The leading position of real estate in foreign direct investment (FDI) in Greece is maintained and even strengthened in 2023, as the figures show, maintaining the reflection on whether and how the country’s production model will eventually be able to change.

FDI has “resurged” in recent years, rising from just €249 million in the fateful year of 2010 to a record €7.9 billion in 2022. However, foreign investors prefer to invest mainly in tourism and real estate, rather than in industry or the creation of new production units from scratch, so-called greenfield investments.

In 2023, Bank of Greece data show that while total FDI fell short of the 2022 record, real estate investment surged. In January-September, FDI reached €3.9 billion, a far cry from the €7.9 billion for the whole of 2022. In contrast, real estate investment reached €1.6 billion compared to €1.2 billion in January-September 2022, an increase of 30%. Overall, FDI in real estate in 2022 will amount to around €2 bn, i.e. 25% of the total.

The tightening of Golden Visa requirements certainly contributed to this jump in 2023, with many foreign buyers rushing to secure a Golden Visa before the new measures took effect.

In addition, analysts note that investments in financial activities, as shown by the Central Bank’s data, amounting to €2.4 billion in 2022 (there are no figures yet for 2023), are also to some extent indirectly related to real estate. This is because this category includes the funds placed for the purchase of non-performing loans from funds.

Moreover, data on gross fixed capital formation (as derived from GDP) from the Hellenic Statistical Authority show that investment in residential construction in January-September rose to 14.7% of the total (€3.2 billion), up from 10.7% of the total in the same period of 2022. This percentage is, of course, far below the 42% of investment that residential construction represented in 2007. It is also very low compared to the corresponding 27.9% in the euro area.

Original Story: Ekathimerini | Author: Eirini Chrysolora

Edition: Prime Yield

The overdue debt owed by Greeks to the state and financial institutions – i.e. banks and funds – is more than the country’s gross domestic product, reaching 224.2 billion euros.

These debts are divided between public and private sector entities as follows: €105 billion is owed to the tax authorities, accounting for 47%; €46 billion to social security bodies, representing 21%; €11.7 billion to banks, representing 5%; and €61 billion to funds managed by servicers, an amount that represents 27% of the total overdue private debt.

This amount, which exceeds Greece’s GDP, does not include the current debt of businesses and households, which amounts to €113.2 billion, raising the total amount of debts to €337.4 billion.

The out-of-court mechanism is a key tool for settling overdue debt, and according to data from the General Secretariat for Private Debt Management, 12,025 arrangements had been made for debts to financial institutions and the public for a total of €4.36 billion in initial debts until December 2023.

Last year, successful arrangements and new application submissions reached record numbers, a fact that, according to the Ministry of National Economy, reflects the dynamism of this particular tool that is significantly used by debtors and contributes substantially to the management and reduction of private debt. From the report of the last six months, it stems that an average of 950 arrangements per month are provided through the tool, while the continuous interest is also reflected by the rate of launching new applications on the platform, which exceed 3,500 every month.

Based on the latest progress report for December 2023, €18 billion in debt is on track for settlement. Most applications concern citizens with debts in the range of €50,000-200,000. From the analysis of the arrangements, it appears that 45% of the arrangements for debts to financial institutions receive a haircut of more than 30%, while for debts to the state, the corresponding rate of applications that receive a haircut of more than 30% is 33%. 

Original Story: Ekathimerini

Author: Evgenia Tzortzi

Edition: Prime Yield

Photo: Getty Images

Greece’s bank bailout fund will start a process to sell a stake in Piraeus Bank, the country’s third largest lender, by March, two sources familiar with the matter told Reuters.

It’s the third such sale since October from the state- controlled Hellenic Financial Stability Fund (HFSF), which was set up to recapitalise Greek banks during the country’s decade-long financial crisis which ended in 2018.

HFSF holds 27% in Piraeus Bank, with a market value of 4.37 billion euros, and has yet to decide whether to sell all or part of its shareholding.

“The plan is for the sale to take place at the end of February or early March,” a banker with knowledge of the matter told Reuters.

“There is no final decision yet on the stake. It might be 17%-18% or the whole stake,” he added.

A second source involved in the process said that it would likely be a combined sale to retail and institutional investors.

