Greek banks set to rely more on Southeastern Europe
Greek banks very soon will be employing more people abroad than in Greece, as 35 percent of employees in major domestic banks are already based outside the country. Within three years this figure is expected to rise above 50 percent. This trend’s momentum is reflected by the fact that during the past year the increase in the staff which the big five banks (National Bank of Greece, Alpha Bank, Eurobank, Emporiki Bank and Piraeus Bank) employ abroad totaled about 5,000 people, when the increase in domestically based staff came only to 500 people. Local banks are transforming into strong regional corporations, with Athens being their administrative center, through which dozens of branches are controlled across a very big geographical area; this stretches from Russia, Ukraine and Poland in the north to Turkey in the east and Egypt in the south, and includes seven neighboring Balkan states. The change over the last five years has been impressive, both for the domestic banking system and its international presence. As of the end of 2000, local banks owned no more than 280 branches in Southeastern Europe and employed approximately 3,900 people there. Today, after the planned acquisition of Turkey’s Finansbank by National and the moves by other domestic banks, the number of branches abroad exceeds 1,400, where Greek banks now employ more than 20,000 people. Bank officials believe that by 2010 Greek banks will be employing more people abroad than in Greece, with over 50 percent of their revenues originating from activities beyond Greece’s borders. In the long term, the percentage of revenues and profits from other countries will increase, offsetting the decline in revenues caused by the gradual maturing of the domestic banking market. Recognizing the huge growth prospects of the broader Southeastern European region, Greek banks are pushing forth with major investments there, having already become strong regional players with a trend to strengthening even further. National is proceeding with a dynamic expansion into Turkey through the acquisition of Finansbank, which owns 208 branches, thereby increasing its network abroad by 64 percent; Alpha Bank will open 260 new branches abroad by 2008 in addition to the existing 176 branches, while Eurobank, which is currently expanding strongly in Poland and Turkey, will by the end of this year have 1,000 branches in total, 530 of which will be located outside Greece. Some 40 percent of Piraeus Bank’s network is already based outside Greek borders, with a prospect of raising this to 50 percent in the short term. Alpha Bank’s director general, Marinos Yiannopoulos, commented to Kathimerini that the new situation, which secures the efficient operation of economies and enterprises in the 25 EU member states and the broader region, provides Greek entrepreneurs and employees with opportunities for activity and growth similar to those of the period when the Greeks ruled the same region. Attracting foreigners The strong regional presence of domestic banks is what makes the difference and pulls in foreign capital like a magnet. In Southeastern Europe and in Egypt, banking expansion may be still at an early stage, but massive growth is expected in the coming years. Greek banks, which in the last few years have experienced halcyon days thanks to the liberalization of retail banking and the great increase in their profits, have a great deal to expect now from the economic and other growth of the states in the region and the opportunities created by their European prospects. In the last three years, the participation of foreign institutional investors in the share capital of Greek banks has multiplied: Foreign investors now have 40 percent of major banks’ shares under their control and this intense interest from abroad has driven banking stocks’ valuations to new heights. The big investments by local banks in neighboring countries and the major benefits they expect from these outlays undoubtedly form a strong attraction for foreigners who decide to buy into the Southeastern European countries through Athens. Since they are unable to purchase stocks of Romanian, Bulgarian, Serbian or Turkish companies (either because they do not wish to position themselves directly in emerging markets or because marketability in the stock markets of Southeastern Europe is disappointingly low), they opt for an indirect placement via Greek banks in the Athens stock market.