Business credit conditions are much improved
After a long period of financial problems for many firms which began with the Greek stock market crash of 1999 and continued deteriorating over the following years, banks are now finding that conditions are now improving in the domain of corporate credit. As a result, Alpha Bank reduced its provisions for corporate bad loans by 40 percent in the first nine months of the year. Piraeus Bank made a commensurate cut. The long, difficult period led to extensive restructuring at firms and in entire sectors, with a large number of companies, even established names, going under. The «irrational exuberance» of 1999 on the stock market led hundreds of enterprises to excesses and misplaced business and investment moves. A large number of such moves bore little relation to firms’ main activities, involved excessively high prices and mainly targeted the realization of capital gains. To be sure, the phenomenon was not confined to Greece. But here, at any rate, it created a difficult situation for the banking system, which was largely responsible for the excesses. The stock market crash created dozens of problematic enterprises that were unable to repay loans. Sectors such as construction, information technology, fish farming, textiles and retailing were hard hit. The restructuring efforts, with the help of banks, involved expenditure cuts, the sale of subsidiaries and refinancing of liabilities. For their part, banks, facing the specter of dozens of bankruptcies, increased their provisions steeply, according to worst-case scenarios. Nevertheless, the list of failures grew long: Alte, Alfa Alfa Energy, Alfa Alfa Holdings, Radio Korasidis, Batatoudis, Daring, Balafas, Ideal Group, Xifias, Keranis, PC Systems, Datamedia, Technodomi, Seafarm Ionian, Empedos, Pouliadis, Promota, Themeliodomi, Ipirotiki, Connection, Sex Form, Ellatex, Korfil, Leventakis, to name but a few firms that have disappeared from the Athens bourse list.