Greece: Banking & Finance

The national competent authority (NCA) for the regulation, supervision and resolution of banks in Greece is the Bank of Greece (BoG), in coordination with Single Supervisory Mechanism (SSM), as established under Council Regulation (EU) No. 1024/2013 (SSMR). The framework for the cooperation between SSM and BoG is set out under Regulation (EU) No. 468/2014 (SSM Operational Framework). ECB has undertaken the direct prudential supervision of systemically important banks (SIs) established in the Eurozone, and thus in Greece, while BoG exercises its prudential supervision powers with respect to less significant institutions (LSIs). BoG maintains its capacity as resolution NCA. The adoption of potential resolution measures for banks may require the cooperation with the Ministry of Finance, the Hellenic Financial Stability Fund (HFSF) (in case of the provision of extraordinary public financial support) and the Hellenic Deposit and Investment Guarantee Fund (HDGIF). Again, there is an interplay between the Greek and the EU resolution framework for credit institutions, with the Single Resolution Board (SRB) being designated as the competent resolution authority under the Bank Recovery and Resolution Directive 2014/59/EU (BRRD), as amended by Directive (EU) 2019/879 (BRRD II). Thus, with respect to credit institutions under SSM supervision, the SRB is the competent body to adopt measures provided for in the Single Resolution Mechanism Regulation (EU) No. 806/2014 (SRM), and potentially finance them through the funds of the Single Resolution Fund (SRF). In its capacity as national resolution authority, the BoG would implement the measures adopted by the SRB, in accordance with the powers conferred on it by Greek law 4335/2015 transposing the BRRD (the Greek BRRD Law), as amended and in force.

In accordance with article 9 of Greek law 4261/2014 (the Greek Banking Law), the following activities are restricted only to institutions having been granted a banking license:

• accepting deposits and other repayable funds from the public
• without prejudice to any special provisions of applicable legislation (e.g. with respect to Micro-credit institutions), the professional granting of loans and/or other types of credit

Article 11 of the Greek Banking Law provides for other regulated services, i.e. services the provision of which triggers a licensing requirement, including, inter alia, payment and e-money services or investment service,) however these are not construed as constituting a trigger event specifically for a banking license, because the relevant services may be provided in compliance with a different licensing framework (e.g. payment institution, e-money institution, leasing company or investment firm).

Following the transposition of Directive 2019/878/EU (CRD V) into Greek law and according to the provisions of Article 22A of the Greek Banking Law, introduced by virtue of Greek law 4799/2021, financial holding companies and mixed financial holding companies established in Greece are also required to seek approval by ECB (if they form part of a significant supervised group) or by the BoG (for less significant supervised groups) in order to act as an EU parent financial holding company of their group.

A banking license is universal, in the sense that an entity holding a baking license is entitled to offer and perform all services of article 9 of the Greek Banking Law and article 11 of the Greek Banking Law. Concurrent licensing regimes apply for certain of the services listed under article 11 of the Greek Banking Law, other than the stricto sensu banking services. In particular:

• With respect to investment and ancillary services as listed under Annex I of Directive 2014/65/EU of the European Parliament and of the Council (MiFID II), the licensing and supervisory competent authority is the Hellenic Capital Markets Commission (HCMC). The relevant regulatory and legal requirements are provided for by Greek law 4514/2018 (the Greek MiFID Law);
• With respect to payment services, e-money services, factoring, leasing, claims’ management companies and currency exchanges services, to the extent not provided under a general banking license, the licensing and supervisory authority is the BoG and the relevant regulatory and legal requirements are provided for:
  • Greek law 4537/2018 (the Greek PSD2 Law) with respect to payment services;
  • Greek law 4021/2011 (the Greek EMD Law) and further specified via Executive Committee Act no.164/2/13.12.2019, with respect to e-money institutions;
  • Greek law 1905/1990 (the Greek Factoring Law) with respect to companies providing only factoring services;
  • Greek law 1665/1986 (the Greek Leasing Law), with respect to companies providing only leasing services;
  • Greek Law 4354/2015 (the Greek Claims Management Law), with respect to claims’ management companies; and
  • Greek law 2515/1997 (the Greek Currency Exchange Law), with respect to currency exchanges;

Special licensing regimes are also provided for:

• the consumer credit companies of article 153 of the Greek Banking Law;
• the micro-credit institutions under Greek law 4701/2020 (the Greek Micro-Credit Law).

