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Agis Leopulos: There Are Always Rumours of Bank Mergers in a Period of Dramatic Change

20 July 2010 / 13:07:06  GRReporter
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The General Manager of International Activities at the National Bank of Greece believes in the future of the Euro. He doesn’t expected rescheduling of debt payments and stated in an interview with Maria S. Topalova that the Greek banks are still strong despite the crisis.

Mr. Leopoulos, we all believed a few months ago that the Greek banking system is healthy and stable. Now the Greek press is constantly writing about the impending merger of Greek banks, which will leave two to three banks on the Greek market. What is the reason for such a dramatic change in the image of Greek banks lately?

I think you are right. It is the image of banks. Because reality essentially shows us that banks remain stable, have high rates of capitalization, know-how, good infrastructure and escaped, unlike other European banks, budgets pollution with toxic and other hazardous products. The Greek banking system remains stable and this is a great advantage for the Greek economy in this difficult period. What affected its image poorly is what caused the crisis in the public finances in Greece - the problems with deficits and debt. They affected the image of Greek banks too. However, my opinion and the opinion of all bankers in Greece is that banks remain healthy and cope with the difficulties faced.

As for mergers - will there be any?

You see, the discussion about what the ideal size of Greek banks is and how it will be reached continues for many years. It is not something anyone can foresee. And I do not think something is being done for sure at this point. It is reasonable to give rise to rumours, in periods of major changes that always happens. What is currently on the agenda of any Greek bank is to ensure its balance, to provide liquidity and, of course, its profits in a period of financial crisis. That is why I’m speaking of comparative stability of banks.

The results of the banks for the first quarter of 2010 are not very good. Their profits fall, expectations for unpayable loans increased. Bank of Greece alarmed for deposits flowing abroad. At the same time, the international agencies continuously reduce the credit rating of the Greek banks and the so-called expected value. Furthermore, Greece is entering into a deeper recession than expected in the beginning. How Greek banks will survive in such a difficult situation?

I think the most important thing now is the stability, which the Greek banks have achieved. It has not changed. Public finances of the state have deteriorated. Greece is aware of this and  took serious measures to remedy this situation. As for the profits and size of banks, let's not forget that, perhaps, we are in the worst crisis since the fall of the military junta in the country. This crisis has affected the Greek economy, but also the economy of the region perhaps a little late after what happened on the Western European and American markets. We are in a better position to deal with the crisis, because the Greek banks and the banks operating in this region as a whole have a much better balance. We granted credits to the Greek economy, the citizens of Bulgaria, the Romanian business. We did a real bank job, and did not use the funds to buy toxic bank products or to divert from our main mission. It is now logical to have any gap in profit in these difficult working conditions, but this is in no way indicative of the stability and strength of the Greek banks.

How the analysts of the National Bank of Greece consider the situation in Greece? How long will the recession continue?

I think we all agree that this year will be difficult. We will be able to see the first signs of economic recovery the next year as far as we can, of course, stick to the terms of the Memorandum. Everyone understands this, I think, and we all have come together to achieve it. Let us not forget from now on that what Greece is currently going through is not a single phenomenon. Other southern countries, and not only in Europe, are facing similar problems. There is a more general problem that needs a global solution. The European Union is trying to solve it by drawing a plan for stability. I want to emphasize that there are problems in the Greek economy which we should not underestimate but there are and positive elements that we should not forget. Greece has a stable banking system. The image of its banks is much better than that of banks in other countries during global crisis. The Greek banks have perfectly developed while it lasted. The prices – especially of real estate – did not boom in Greece as was the case in other EU countries. Greece is a country with a small share of private loans as a percentage of gross domestic product, which speaks well for the banking system. It is much lower than in other countries when compared to external debt ratio. What we now consider as a problem, for example, is the informal economy. It exists and is one possibility. There is a great chance for improvement if the state manages to cope with it supported by all of us. I mean that there are immediate solutions; we just have to find them and bring them to light.

Tags: Agis LeopoulosNational Bank of GreeceBank mergersCompanies
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