Lending deceleration to continue

Piraeus Bank, Greece’s fourth-largest lender, expects its loan growth to slow to as little as 5 percent this year due to the global financial crisis. Credit growth for the group is expected to be between 5 and 10 percent, said Piraeus’s chairman, Michalis Sallas. «The country’s economy is being tested and the situation is difficult, as it is in many economies around the world,» Sallas said. Piraeus Bank plans to use 2.5 billion euros of the government’s 28-billion-euro liquidity package, designed to keep credit flowing in the Greek economy and maintain 10 percent credit expansion. Loan growth in Greece has been decelerating sharply in recent months as banks make lending criteria more stringent to protect balance sheets and consumers cut spending in view of the downturn. Data from the Bank of Greece, the country’s central bank, indicate that credit expansion to households and businesses slowed to an annual pace of 10.8 percent in March from 12.8 percent in the previous month. It stood at almost 16 percent in December. Piraeus Bank, which plans 3 billion euros of securitizations this year, will offer shareholders one free share for every 47 shares held instead of paying a dividend for 2008, Sallas said. That’s equivalent to 0.10 euros for every 47 shares, he added. Shares in the lender soared 7.69 percent to 7 euros on the Athens bourse after news of the dividend, pushing its market capitalization to 2.3 billion euros. The bourse’s benchmark general index added 3.18 percent on Thursday. Piraeus Bank’s lending in Greece grew 27 percent last year and by a faster 42 percent pace in subsidiaries abroad. It is present in Romania, Bulgaria, Serbia, Albania, Cyprus, Egypt, Ukraine and the United States. «Despite the crisis, the neighboring regional markets remain important for the group,» said Sallas. «Our strategy is to minimize the effect of the problem, not to run away.» Profits declined 49 percent to 315.1 million euros last year after the bank set aside more money for potential bad loans as the global economy began to deteriorate. MIG defers share capital increase Marfin Investment Group (MIG), Greece’s biggest buyout fund, has postponed plans for a share capital increase of 5 billion euros, citing adverse market conditions as the reason. «After the recommendation of the group’s consultants (Morgan Stanley, Deutsche Bank and UBS), MIG’s management believes that a vehicle for bank asset acquisitions, as recommended by the consultants, must in a first stage raise capital independently from MIG,» the company said in a bourse filing. The decline in share prices that prompted MIG to announce in September that it would seek to buy banks in Southeast Europe has obstructed share sales by companies and has also beaten down MIG’s share price, which closed at 3.27 euros on Thursday, after a gain of 3.5 percent. MIG said in September it would sell new shares at 6 euros apiece to strategic investors or money managers. It amended the price to a minimum of 5 euros in November. MIG owns about 5 percent of Marfin Popular Bank, Cyprus’s second-biggest. Dubai Financial owns about 18 percent of the fund and also has a 17 percent stake in Marfin Popular Bank. The company raised 5.2 billion euros in a share sale in July 2007, the biggest ever in Greece, and has invested in healthcare, food companies and fast-food restaurants as well as passenger shipping.