Greek banks are in need of further bolstering of their capital structure in order to be able to meet the increased borrowing requirements of households and enterprises, a prominent Greek banker said yesterday. Speaking to reporters on the sidelines of a presentation to institutional investors in London, Managing Director of EFG Eurobank Ergasias Nikos Nanopoulos said criticism of «superprofits» against Greek banks was misplaced. He noted the profitability of banks in 2003 was about 70-75 percent of the level of 2000, which was their best year. «In 2003, the banking sector did not even approach the 2000 level, but may do so this year,» Nanopoulos said. He argued the progress of an economy was closely intertwined with that of the banking system, saying it is no coincidence that countries with problem-ridden banking systems, such as Germany and Japan, are now showing very low growth rates. Nanopoulos said Greek banks in 2003 lent 15 billion euros more and received 11 billion euros more in deposits. Their profits totaled 1.6 billion, which, after deduction of taxes and dividends, left only 500 million euros to be disbursed for new loans – a sum too low in terms of capital adequacy. The additional amount required for lending was made possible by a favorable legal provision which enabled banks to readjust property values. Competition Nanopoulos also dismissed frequent criticism of an oligopolistic structure in the Greek banking system, saying that competition is strong, both in terms of structure and in the pricing of products and services it offers. «The degree of concentration in Greek banking appears moderate in relation to other European countries, such as Portugal, Belgium and the Netherlands, while the strong competitive conditions prevailing are shown by banks’ high advertising outlay, which is rising at an annual rate of 15 percent,» Nanopoulos argued. An area of concern is cost, which is considerably higher than the average European level, mainly due to inflexibilities in the labor market. Nevertheless, he noted that the outward-looking orientation of Greek banks has enabled them to invest in neighboring countries and compete with local banks. Their shares total 35 percent in the Former Yugoslav Republic of Macedonia, 19 percent in Bulgaria and 10 percent in Romania.