Eurogroup to agree to move on to next steps on Greece

As has been the case since the beginning of the year, the Eurogroup meeting will be almost entirely dedicated to Greece. Indeed, the Greek government is expected to have adopted all the remaining measures needed to get hold of the €2bn second sub-tranche of the bailout programme, although there is a risk that this is not the case. The Eurogroup will in any case discuss the next steps for the Greek programme, namely the conclusion of the review (expected by late November but most likely around the turn of the year), the subsequent discussion on debt relief and Greek bank recapitalisation. 

Regarding the latter, in line with expectations, the ECB put Greek bank capital shortfalls at €4.4bn in its baseline scenario and €14.4bn in the adverse scenario. The HFSF, the Greek recapitalisation fund, will make €10bn available (ESM's money, part of the €25bn set aside for bank recapitalisation), but this is to be used only as a last resort (i.e., in the adverse scenario or if banks struggle to cover the €4.4bn via private investors). Approval from the Eurogroup will be needed for the €10bn fund to be fully available. 

The Eurogroup will also discuss post-programme surveillance for Spain and the banking union. In particular, the finance ministers will likely discuss the Commission's plan to propose a European Deposit Insurance Scheme at the December EU Summit. The recently published EU Commission forecasts and their implications for 2016 budgets are also likely to be debated.