The Chief of Commercial Banking of Alpha Bank, Telemachos Georgakis, speaking at the open meeting of the General Assembly of the Association of Management Consultants of Greece (SESMA) on the topic “Financial tools NSPA, TAA, PDE: What we have gained, how we will make better use of them”. Mr. Georgakis also commented on the criticism leveled at the financing difficulties faced by Greek businesses, underlining that a large part of businesses borrow on equivalent or even better terms compared to their European counterparts.
“In fact, a significant percentage of Greek businesses not only have access to bank loans, but also on terms that are equivalent or even better than their European competitors of similar size. Beyond that, obviously the structure of the Greek economy, with the existence of many small businesses and freelancers, where the official financial results often deviate from the real ones, creates difficulties for many businesses in accessing bank loans. Also, a significant percentage of Greek businesses, unfortunately, still bear the scars of the wounds left by the long crisis of the Greek economy, with the result that access to credit is not easy”, Mr. Georgakis pointed out, adding that in combination with the initiatives that the companies themselves should take to grow and join forces, financing guarantee programs also come to improve access to credit.
The Chief of Commercial Banking of Alpha Bank emphasized that banks finance development, investment and in particular targeted investment. Greek businesses, having to cover an investment gap of 94 billion euros created in the period 2010-2021, are invited to invest aiming at increasing productivity, improving production costs, creating better products or offering upgraded services. They invest by focusing on automation and digitization, reducing energy costs and improving the environmental footprint.
“In this effort, the banks come to stand next to the client as a consultant and as a financier”, pointed out Mr. Georgakis and added: “They identify the needs of businesses and operate in addition to the role of consulting companies. Banks in recent years have evolved, increasing the expertise they already had in financing key sectors of the economy. For example, we mention the know-how that has been acquired in the financing of the hotel sector, the energy sector and infrastructure. At the same time, they became faster in their decisions, more flexible, with a greater willingness to take on credit risk, while they invested and continue to invest in technology in order to simplify the way corporate customers carry out their daily transactions.”
In recent years, significant European and national funds have been allocated through the banks either to deal with extraordinary adverse situations (pandemic, increase in production and energy costs) or to finance new investments. A key feature of all the programs was the assessment of the viability of the business by the bank which assumed part or all of the credit risk, while the European or national body – Recovery Fund, Hellenic Development Bank, European Investment Fund (EIF), European Investment Bank (IB) – contributed through co-undertaking of risk or through alleviation of financing costs.
Targeting the right investments
Mr. Georgakis commented that the ecosystem of banks, funds and advisors should aim for investments that will shield businesses against future challenges and underlined that “an investment should not be an end in itself, nor should the existence of a program create the need of an investment. The program must be the appropriate tool that will finance a correct and necessary investment”. As he characteristically noted, “we have seen many cases where businesses through financing programs managed to grow, become more extroverted and more efficient. Through investments, hotel companies attract more foreign visitors of significant economic value contributing to the creation of successive records of tourist arrivals and revenues, Greek food fills the shelves of large European supermarkets and Greek industrial products are exported all over the world. However, we also see cases where the preferential terms of financial instruments push entrepreneurs to consider unnecessary or risky investments. No matter how favorable the terms are in terms of duration, cost and collateral, the company should at least be able to service the loan of the said investment from the benefits of the investment. And here the role of both banks and consulting companies is important.”
Source: RES-MPE