In all cases, the licensing and supervising authority remain Bank of Greece.

Yes, if a general banking license is granted for all activities listed under article 11 of the Greek Banking law (i.e. activities that are subject to mutual recognition, in accordance with Annex 1 of Directive 2013/36/EU of the European Parliament and of the Council (CRD IV)). Moreover, Greek banks are allowed to distribute insurance products (bancassurance business) in the capacity of insurance agents.

The regulatory sandbox of the BoG has been online since 2.06.2021, pursuant to the issuance of BoG Executive Committee Act No. 189/1/14.05.2021, with a stated purpose to (a) facilitate financial innovation and preserve financial stability, (b) enhance legal certainty, and (c) build and promote knowledge. In the context of the sandbox, regulatory guidance is provided to participating institutions and active dialogue between the BoG and the participating institutions, through a designated Single Point of Contact for each participating institution. The life cycle of the Regulatory Sandbox comprises the following successive phases: (i) application phase; (ii) preparation phase; (iii) testing phase; and (iv) evaluation/exit phase.

In March 2019, BoG set up an Innovation Hub to enable FinTech aiming to encourage industry participants to engage in dialogue with the regulator regarding digital transformation and innovation, and subsequently became a member of the European Forum for Innovation Facilitators (EFIF), since its launch in April 2019. The BoG had also initiated the process of launching a regulatory sandbox and a relevant procurement note has been issued by the European Bank for Reconstruction and Development (EBRD).

Until today, there is no special local regime for the issuance and custody of crypto-currencies.

However, Greek Law 4557/2018 (the Greek AML Law) has been amended to transpose Directive (EU) 2018/843 (the AMLD V) to include in the scope of the customer due diligence and reporting requirements the providers of exchange services between virtual and fiat currencies and custodian wallets (the Crypto-Currency Services).

Further to the above, a register for the Crypto-Currency Services providers in Greece has been established. By virtue of HCMC decision no 5/898/3.12.2020, a specific registry was established in which all digital wallet providers and cryptocurrency exchanges must register certain information about their AML compliance policy and internal audits, their corporate and ownership status, their management and their business plan. The register is kept by the HCMC. No Crypto-Currency Service can be provided in Greece, if HCMC rejects the registration of the provider. As stressed by the HCMC in the relevant public communication issued on the entry into force of the new regime, the registration does not constitute, and should not be communicated to investors as, an authorisation of any type.

Crypto assets are not defined in law and are not recognized as deposits. In this context, crypto assets are not covered by any deposit guarantee scheme, as the definition of deposit set out in Greek law 4370/2016, transposing Directive 2014/49/EU on deposit guarantee schemes (DGSD) into Greek law, refers to the notion of funds, which is limited to banknotes, coins and scriptural money, excluding even electronic money and the funds received in exchange of electronic money. Moreover, insofar as crypto assets do not constitute electronic money, the segregation and other safeguarding requirements under Greek law provisions transposing Directive 2009/110/EC on electronic money institutions (EMD II) and Directive (EU) 2015/2366 on payment services (PSD II) are not applicable to them.

The terms and conditions for the establishment and operation of credit institutions in Greece are laid down in the Greek Banking Law, and further specified in the BoG Executive Committee Act 142/11.6.2018, as amended and currently applicable, and the Banking and Credit Committee Decision 211/1/5.12.2005.

More specifically, the applicant submits to the BoG the license application with supporting documentation containing information inter alia on organisational and capital structure and fit-and-proper assessments with respect to Board of Directors Members and key function holders, as well as the AML officer. Moreover, the applicant must provide information on shareholders with holdings exceeding 1%, a copy of its AoA and a detailed programme of operations, in which all material information that will allow the BoG to make its assessment of the application is contained (including funding sources, projected capital adequacy ratio, group structure, distribution channels, accounting/auditing procedures, IT system architecture and security policy and corporate governance framework).

