The taxpayer backed bank that’s propping up Greece

As fears grow over state of eurozone economy . . .

A LONDON-based bank that is backed by British taxpayers looks set to plough even more money into Greece’s basket case financial system.

The European Bank for Reconstruction and Development, which is based in the City and supported by governments around the world including the UK, spent £200m on stakes in Greece’s four biggest banks last year.

And it is now planning to splash out on a 15pc stake in European Reliance, the insurance arm of Piraeus Bank, Greece’s largest lender.

Sabina Dziurman, the EBRD’s director for Greece and Cyprus, revealed the bank intends to spend more in Greece this year than the £250m it invested in the country last year.

‘I’d be disappointed if it was less this year,’ she said.

The investments in the Greek banking system will raise eyebrows given the parlous state of its economy and serious concerns over the long-term sustainability of the national debt.

British taxpayers were forced to stump up billions of pounds to bail out stricken eurozone countries, including Greece, during the region’s crippling debt crisis. But the UK’s stake in EBRD effectively means taxpayers are taking part in another bailout by the back door.

EBRD was set up in 1991 to support former Communist nations in the Easter Bloc in establishing market economies and private enterprise. It opened its doors to a blaze of controversy – spending more than £50m on refurbishing its headquarters in London, including hundreds of thousands of pounds on marble floors – earning itself the nickname ‘ the glistening bank’.

The bank also spent hundreds of thousands of pounds hiring executive jets to fly highly paid staff around the world.

Britain is one of 67 shareholders in EBRD with an 8.5pc stake having provided £2bn of funding. Taxpayers in Germany, France, Italy and Japan stumped up similar amounts, with only the United States contributing more.

The EBRD insisted it is now ‘self-financing’ but governments around the world effectively stand behind the bank through the money provided by taxpayers. A spokesman said: ‘EBRD share- holders as such do not make contributions to individual EBRD projects, but the EBRD is predominantly self-financing.’

He added: ‘It is correct that EBRD invested €320m (£250m) in Greece last year, of which €250m (£200m) were in the recapitalisation of the country’s four systemic banks. On European Reliance we cannot comment as it is a listed company.’

The Greek economy remains on its knees more than six years after the debt crisis pushed the euro- zone to the brink of collapse. Around one in five Greeks are out of work including more than half of under 25s who want a job.

Greece secured a £60bn bailout last year – its third in five years – but only after signing up to tough reforms and seeing its banks temporarily closed to save the financial system from collapse. But talks are ongoing over unlocking the next tranche of emergency cash, with eurozone finance ministers this week setting a deadline of May 24 to reach a deal.