Consolidation in Greece's banking system through mergers or acquisitions can be expected when the time is right, according to the chief executive of EFG Eurobank, the country's second-largest lender.
"The trend towards strategic collaborations is a reasonable development, when conditions allow it," Nicholas Nanopoulos told a banking conference on Tuesday.
Greek authorities have called on the country's banks to explore alliances to form bigger entities in a bid to better cope with a debt crisis that has hit them on many fronts: deposits, government bond holdings and interbank funding.
Greece plans to sell stakes in Hellenic Postbank and ATEbank as part of an asset disposal that aims to raise 50 billion euros (44 billion pounds) by 2015 to cut public debt.
"It's the right initiative to privatise these banks, but a bit premature for us to take a view. Whether we show interest or not needs to be left for some later stage," Nanopoulos said, responding to a question.
He said Greece's banking system had shown resilience and flexibility in the debt crisis, with lenders cutting costs and shielding their balance sheets with provisions and deleveraging.
Reducing banks' dependence on the European Central Bank (ECB) for liquidity must be gradual because abrupt adjustments could exacerbate the economic downturn, Nanopoulos said.
ECB funding to Greek banks fell slightly in April month on month, Greek central bank data showed on Monday. Lending dropped to 86.8 billion euros at the end of April from 87.9 billion in March.
"The basic problem of Greek banks is not capital but liquidity," Nanopoulos said.
Deputy National Bank CEO Alexandros Tourkolias told the conference that banks reduced ECB liquidity exposure by 9.8 billion euros in the first quarter, despite an ongoing erosion of their deposit base.
On Monday, Bank of Greece data showed the system's business and household deposits fell for a fourth straight month in April, down 1.2 percent month on month to 196.8 billion euros. They have shrunk by about 13 billion since the start of 2011.
Panagiotis Thomopoulos, head of the Financial Stability Fund (FSF) -- a 10-billion euro safety net for the country's lenders -- said banks were hard pressed to come up with a medium-term plan to gradually reduce ECB dependence.
He said it may take Greek banks longer to return to the interbank funding market than other countries with stronger recoveries, but their leverage ratio at 13.8 was a sound indicator at about half that of larger peers.
Reuters
