The management of capital raised by Greek systemic banks to cover their non-performing loans portfolios will determine the sustainability of the banking system, Leonidas Fragiadakis, National Bank’s chief executive told ANA.
The Greek banker said that 2015 was marked by the successful recapitalization of the country’s four systemic banks and noted that banks managed to secure a large sum to cover their bad loans. “The management of these capital in the future will determine the sustainability of the system,” Fragiadakis said.
He added that factors such as boosting confidence among depositors, economic stability and a recovery of macro-economic figures were necessary conditions for a medium-term and long-term safeguarding of improving bank results. Fragiadakis noted, however, that the banking system itself must maximize its available capital by finding a balance between developing new activities and improving portfolio quality.
Banks can contribute in the improvement of economic conditions for both businesses and households in two ways: the first is by boosting funding and credit and second by trying to raise productivity of both enterprises and households, hit by a drastic decline in income and currently facing difficulties in repaying their debts. Banks must focus on this part of the population, hardly small in size, offering drastic and long-term solutions.
“National Bank, enjoying a strong liquidity position, continues its funding programme, but at the same time it is focusing on new funding actions with international partnerships to help enterprises,” Leonidas Fragiadakis said, noting recent partnerships with EBRD and the European Investment Fund for small- and medium-sized enterprises which will offer liquidity to SMEs.
He stressed that a fair management of non-performing loans was an one-way road for growth and to maintain respect towards depositors and shareholders.
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