Greece's central bank said on Monday it had activated a bank rescue fund to save Proton Bank
, a small lender that is under investigation for possible violation of the country's money-laundering laws.
According to a statement by the Bank of Greece, a "good bank" has been created, into which all of Proton's deposits and "healthy assets" have been transferred. That good bank has been funded by a recently established Financial Stability Fund (FSF).
"After recoommendation by the Bank of Greece, the Finance Ministry proceeded to apply to Proton Bank a new law about the restoration of banks," the Bank of Greece said in a statement.
The Bank of Greece said Proton was split into a "good bank" where all of its private sector, government deposits and sound assets were transferred.
The good bank will have the FSF backstop as its sole shareholder and retain the trade name Proton.
"The 'good bank' is well capitalized, with a capital adequacy ratio that is well above the regulatory threshold. It has access to euro-system liquidity through the Bank of Greece," the central bank said.
The central bank said the license of the old Proton Bank was withdrawn and it was put into liquidation.
The proceeds of the liquidation will be used to cover the claims of third parties. Proton shareholders will rank as last claimants.
"The new bank, free of the deficiencies of the previous bank, is financially sound and will continue normally its operations," the Bank of Greece said.
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