Four in five firms considered insolvent
No more than 50,000 local enterprises are thought creditworthy by domestic lenders
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 last week, 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.