In the event that BoG rejects the license application of a credit institution, it will notify the applicant within six months from receipt of said application, or, in the event that the application was incomplete, within six months from the filing of all information required by BoG to issue its decision. In any event, the decision granting license or rejecting the application shall be issued within 12 months from receipt of a complete application.

In principle, the provision of banking services to clients resident in Greece on a cross-border basis is allowed only to banks duly authorized in another EEA jurisdiction. Where the provider of the relevant services is licensed in another EEA jurisdiction (home state), they may market and/or offer any of the services for which they are licensed in their home state on a cross-border basis, based on the European passport (freedom to provide services), subject to a notification process. BoG, in its capacity as the supervisory authority of the host state, may inter alia require the reporting of information and supervise the compliance with certain regulatory business conduct rules.

Where the provider of the relevant services is not licensed in another EEA jurisdiction (i.e. it is a third-state entity) and intends to provide such services in Greece, they must establish a subsidiary or a branch which will be licensed by BoG. Such a subsidiary/branch would have to comply with all requirements (inter alia organisational and capital) that are applicable to a Greek credit institution licensed under the Greek Banking Law for the same services. The regulatory framework on their establishment and operation is further elaborated in the BoG Executive Committee Act 58/18.1.2016.

In accordance with article 8 of the Greek Banking Law, credit institutions established in Greece must have the legal form of a societe anonyme under Greek Law 4548/2018. Alternatively, they may be established and operate under any of the following legal forms:

• A credit cooperative society under Greek Law 1667/1986; or
• A European company (SE), under Council Regulation (EC) No 2157/2001; or
• A European cooperative society (SCE), under Council Regulation (EC) No 1435/2003.

Institutions licensed by the BoG as banks have to comply with the corporate governance requirements set out in the Greek Banking Law and in the BoG Governor’s Act No. 2577/2006, as amended, which sets out the “Framework of operational principles and criteria for the evaluation of the organization and Internal Control Systems of credit and financial institutions and relevant powers of their management bodies”. The relevant corporate governance framework is based on the three lines of defense model, as reflected inter alia in the following main pillars:

1. Μanagement: The board of directors as the overall responsibility for the bank and approves and oversees the consistent implementation of the strategic objectives, risk strategy and internal governance of the bank. With respect to banking groups, the board of directors of the parent entity is responsible for the entire corporate group, including for establishing the corporate strategy at group level and for coordinating and ensuring the internal consistency of the relevant control functions within the subsidiaries. To be able to carry out these tasks, the board of directors must be composed of members that collectively have the requisite knowledge and experience at least in relation to the primary activities of the bank. Moreover, the separation principle is meant to prevent conflicts of interest, by ensuring administrative separation between executive and supervisory functions; at least one member, or two members of the board of directors in case the value of the bank’sassets exceeds 10 billion euros, must be nonexecutive and independent, and the chairperson of the board of directors cannot assume the function of the bank’s chief executive officer, unless an exemption is granted by BoG. The board of directors is assisted by committees, which perform the duties assigned to them by the board of directors and/or by specific legal provisions.
2. Support functions: Greek banks have to identify, monitor and manage risks through the relevant functions. Greek banks are required to have a risk management unit, independent of all operation functions, which is responsible for designing, specifying and implementing policies related to risk management and capital adequacy, including the application of an early warning system, the annual performance of stress tests and the periodical submission of relevant reports to the board of directors. In addition, the compliance function is entrusted to the Compliance Unit (or to specific persons, depending on the size of a bank), which establishes and implements appropriates procedures and an annual programme to ensure full, uninterrupted and readily verifiable compliance of the bank with applicable laws, regulations and the bank’s internal rules and policies.
3. Internal Control: An internal control unit is mainly responsible for performing the checks required for an objective, independent and substantiated assessment of the efficiency of the internal control system at both single entity and corporate group level. The establishment of an Audit Committee is also mandatory for Greek banks whose shares are listed and traded on a regulated market, have subsidiaries or branches outside of the Greek territory, or have assets with value exceeding 100 million euros.
4. The above mechanisms are supplemented by a bank’s remuneration policy (and the establishment of a remuneration committee or, as the case may be, the assignment of such duties to no-executive members of the board of directors), policies and procedures addressing conflicts of interest, and potentially by the adoption of a Corporate Governance Code. Greek banks offering investment services also need to comply with relevant organisational requirements set out in the Greek MiFID Law.

