February 21, 2013
The European Central Bank said it earned €555m last year on its holdings of Greek sovereign bonds that were bought during the crisis in an attempt to calm financial market fears of a break-up of the eurozone.
The bank also revealed for the first time that nearly half of its holdings in the so-called Securities Markets Programme are of Italian debt. At the end of 2012 it held €99bn in Italian sovereign bonds, €30.8bn in Greek debt, €43.7bn in Spanish paper, €21.6bn in Portuguese debt and €13.6bn in Irish bonds.
The previously confidential figures were released by the ECB along with its annual accounts as part of a drive to increase transparency about its actions.
The SMP programme was wound down last year but has been replaced by another bond-buying programme that stands ready to buy more government debt as part of a pledge by Mario Draghi, ECB president, to do “whatever it takes” to prevent a break-up of the euro.
The earnings on the Greek debt are particularly significant as there has been a political agreement to pay back profits made from holding the bonds to the Greek government. Because the bonds still pay interest and were bought at depressed prices, they yield a lot of interest.