The National Bank of Greece is spearheading spectacular growth in the Greek banking sector

Domestic market growing rapidly as lending to businesses fast approaches the level found in other developed nations

ANKING has undergone a transformation over the past decade to become one of the most dynamic sectors of the Greek economy. The private sector is playing a larger role, while publicly-controlled banks have been restructuring and modernizing. Systems and management styles have been upgraded, and the focus is more firmly on the customer. The quality of services, including the range of products on offer, is now equal to that found in all major financial centers.

Borrowing, both by businesses and households, has been stimulated by the low interest rate environment following Greece’s entry into the European Monetary Union (EMU) in 2001. Lending to businesses—mostly SMEs—amounts to 40% of GDP, a level that is fast approaching that in other developed nations.

The domestic market is expanding rapidly. The banks have been benefiting from the strength of the Greek economy and enjoying a marked rise in profitability. However, they have not been confining their activities to Greece. They have been strengthening their presence in southeastern Europe, following Greek companies as they expand into neighboring countries.

The sector has seen a series of mergers and acquisitions since the late 1990s, and a number of new banks have opened in recent years, primarily focusing on retail banking. However, the industry is dominated by the five largest banks, which between them control approximately 80% of business.

Takis Arapoglou (INTERVIEW), Chairman & CEO of the National Bank of Greece (NBG), believes that Greece is a growing market from a banking point of view. “It was only three years ago that the retail-consumer market was liberalized. We expect the market to continue to grow for the next three to five years,” he says.

The oldest and largest Greek bank, the NBG, is focusing on consumer banking, SMEs, and asset management. “These are the three areas that provide the highest return,” says Mr. Arapoglou. He does not envisage further consolidation in the sector in the near future. “Any consolidation that will occur over the next few years will reflect Greek banks’ continued expansion of activity in southeastern Europe.”

The links between Greece and its regional neighbors are historical, political, religious, and economic, and have existed for many centuries. “This provides us with a comparative advantage in attracting local customers as well as foreign corporations who want to invest in southeastern Europe and seek an advisor who would be helpful in opening doors,” says Mr. Arapoglou.

The NBG’s objective is to be the biggest bank in the region. It already has a presence in Cyprus, Romania, Bulgaria, the Former Yugoslav Republic of Macedonia (FYROM), Serbia, and Albania, as well as in New York, London, and South Africa. The NBG Group is the only Greek financial group to have floated its stock on the NYSE.
Alpha Bank, Greece’s second largest bank, has similar regional ambitions.“We definitely see ourselves as a regional player, mainly helping Greek companies in their ventures outside Greece, but also doing business with local enterprises and the local governments,” says Artemis C. Theodoridis (INTERVIEW), Executive General Manager.“We are looking at investment opportunities in all of the countries in the area, for example increasing our presence in Bulgaria.”

TAKIS ARAPOGLOU Chairman and CEO of the National Bank of Greece INTERVIEW	MICHAEL H. COLAKIDES Vice Chairman of piraeus Bank INTERVIEW	ARTEMIS C. THEODORIDIS Executive General Manager of Alpha Bank INTERVIEW

In February, Alpha Bank announced its participation in an international partnership that will enable Vodafone to extend its network coverage across Albania through an 85 million euros ($113 million) long-term loan.

The bank gave its image an enormous boost, both at home and internationally, by becoming the official bank of the Athens Olympics, investing around 74 million euros ($98 million).

“We have set ourselves the very high target to be the number one bank in Greece, and we aim to achieve this without compromising the quality and the reputation that we have had in this market for many years,” says Mr. Theodoridis.

Already a leader in retail, wholesale, treasury products, and international investments, Alpha Bank has a growth plan for every part of its business. “The main focus for the next few years is to be strong in corporate banking, shipping, and medium-sized company lending,” Mr. Theodoridis explains. “We are also planning for further growth in retail banking.”

As the head of the fastest growing financial group in the country, Piraeus Bank has a presence in Albania, Bulgaria, Romania, and Serbia. Michael H. Colakides (INTERVIEW), the Bank’s Vice Chairman, says,“You have to take into account that the cultures in these countries are similar to that of Greece, so we find it much easier to operate in this area than our European competitors do.”

While the bank’s regional objective is to become the local bank for Greek businesses operating outside the country, it has also invested heavily in systems, branches and people at home.

“We view ourselves primarily as the bank for Greek enterprises—small, medium, and large—and the Greek consumer,” says Mr. Colakides. “We rely heavily on the branch network and prefer a decentralized approach.”

One of the sector’s most dynamic players, EFG Eurobank employs 4,500 people in Bulgaria, Romania, and Serbia. Nicholas Nanopoulos, the Bank's Chief Executive Officer, says, “We are expanding rapidly in those countries and we anticipate that in three years time, 20% of the bank’s profitability will derive from this area.”