The operation of Greece’s retail banking sector must undergo radical changes if it is to adapt to today’s more competitive environment, Alpha Bank Chairman Yiannis Costopoulos told participants at a banking conference yesterday. The biggest obstacles, according to Costopoulos, are excess the personnel and insufficient opening hours. «Even today, banks face serious obstacles in reducing the numbers of their employees, which are now excessive due to the technological advances that do not require the same number of people. Some functions that employed numerous people in the past, such as foreign exchange, have almost disappeared. You can understand how many people have been made superfluous as a result of these changes,» Costopoulos said during his speech at the Fourth International Banking Forum, organized in Athens by Economist Conferences. Costopoulos called existing opening hours a «historical relic» that «do not allow us to cater properly to our clients.» He referred to a recent controversy that flared when EFG Eurobank decided to keep a branch at a busy commercial place open on Saturdays and Sundays, saying that such developments should be welcomed by bank employees as they create jobs. «Banks face difficulties in following those flexible operation rules that the global market demands. And let us not forget those interventions that hinder market rules and are outside the rational bounds of an economy’s operation,» he said. Responding to widespread criticism of banks’ big profits, Costopoulos said that sharper competition demands even higher profits. «We see more and more and more partnerships of higher risk than in the past… Banks must have higher revenues commensurate with the risks they undertake.» Alpha’s CEO Dimitris Mantzounis concentrated on the bank’s expansion into other Balkan countries, saying that the area is «the future for Greek banks’ investment, adding that there is still lots of room for expansion in the area.» This view was confirmed by National Bank’s Deputy Managing Director Yiannis Pechlivanidis, who added that foreign capital has shown great interest in the Balkans and Southeast Europe. «Today, foreign capital accounts for more than 60 percent of the total capital of banks in the area,» he said. Greek banks in Southeast Europe employ a total of 11,000 in 630 branches. Business in the area accounts for 14 percent of banks’ total assets, or 7.7 billion euros, making Greek banks the most heavily engaged in the area behind Austrian ones, Pechlivanidis said. «Greek banks have invested a total of 1 billion euros in the Balkans since 1990, accounting for 10 percent of all Greek investment in the area,» he added. Some bankers, like Emporiki’s Managing Director Leonidas Zonnios, tried to play down the idea that households and enterprises have borrowed too much, too fast. «Despite the fast pace at which Greek households have borrowed in recent years, total indebtedness at the end of 2004 equaled 31.4 percent of GDP, when the same amount for the eurozone was 50 percent, and even higher for the United States. Despite the recent fast credit expansion, there is a lot of unmet demand for credit to the private sector in Greece,» Zonnios said, adding that many bank managers consider that credit growth can continue at today’s pace, or perhaps a bit slower, for the next five years. Marfin Bank Deputy Chairman Andreas Vgenopoulos said that the Greek banking sector will witness significant changes by the end of 2007. «We are witnessing a very interesting period… We have already entered a phase of concentration,» he said. Vgenopoulos said it was likely that one of the «big five» banks (National, Alpha, Eurobank, Emporiki, Piraeus) will ally itself with a major foreign banking group. This is what the government would also like to see, rather than mergers among the big banks. «Concerning medium and small banks, merging is a necessity because no bank can remain competitive without adequate capital, economies of scale and synergies, unless it becomes a very specialized institution,» Vgenopoulos said.