Drastic concentration of credit sector is almost complete

Greece’s four systemic banks currently control no less than 90 percent of the country’s entire credit sector in an unprecedented concentration process that has taken approximately a year.

Besides National, Alpha, Eurobank and Piraeus, in early 2012 there were 10 more sizeable commercial banks operating (Emporiki, ATEbank, Hellenic Postbank, Millennium, Geniki, Attica, Probank, Proton, First Business Bank and Panellinia) along with three Cypriot lenders (Bank of Cyprus, Cyprus Popular Bank and Hellenic Bank).

One year on, everything has changed: Emporiki has been absorbed by Alpha, ATEbank, Geniki and Millennium along with the three Cypriot lenders have come under the control of the Piraeus Group, FBB has been absorbed by National and this month saw the transfer of Hellenic Postbank and Proton to Eurobank. In other words, within just a few months as many as 10 banks have disappeared from the map.

Among medium-sized lenders, only Attica has retained its independence by successfully concluding its share capital increase, making it the only healthy private bank in Greece at the moment.

Meanwhile, the management of Probank is in a race against time to concentrate the necessary capital to retain its autonomy. The bank has been granted an extension of a few weeks, with Probank sources expressing their optimism that the increase will be successfully completed. Failing that, the bank will be broken into “good” and “bad,” with the healthy part being sold off to one of the systemic banks and the unhealthy one heading for resolution.

Systemic banks now have to adjust to the new economic reality – they have to shrink in order to survive. Total deposits amount to 163.4 billion euros and total loans are up to 223.8 billion euros. This 60-billion-euro difference will have to be covered through the expected return of deposits and the reduction of loan balances (by issuing fewer loans than those repaid). Banks will also have to resort to selling non-banking activities, cutting staff and shutting down branches.

The key point this year will be the stress tests to be conducted this fall, which will determine the strength of each bank. Bank officials tell Kathimerini that we will not know where every lender really stands until the results of the stress tests are published.

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