Greece’s largest lender, National Bank, plans to make 3 billion euros ($4 billion) worth of corporate loans this year to support businesses and assist the economy’s recovery, its chief executive said on Thursday.
That represents a substantial increase over the almost 1 billion euros of total loans the bank made in the first nine months of 2013. Lending figures for the full year are not yet available.
With bank credit to the private sector in decline since 2011, aggravating Greece’s six-year economic slump, prospects of a mild economic recovery this year will largely depend on new lending.
“Investments will shape the country’s long-term growth potential and how fast labor market conditions will improve,” the bank’s Chief Executive Alexandros Tourkolias told business people in the city of Kavala, in northern Greece.
Greek banks, burdened by bad loans and a shrunken deposit base, will not be able to sharply expand credit in the short term, the country’s central bank chief said last month. Firms also need to look to capital markets to plug their funding needs.
December data showed that bank credit to Greece’s private sector shrank at a much sharper pace than in the rest of the euro zone, down by 3.9 percent versus 2.3 percent in the single currency bloc.
The central bank has said bank lending must support export-oriented firms and avoid trends in the last decade, when a large part of available credit financed consumption and residential investment.
Greece’s 183 billion euro economy is expected to pull out of recession this year, with the government projecting national output will expand by 0.6 percent.
“Healthy entrepreneurship, investments and a transition to sustainable production will be the catalysts to exit the crisis,” Tourkolias said.