HFSF has mandated BofA as an advisor on its stake.

After injecting about 50 billion euros into the sector, HFSF started reducing its participation in four major Greek banks last autumn as part of its divestment from the lenders which have been recovering.

Original Story: MarketScreener | Author: Reuters
Edition: Prime Yield
Photo: Serge Mouraret / Alamy Stock Photo

The Greek banking sector will see this and next year a credit expansion of 4% per annum, per Eurobank Equities, ensuring resilience in interest income and profitability for Greek banks.

This is ahead of the imminent reduction of interest rates by the ECB, expected to start from the second quarter of this year.

Bank of Greece data put credit growth in January-November 2023 at 2.8%, affected by low financing to households. In contrast, credit expansion to businesses stood at 6% and the net flow of financing – new loans to businesses after repayment of existing debts – amounted to 1.1 billion euros in the same period.

Original Story: Ekathimerini | Evgenia Tzortzi
Photo: FreeImages (Jonte Remos)
Edition: Prime Yield

Bank profitability will reach record levels in 2023, but is expected to decline thereafter, a trend that will intensify after the interest rate cut from mid-2024. Interest expenses have tripled in 9 months.

Banks’ profitability is expected to weaken in the new year, a trend that will be reinforced by the gradual reduction in interest rates expected from mid-2024.

The year ends with an impressively strong performance by domestic banks, with profitability reaching record levels as a result of the extremely favourable interest rate environment.

The ECB’s sharp rise in interest rates led to a surge in banks’ interest income, as they benefited from the almost immediate pass-through of the increases to borrowers. At the same time, they were able to pass on the increases to depositors to a lesser extent due to the excess liquidity in the system and the structure of deposits with the absolute dominance of demand deposits. 

The limited volume of deposits and the small size of the average deposit make it pointless for depositors to seek better returns through time deposits. As a result, the bulk of deposits remain demand deposits with very low interest rates.

Despite this policy, however, the rise in interest rates is gradually being passed on to depositors, albeit with a time lag. It is significant that in the nine-month period from January to September, according to the Bank of Greece, banks’ interest income increased by +96.5%, while interest expenses amounted to €4.07 billion, an increase of +211.30%.

Thus, the final picture of bank profits for the nine months is a modest +4.6%, far from the impressive +96.5% of interest income.

Bank executives estimate that bank profits will peak this year, largely due to the positive interest rate environment, and gradually decline in the following years, while remaining at a high level.

They note that pressure on interest expenses will intensify, while the gradual decline in interest rates that most expect after the first half of 2024 will lead to a decline in interest income.

Moreover, despite claims to the contrary, there is fierce competition among commercial banks in corporate lending, where credit growth is strongest, and this competition is driving down interest margins.

Despite the expected decline in bank profitability from the highs of 2023, the overall picture for profitability in the sector will remain very satisfactory. Moreover, profitability is expected to increase further as large banks continue to cut costs and reduce their branch networks.

Original Story: Yiannis Papadogiannis | Business Daily Greece
Image: Photo by Takis Kolokotronis in FreeImages
Edition: Prime Yield

The National Economy and Finance Ministry’s plan for “Hercules 3” provides for additional guarantees to banks amounting to €2 billion, and for its extension until the end of 2024.

The aim is to include in the mechanism of bad-loan management at least three more securitizations of loans pending from the four systemic banks, as well as the securitizations of smaller banks, such as of Attica Bank and Pancreta Bank.

The criteria of Hercules 3 will be stricter compared to the first and the second version, as the senior notes, which will be guaranteed by the state and will have to secure a higher investment category – i.e. more chances of collection.

Original Story: Ekathimerini | Evgenia Tzortzi 
Photo: Photo by Sergey Klimkin in FreeImages
Edition: Prime Yield

The Greek government has just tabled in Parliament a draft law seeking to further reduce non-performing loans (NPL) in banks’ portfolios by expanding the “Hercules” programme.

The draft legislation envisages measures to introduce greater transparency, more information and respect of debtors’ rights for servicers, modernise an out-of-court mechanism and expand protection for vulnerable debtors, improving the operating framework of a sale and leaseback agency, introducing measures to boost competition, such as loan offering from non-banking agencies, and expanding transactions through the IRIS system.

