Greek cooperative banks have a role to play, BoG deputy governor says

“The Greek economy is now showing signs of stabilization and recovery. Positive signals make us all more optimistic about the future. On their own, however, they are not enough. Εffort and active participation is needed by all of us,” Theodoros Mitrakos Deputy Governor of The Bank of Greece, said in a speech addressing an event by the Cooperative Bank of Epirus.

The central banker said that cooperative banks should “build on the weaknesses highlighted by the crisis, reinforcing their capital and organizational structure, focusing on risk management and support for healthy entrepreneurship. Local communities and local governments in turn have to stand up for the cooperative banks, as support for investment projects in local societies that have been particularly hit by the crisis is the only way to definitively re-establish the country on the path of regularity and sustainable growth.

Mitrakos said cooperative banks can play an important role locally in complementing commercial banks. The banking sector in Greece has a very high degree of consolidation, with emphasis on urban centers. It is therefore necessary to further develop the cooperative banking pillar with a customer-based concept that will be supported by local productive forces and social entrepreneurship.

The model of cooperative banks serves values ​​and activities that are at the core of enterprises in the social entrepreneurship by providing appropriate products and services for social businesses. Mitrakos said that unlike what is observed in the rest of Europe, the market share of cooperative banks in Greece was and remains extremely low. In many European countries, cooperative banks are an important part of the banking sector, accounting for an average of 1/5 of their market share in loans and deposits and serving 210 million customers. In contrast, in Greece, the nine cooperative banks currently operating through a network of 87 branches, mainly offer basic banking services (loans, deposits), which are small and account only for 1 pct of the credit market, with total loans before provisions at 2.8 billion euros in March 2017. Correspondingly, the other key figures are similar. Indicatively, in March 2017 total assets amounted to 2.5 billion, deposits at 1.9 billion euros and supervisory capital of 222 million.

Mitrakos referred to the prospects of the cooperative banking sector stressing that it can play an important role in the development of the Greek economy. Institutional interventions have already contributed and are expected to further contribute to strengthening the capital base and improving the corporate governance of the sector without, however, losing its cooperative character. Furthermore, through the European Union and the European Investment Fund, cooperative banks are given an important opportunity to support small financing programs, and possibly microfinance, when the relevant institutional framework is in place. According to Mr. Mitrakos, the Bank of Greece understands these challenges and attaches great importance to the strengthening of small and especially cooperative banks.