Greek Banks Poised for International Expansion Following Financial Recovery

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Greek banks have undergone a significant financial turnaround following years of restructuring and recovery from the sovereign debt crisis. As of 2024, these banks are poised to expand their operations internationally, leveraging their improved financial health and strategic initiatives.

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Financial Turnaround and Recovery

Greek banks have made substantial progress in cleaning up their balance sheets and reducing non-performing loans (NPLs). This has been achieved through higher profitability, capital accretive actions, and the successful divestment of stakes by the Hellenic Financial Stability Fund from three out of the four major banks in late 2023 and early 2024. The upgrade of the Greek sovereign credit rating to investment grade has also facilitated easier and cheaper access to funds from the market, further bolstering the banks' financial positions.

Strategic Initiatives for International Expansion

1. Capital Buffers and Profitability: The significant improvement in the capital adequacy of Greek banks, driven by strong core profitability, has positioned them well to pursue international deals. The banks have been able to meet their minimum requirements for own funds and eligible liabilities (MREL) and are on track to fully comply with these requirements by the end of 2025.
2. Regulatory and Supervisory Support: The establishment of the Single Supervisory Mechanism (SSM) in 2014 has played a crucial role in the recovery of Greek banks. The SSM has ensured top-quality supervision using common tools and methodologies, contributing to the financial stability of the banks.
3. Partnerships and Collaborations: Greek banks have been actively collaborating with international financial institutions like the European Investment Bank (EIB). For instance, a new €700 million guarantee program has been established to support mid-caps in Greece, providing favorable loan terms and enhancing the competitiveness of Greek businesses.

Pursuing Foreign Deals

Greek banks are now ready to invest in foreign deals, marking a significant shift from their earlier focus on domestic recovery. This move is driven by their newfound financial stability and the strategic initiatives aimed at expanding their international footprint. The banks are looking to acquire foreign assets and engage in mergers and acquisitions to diversify their portfolios and enhance their global presence.

Impact on the Greek Banking Sector

The expansion of Greek banks into foreign markets is expected to bring several benefits:

• Diversification of Revenue Streams: By engaging in international deals, Greek banks can diversify their revenue streams, reducing dependency on the domestic market.
• Enhanced Competitiveness: International expansion can help Greek banks gain competitive advantages and improve their market positioning globally.
• Attraction of Investors: The ability to pay out dividends and engage in international deals will make Greek banks more attractive to both existing and potential investors.

In summary, Greek banks are strategically positioned to pursue international expansion following their successful financial turnaround. Their strong capital buffers, regulatory support, and strategic partnerships have equipped them to take advantage of new opportunities abroad, contributing to their long-term growth and stability.