ECB makes EUR555m on Greek bond holdings as SMP figures revealed

22 February 2013

The European Central Bank (ECB) reported a net profit of EUR998m for 2012, against EUR728m in 2011, from its securities market programme (SMP) aimed at reducing the borrowing costs of eurozone members suffering most from the sovereign debt crisis through bond buying.

The SMP has enabled the ECB to profit from its rescue efforts, even though this is not the primary aim. It was launched by the central bank in 2010 in the depths of the eurozone crisis. It ran until last September, when ECB president Mario Draghi announced that it would be succeeded by a new, unlimited bond-buying plan known as outright money transactions (OMT) as part of his pledge to do “whatever it takes” to prevent a break-up of the euro.

The ECB has yet to make any bond purchases under the OMT programme, but is continuing to support many banks across the countries whose debt has been taken on by national governments. The existence of the OMT scheme has helped pave the way for lower borrowing rates for the eurozone’s more vulnerable member countries, such as Greece, since last autumn and eased fears that a major member such as Spain might potentially default on its debts.

The ECB’s annual accounts, which offered a breakdown of the bonds held by eurozone central banks under the SMP, showed that net profit for 2012 included €555m in interest from Greek government bonds against €654m in 2011. However, Italy was the single biggest beneficiary of the SMP bond-buying programme; at €102.8bn Italian bonds represented nearly half of the SMP portfolio value of €218bn at the end of last year. Spanish bonds made up €44.3bn, Greek bonds €33.9bn, Portuguese bonds €22.8bn and Irish bonds €14.2bn.

The ECB said that it had already distributed €575m of its profit to national central banks at the end of last month and the remainder will be transferred on 25 February.

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