In addition, Greek banks whose shares are listed on a regulated market in Greece are also subject to the corporate governance requirements applicable to Greek listed entities.

The Greek Banking Law has transposed almost verbatim the CRD IV and CRD V provisions on remuneration policies, including (a) those setting a cap on the bonuses of bankers (i.e. the variable component cannot be higher than the fixed component, unless the general meeting of the bank’s shareholders approves a higher ratio up to 200% of the fixed remuneration), with any deviation from the cap being subject to a specific corporate procedure and to notification to BoG, evidencing that the higher ratio is not contrary to the regulatory capital obligations of the bank, and (b) the requirement that the remuneration policy be gender-neutral. The applicable regulatory framework also includes the provisions of Regulation (EU) No 575/2013 of the European Parliament and of the Council (CRR) on the disclosure of remuneration policies etc. and the regulatory provisions enacted by BoG, mainly the BoG Governor’s Act No. 2650/2012 on the remuneration policy to be applied by credit institutions, as in force, the BoG Executive Committee Act No. 158/2019 endorsing the EBA Guidelines on sound remuneration policies (EBA/GL/2015/22) and the BoG Governor’s Act No. 2577/2006, as amended.

Greek banks whose shares are listed on a regulated market additionally need to ensure that their remuneration polices meet the minimum content requirements provided for in Greek Law 4548/2018, prepare relevant remuneration reports and comply with specific provisions on employee share schemes.

Greek banks that have received capital support from the HFSF are subject to additional restrictions.

Further restrictions may be imposed on distributions within the context of the exercise of the prudential supervisory power of the competent authorities.

In line with the Basel III framework, the CRD IV and CRD V regulatory framework has been fully transposed in Greece through the Greek Banking Law (including the introduction of capital buffers to be maintained by banks), whilst CRR, as amended pursuant to Regulation (EU) 2019/876 (CRR II), and the EU implementing and delegated acts for CRR are directly applicable to Greek banks, without any transposition measure being required.

The leverage ratio of the Greek banks is calculated in accordance with the CRR provisions, reported to BoG under the reporting requirements of the Commission’s Implementing Regulation (EU) No 680/2014 (as amended by Commission Implementing Regulation (EU) 2016/428 with respect to the reporting of the leverage ratio) and disclosed publicly. This monitoring procedure is intended to prevent excessive leverage; pursuant to the entry of the CRR II into force in June 2021, a binding 3% leverage ratio requirement has been applicable to Greek banks, in accordance with article 92 para 1 of the CRR, as amended.

Greek banks are subject to the liquidity metrics under the CRR and Commission Delegated Regulation (EU) 2015/61, as amended, i.e. the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR). Whenever a Greek bank assesses that it will not be able to satisfy the LCR or the NSFR requirements, it has to notify BoG and take measures to ensure compliance with LCR and NSFR limits.

Pursuant to the transposition of the CRD V to Greek law and the entry into force of CRR II, certain changes to the regulatory requirement with respect to the LCR and the NSFR have been introduced. Importantly, CRR II provides that the NSFR should be expressed as a percentage and set at a minimum level of 100%, which indicates that an institution holds sufficient stable funding to meet its funding needs over a one-year horizon under both normal and stressed conditions. Should its NSFR fall below the 100% level, the institution should comply with the specific requirements laid down in CRR for a timely restoration of its NSFR to the minimum level.

