ECONOMY

Banks well positioned for slowdown

Greek banks are well positioned to weather the country’s economic downturn as the chances of consolidation activity taking place in the sector in 2009 increase, according to investment bank UBS. «Although the environment will be far less supportive than in the past, Greek banks have avoided toxic assets, their capital position is strong and earnings performance up until now has been good,» UBS said in a note dated November 18. Greek bank shares have underperformed their European peers, falling 61 percent in the last six months on concerns about their exposure to vulnerable Southeastern European economies and shipping loans. Technical reasons have also played a significant role in the share drops as unwinding hedge funds have had a bigger effect in small illiquid markets like Greece, the note added. UBS said that it sees consolidation becoming a key theme for the Greek sector in 2009 with the landscape set to change significantly. Marfin Investment Group, which is going ahead with a 5-billion-euro share capital increase, is expected to take advantage of opportunities in Greek banking space, UBS added.