What we must change is our mentality as a society, and not our laws, argues Takis Arapoglou, the president and CEO of the National Bank of Greece, in an interview with Kathimerini. He calls for more action on reforms and considers the bank’s treatment by the media as unfair. How is NBG shaping up after recent acquisitions in Turkey and Serbia? What are the group’s prospects? The new NBG, according to our 2005-2007 business plan, is to expand by relying on the very broad base of Greek and foreign investors. This has taken its capitalization to 16 billion euros from 7 billion euros two-and-a-half years ago, taking NBG to the top 30 in Europe, some 10 spots higher than in 2004. This course allows us to continue our growth in the coming years, investing in countries that are expected to enjoy high growth, such as Serbia and Turkey, where banking still has relatively low penetration. Our expansion abroad does not reduce our presence at home, as the Greek market will keep growing rapidly and our profits will depend on our containing operating expenses. In the next five years, it is unlikely that Greece’s share in the group’s profits will drop below 60 percent. What are the next moves for your expansion abroad? If we succeed in the tender for acquiring Romania’s CEC, we will have achieved 100 percent of our 2005-2007 expansion plan. We will then focus on the effective absorption of newly acquired banks into our group – a very complex process. These branches will adopt all NBG services controlled centrally from Athens, a procedure set to last until mid-2008. This will increase our future options and determine our next plans. We aim at profits that will help us exceed 20 billion euros in capitalization, provided foreign markets have a good course and NBG is among Europe’s 20 biggest banks. Was Greek society ready to accept the investment in Finansbank and the move into Turkey? Society in general, despite the odd reactions, was positive toward our attempt. The issue was unfortunately taken up in petty party politics, yet those who have studied the issue in depth support our decision. The course of our stock has also given everyone a good answer. Several people refuse to accept that NBG now operates as a fully privatized bank that works with its shareholders’ benefit in mind. The government no longer has any stake in NBG, after the sale of the 7.5 percent package. The fact that state pension funds have invested in NBG does not make the bank a state-controlled one. These funds cannot avoid investing in a company that represents at least 20 percent of the daily turnover of the stock market. After all, they invest in private banks, too. How does NBG’s expansion into Turkey change its risk profile? I do not think we have any significant negative changes to our risk profile. Although risk is increased by the acquisition of Finansbank, our credit rating has not changed, which speaks volumes about us and Finansbank, as well as Turkey. We must also note that with the EU entry of Bulgaria and Romania, our risk profile is positively upgraded, while other Balkan countries are also starting talks leading to EU membership. The group follows an aggressive policy within Greece, too. What is your next step? In our business plan, we clearly state that we aim at strengthening our presence in Greece in clients’ property management, in investment products and in the capital market. Our intention to buy out P&K is a significant step in this direction, offering us skilled human resources, know-how, new products and an expanded clientele. At the moment, we have no other acquisition targets in Greece as we continue with our plan for stronger organic growth. When is the group’s new business plan to be presented? Which sector will it focus on? Our new plan will cover the 2007-2009 period and will be presented this month. The plan’s main focus will be the restructuring and effective incorporation of recently acquired banks and the proper operation of the group generally. Does the interest rate rise worry you, combined with the massive credit growth? To what extent is Greek banking ready for a rise in bad debts? The capital adequacy of Greek banks is certain and proven by all analysts and auditing authorities. Therefore, in the unlikely event of a sudden rise in bad debts, banks can hold firm. Bad debts are following credit expansion, without reaching an alarming level. At NBG we reject more than 40 percent of applications for consumer loans and 20 percent of mortgage loans, so as to protect both our clients and our shareholders. People see a competition deficit in banking. Do you agree? Contrary to what is being said, banking in Greece is probably the most competitive and profitable domain in our economy, responsible for a quarter of the annual growth of GDP. After the state, banks are the biggest employers in the country, paying the highest taxes, offering the best dividends to shareholders and being the best Greek ambassadors abroad. They also represent at least 50 percent of transaction volume in the stock market. Competition keeps increasing, with the top four or five banks shifting their objectives and policy. Yet the media portray banks in a negative light, accusing them for having made profits, when a big part of those profits comes either from abroad or from capital market moves that have nothing to do with clients. How do you see the post-Olympic course of the economy and what are your future expectations? We have been pleasantly surprised with the dynamism of the economy after the Games. Domestic consumption and strong investment this year allowed for growth to maintain its 4 percent level, while external demand continues to rise. Tourism has also grown as do Greek exports to Southeastern Europe, not to mention the contribution of shipping, so overall prospects are positive. Which reforms are required? Discussion on this issue is exhausted, we need action. Laws and amendments for helping the competitiveness of the economy are very good, but the catalyst is the mentality of those applying them, the society. For some time we have been in need of a change in mentality, not legislation. We sacrifice long-term stability for short-term party ends. This is a serious lack of credibility or mentality to achieve something better. Laws change easily; it is mentality that takes time to change and the efforts of society.