Pursuant to generally applicable corporate rules to entities established in Greece as societes anonymes, Greek banks have to publish their annual financial statements. Greek banks whose shares are listed on a regulated market are also obliged to publish half-year and quarterly financial statements for the first and the third quarter of each financial year, as provided for and further specified in Greek Law 3556/2007 which transposed Directive 2004/109/EC in Greek law, as currently applicable.

The Greek Banking Law and the CRR establish the principle of prudential supervision on a consolidated basis for Greek credit institutions. Pursuant to the SSM rules and the Greek Banking Law, BoG is responsible for the consolidated supervision where it has authorised an institution as a less significant institution (LSI) which is a parent institution in Greece or an EU parent institution. Moreover, BoG exercises prudential supervision with respect to credit institutions whose parent company is a financial holding company or a mixed financial holding company in an EU member-state (CRR, article 12). Conversely, where the institution is classified as an SI, ECB will exercise its prudential supervision on a consolidated basis, again through SSM. By way of consequence and in any case, the regulatory framework set forth by articles 11 et seq. of CRR will be applicable, affecting the methodology via which the observance of prudential rules will be assessed.

In accordance with the BoG Executive Committee Act 142/11.6.2018, as currently applicable, implementing the 2016the Joint Guidelines for the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector (JC/GL/2016/01) of the Joint Committee of the European Supervisory Authorities, if a natural or legal person, alone or acting in concert, has decided to:

• acquire, directly or indirectly a qualifying holding (i.e. 10%); or
• increase an existing qualified holding so that the proportion of the voting rights or of the capital held would reach or exceed 20%, 1/3 or 50%, or so that the credit institution would become its subsidiary; or
• although not included in the above cases, plans, to control the credit institution,

has to notify in writing BoG and submit a fit-and-proper assessment questionnaire.

Relevant data and submission of the assessment questionnaire may be required by the BoG on a discretionary basis even for less significant changes in the institution’s holdings (e.g. where the acquired holding exceeds 1% of the credit institution’s share capital).

BoG checks the suitability of a proposed acquirer of qualifying holdings (defined as a direct or indirect holding in an undertaking which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of said undertaking) in light of the following criteria:

1. the reputation of the proposed acquirer and any BoD members that they plan to propose;
2. the financial soundness of the acquirer;
3. the ability of the credit institution to continue complying with its prudential requirements;
4. any reasonable grounds to suspect that the proposed acquisition bears significant AML/CFT risks.

There is currently no distinction between domestic and foreign investment in banks under Greek law, nor is there any additional requirement that potential foreign acquirers of shareholdings in Greek banks must meet that is not applicable with respect to potential domestic acquirers.

Four (4) Greek banks qualify as significant institutions under the SSMR and are subject to the direct supervision of ECB. BoG also identifies every year the banks to be treated as other systematically important institutions (OSIIs), to which the O-SII buffer and the combined buffer apply. However, there are no banks identified as global systemically important institutions (G-SIIs) in Greece.

In performing its supervisory tasks, the BoG may decide to impose administrative sanctions on supervised entities in cases of non-compliance with the legal and regulatory framework. More specifically, the BoG has the power impose penalties both on credit institutions/financial holding companies and members of the Board of Directors due to an infringement of the provisions of the Greek Banking Law, of CRR or of any delegated administrative act. The nature of the imposed sanction may vary depending on the nature of the violation and on the discretion of the BoG. Sanctions may inter alia include:

• if the sanctioned entity is a legal person, administrative fines up to €10,000,000 or 10% of the entity’s turnover;
• if the sanctioned entity is a natural person (e.g. in their capacity as BoD member), administrative fines of up to €5,000,000;
• a public notice of the violation;
• if the sanctioned entity is a BoD member of a supervised entity, a suspension of their voting rights.

Finally, it is noted that the pursuit on a professional basis of stricto sensu banking activities (taking deposits and granting loans) in violation of the licensing requirements set by articles 9 et seq. of the Greek Banking Law constitutes a criminal offense.

