Domestic bankers believe that the international credit crisis will have no impact on the Greek credit system, with most of them insisting that «there is no bubble in domestic mortgages» and «domestic portfolios are healthy.» The news, however, is not necessarily good. What hides behind bankers’ talk is that the cost of money has had an impact on the entire banking sector. What they mean, of course, is the «higher» cost of money. And that is exactly why they do not rule out the likelihood of the increased cost of money being passed on to consumers, with whatever consequences such a move may have. «Foreign banks have already done so, and gradually their example is starting to be followed in Greece,» said National Bank of Greece CEO Takis Arapoglou. He was speaking during an event last Wednesday to celebrate the New Year. The same prediction was also made, in late 2007, by EFG Eurobank CEO Nikos Nanopoulos, as well as a number of other bankers. Relevant developments will largely depend on the course of the international credit crisis that broke out last August. «The question of a slowdown in global growth is still open,» said Arapoglou, adding that «we must acknowledge that certain action taken by central banks has proved effective.» There is consensus among bankers, however, that it would be «too risky to dare predict, at the current stage, when the present cycle of the economy is going to close. At this time, one can only make an estimate.» With regard to this crucial issue, there is a more general estimate that «more news of additional bad debts in the subprime category will come in the first half of 2008.» And this might not simply be the continuation of developments seen during 2007, but new ones that may push things to an even worse situation. National’s CEO however ventured a prediction as to when the current crisis might eventually begin to subside. «I believe the situation will improve toward the second half of 2008,» Arapoglou said. It would appear that many major institutional portfolio managers agree with that prediction. «The truth is that the credit crisis and its consequences are having an impact on liquidity,» says Arapoglou, and «the higher cost of money affects us all.» Interest rates The debate begins where it all started: interest rates. With the sole exception of Eurobank, which recently decided to raise its interest rates on business loans, so far no other domestic bank has gone ahead with a similar move. Hence, liquidity is still the main feature of the Greek market, too. And everyone appears to be simply waiting for new developments. Competition National Bank has voiced implicit but clear criticism of competitor banks, most of which have recently entered a cycle of revising their business plans. «Ours is not going to change,» Arapoglou confirmed emphatically. Signs from National indicate that the bank’s business plan is to be implemented as scheduled, with no deviations whatsoever. National believes that its significant growth has helped the credit institution to climb to 21st position in European capitalization rankings. National officials believe that its present growth will continue. Foreign operations An issue that enjoys great consensus among bankers is that the domestic credit system’s future lies beyond Greek borders. This was stressed a year ago by Piraeus Bank CEO Michalis Sallas, but the view is still shared, and often reiterated, by almost all heads of major credit institutions. As Arapoglou stated earlier in the week, «the future lies primarily beyond our borders.» National’s CEO added that «we are looking at various foreign markets in order to expand our operations or enhance our existing activities.» «But this does not necessarily mean more acquisitions,» he clarified. Nevertheless, according to certain reports, National is in search of a bank to buy out in the Ukraine. So far, in the Ukraine, National has taken part in at least one international bid for the acquisition of a major local bank. It has also been confirmed by sources close to National that the Greek bank is currently considering a number of interesting possibilities in this direction, while looking for such opportunities also in other countries, such as Egypt. Domestic front National’s senior executives believe that no foreign bank will move to take over any Greek bank during 2008. They also see the likelihood of mergers between Greek banks fading as bank profits are on the rise. Additionally, they note that merger considerations depend largely on the Greek market’s degree of maturity for such moves.