Greece’s banking sector: Facts & Figures
Updated September 2019 – For earlier editions of Facts & Figures click here
Greece exited the third stability support programme in August 2018 and has been fully integrated into the European Semester framework of economic and social policy coordination. This marks a clear shift towards a new chapter for Greece after years of financial assistance programmes.
After a prolonged period of recession, GDP growth accelerated to 1.9% in 2018 from 1.5% in 2017, following a cumulative contraction of 26.4% between 2008 and 2016, and is expected to remain at around 2% in 2019 and 2020. Greece’s fiscal position has improved substantially. The General Government balance improved, from a massive deficit of 15.3% of GDP in 2009, to a surplus of 1.0% of GDP in 2018. Furthermore, the government primary balance recorded a sizeable surplus of 4.3% of GDP under the “Enhanced Surveillance” definition, exceeding the programme target for a fourth consecutive year. Labour market conditions are steadily improving, with the average annual unemployment rate declining to 18.5% in February 2019, the lowest level since August 2011. A part of capital controls remains in place, following several rounds of relaxations since their imposition in June 2015.
The number of domestic credit institutions has drastically diminished since 2009 from 35 to 15, out of which eight are commercial and seven cooperative. Of the eight commercial banks, only four are deemed “systemically significant”, according to the respective SSM definition and these control about 96% of the banking assets. Foreign banks have an insignificant market share, since all but one of the foreign banks with retail customer service networks have divested from Greece. Currently, 20 foreign banks operate in Greece with local branches. In total, the number of bank branches (1,979) has decreased by 51% since 2010 and similarly, the number of employees (39,382) and ATMs (5,594) dropped by 38% and 35%, respectively.
The Emergency Liquidity Assistance (ELA) was virtually eliminated in March 2019 and the Eurosystem exposure was limited to €11.1 billion in December 2018 and to €8.4 billion in March 2019. Private sector deposits increased by 6.3% year-on-year to €134.5 billion in December 2018, as depositors’ confidence is improving and external capital inflows are accelerating. The CET1 ratio of Greek systemically important banks, averaged at 15.8% during 2018, setting Greek banks among those adequately capitalised within the EU according to the European Banking Authority (EBA). Following huge cumulative losses in the previous years, Greek banks returned to profits, although profitability remains vulnerable.
With regard to private sector financing, gross loans decreased by 1.1% year-on-year, from €183.9 billion at the end of 2017 to €170.3 billion at end of 2018 since the pace of repayments, write-offs and disposals exceeds new loan demand. Greek banks have contributed to economic recovery mainly through the funding of large-scale infrastructure projects and the ongoing funding of the tourism industry.
Greek credit institutions have submitted to the Bank of Greece and the SSM operational targets for the management of non-performing loans (NPLs) for the period up to the end of 2021, aiming to reduce the NPL ratio to slightly below 20%.
Contributor: Anna Vasila email@example.com