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Greek banks: A challenging road ahead

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Greek banks: A challenging road ahead
Gikas Hardouvelis
GET INVOLVED Annual Conference at the Bank of Greece
Friday, December 13, 2019


Greek banks have been in crisis for a long time, losing twice ~100% of their stock value,
  • once in February 2012 (due to the PSI)
  • and then in November 2015 due to the BRAVADO recession
The Greek political irony: Center-right governments nationalized the banks with borrowed (mainly) European funds, and subsequently a leftist government privatized them
  • Now banks are pressed to quickly shed their NPEs under two major constraints:
    • 1)Regulatory constraint: Capital reduction due to NPE reduction may hit the regulatory CET1 lower bound
    • 2)Private Investor constraint: Profitability reduction due to higher provisioning may become negative and trigger DTC
DTC is the little-advertised success story of the Fall 2014 government
  • Risks are contained yet profitability under pressure  due to stricter regulation, technology and competition
  • Greek banks like their European counterparts face a profitability challenge and stiff competition from Big Tech

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