National Economy and Finance Minister Costis Hatzidakis said that the government’s intervention for banks and loans combined the goal of financial restructuring and the protection of vulnerable debtors with a series of modern and fair solutions. Servicers will operate under new and stricter transparency rules, ensuring debtors are given more information. The out-of-court mechanism becomes simpler, while the expansion of the Hercules programme will operate for the benefit of the banking system. At the same time, competition in the banking system becomes more intense through initiatives such as the ability of non-banking agencies to offer housing and business loans. The Greek economy has proven to be resilient and will move even higher in 2024, while dealing with the outstanding private debt will definitely contribute towards this direction, he said.

The expanded Hercules programme, following an agreement reached with the European Commission, will have a guarantee offer ceiling of up to €2 billion and will last until December 31, 2024. The Greek state has offered guarantees worth €18.7 billion in the previous two phases of the programme, helping to reduce the stock of NPL held by banks from 40.6% in December 2019 to 8.6% in June 2023.

Original Story: Hellenic News of America |HNA
Photo: Photo by Jonte Remos in FreeImages
Edition:  Prime Yield

Greece has a negative lead in Europe on the income-housing costs ratio, with 27% of the Greek population spending more than 40% of their disposable income to cover housing costs. November’s Financial Stability Report by the Bank of Greece (BoG) attributed the country’s position to its low per capita income compared to the rest of Europe. 

According to the report, Greece also ranked first in terms of housing costs. The figures, reported by Nafteboriki, show that:

– Apartment prices (in nominal terms) rose by 13.9% in the second quarter of 2023, year-on-year, compared to an increase of 11.8% in 2022.
– Prices of new apartments (up to 5 years old) increased at an average annual rate of 13.8%, in the second quarter of 2023, while prices of old apartments rose by 14.1%.
– In terms of geographic region, the prices in the country’s major urban centers rose significantly and more specifically in Thessaloniki (16.4%) and other major cities (14.6%), which exceeded the corresponding average growth rate for the entire country.

In the short term, foreign investment interest will persist, especially in privileged locations in the Attica basin and tourist areas. According to the BoG, expectations for the Greek residential real estate market remain positive, despite the uncertainties in the domestic and global economy.

Original Story: Ekathimerini |Staff 
Photo: Photo by Takis Kolokotronis in FreeImages
Edition: Prime Yield

Greece has secured revenues of €1.066 billion from the disposal of 22% of National Bank, a process oversubscribed eight times.

As Minister of National Economy and Finance Kostis Hatzidakis underlined, this is the “most successful transaction in the last three years in the EU in terms of the demand manifested and the minimization of the discount on the offering price,” set at €5.30 per share from a provisional price range of €5-5.44. Demand for the HFSF shares at National exceeded all expectations, reaching 9.5 times for the international book and 2.2 times for the Greek book. The shares immediately attracted very strong interest from leading international institutional investors, with a total of more than €30 trillion of funds under management.

As the HFSF bank bailout fund noted, “several of them have included a Greek bank in their portfolio for the first time, or again after many years.”

The participation of long-term investors covered more than half of the demand and according to data from the share allocation, among the big investment houses taking positions in National Bank are Fidelity, BlackRock, Capital, Allianz and Lazard.

The president of the HFSF, Andreas Verykios, thanked the international and Greek investment public “for the high response to the public offer,” which, as the managing director of the HFSF, Ilias Xirouhakis, stated, is “a resounding vote of confidence from the markets in the prospects of the Greek financial system and the growing dynamics of the Greek economy.”

At the same time, “it is recognition at an international level of the fund’s contribution to the recovery of the banking sector and to the consolidation of a climate of investment confidence in our country.”

That was also acknowledged by Bank of Greece Governor Yannis Stournaras, who contacted the management of HFSF, and those of National and Alpha, whom he congratulated for the successful moves in the privatization of the two banks. In total, from the two privatizations, of National and Alpha, the state will collect €1.36 billion.

Original Story: Ekathimerini | Evgenia Tzortzi 
Photo: Photo by Michalis Famelis / Wikimedia Commons
Edition: Prime Yield