The domestic banking system provides loans at a competitive price to small and medium-sized enterprises, which also benefit from the programs of the Development Bank and the European Investment Fund. with guaranteed and co-financed loans, interest rate subsidies for investment purposes and to meet working capital needs, said Todoris Tsouros, CEO of the main corporate and investment banks in Piraeus, at the 5th International Conference of the Hellenic Chamber of Commerce. The world is in transition.
In the two years 2022-2023, credit expansion to businesses amounted to 9.4 billion euros, the growth of loan balances was 15.5%. In the corresponding period, the GDP growth rate doubled, despite the negative impact on the market of interest rate jumps to historically high levels in the Eurozone, Mr. Tsouros noted. He added that 5 billion euro recovery fund loan agreements were also signed, of which 1.5 billion euro was allocated, which is not counted in the banks’ credit expansion, as well as 10 billion euro loans that were given. Greek shipping contributes up to 8% of the country’s GDP.
It is assumed that the volume of new credit production, which the domestic banking system would have the opportunity and willingness to offer today.exceeds the demand for new loans to companies and individuals, as systemic banks, with a loan-to-deposit ratio of 60% against the European average of 107%, have excess liquidity at relatively low costs that they want to take advantage of.
“In my opinion, small and medium-sized enterprises today have access to bank financing and really very competitive spreads that are not significantly different from large enterprises. However, since most of the development and investment in our country is carried out by large groups, be it infrastructure projects (roads, PPPs, airports), or green transition projects (RE, batteries, electric cars), or new large hotel units, or bank financing for park modernization should support and follow the country’s production model, it cannot impose it, nor can banks replace entrepreneurs,” he emphasized.
An important part of the lending, about 100 billion euros, is located outside the banking system and refers to securitizations that were carried out in the context of Heracles. Although most of it concerns defaulted loans and bankrupt companies, there is a notable segment related to companies that had difficulties during the crisis and can re-enter the banking system. “In this regard, I believe that non-systemic banks, which do not have the restrictions of systemic banks to finance securitized non-performing loans, play a key role,” said the main corporate and investment bank of Piraeus.
In response to the question, what is the effect of the experience of large volume of non-performing loans caused by the financial crisis on the lending process of banks, A. Mr. Tsouros referred to the changes that have been made both in the assessment of credit risk, which is now more detailed and strict, as well as in the assessment of the actual compensation of collateral in an adverse economic environment.
“As was natural after the long financial crisis, the credit rating pendulum swung to the strict side, but over the last few years it has shifted to a more entrepreneurial approach, both in business lending and retail. In any case, the management of the troubled portfolio has equipped us with know-how and experience, which contribute to a better evaluation of new deals,” emphasized Mr. Tsouros.