Greece’s financial services sector remains slow growing.
Several boutique firms operate out of the capital, Athens, with many of them clustered in the high-end neighbourhoods of Kolonaki and Maroussi. he overall sector, however, is underdeveloped and made up just under 4 per cent of the country’s GDP in the fourth quarter of last year, versus an EU average of 6 per cent.
Costas Mitropoulos, executive director at the Greek unit of PwC, anticipates that with proper nurturing, the financial sector’s contribution could be greater.
“The Greek financial sector, with the exception of institutional equity, is well developed although highly concentrated,” said Mr Mitropoulos. “The creation of a healthy venture capital/private equity subsector able to finance Greek firms, which are mostly medium to small size, will make the difference and will have a real impact on Greek GDP.”
The difficulty Greece faces is both an image problem, where many investors have lost trust in the country, and a lack of focus from within Greece when it comes to nurturing and developing the sector.
“The banking sector in Greece can certainly benefit from further growth in terms of increased revenue streams stemming from a wider array of offered financial services,” says a senior European banker who deals regularly with the Greek government, speaking on condition of anonymity.
“However such a possibility is largely dependent on the support of the Greek state to bring about the necessary changes to create an attractive playing field for international banking groups as well as global investors [such as hedge and venture capital funds, property funds, insurance and pension funds], all of which would be the primary recipients of such financial services.”
The source outlined a number of measures that the Greek government could undertake to develop the financial sector – deregulation, a lower tax rate for financial services, and a reduction in state involvement.
Still, Panayotis Alexakis, a professor of business economics and financial markets at Kapodistrian University of Athens, insists there are a great deal of business opportunities to be had in Greece, which can be turned into investment once a solution is brokered between the new government and its creditors. When that happens, Greek financial companies will be well placed to channel funds from abroad, particularly from the UAE, he says.
“As we know in Dubai and the UAE there is a very important financial and economic centre. I believe that Greece can utilise this opportunity in terms of cooperation with financial companies, with investors, with commerce and economics.
“The UAE is a part of the world that has funds. It’s a big opportunity for Greece. If you see it in terms of privatisation, industrial and touristic investment plans, I think there are tangible possibilities for cooperation.”
Mr Alexakis also points out that the banking sector in Greece “is not a multiple of GDP as in Cyprus because the Greek economy expanded in other sectors like agriculture, tourism etc”.
However, he admits the economic crisis and resulting stagnation has affected Greek companies that are not export-orientated, and the way forward needs to be carefully undertaken.
“We hope that this issue is going to be settled gradually, gradually because, as I said, it is the stagnation of economies that creates problems for producing firms,” Mr Alexakis says. “Right now the uncertainty has made the risk very high for the Greek economy.”
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