Piraeus Bank, Greece’s seventh largest in terms of market capitalization, is showing a strong interest in enterprises investing in the tourism sector. Giorgos Papaioannou, who heads the bank’s respective department, acknowledges in an interview that past lending policies to small enterprises in the sector have been mistaken and that more serious efforts must be made to improve the competitiveness of Greek tourism to tap the potential of the 2004 Olympic Games and implement bigger and better studied projects. What place does entrepreneurship in tourism hold in Piraeus Bank’s growth prospects? Piraeus Bank now has a network of 200 branches throughout Greece, with a strong presence in tourism areas where the industry is the main source of income for the local populations. We have to be mindful that tourism also means regional development. At a national level, it has been estimated that our 12 million foreign visitors annually contribute 14-15 percent of gross domestic product (GDP), with a commensurate contribution to employment. The growth of the tourism industry in such areas is bound to reflect on the bank’s revenues. Today, about 6.5 percent of Piraeus Bank’s business credit, including that of subsidiary ETBA bank – acquired earlier this year – is in the tourism and hotel sectors and is showing an upward trend. Greek tourism has had one of its worst years of the last decade. What has been the impact on the banking sector? I would not say it has been one of the worst years. The worst was 1995, after a particularly good year. Recent data shows the fall in arrivals this year will be around 2-5 percent, possibly more in certain areas, such as Rhodes, but will be greater as regards overnight stays and revenue per visitor. The indications are that the fall will be better for small and medium-sized businesses, compared to the bigger upmarket hotels. The impact on the bank will depend on what kind of lending it has done and what criteria it has used. At any rate, Piraeus Bank’s portfolio in the tourism sector is one of the healthiest among banks. Serious mistakes in lending in the past have resulted in many problematic hotel enterprises. Where does bank lending policy to tourism enterprises stand today? It is true that mistakes have been made. The classic choice in past decades was based on financing small concerns which did not possess the know-how, personnel training and infrastructure capable of attracting high incomes and profits. This policy was mainly pursued by the banks of the broader public sector. The basic criterion for lending was the theoretical value of fixed capital rather than the cash flows. Our policy is to finance the investment programs of existing or new enterprises headed by people with long experience and considerable know-how, a clear plan and ability to consider alternative investment plans, with a satisfactory capital structure, a satisfactory projected cash flow and other guarantees to reduce credit risk and support the enterprise against one or two years of unsatisfactory results. Are you satisfied by the rate of investment in tourism, given the forecasts for substantial growth rates, particularly after 2004? A great number of investment projects have been planned and are being implemented. However, the problems in Greek tourism (the small size of hotels, strong seasonal fluctuations, low quality of services and training, limited infrastructure, insufficient use of new technologies and excessive dependence on 3-4 tour operators) require strategic planning and a coordinated long-term policy. I could just say that if Greece had a tourism infrastructure in proportion to competitor countries, such as Spain, Turkey, Portugal or Egypt, this would amount to 46 golf courses instead of four, 15 conference centers instead of nine, 24 thalassotherapy centers instead of five, and 42 marinas instead of 15. It goes without saying that we need to do more to tap the potential of the Olympic Games and increase our share in the long run. What role can banks play as intermediaries in the disbursement of European Union investment subsidies to tourism enterprises? The 13 regional entrepreneurial programs of the third Community Support Framework subsidize the investments by small and medium-size enterprises in manufacturing and tourism and cover fixed capital but also intangible expenses. Banks have now been assigned the task of assisting the authorities in the management of these activities. This support concerns program promotion, helping investors in filing the applications, monitoring their implementation, managing the subsidies and their disbursement according to the projects’ progress, and keeping the authorities abreast of all relevant aspects. It is also our task to propose a series of credible solutions, either standardized or adapted to the requirements of each investor and project. Our experience in this field is important, ensuring the correct use of resources and, in our opinion, should also be utilized in other investment subsidy programs of interest to the public sector.