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Maria S. Topalova

Being a banker in these troubled times is not easy - markets are merciless to banks, governments are stabbing them in the back, their reputation according to societies is as bad as the reputation of drug cartels and the economic crisis is threatening to become a permanent business environment. This is the impression from the annual conference on bank management, in which financial experts, analysts, businessmen and politicians discussed the possible emergence from the debt crisis.
    Greek bankers in general are angry at PSI - Private Sector Involvement or the involvement of private creditors in the debt haircut procedure. "PSI was a big mistake. Greece is the only country which will apply this procedure. But no matter how bad the news is, the procedure should be applied as quickly as possible and be completed before the upcoming elections next year, because there is a real danger of politicizing this issue during the election campaign," said the chief economist at Alpha Bank Michalis Masourakis, who acknowledged with a sigh, that in fact, Greece is a bankrupt country.
    "Negotiations on the PSI continue. They are very complicated because both parties - the Greek State and private creditors – are diametrically opposed," revealed Pavlos Milonas, chief strategic director at the National Bank of Greece. He said it was unclear after the negotiations how many private creditors would be involved in the procedure, which is voluntary, but he stressed that PSI was a big blow to the Greek banking system. Miranda Xafa, a former deputy executive director of the International Monetary Fund, expressed the opinion that voluntary involvement could become mandatory. "But this will not be the end of the world," she tried to reassure bankers. Discontent over the PSI was expressed by the former Prime Minister of Luxembourg and former European Commission President Jacques Santer, who is currently Chairman of the Board of UniCredit Bulbbank.
 
    "This is the Holy Week of the Eurozone. It has started with the new measures of financial discipline in Italy, went through the Merkel - Sarkozy meeting and we expect its climax on Good Friday when the European Union summit will be held. The only difference with Easter is that we will not wait until the resurrection of the Euro." In this figurative way, Michalis Masourakis depicted the dramatic situation, in which Greek bankers are awaiting the decisions of the leaders of the 27. He predicted that the outcome would not come soon, and we would have to experience many episodes before the end of the drama. "In the long term, I am optimistic, but in the short run - no, I do not expect easy solutions," concluded the chief economist at Alpha Bank.

For his part, Jacques Santer supported the issuance of Eurobonds as the only way to provide funds for investment and thus to create jobs in the Eurozone. He acknowledged that the dollar is in a better position than the Euro, because a federal state stands behind it. Among other things, this state is a superpower and he suggested that some kind of a fiscal union could be the only way for the Eurozone to emerge from the crisis. According to Miranda Xafa, the European Central Bank was much closer to the decisive measures to limit the debt crisis than officially stated. She is confident that the bank based in Frankfurt will continue to buy bonds of troubled countries for another two-three years, not just one, as planned at the beginning of the crisis.

    Plato Monokrousos, head of stock and market analysis at Eurobank EFG forecasted that Greece would need a third package of financial assistance, which however would be smaller than the first two. In his opinion, the first two packages have been lifesaving for the country, because without them, it would allocate 10% of GDP just to pay the interest on loans.

"In 2008, we started with the hope that the crisis would not last long, that it would pass and would not affect Greece. Then it turned out that Greece is at the centre of the storm and finally, from Greek, the crisis has become European. We are continuously managing banks under crisis conditions and this crisis is turning into a permanent business environment," Spiros Papaspirou, Deputy CEO of Piraeus Bank, summarized the situation of the Greek banking sector. He recalled that the cost of capital in Europe and the U.S. has reached 12%. "It's very difficult for a bank to be effective enough so as to offset this higher cost of capital and make a profit," he admitted. "In the beginning, we wondered whether this bank or that one would survive. Then, we wondered if the entire banking system would survive. Then, we wondered whether Greece would be able to emerge from the crisis. Now the question is whether the Eurozone will be able to survive," concluded Spiros Papaspirou.

"When we lent, our clients were saying, "Do not look at the taxes I pay but at what income I have." Now, that we have started to look for their income, it appears that there is none," said in turn Andreas Atanasopoulos, Director General of the National Bank of Greece. And continued, "If anyone could see today the credit records of all Greek banks which were lending to small companies and freelancers, this person would rub his eyes because he would think this was a dream." In his opinion, the future of banks is to move towards serving fewer but safer clients and lower, but safer, returns.