The legislation governing resolution of credit institutions in Greece is set out in the Greek BRRD Law and the Greek Banking Law (where the Greek BRRD Law refers with respect to, inter alia, the ranking of liabilities in case of special liquidation). The Greek BRRD Law has transposed almost verbatim the provisions of the BRRD and BRRD II.

The resolution tools include:

• The sale of business tool, whereby the resolution authority transfers ownership of all or some assets, rights or liabilities of the resolution entity to a purchaser on commercial terms without requesting the consent of the shareholders;
• the bridge institution tool, whereby the transactional architecture is the same as per above, but the purchaser is a publicly controlled entity known as a bridge institution;
• the asset separation tool, whereby the purchaser is an asset management vehicle; and
• the bail-in tool.

With respect to LSIs, BoG is the competent resolution authority in Greece and may, in that capacity, request available information, carry out raids and impose fines and administrative penalties. In the event that the resolution of a SI is required, SRB is recognised as the authority with competency to devise the resolution strategy, with BoG having an executory role.

Greek law 4370/2016, (the HDGIF Law) governs the operation of the Hellenic Deposit and Investment Guarantee Fund (HDIGF). The HDIGF’s purposes are (i) to compensate depositors if repayment of their deposits by the credit institution is not possible, (ii) to compensate investor clients where a credit institution cannot fulfil its obligations to them and (iii) to finance resolution measures for credit institutions. The HDGIF is funded by all Greek banks (including their foreign branches), as well as by local branches of third-country credit institutions (participation by local branches of EU-licensed credit institutions is available on an optional basis). The HDGIF operates three distinctive schemes (corresponding to each of its purposes), namely:

• A Deposit Guarantee Scheme (with a maximum coverage of €100,000 per depositor, per bank);
• An Investor Compensation Scheme (with a maximum coverage of €30,000 per investor per bank);
• A Resolution Fund for banks (where operation of the SRF is not applicable, pursuant to articles 24 and 36 of the HDGIF Law).

Further to the above, according to article 145 par. 3 of the Greek Banking Law, assets owned by customers of the credit institution under resolution and for which such ownership can be verified based on the relevant entries in the books of the credit institution as well as any other means of evidence, including safe deposit content, are segregated from the insolvent entity’s other assets.

Same as the above, there are excluded liabilities from the scope of the bail in resolution tool which refer to any obligation deriving from custody of clients’ assets.

Under the Greek BRRD Law, the resolution authority has the power to use the bail-in tool under the same circumstances that the BRRD, as currently applicable, provides for. When using the bail-in tool, the relevant resolution authority must write down or convert obligations of the entity under resolution in the following order:

1. CET1;
2. Additional Tier 1 instruments;
3. Tier 2 instruments;
4. other subordinated debt, in accordance with the ranking of claims in special liquidation proceedings; and
5. other eligible liabilities, in accordance with the ranking of claims in special liquidation proceedings.

A number of liabilities are excluded from the bail-in tool, including covered deposits and secured liabilities (including covered bonds). For the purposes of the bail-in tool, the designated resolution entities are required to maintain at all times a sufficient aggregate amount of own funds and eligible liabilities at a stand-alone and/or consolidated level, the aim of which is to ensure that they have sufficient loss-absorbing capacity.

The BRRD sets minimum requirements for own funds and eligible liabilities framework (MREL) on credit institutions’ business, financial condition and results of operations. The scope of these requirements is institution-specific, meaning that MREL is set for each institution in consultation with the competent resolution authority (i.e. SRB or BoG) and will be a function of different paragons, such as the systemic importance of the institution, its size and anticipated resolution scheme.

TLAC requirements in the EU are applicable to global systemically important institutions (G-SIIs), denominators of which are aligned with the existent MREL standard, pursuant to the Regulation (EU) 2019/877, which amended the SRM Regulation.

However, it is noted that there are no G-SIIs currently headquartered in Greece and thus TLAC requirements would only be applicable to a credit institution in Greece to the extent that it would be considered as a resolution entity or material subsidiary of a G-SII.

