Despite representing an important customer group for banks, small and medium-size enterprises (SMEs) are not free of credit risks, with their funding demanding careful analysis. Lending to them usually carries high profit margins for banks, which must take care to monitor timely repayment of loans to avoid facing a rising tide of bad loans. Citibank’s general director of business credit in Greece, Dimosthenis Anagnostopoulos, says the SME sector is becoming an extremely important market for bank loans, representing a «strategic choice» for further expansion in retail banking. He added that such expansion must be based on criteria and procedures, comparable with those deployed in other sectors of retail banking. Bankers are now reported to have a specific sense of the importance of the use of information systems to avoid experiences of the past with regard to bad loans. Anagnostopoulos noted such criteria as the income record applied to private customers is not a reliable indicator of the likely performance of businesses, which is often dependent not only upon medium-term developments. but upon general circumstances. At the same time, the Teiresias database for bank customers remains inadequate. The specific, high-risk features, characteristic of loans extended to SMEs, are managed by the application of alternative repayment monitoring methods, including credit products offered by banks. «The granting of working capital by allowing the borrower to use checks can amount to a kind of scoring table, giving us greater possibilities of monitoring business behavior, while in the case of open credit lines, Citibank views the customer’s consistency in repaying a part of the initial borrowed capital at regular time periods as a necessary condition,» says Anagnostopoulos. «The obligation of recycling at least 30 percent of the capital every six months, for instance, allows the bank to see how good the customer’s access to liquidity is. Another monitoring system is the direct connection of working capital loans with its intended use.» In the framework of Citibank’s turn to retail banking in recent years, card credit is a prime means for its penetration into the SME sector, notes Anagnostopoulos. Its expansion strategy is based upon the further development of its broad customer base, consisting currently of more than 25,000 retailers. «The prospect of success of this policy is enhanced by Citibankãs large market share in card credit, which is currently around 18 percent. The recent conversion of Diners to a credit card creates new possibilities,» says Anagnostopoulos. He projects the bank will easily achieve its goal of increasing market share in the Greek business credit market to 3 percent from the current 1 percent. The number of SMEs in Greece is estimated at between 700,000 and 800,000. Those with an annual turnover lower than 2 million euros make up a total of 12 -14 billion euros and those with annual turnover between 2 and 30 billion euros make up a total of 25-27 billion euros.