Commercial sees its chance
Undeterred by the subdued outlook projected for investment banking this year, Commercial Bank yesterday said it was confident the sector would pick up momentum as a spate of state projects and sell-offs of public enterprises get underway. Announcing the incorporation of its stock brokerage operation, created from the merger of Commercial Securities and Metrolife Securities, into its investment banking subsidiary Investment Bank, Commercial Bank Governor Yiannis Stournaras said the climate is set to improve this year. «There are a number of major infrastructure projects in progress, along with the government’s privatization program and work related to the 2004 Olympic Games, these factors are very positive for investment banking,» he said. Based on last year’s investment banking results, such optimism is hardly justified. Commercial Bank last month reported a 19-percent drop in consolidated revenues from commissions. The parent bank took a 14-percent hit in commission revenues and a 26-percent decline in trading income last year. Other major banks also saw their trading and commission revenues drop sharply last year, as underwriting and capital market activities slowed down, victims of the prolonged stock market downturn. Commercial and Metrolife securities will be formally merged on April 8 and subsequently integrated into Investment Bank, Giorgos Christopoulos, managing director of the bank, said. Set up in 1962, Investment Bank offers services in corporate finance, capital markets, treasury, private banking and project finance. It strengthened its capital with a 42-billion-drachma share increase last August to 57 billion drachmas. French mutual Credit Agricole, which holds a 6.7-percent stake in Commercial Bank, has a 1.85-percent share in Investment Bank, down from 10 percent before the share capital increase. It has an option to increase its stake in the event Investment Bank launches another share capital increase. Christopoulos said the bank expects to recoup its investment a year from now and is projected to match the parent bank’s profit margin in five years. Business circles believe it possible that we may go through a collapse in demand, even if only for a few months. The signs are here: Real estate agents have noticed that property prices in prime areas have fallen. Wholesale traders in building materials are lucky to get paid eight to 10 months after purchase. Bankers are worried about a slowdown in loans. Finally, State coffers are suffering from delays in payments. The danger of stagnation is present.