The establishment and operation by the BoG of the Regulatory Sandbox signals the importance that the digitalisation of traditional banking services and fintech has and is expected to continue to have in the Greek market. The sandbox is expected to operate as an additional tool for the BoG within its supervising power, allowing for personalized regulatory guidance and continuing dialogue with regulated entities through a single point of contact. The BoG will be assessing the sandbox’s operation in 2022 and will compile a review on its first year of operation, in order to assess potential improvements; on the basis of this review, it will examine possibilities to broaden the scope of the sandbox, e.g. by amending its current scope of application or eligibility criteria, and assess the potential impact of such changes to existing legislation.^[1]

Based also on the interest that crypto-currency service providers are showing for the Greek market, it remains to be seen whether the existing registration regime will be enhanced, taking also into account relevant EU law developments.

The ECB, the BoG and the Basel Committee on Banking Supervision have already identified the issue of climate change and its interaction with the banking sector as a major point and reflect on its impact on traditional risk types, such as credit risk, market risk, liquidity risk and operating risk, with related initiatives being undertaken at both the EU and the BoG level. Specifically, in the context of the European Green Deal package of the EU Commission (the EC), the EC has proposed a draft Regulation of the European Parliament and of the Council on European Green Bonds, in order to lay the foundation for a common framework of rules regarding the use of the designation ‘European green bond’ or ‘EuGB’ for bonds that pursue environmentally sustainable objectives within the meaning of Regulation (EU) 2020/852 and combat greenwashing.^[2] Relatedly, the ECB presented on 8 July 2021 a detailed action plan to include climate change considerations in its monetary policy strategy^[3] and published the results of the first economy-wide climate stress tests on 22 September 2021. On the other hand, the BoG has proceeded with the establishment of the Climate Change and Sustainability Centre to coordinate its climate and sustainability actions, acknowledged and welcomed the aforementioned ECB action plan, and committed to several climate change-driven goals in its practice, including the development and maintenance of an action plan for addressing climate change and sustainability issues within its field of responsibility.^[4]

References

^[1]     BoG Financial Stability Review 2021 (available only in Greek) https://www.bankofgreece.gr/ekdoseis-ereyna/ekdoseis/ekthesh-xrhmatopistwtikhs-statherothtas

^[2]         https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52021PC0391&from=EN

^[3]          https://www.ecb.europa.eu/press/pr/date/2021/html/ecb.pr210708_1~f104919225.en.html

^[4] https://www.bankofgreece.gr/en/news-and-media/press-office/news-list/news?announcement=d4705cef-d3c2-42b4-9e33 c485ae9b85d4

Following a ten-year financial and economic crisis, the recovery of the Greek economy and of the Greek financial sector has also been affected by the Covid-19 pandemic and by the measures taken to combat the pandemic. Although the portfolios of non-performing loans (NPLs) of the Greek systemic banks have been reduced through targeted actions, such as the securitization of NPLs backed by the asset protection scheme “Hercules”, the Covid-19 pandemic is expected to generate a new inflow of NPLs despite moratoria that have been granted. Although the BoG Financial Stability Review issued on December 2021 highlights that projections for economic growth in 2021 and 2022 remain exceptionally favourable, on the back of parameters such as the Multiannual Financial Framework 2021-2027 and the new European recovery instrument Next Generation EU (NGEU), which are expected to provide funding for major structural reforms and investment projects, it also notes that these projections are subject to uncertainties. An upside risk is associated with a stronger rebound in private consumption driven by household savings accumulated during the COVID-19 pandemic and a faster-than-expected implementation of structural reforms leading to more efficient utilisation of NGEU funds. There are also downside risks, associated with the impact of the fourth wave of the COVID-19 pandemic, a rise in NPLs after government support measures are lifted and potential low absorption rates of NGEU funds.

We have prepared the responses to the questionnaire in the early days of the Russia-Ukraine War. It was still very early to access the impact this war will have on the international financial markets and in turn to the banks’ capital as well any other aspects of banking and finance.