Germany reaps €2.9 billion from Greek financial crisis


The eurozone has finally agreed to get Greece out of the European assistance program with the country to get its fifth and last tranche of €15 billion in August. The step brings an end to the 10-year debt crisis in the country.

“Greek debt is sustainable going forward,” Eurogroup President Mario Centeno told journalists. “This is it, we have managed to deliver a soft landing of this long and difficult adjustment. There will be no follow-up program in Greece.”

The agreement grants Greece a 10-year extension to repay €96.9 billion worth of loans covering roughly half of Europe’s financial aid to Athens since 2010. The deal also defers interest payments and amortizations for another 10 years, until 2033.

Greece will also receive an additional €15 billion on repayment of some more-expensive IMF loans, as well as to create a cash buffer so that it could meet financing needs in the next two years.

The deals sealed as part of the financial aid to Greece over the past eight years will give Germany, the EU’s biggest economy, some €2.9 billion. The profit emerged from interest rates through purchases of Greek government bonds under the Securities Markets Program (SMP) of the European Central Bank (ECB).

Under the SMP deals, all the profits received from buying the Greek securities by other states should be transferred to Greece in case Athens manages to meet all the austerity and reform requirements.

By 2017, the Bundesbank reportedly earned around €3.4 billion in interest gains from the SMP purchases. However, only in 2013 and 2014 these funds were transferred to Athens and the ESM, the federal government says. For the last four years, the money has stayed in Germany.

In 2013, nearly €527 million was transferred back to Greece and around €387 to the ESM in 2014, with Germany receiving €2.5 billion in overall profit. Moreover, the state bank KfW managed to get interest profits of €400 million from the loan.