Greece’s banking sector: Facts & Figures
Updated December 2020 – For earlier editions of Facts & Figures click here
After many years of economic depression and three stability support programmes, Greece’s economy has started to grow again since Q2 2017. In 2019 real GDP increased by 1.9%, sustaining the growth momentum of 2018 (+1.9), well above the euro area average of 1.3%. Real GDP growth was mainly driven by net exports, supported by quite a positive tourist season and a rebound of government consumption, ahead of the July 2019 government elections. On the other hand, private consumption and investment growth remained lower than expected. The unemployment rate, while still the highest in the EU, decreased to 17.3 in 2019 (2013: 27.5%), the lowest level for the last eight years. The Harmonised Index of Consumer Prices (HICP) increased by 0.5% in 2019, from 0.8% in 2018, while the current account balance improved to -1.4% of GDP from -2.8% a year before. Overall sentiment indicators underlined a positive momentum for the Greek economy in 2019. Capital controls, in force since June 2015, were totally lifted in September 2019 and Greece has been active on European and international capital markets. As a result, Greek government bond yields have declined significantly, which in turn also brought down corporate bond yields.
The number of domestic credit institutions incorporated in Greece is 15, out of which eight are commercial and seven cooperative banks. Of the eight commercial banks, only four are deemed “systemically significant credit institutions”, according to the respective SSM definition. The share of the five largest credit institutions in total assets reaches almost 97.4% of the banking system. Currently, 21 foreign banks operate in Greece with local branches, out of which 18 branches of credit institutions are incorporated within other EU Member States and three branches of banks incorporated within third countries. In total, the number of banks’ branches is 1,834 (2018: 1,981), while the number of employees is 36,727 (2018: 39,383) and ATMs 5,702 (2018: 5,594).
The resilience of Greek banking groups was enhanced during 2019 mainly due to improvement in their capital adequacy ratios. The return to profitability was positively affected, based mainly on the sale of subsidiaries of Greek banks. The Capital Adequacy Ratio on a consolidated basis rose to 17.4% in 2019 from 16% by the end of 2018 and the CET1 ratio increased to 16.4% from 15.3%. Liquidity conditions for Greek credit institutions have been constantly improving mainly due to (a) broadening deposit base, and (b) expanding funding sources, such as securitisations and covered bonds. At the same time, bank deposits continued to increase despite the significantly low deposit rates. In 2019, the overall weighted average interest rate on new and outstanding deposits remained almost unchanged. On the other hand, the overall weighted average interest rate on all new loans to households and non-financial corporations increased by 11 basis points, while the overall weighted average interest rate on outstanding amounts of all loans remained almost unchanged.
In order to improve asset quality, Greek banks have renewed their binding operational targets towards reducing their NPL stock, to the SSM. On the same issue, the initiative for establishing a Hellenic Asset Protection Scheme (HAPS) is considered a positive step towards improving banks’ quality of assets. The scheme involves credit institutions transferring NPL exposures to a special purpose vehicle, which in turn is going to securitize these loans and sell notes to investors, with senior tranches being guaranteed by the Greek state.
Contributor: Anna Vasila email@example.com