Nikos Nanopoulos, CEO of EFG Eurobank, one of Greece’s largest banks, considers it crucial that the country’s growth rate remain above 3 percent while the government pursues its policy of fiscal adjustment. In an interview with Kathimerini, he also stresses the need for the government to accelerate reforms for limiting state presence in the economy, and expresses his disagreement with the latest plan for a single solution to the social insurance problem in banks. In the last few years, Eurobank has shown turnover increase rates that are considerably higher than the market average. To what can this positive picture be attributed? I believe it is down to three factors: The strategic setup of management, the novel, client-orientated model of organization and, of course, the human element and the managers who add value to our strategy. We have therefore developed advantages that make our approach to clients more friendly, timely and immediate, making it more effective. We achieve this in many sectors, not just in loans, offering complete coverage of all their needs, whether they be private clients, entrepreneurs, institutions, corporations or organizations. In 2004, Eurobank showed a 43 percent rise in credit to households, compared with a 30 percent rise in the whole banking sector, and a 18.6 percent rise in loans to businesses, compared to 7.5 percent in the whole sector. The new client attraction rate is higher than the market average. One of our strong points is the efficient and productive coalescence of the traditional with the modern, providing strong momentum for expansion. This was made in conjunction with essential organizational changes for a more efficient operation model, comparable with the best in Europe. Might the high rates of credit expansion, considerably above the market average, be associated with a more flexible risk policy? On the contrary, the risk management system is actually conservative. It operates on an administrative level, away from operations development. The officials responsible for managing risk are different to those whose mission is the development of operations. Bad loans constituted no more than 2.9 percent of our portfolio in 2004. This is the lowest percentage in the Greek market and provisions on these loans exceed 85 percent. What are your plans for the internal market? Will there be special weight given to certain sectors? Our strategy dictates development across the entire sphere of financial activities, with an emphasis on the sectors that show the greatest growth and prospects for profit. However, I would particularly focus on property management, long-term savings, securing pensions and private banking on the one hand, and developing relations with small and medium-sized enterprises on the other. We also promote capital market operations, which add value to the other activities of our customers. Another important sector is that of alternative networks and the modern forms of service which bring the customer more easily and rapidly to the bank. Finally, the international expansion of our activities is probably the greatest future challenge for our bank. What are your plans for the bank’s international expansion? Our priority is the Balkans. We already have a significant presence in Bulgaria and Romania, and have made a dynamic start in Serbia. Our development there relies on transferring, adapting and utilizing our successful model in Greece. We are also examining new markets. In some cases, we may target certain sectors if there are opportunities and serious prospects. Our aim is to become a strong regional force and earn the trust not only of Greek enterprises that are active abroad, but also of the citizens in the countries in which we are active. Given your strong market position, do you consider following a more aggressive rate reduction policy? We aim to provide the most competitive products and services. That is not just down to interest rates. We focus on quality, supplying more and better products with greater flexibility and value. The great customer response shows we are heading in the right direction. What messages are you getting from the business world? There is the feeling of economic hardship. After 2003 and the 2004 Olympics euphoria and the elections, we have entered a period of low growth rates, after public investments diminished and the economy worsened, partly due to the Games. This will not be worrying if growth rates remain above 3 percent and above the European average. This is linked to an efficient macroeconomic policy. A solution that combines fiscal adjustment and maintaining the economy’s growth momentum must be found. Where should the government focus to boost the economy again? The government has shown its «mild adjustment» policy. It acknowledges the need for adjustments and reforms, but wants them made without causing problems. I do not disagree with this approach if progress is achieved and initiatives are taken. I just expected a greater pace. When dialogue becomes pointless, the essential reforms must proceed. Only then will we make the reforms and changes required to at least have a 3 percent growth rate. As for what must be done, it is clear that the state-centered economy management model does not work well. We must agree on a new development model that is extroverted, more productive, clearly orientated toward private initiative and entrepreneurship, and structured toward reducing the state’s role. This should be combined with the faster promotion of real privatizations and structural reforms in many crucial sectors. Private bodies should do their bit for the country’s development prospects through serious investment initiatives. In public works, we must find ways for joint financing with the participation of constructors, banks and others to shoulder part of the business risk and, of course, share its fruits. Does Eurobank agree with a single solution to the social insurance problem of banks? When the so-called «Sallas proposal» was tabled, we did not reject it. Despite any reservations we expressed, we consented because in the proposed solution framework, we discerned an approach that fulfilled certain basic criteria: transparency of terms, relatively balanced share of the cost between the banking system and the Greek taxpayer, and limited distortion of competition. We are not dogmatic against a total solution, despite its difficulties. There was recently a new proposal with which we cannot agree, as it is unclear and places a disproportionate burden of adjustment and funding of banks’ deficits on the Social Security Foundation (IKA) and therefore on taxpayers, while increasing this weight by reducing the banks’ contributions. It also distorts the rules of fair competition, favoring only a few enterprises.