Greece's fiscal crisis could spell trouble for the banking sector should deteriorating risk sentiment lead to reduced interbank lending or major deposit withdrawals. For the time being these are risks to our forecasts, with a major systemic crisis not part of our core scenario. As such, we continue to project asset expansion over the medium term, albeit at a slower pace than before the international financial crisis. We have previously stressed that unlike some of its more precarious counterparts in Western Europe, the Greek banking sector is fairly robust and has weathered the global financial crisis well. This is largely due to the manageable degree of leverage and absent funding gap. According to our estimates, industry leverage has remained in single digits since the beginning of the Bank of Greece's data series in 2001 and was 9:1 in December 2009. Client deposits completely cover outstanding loans, with a loan-to-deposit ratio of 80% at the end of 2009, indicating that there is limited reliance on external financing. Capitalisation rates have trended higher, with the most recent data showing bank capital increasing at a rate of 40.1% y-o-y in December 2009. While these relatively sound ratios bode well for systemic stability, we nonetheless highlight that there are major risks stemming from Greece's fiscal crisis. In particular, we see risks arising from potential decapitalisation, reduced interbank lending and a rise in non-performing loans as the real economy deteriorates. In the case of the former, should risk sentiment continue to deteriorate, especially in light of ambiguity from the European Commission over a potential financial bailout for the Greek government, there is a risk of investors pulling capital out of the country's banks, alongside a potential drawdown in domestic deposits. In addition, an elevation in risk aversion among banks could mean interbank lending starts to deteriorate, which would affect the cash flow among less liquid institutions. The deterioration in real economic conditions as a result of fiscal consolidation could also rock banking sector stability. With the government under pressure from the European Commission to rein in its deficit below 3% of GDP by 2012, from about 13% in 2009, the required budget cuts will prevent a meaningful economic recovery from materialising in 2010. Forced to improve competitiveness through internal devaluation, the government's deflationary policies will exacerbate the rise in unemployment and deterioration in corporate profitability. This would likely result in a further increase in non-performing loans, requiring greater loan loss provisioning. These scenarios are risks to our core outlook. A full-blown systemic banking crisis is a far-fetched proposition at this stage and as such we hold to our medium-
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Partial Table of Contents:
Executive Summary
- Table: Levels (EURbn)
- Table: Levels (US$bn)
- Table: Levels At March 2010
- Table: Annual Growth Rate Projections 2010-2014 (%)
- Table: Ranking Out Of 59 Countries Reviewed In 2010
- Table: Projected Levels (EURbn)
- Table: Projected Levels (US$bn)
SWOT Analysis
- Greece Commercial Banking SWOT
- Greece Political SWOT
- Greece Economic SWOT
- Greece Business Environment SWOT
Business Environment Outlook
- Commercial Banking Business Environment Ratings
- Table: Greece Commercial Banking Business Environment Rating
- Commercial Banking Business Environment Rating Methodology
- Table: Emerging Europe Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
Europe Banking Sector Outlook
- Table: Comparison Of Loan/Deposit, Loan/Asset & Loan/GDP Ratios
- Table: Anticipated Developments In 2010
- Table: Comparison Of Total Assets, Client Loans & Client Deposits (US$bn)
- Table: Comparison Of US$ Per Capita Deposits (Late 2009)
- Table: Interbank Rates & Bond Yields
Greece Banking Sector Outlook
Economic Outlook
- Table: Greece Economic Activity, 2007-2014
Competitive Landscape
- Market Structure
- Protagonists
- Table: Protagonists In Greece's Commercial Banking Sector
- Definition Of The Commercial Banking Universe
- List Of Banks
- Table: Members Of The HBA (June 2010)
Company Profiles
- National Bank of Greece
- Table: Stock Market Indicators
- Table: Balance Sheet (EURmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Alpha Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (EURmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Eurobank EFG
- Table: Stock Market Indicators
- Table: Balance Sheet (EURmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- ATEbank
- Table: Key Statistics For ATEbank, 2004-2009 (EURbn)
- Emporiki Bank
- Table: Stock Market Indicators
- Table: Balance Sheet (EURmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Piraeus Bank
-
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