We want a robust banking system and the evidence shows that we are moving in that direction. But profitability does not mean dishonesty, robustness does not mean greed and reliance on the banking system does not mean arbitrariness.

This message was sent by the Minister of National Economy and Finance, Kostis Hatzidakis, during his speech in Parliament as part of briefing the Committees on Economic Affairs and Production and Trade regarding the Financial Stability Fund. The Governor of the Bank of Greece, Ioannis Stournaras, the Chairman of the Financial Stability Fund Andreas Verykios and the Managing Director Elias Xirouhakis and senior executives of the two organizations participated in the meeting.

“We want strong banks not only because the losses are ultimately paid – as we have unfortunately seen – by the citizens themselves. But also for another reason that has to do with settling the pending deferred tax. Loss-making management in banks does not benefit either the State or the taxpayers. For this very reason, positive results for the banks also mean positive results for the State. And the evidence shows that we are already moving in that direction“, the minister underlined, referring among other things to:

– In the reduction of bad loans, in the portfolios of the banks from 71.2 billion. euros in the third quarter of 2019 to 11.7 billion. euros in the third quarter of 2023.
-In their overall reduction, both in banks and in servicers, from 92 billion euros in 2019 to 73 billion euros in 2023.
-In increasing deposits from 150 billion euros in 2019 to 195 billion euros at the end of 2023.
-In the -even if gradual- strengthening of bank credit expansion in relation to 2019, and the improvement of the financing conditions of the real economy.

Mr. Hatzidakis noted with emphasis that the government attaches great importance to competition, which is the “key” for the operation of banks, not only for the benefit of their shareholders, but for the benefit of depositors, borrowers and citizens in general and of businesses. “The Competition Commission has already done its work in relation to issues of harmonized procurement practices. And I’m sure she will continue to do so. And we, as a State, move with competition in the banking system as a high priority”he said.

Benefit of 3.5 billion euros for the State

the minister repeated for the umpteenth time that the State had a significant financial benefit from the disinvestment of the Financial Stability Fund by the banks, which if the non-systemic banks are also taken into account, reaches 3.5 billion euros so far. He also noted that thanks to the recapitalization, Greeks’ deposits were saved while Greek businesses and households were protected from a more comprehensive collapse and crisis. Also answered:

-In the analysis of two KEPE scholars which is often cited by opposition figures. “This analysis sees the trees and misses the forest. That is, it ignores in the cost-benefit calculation, the benefit that has been for the State from PSI. The State should have returned to the banks almost 60 billion from buying bonds, but because of PSI it returned half. This is very clear, very clear, very specific. It cannot be ignored in any approach to this issue“, he underlined.

-On the criticism of the opposition, according to which disinvestment should not be done now, but later or not at all. “We took advantage of the opportunities presented in the wider environment”, said the minister. “First, because now the situation was favorable, as the disinvestment comes after the recovery of the investment grade, the high growth rates, the positive course of most of the main parameters of the economy. Secondly, because this is how we return to normality. Thirdly, because the process of disinvestment itself has a positive effect, not only on the banking system, but on the economy as a whole. And fourth, because with heightened geopolitical risks and international liquidity, ignoring the positive moment would be unwarranted frivolity, a risk no one needed to take.».

Six more points for banks in government policy

Mr. Hatzidakis emphasized that beyond disinvestment, the government’s policy for banks includes six more elements:

-First, the regulation of Law 5072/2023 which allowed non-banking institutions to be able to give mortgages and some form of business loans, with the aim of strengthening competition in the banking system.

-Secondly, the abolition of taxation on the acquisition of interest-bearing Treasury bills, in which the interest rate currently ranges between 3.5 and 4%, “sending in all directions the message of low lending rates”.

-Thirdly, the obligation of the servicers who handle red loans – which has already been implemented – to inform the borrowers in relation to their account, with what is owed, with every relevant detail!

-Fourth, the modernization, expansion and acceleration of the extrajudicial mechanism (additional “haircut” of up to 28% of the debt in collateralized loans, reduction of the interest rate for all debt arrangements to 3% for 3 years, obligation for Banks, servicers and the State to accept the proposal of the extrajudicial mechanism for vulnerable debtors). The results are already visible as in the first quarter of the year more than twice as many applications were made compared to 2023.

-Fifth, the message to all market players to reduce POS charges, especially when they concern small transactions, which has already been understood, an area in which positive developments are expected in the next period of time.

-Sixth, the support and promotion of alternative payment systems, currently IRIS, which will be expanded by the end of the year to cover not only freelancers, but every form of business with which the average citizen transacts. IRIS ensures zero fees for consumers for transactions up to €500 and much lower fees for professionals.

He also referred to the initiatives to support liquidity, especially for small and medium-sized enterprises, by utilizing funds from the NSRF, the Recovery Fund and the Hellenic Development Bank. As he said, the Operational Program “Competitiveness” of the NSRF, which exclusively concerns small and medium-sized enterprises, has a total budget of public expenditure of almost 4 billion euros, in the loan part of the Recovery Fund, 47% of the contracted investment projects concern small and medium-sized enterprises, while the Hellenic Development In 2023 alone, the Bank disbursed loans to small and medium enterprises totaling 933 million euros.