REUTERS/Yves Herman

ATHENS (Reuters) - The European Commission said on Thursday it had approved the extension of a guarantee scheme for Greek banks until May 31, 2020.

The Greek guarantee scheme was initially approved in November 2008, intended to stabilise markets as a response to the global financial crisis.

It provided eligible banks with new capital and securities that could be converted to liquidity with the European Central Bank.

With the liquidity situation of Greece’s banks gradually improving, the Commission said the extension of the scheme was in line with EU State aid rules as “the prolonged measure is targeted, proportionate and limited in time and scope”.

The scheme is available for banks with no capital shortfall.

The Commission authorises guarantee schemes on banks’ liabilities for successive periods of six months as it seeks to monitor developments and adjust conditions accordingly.

The Greek guarantee scheme has been extended several times, the last being in June last year.

Reporting by George Georgiopoulos; Editing by Kevin Liffey