OPINION

Banking priorities

This commentator has previously pointed out (July 27, 2004, January 1, 2005) that the Bank of Greece’s oversight of the country’s banking system is unfortunately based on ensuring banks’ profitability and other interests at the expense of their role in society. So Greek banks have embarked on a race not just to grab Greeks’ savings but to keep them in debt with tempting offers of loans for holidays and spending sprees. European Central Bank figures released yesterday revealed that interest rates on housing loans in Greece are two percentage points higher than the European average. The fixed interest rate in Greece is 6 percent, against 4 percent in the eurozone. Clearly this is an unacceptable gap, since the value of the collateral more than covers the amount of the loan. It is doubtful whether the difference is due to the lack of competition, as claimed by the government. Prime Minister Costas Karamanlis said in Thessaloniki that the government would intervene in the banking sector to boost competitiveness, mainly by attracting other foreign banks to Greece. First, a number of major foreign banks have already established themselves in Greece without altering the conditions of competition. Second, the main incentive for foreign banks to move operations here in the first place is the major profits enjoyed by Greek banks. The priority is for the Bank of Greece to rid the system of its loan shark status. In an interview with Kathimerini on Sunday, Aspis Bank’s CEO Constantine Karatzas described banking activity as aimed at «the best use of an economy’s surplus resources, therefore it has a role to play in society.» This is what this commentator meant in his earlier criticism of the way Bank of Greece Governor Nicholas Garganas was exercising his duties.