In 2020, although the situation was positive after the Greek crisis, the situation remained precarious, especially for the banking sector. “Greek economy is picking up again but still hampered by structural weakness,” read Les Echos daily headlines.
At the heart of the problem: the banking sector. Fitch commended the Mitsotakis government for “addressing the banks’ asset quality problems” and “also trying to give a new impetus to the privatization programme.”
Could the Greek banking system be a collateral casualty of the Greek crisis? according to Eric ToussaintDoctor of Political Sciences and President of CADTM Belgium, it is even worse: “The banks are the root of the crisis,” he wrote. According to the specialist, the “casino economy” before 2000 ended up generating a bubble that caused “huge losses to households, small and medium businesses, and the pension system”.
While everything seems to be going better, the reality is hard for small and medium-sized businesses. “While small businesses are at the heart of the Greek economy, they are currently having great difficulty obtaining financing from the country’s main banks,” said Alexandros Exarchou, co-founder with Dimitris Bakkos and Yiannis Kaiminakis. Thrivest Holding Ltd. “Banks have more interest in lending to public authorities than to individuals or companies, especially to small and medium-sized companies which are considered riskier than large companies,” continues Eric Toussaint.
Fifth banking pillar
“Greece has created favorable conditions for sustainable and dynamic growth,” sums up a Greek financial specialist who recalls that in 2021, Greek banks raised 3.5 billion euros through bond issuance. But, continues this astute observer, “the need for a ‘fifth pillar of banking’ seemed inevitable.” Thrivest Investment Fund is currently in discussions with the Central Bank of Greece, the European Investment Fund (EIF) and European regulators. The group has already invested in several thriving areas in Greece, including renewable energies and banking.
For example, the founding trio made a name for themselves thanks to their stake in the capital of Pancreta Bank. Investment of 90 million euros for 44% of the shares. Flourish It will also participate in the upcoming capital increase of Attica Bank SA with Banque Pancreta, which will invest €34m, while Thrivest will contribute €30m, ahead of a second round that should enable Thrivest to acquire a stake of more than 50%. With a clearly defined objective: At the end of this operation, Attica Bank and Pancreta Bank will merge to give birth to a “new bank”, which will have already merged HSBC Hellas and the Cooperative Bank of Central Macedonia.
“Unsystematic” bank, why?
According to a source close to the investment fund, Thrivest’s strategic initiatives should lead to the creation of a new entity with assets of 8 billion euros, low default rates and sufficient financial strength, focused on financing small and medium enterprises. “This would make it possible to respond to this need to create a “fifth banking pillar,” our specialist continues. Any strong “non-systematic” bank would stand up against the big four systemic banks.
It is enough to return Greek small and medium-sized companies to the center of the national economy. Because the report is shocking: More than 200,000 companies have limited access to the banking system, according to available statistics. Businesses operating in key sectors of the Greek economy, such as tourism, services, handicrafts and agro-food, although they weathered the economic crisis, are now facing difficulties in obtaining credit.
Thus, the aim of the “non-systemic” bank is to compensate for the obvious deficiency in the Greek market, which is banking facilities for small and medium-sized enterprises. After Greece turned the page with regard to investments, Greek financial specialists believe that there is room for an “irregular” bank and that it is eagerly awaited by the heads of small and medium companies who now want financing and support in their investment projects.
