Fitch Ratings, a prominent American credit rating agency, has cast a positive outlook on four Greek banks in light of the upgraded Greek debt and an elevated credit rating to investment grade. This favourable shift reflects Fitch’s anticipation that the credit rating recovery will not only benefit Greek banks but also enhance the overall business climate in the country.
The credit rating agency’s positive assessment suggests that the improved operating environment will empower Greek banks to increase their turnover while maintaining a robust risk profile. The positive momentum follows Greece’s journey through three recapitalisations within a few years, stemming from the challenging debt crisis that compelled the Eurozone member into three successive bailouts between 2010 and 2015.
In response to the crisis, Greece initiated three recapitalisations and established the Hellenic Financial Stability Fund (HFSF) after signing the first bailout agreement in 2010. The HFSF aimed to stabilise the credit market through strategic bank mergers and state funding, thereby preventing a bail-in scenario where significant portions of bank deposits could be confiscated to sustain the banking sector.
Throughout this challenging period, Greece invested over 30 billion euros (approximately 33 billion U.S. dollars) to avert a bail-in scenario and ensure the viability of the banking sector. Recently, the National Bank of Greece, a major commercial lender, witnessed a notable transition as 22 percent of its shares shifted from state ownership to private investors. This move marked a pivotal step in Greece’s financial recovery.
National Economy and Finance Minister Kostis Hatzidakis hailed this transaction as “the most successful transaction of the last three years in the European Union.” The minister expressed optimism, stating that the upgrade signifies the end of the financial crisis and serves as a positive signal for the Greek banking system and the overall economy.
However, not all experts share this optimistic view. Nikos Theocarakis, a Political Economy Professor at the University of Athens, argued that the crisis in Greece is far from over. He emphasised that the concession of shares to private shareholders represented a significant loss for the state, questioning the decision to transfer shares to private entities and highlighting the exceptional financial loss incurred by Greece, estimated at around 30 billion euros.
As Greece navigates its post-crisis recovery, divergent opinions on the true extent of financial stabilisation underscore the ongoing economic complexities facing the nation.