The reduction of Greek banks’ stock of bad loans is also leading to a shrinking of the credit system’s assets, which may make local lenders healthier but also significantly smaller. This comes at a time when the penetration of technology is changing their operation model, reducing jobs at their networks of conventional branches.
The total assets of Greece’s four systemic banks reached 225 billion euros in end-2018, 60 percent of which consisted of loans to businesses and households. This is due to come down by some 50 billion euros, which is the target for the reduction of bad loans by 2023.
The banks’ aim, therefore, is not only to slash their bad-loan stock but also to reduce the staff employed in managing those loans. This effort will also take place at the group level, through the divestment from activities that are not at the core of banks’ purview, as well as by ceasing certain activities abroad.
At its peak in 2008, the number of employees in the Greek banking sector exceeded 66,000. Last year this figure (including non-systemic banks) dropped to 39,380 people, a reduction of 26,780, or over 40 percent. The number of branches shrank by over 51 percent in a decade, from 4,097 in 2008 to 1,979 in 2018.
The reduction of staff has been much faster in the last few years than the diminishing of the system’s assets, because banks were slow in relieving their books of nonperforming loans.
The size of the banking system in the next few years will depend on the growth of the Greek economy, but in any case digital banking is set to change its structure and operation as well.
After a voluntary redundancy program in 2018 that led to 2,582 fewer bank jobs in Greece, estimates for this year speak of a reduction in staff by up to 4,000 people. Banks’ initiatives for the reduction of their employees will not be confined to voluntary exit programs, which are set to see some 1,500 staff depart. Even greater staff cuts are expected – by up to 2,500 people – through the transfer of the management of NPLs to investment entities, with a parallel transfer of employees.
National Bank is due this week to present its transformation plan, a key dimension of which is the reduction of its staff by 2,000 by the end of the year.