ECB made €7.8bn profits from Greek bond holdings

TheEuropeanCentralBank /

FT — The European Central Bank has made nearly €8bn in profits from its holdings of Greek government debt.

In a written response to a request from a Greek MEP, the ECB said holdings of Greek sovereign bonds acquired under its Securities and Markets bond-buying programme (SMP) had resulted in €7.8bn of net income interest between 2012-2016.

These profits are then redistributed to across all 19-country central banks in the eurozone.

The SMP programme was designed to ease market pressure on the borrowing costs of the eurozone’s member states and preceded the central bank’s more ambitious quantitative easing programme, which launched in 2015.

Greece has been excluded from QE as it is still under its third EU bailout which will end next August.

The ECB has insisted any inclusion into QE will only come when the central bank has deemed Greece’s 180 per cent debt to GDP pile as sustainable.

The SMP profits have been promised to Greece at various points during its seven years of financial rescues. In talks over debt alleviation measures in May last year, eurozone finance ministers suggested returning profits from bond holdings for 2014 to Athens’ government to help ease pressure on the cash strapped country but that suggestion was never taken up.

Most of Greece’s near €300bn government debt is in the hands of international rather than private sector creditors.

An analysis from the Jubilee Debt Campaign in 2015 estimated the International Monetary Fund also had made €2.5bn in profits from its loans to the country.

Any decisions on the transfer to the Greek State of “amounts equivalent to the National Central Bank’s (NCB) income do not fall within the remit of the ECB or the NCBs, but rather that of the national governments of the euro area Member States”, said the letter signed by ECB president Mario Draghi.