GIG Economic Bulletin –2 August 2021

All four Greek systemic banks passed the ECB stress tests with ease last week, while the loosening of deferred tax treatment makes the lenders a more attractive investment proposition. Tourism bookings are picking up for August, boosting the government’s confidence that the economy will meet or surpass its 3.6% growth target for this year.

Economic BulletinInsights
Greece’s systemic banks – Alpha Bank, Eurobank, National Bank of Greece, and Piraeus Bank – have passed the ECB’s latest stress test; privatisation fund HRADF has approved the transfer to COSCO of an additional 16% stake in the Port of Piraeus; four investment funds will move on to the next phase of bidding for 49% of transmission network company HEDNO; and while tourism bookings to Greece are gaining momentum the ECDC has put the 13 Southern Aegean islands on its “dark red” list due to rising Covid-19 infections.


Finance Minister Christos Staikouras reiterated the government’s projection of 3.6% growth in the current year, characterising it as “fully feasible, realistic and even conservative”. The minister was presenting a report on the Greek economic outlook to Parliament.

Economic sentiment rose to 111.2 points in July from 108.7 points in June on the European Commission index, approaching the pre-pandemic high of 113.2 reached in February 2020. Consumer confidence meanwhile slipped a further 7.3 points after a 3.4-point drop in June.

Private sector bank deposits grew by a further €1.62 billion in June according to the latest figures from the Bank of Greece (BoG), bringing the aggregate increase this year to €6.3 billion.

Unemployment dropped to 15.9% in May from 17.1% in April according to the Hellenic Statistical Authority (ELSTAT). Employment increased Y-o-Y by roughly 140,000 people, while the inactive population fell slightly from the Q1 peak of 3.45 million to 3.23 million in May.

Household disposable income jumped by 5.1% Y-o-Y in Q1, following a rise of 0.8% in the previous quarter according to ELSTAT.


A study by NBG highlights a substantial information gap among Greece’s SMEs about the RRF funds available, with just 14% of firms saying they have full knowledge of the recovery plan, and one in three saying they have no knowledge.


Greek 10-year and 5-year bonds continued their low yield rally with new records in July, bringing expectations of a new market foray. The 10-year bonds were trading as low as 0.6% while 5-year bond yields turned negative to hit -0.145%.

Greece drew €812.5 million from a 6-month T-bill issue with a final yield of -0.39%.


The board of privatisation fund HRADF has approved the revised terms of the agreement for the transfer to COSCO of a further 16% stake in the Port of Piraeus. COSCO has been given a 5-year extension to complete €295 million of investments in the port which were stipulated in the original agreement.

In PPA’s master plan, one of the most important projects includes a new cruise shipping port in Piraeus’ Peiraiki district. Copyright: Aerial-motion / Shutterstock

Four investment funds will proceed to the next phase of bidding for 49% of transmission network company HEDNO/DEDDIE, with the deadline for binding offers extended to early September.

Tax Incentives

The government plans to halve the tax rate for companies that merge or undergo major restructuring, bringing the rate down as low as 11%, on the condition that profits are not capitalised or distributed to the shareholders. The aim is to encourage economies of scale, while directing profits to proactive investments.


Flight bookings from the UK have jumped to 280,000 for August, up from 110,000 for the past week. So far this year 2.8 million visitors have come to Greece, led by arrivals from Germany, France and Poland, with July arrivals surpassing 2020 by 60%.

Hotel industry data shows that almost all 10,000 hotels opened in July, while occupancy rates ranged between 60-85%.

After Crete, the European Centre for Disease Prevention and Control (ECDC) has put the 13 southern Aegean islands on its “dark red” list due to rising Covid-19 infections, meaning that all but essential travel to and from the region is discouraged. This includes top tourism destinations including Santorini, Mykonos, Rhodes. The decision is expected to have an impact on national risk ratings in some of Greece’s key tourism markets, including Germany.


All four of Greece’s systemic banks passed the ECB’s stress test. All banks performed strongly in the base case scenario, but only Alpha Bank kept its core capital (CET1) ratio above 8% in the worst-case scenario. The tests, however, did not take into account the strengthening actions taken by the banks after the end of 2020.

The ECB has approved changes to deferred tax rules, giving Greek banks a 20-year period in which to move losses to years where there are enough profits to absorb them. The change effectively removes the prospect of mandatory recapitalisation in favour of the state and allows more room for manoeuvre in the lenders’ efforts to clean up their balance sheets.

Eurobank has announced the purchase of 9.9% of Hellenic Bank in Cyprus, in the latest move by a Greek bank to expand overseas. Eurobank has already made a move in Serbia, while Alpha Bank plans to build on its presence in Romania, aiming to draw 10% of profitability from international operations.

Greek banks have emerged as the biggest borrowers from the ECB’s TLTRO facility in the period since May 2021, with the liquidity accounting for 14% of their assets. The TLTRO is intended to be directed to loans on favourable terms to the private sector. Greek banks are expected to extend €20 billion of credit annually in the 2022-2024 period according to analysis by JP Morgan.

Stock Market

The ASE general index closed July with marginal gains of 0.38% at 888.26 points, as a run of positive sessions reversed losses earlier in the months. The weekly performance was 2.76%, buoyed by the banking index with 3.72% weekly gains on news of the ECB’s decision on deferred tax and expectations of their positive performance in stress tests.

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