The Greek banking system is effectively shielded from the financial crisis we have been experiencing for the last 15 months, Eurobank EFG CEO, Mr. N. Nanopoulos stated in his speech at a business lunch in Thessaloniki ( Friday, October 3 2008) in the presence of more than 500 businesspeople from the wider region.
In his analysis of the global environment, Mr. Nanopoulos briefly overviewed the unfavourable conjecture of the past 15 months to stress that the adoption of the Paulson plan will impact positively on reestablishing financial stability in the US as well as to the rest of the world as a result thereof. From the Paulson rescue plan in the States to the nationalization of banks in England or the rescuing, through the provision of state resources, of big banking institutions in the Netherlands, Belgium, Germany, the will on the part of governments to ensure the stability of the financial systems as well as the confidence and the depositors’ money is confirmed.
He also pointed out that because we live in a globalised market, the global economic slowdown and the global financial crisis impact on the Greek economy. The country’s growth rate is expected to slow down while fiscal deficits become more pronounced resulting in additional tax measures with a view to containing the deficit. Certainly, Greece still maintains considerably higher growth rates of 3-3.5% compared to the rest of Europe where growth rates are just above 1%.
As he said: “Within this financial crisis the Greek banking system turned out to be effectively shielded as the Greek banks were never essentially exposed to high risk investment products. As actually Mr. G. Provopoulos, the newly-appointed Governor of the Bank of Greece, recently stated, there are three main reasons that assist Greek banking institutions in effectively managing the crisis. These are their strong deposits and the minimal extent of dependence on money markets to finance their growth, a minimally leveraged balance sheet or in other words their strong capital sufficiency and, last but not least, their non-exposure to high risk products (sub primes) unlike banks in other countries. One should add to the above, their healthy and sustained organic growth and profitability and a dynamic presence in regional markets that offer great scope for growth.”
In any case, according to Mr. Nanopoulos, recent global financial developments and the ways they were handled clearly indicate how interwoven the health and robustness of an economy are to the health and robustness of its respective financial system. Let us make a note of the fact that despite serious turbulence throughout the world, nowhere has there been an instance where citizens lost their deposits, no matter what the sums involved may have been (Lehman was an investment bank and not a commercial banking institution and was financed by the markets through complex investment products and not though deposits).
“In our country,” as Mr. Nanopoulos went on to add, ”Prime Minister K Karamanlis stated that the government ensures and guarantees the system’s stability and protects the interests of all citizens in cooperation with the Bank of Greece. Moreover, Minister of Economy and Finance G. Alogoskoufis stated that the government politically commits itself to fully guaranteeing deposits made by citizens in all the banks operating in Greece. We believe that these interventions should soothe any concern whatsoever. Thus, it is obvious that the relationship between banks and the economy is a two-way relationship. This becomes especially apparent, not so much at times of financial robustness but rather at critical times like the one we are experiencing. The banking system is the main mechanism through which funds from deposits are transferred to finance consumption and investments. Moreover, the relation between the banks and the economy should be creative and constructive for the sake of both parties and not competitive. A perception according to which in order for banks to make money their customer ought to lose it is totally wrong.”
In the framework of the presentation he made, Mr. Nanopoulos stressed that Eurobank EFG today is a large and strong, capital-wise, international banking Group, with over 1750 branches and POS both in Greece and abroad. It is the second largest bank after the National Bank of Greece. Eurobank EFG is a member of EFG Group, which is the 3rd biggest Geneva-based banking group in Switzerland. It is worth pointing out that only last September (2007) a timely share capital increase by 1.25 billion euro was completed and thus capital sufficiency for the Bank is very strong. We follow a consistent credit policy which accounts for our optimum credit ratings by international firms.
He also underscored that fact that in the last twelve months the increase in deposits made to the banking Group exceeded the increase in the number of loans approved in absolute terms. In Greece, actually, the growth rate for deposits is twice that of loans taken out, and this is evidence of the Group’s strong liquidity.
He concluded that “In addition to Greece, Eurobank EFG is strongly active in another seven countries, i.e. Bulgaria, Romania, Serbia, Cyprus, Turkey, Poland and Ukraine. In these countries it has a total of 1,200 branches and business centres while there are more than 14,000 people on its payroll. The Bank’s priority in today’s environment lies with the selective growth of its individual activities, an even more effective exploitation of its capital and further enhancing its liquidity. Most importantly, our first priority is to encourage the deepening of a relationship of trust and creative cooperation with our customers and to provide real and qualitative service as for us to jointly overcome the impact of the crisis in the financial sphere as smoothly as possible.