The Hellenic Confederation of Commerce and Entrepreneurship (ESEE) has identified serious irregularities in the functioning of the banking system in Greece, noting that, in addition to charging high interest rates, Greek banks are not fulfilling their essential role, that of granting loans.
According to the most recent data from the European Investment Fund, “The European Small Business Finance Outlook (ESBFO) 2023”, Greek businesses are in last place in terms of access to financing. Furthermore, any access to financing is particularly costly, slowing down the transformation of commercial businesses, as after the decade-long crisis of the Greek economy, the criteria for providing loans have been tightened to a large extent, excluding the vast majority of businesses, which are classified as non-bankable.
In a statement, ESEE President Stavros Kafounis spoke on Thursday of “a new deal between banks and the market,” so that, in the context of the public debate on improving the functioning of the Greek banking system and strengthening market liquidity, “the robustness of Greek banks is reflected in a new relationship of trust with all entrepreneurship.”
The study by the ESEE Institute of Commerce and Services highlights the issue of the high interest rate margin that Greek banks have in relation to European ones, which according to the latest data for the second quarter of 2024 was formed at a level more than twice as high (3.32%) compared to the European average (1.61%).
According to the same data, the net interest rate margin of the four systemic banks in Greece was the fifth highest in Europe, far ahead of the rest of the countries, especially in relation to those with mature banking systems.
As the ESEE Institute of Commerce and Services notes, “this also raises issues of competition and proper functioning of the market, since in Greece there are four systemic institutions, when for example in Germany there are 22, in Italy 12, in France 11. On the contrary, in Latvia, Slovenia and Estonia there are only three and in Lithuania two. On the other hand, in Belgium, where the interest rate margin is the third lowest, there are five systemic institutions, while in Luxembourg and Finland there are only three.”
At the same time, despite the robustness of the Greek banking system, the total capital ratio of the four Greek systemic lenders (18.84%) is very close to the corresponding European one (19.71%), the loan-to-deposit ratio is much lower in Greece and is even decreasing. This finding essentially highlights that domestic banks, in addition to charging high interest rates, are not fulfilling their essential role, that of issuing loans.
ESEE points out that a series of new charges cumulatively create a suffocating noose on businesses: Charges on incoming and outgoing remittances, on ATM withdrawals, as well as on transferring money to another bank, a charge for reissuing a debit or credit card due to expiration, theft, loss or damage, card reissuance, a commission for paying bills (e.g. public utilities, mobile telephony) through banking channels, an annual fee for maintaining a credit card, POS use by small businesses, commissions on basic transactions and, finally, a charge for opening an account.