Eurobank’s investment has given ‘big boost to Greek banking sector’

Transcript

The recapitalisation wave continues among Greece’s banks. One of the latest and biggest institutions to grab headlines is Eurobank. World Finance speaks to Stavros Ioannou, Senior General Manager, to discuss more.

World Finance: There have been recapitalisation efforts across southern Europe, can you tell me about the impact they’re having?

Stavros Ioannou: When we talk about the Greek banking system, we talk about four systemic banks, actually, today. All these banks have raised more than €8.9 bn, and they have perfect core Tier 1 ratios, that they rank from 14-15 percent to 17.8 percent. Actually, Eurobank is having the highest core Tier 1 ratio, and this was a tremendous opportunity for institutional investors to visit Greece and come to Greece and invest money which of course has given a big boost to the Greek banking sector. I can give you three or four examples just to understand how well this recapitalisation has affected the economic situation in Greece. One is that we are noticing lately a big deposit boost. Actually we used to have deposits of a €215 bn once upon a time, then this has dropped to €150 bn, and then this back to €164 bn. So the deposit sentiment is coming back, it’s rebalancing. The second one could be the de-leveraging. We have in the last two or three years experienced a very steep de-leveraging, which again is coming back now from the worst that we could have, which was -9.3 percent, as we speak we are at around minus three percent. So this shows that at least the people have again the courage to borrow money. And the last thing which is also important for the Greek banks is about the transparency that is coming out through the AQR tests, because I’m sure you know that the ECB is taking control of the situation, and so we feel also that this transparency will boost even more this kind of markets.

When we talk about the Greek banking system, we talk about four systemic banks, actually

World Finance: There is the average Greek person. Tell me, how have they been responding to some of these efforts?

Stavros Ioannou: What are the things that someone could see and could understand that faith is coming back, is that, of course, their deposits are increasing back, which I said earlier, which means that they have more trust in the banking system that they used to have in the past. The other part that is very important for them is that unemployment is coming down, so we have unemployment from 27.6 percent to come down to 27.1. It’s not a big decrease, but as you know unemployment rates are decelerating steeply when growth is there, when six or 12 months from growth have come down. Still in Greece, as you know, we are experiencing a minus GDP, but what I have to say, you know very well that the contraction of GDP in the last five or six years was almost 25 percent, which was big. Lately, in the first quarter of 2014, we had only -1.1 percent, in the second one we have -0.3 percent, and hopefully all the macro-economists, and the macro-economists of the bank as well, foresee that the third quarter may be and should be the first positive quarter on GDP.

World Finance: Now I now that Moody’s has recently lifted its outlook on the Greek Banking sector form negative to stable. How has that contributed to your ongoing momentum?

Stavros Ioannou: Moody’s are changing positively their evaluations, and for us it was really extremely important to see this kind of thing. Don’t forget that when the crisis came into the picture, we had a big deceleration of our levelling in these kind of companies. For Moody’s, I have to tell you that they were even in some instances much more optimistic than what the Greek situation was, which seems that they have faith, they have trust. Of course, these kinds of organisations, as you know, they base always their valuations on real data, and what I have referred earlier on in saying about unemployment, about consumption, about these kind of indicators which are extremely important indicators, I think they have been checked thoroughly by Moody’s and they have arrived to that result.

Moody’s are changing positively their evaluations, and for us it was really extremely important to see this kind of thing

World Finance: Now I know you’re not going to stay stagnant, of course you’re going to continue to keep growing. Can you tell me about some of the large scale restructuring efforts that are on the horizon?

Stavros Ioannou: One of the things that we have touched upon and we will continue to touch upon is the troubled assets. Troubled assets are for us a very important sector. What we have done in Eurobank is that we have consolidated all the non-performing and the remedial management together, so we are focusing on that. We have very noticeable results in the second quarter, which we have already published, and we feel also that in the months to come, in the quarters to come, we’ll be able to do even more good things.

World Finance: Well certainly an exciting time for Eurobank. Stavros, thank you so much for joining me today.