Lean days ahead for stockbrokers

The crisis that is hurting brokerages and which manifested this week in the decision by Panayiotis Voilis, head of the stockbrokers’ association, to close his own company, will continue and become ever more acute, according to a report by consultants Kantor Capital. The causes of the crisis are the continuing low volume of trade on the Athens Stock Exchange, which is still far from the levels it attained during the bull years of 1998-99, and the excessive number of brokerages. There are 84 registered brokers with the Athens Stock Exchange, about one-fifth of which are bank subsidiaries. The top 15 brokerages accounted for 67 percent of all transactions in 2003. Although last year was one of recovery, with the average value of transactions per session shooting up 38.5 percent to 138.9 million euros, the volume of trade is not enough to allow all brokerages to break even. The break-even value rose 8.6 percent in 2003 to 266 million euros, which means, with very few exceptions, that brokerages are losing money every day. Kantor Kapital estimates that a round of mergers and closures is inevitable, given the rapidly accumulating debts. The collapse of P&A Voilis brokers has disturbed other companies in the sector, because they believe that Voilis did not handle the situation well and has created a precedent for dozens of brokerages which are in even tighter financial straits than his. There have also been political repercussions, with opposition MPs demanding to know whether Voilis had colluded with the Capital Market Commission, the market watchdog, so that the company could get back its share in the brokers’ surety fund.

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