Four in five companies are considered insolvent

The soaring of business financing recorded in the year’s first half with record new loans amounting to 4.2 billion euros has not kept pace with a parallel increase in worthy businesses. The majority – estimated at 80% – remain without banking credit, and the businesses with access to bank lending, according to all estimates, number approximately 50,000.

They are the target of banks in their effort to increase financing: “Competition among banks for a place in healthy entrepreneurship in the last half-year has spiraled out of all control and has become relentless,” bank executives tell Kathimerini.

It is no coincidence that amid an environment of rising interest rates, the spreads of Greek banks for new loans are decreasing, and despite the rise in the cost of money, banks are competing over who will land the best clients: These are businesses that have healthy fundamentals, can support business plans and initiatives, and stand confidently in front of the bank counter to claim a loan. 

Besides those 50,000, there are 200,000 businesses that, due to unfavorable economic data, either avoid borrowing or have their bank loan applications rejected.

“Unfortunately, banks are the only lending channel, and with the presence of fintechs shortly they will be hard put to find new clients,” emphasized Deputy Development Minister Yiannis Tsakiris, stressing the need to expand the pool of creditworthy businesses.

In a presentation of the Hellenic Development Bank’s work and the new financial tools it is planning, Tsakiris defended the need for state intervention with new tools where the banking market “fails,” underlining that the goal “is to increase the perimeter of solvent businesses from 40,000-50,000 today to 80,000 or 100,000,”

“If we succeed, we will have taken an important step in our effort to strengthen entrepreneurship,” he added, locating the problem in the fragmentation of Greek entrepreneurship into very small businesses.

The Bank of Greece estimates that Greek loan portfolios should reach €160-180 billion from €112 billion today, to fulfill banks’ role in the country’s economic growth.

Original Story: Kathimerini | Evgenia Tzortzi 
Photo: Photo by Jonte Remos from FreeImages
Edition: Prime Yield

Bradesco results above expected; market monitors NPLs

Bradesco reported a better-than-expected result – and marked by mixed performances in its various business lines. 

The bank posted a R$ 7 billion profit in the second quarter, up 11.4%, with strong growth in the margin with clients, tariffs and insurance.  

These lines more than offset the drop in the margin of treasury operations – which was negative by R$ 587 million, pressured by the Selic rate – and the 10% increase in expenses with PDD, due to the return of default to historical levels and the growth of credit lines of higher return and, therefore, more risk.

The bank’s ROE was 18.1% in the quarter, compared with 18% in 1Q22. 

Service revenues grew 6.7% to R$9 billion, benefiting from the strong performance in cards, which recorded a 46% year-on-year growth in the base. In personal loans, the increase was 20.9%.  

The bank’s growth in riskier lines of credit drew attention. “‘Bradesco’ and ‘aggressiveness’ are rarely in the same sentence,” said one manager. 

The NPL ratio for 15-90 days remained stable at 3.6%; and NPL above 90 days came out from 3.2% to 3.5%.  

At Citi and JP Morgan, analysts highlighted that the 30 basis points rise in NPL over 90 days was ‘helped’ by the sale of a R$2 billion credit portfolio – without this sale, the rise would have been 60 points. 

“We believe the continued deterioration in asset quality is the main concern, and the second quarter brought no relief on this issue,” wrote Citi’s Rafael Frade.  

For BTG, given the market’s low expectations for Bradesco’s results, the poor performance of the stock in the year and the scenario of a possible end to the Selic hike cycle, the stock could react well to the result. 

 “There were things to like and others not so much, but overall, the quarter came in as expected,” wrote analysts Eduardo Rosman, Ricardo Buchpiguel and Thiago Paura. 

Original Story: Brazil Journal | Anna Paula Ragazzi 
Photo: Bradesco Linked IN
Edition & Translation: Prime Yield

HFSF disinvestment from Greek banks enters in its final countdown

HFSF currently controls 40.39% of the shares of National Bank, 27% of Piraeus Bank, 9% of Alpha Bank and 1.4% of Eurobank. In addition, it controls 62.93% of Attica Bank’s shares.

The Hellenic Financial Stability Fund (HFSF) will soon launch the procedures for the selection of a specialist consultant who will undertake the preparation of the fund’s disinvestment strategy from Greece’s lenders. The passing of the new institutional framework for the operation of HFSF, which includes an extension to the fund’s lifetime until the end of 2025, and the appointment of the new Board of Directors paves the way for the utilization of HFSF’s holdings in the banks, with the government pushing for the fastest return of banks to private ownership.

HFSF currently controls 40.39% of the shares of National Bank, 27% of Piraeus Bank, 9% of Alpha Bank and 1.4% of Eurobank. In addition, it controls 62.93% of Attica Bank’s shares. The total current value of the banking shares that HFSF has in its portfolio amounts to 1.69 billion euros, of which 66% is the value of National Bank’s stake

However, despite the government’s desire for the disinvestment to proceed quickly, it seems that this will require a fair bit of time: after the selection of the consultant, they will need sufficient time to study the data and propose strategies, and then HFSF’s management will proceed with the implementation, depending on market conditions. In any case, the disinvestment process should be completed by the end of the fund’s lifetime at the latest, i.e. by the end of 2025, with most of the parties involved, the government, the Bank of Greece and banks wanting this to happen as soon as possible, as the participation of an entity linked to the state in the share capital of commercial banks is seen as being a negative. After all, HFSF had a specific mission from the beginning, the recapitalization of banks and their quick return to private hands. It is no coincidence that in all the capital increases that the banks carried out, they sought to reduce HFSF’s participation. On the other hand, there are some within the HFSF who want the fund to evolve into a special type of investor that will also support the system, just as with Attica Bank. As far as the divestment is concerned, they argue that it should be done gradually and with very careful steps in order to maximize the amount that will be recovered from the share sale. Of course, all this now has a limited effect, as due to successive recapitalizations, HFSF has already lost most of its capital. As reflected in HFSF’s financial data at the end of September 2021, 38 billion euros of its initial funds amounting to 42 billion euros have been lost.

Original Story: Business Daily | Yiannis Papadogiannis 
Photo: Photo by Michalis Famelis / Wikimedia Commons
Edition: Prime Yield