Greece: ATE Bank Capital Injection, 2011

In 2009, ATE Bank, the fifth-largest Greek bank, received a capital injection of EUR 675 million in Tier 1 preference shares as part of a broader aid package for the bank. In August 2010, Greek authorities conducted a strategic review of Greek banks, which concluded that ATE Bank was still facing serious difficulties. In October 2010, ATE Bank submitted a restructuring plan that included the purchase of EUR 1.14 billion in new ordinary shares. Of this EUR 1.14 billion, the bank used EUR 675 million to repurchase the earlier EUR 675 million preference shares. Private investors purchased an additional EUR 115 million in new shares, bringing the total raised to EUR 1.26 billion. This share capital increase took place in June 2011 and resulted in the government's stake increasing from 77% to 90%. However, the capital situation of ATE Bank deteriorated in the second half of 2011 when the Greek government marked down the value of its sovereign debt. In December 2011, the Greek government invested an additional EUR 290 million in new shares, bringing its stake up to 93%. In July 2012, Piraeus Bank, a larger Greek bank, purchased ATE Bank's viable activities, while leaving other assets and liabilities in a bad bank. Existing ATE Bank shareholders, including the Greek state's EUR 1.4 billion investment, and subordinated debt investors were wiped out in the transaction. The state ultimately lost more than EUR 6 billion in the recapitalization and later restructuring of ATE Bank.