OPINION

Profiteering banks bleed Greek society

The nine-month results of Greek banks made public yesterday prove that price cartels exist in the local banking system. The announcement by the National Bank of Greece that profits soared by 87 percent confirmed beyond doubt what this newspaper has repeatedly said about the excess profits in the specific sector. There is little doubt that profitability is a condition for business growth and well-being. For that reason, it is not just welcome but necessary. The problem lies with the profiteering practices of banks. Let’s not forget that profit margins in the banking sector are the highest in the Greek economy. They are also higher than the average eurozone margin. Most importantly, Greek bank profits are not the result of successful investment decisions. Greek banks actually score quite poorly in that respect. The business priorities of Greek banks are starkly reflected in the sea of commercials for credit cards and consumer loans. Intense competition is essentially limited in the commercial field. Banks go for a bigger market share but do not sacrifice their profiteering privileges: They seek to perpetuate the virtual oligopoly in the sector. The squandering of customers, particularly of borrowers, is the banks’ primary goal. Their profits derive from two main sources: the plethora of services for which customers have to pay, often unknowingly, and the huge discrepancy between the deposit and lending rate. The rate on credit cards and consumer loans is as much as five times the deposit rate. This is actually a usurious rate that puts an extra burden on the already strained lower-income groups. If we take into consideration that most households resort to borrowing to meet their outstanding consumer needs, the issue takes on a disquieting social dimension. In light of this gloomy picture, the state must re-examine the question of commissions on services and the exorbitant lending rate. Given that banks cannot be expected to raise the issue on their own, the Competition Commission should examine the oligopoly charges.