GIG: Despite a turbulent few years, HSBC Bank (HBSC) has stayed the course in Greece. What drove your decision to stay put and, in retrospect, would you say it was the correct decision?
Yeates: We have been in Greece since 1981 and, over the years, have become a successful player in the Greek financial sector. Like all banks in Greece, we faced challenges as a result of the turbulent economic environment, but we decided to streamline our business to maintain our footprint in Greece. With the country showing now, after a decade of recession, some initial signs of economic recovery, there is a clear role for HSBC to play in supporting that ongoing process.
More specifically, we are able to both support Greek businesses when they expand overseas and to help link Greek corporations with international trade and business partners. As the Greek economic recovery begins to gather pace, HSBC is well positioned to support many of the international companies that will be looking to invest in Greece. For our 100,000 personal customers, HSBC continues to offer access to a broad range of investment services that leverage HSBC’s international strength and experience.
GIG: At the same time, HSBC has maintained a pronouncedly low presence in the Greek market, limiting itself to a few niche markets. What would drive you to consider expanding your presence?
Yeates: We are now the only international bank in Greece that offers a full range of banking and investment services in the country. But obviously, as an international bank we follow a very focused strategy, and we strive to be the very best at what we do. One of our group’s core objectives is to leverage our global network to connect customers to opportunities. We have been able to do this many times in Greece, and we will keep focusing on that.
GIG: What are the key opportunities you see in the Greek market presently?
Yeates: Today, our three main areas of focus are corporate banking and capital financing; shipping finance; and retail banking and wealth management.
HSBC’s Wholesale Banking team provides a full range of financial services to companies, with specific emphasis on supporting businesses with an international focus. HSBC has played a key role in supporting Greek companies and the Hellenic state as they access international capital markets.
Another key area for us is shipping finance, which was the main reason we first established a presence in Greece. We provide a broad range of financial services to shipping companies, and this will be a core area for us going forward.
In retail banking, HSBC has over the years built a reputation as experts in wealth management. We focus on delivering exceptional, personalised service through our internationally connected Premier proposition.
The overarching theme of our strategy is to connect customers to international opportunities. This international connectivity is our unique selling proposition, and this will underpin a lot of what we offer to clients over the coming years.
GIG: Greek borrowing rates have improved considerably – more so than Greek ratings have. Is that, in your opinion, a fair reflection of the improvement in the underlying fundamentals of the Greek economy?
Kamaris: Greece has seen the biggest fall in yields, and Greek government bond (GGB) spreads versus core countries have also fallen the most in 2019. Greece is increasingly treated by the markets as a ‘regular’ non-core investment. The spread of Greek bonds versus Germany looks fairly valued to its current rating, but it has significant room for improvement as Greece is expected to improve its credit rating, over the course of 2020, to possibly reach investment grade (BBB-).
Is such a scenario possible? Most likely as the macroeconomic outlook of Greece continues to improve. Business and consumer confidence indicators have reached multiyear highs in recent months, and they could continue moving higher if the non-performing loan (NPL) issue is successfully addressed and the reforms continue to gather pace. Recently, Three-month Treasury Bill (3 T-Bill) rates have gone negative, and we expect this to continue on the short end of the GGB curve.
GIG: As more Greek corporates are tapping bond markets, are you seeing an appetite for Greek corporate debt internationally? What would make an issue attractive to foreign investors?
Kamaris: In the third quarter of 2019, three major Greek companies – Hellenic Telecommunications Organization, Hellenic Petroleum, and Wind Hellas – tapped the eurobond market successfully. The strong interest by international investors for these new issues was verified by the fact that all the three issues were oversubscribed, and that they were issued at historic low yields and spreads over benchmark.
In September, OTE PLC borrowed €500 million for seven years at a yield of 1% (a coupon of 0.875%), with its books oversubscribed five times to €2.5 billion; at the end of September 2019, Hellenic Petroleum issued a 5-year €500 million bond at a yield of 2.125% (the initial price guidance was 2.5% for €400 million), with its books reaching €1.5 billion; and Wind Hellas (Issuer Crystal Almond) issued a 5-year €525 million senior secured bond at a 4.25% yield.
In an environment of negative yields, international investors are seeking yield pick-up and risk-on assets. With the Greek economy continuing to improve, investors are expecting Greek corporate bond spreads to tighten further in the coming months, with more potential to be upgraded to investment-grade and, as a result, become QE-eligible. Hellenic Telecommunications was recently upgraded to BBB-.
GIG: HSBC has been at the forefront of global diversity and inclusion in the workplace movement. What are you doing in Greece on that front? How has it differentiated you? Do you have any advice for domestic peers in that regard?
Yeates: Diversity is in our roots as HSBC was founded more than 150 years ago to finance trade between Europe and Asia. We employ about 240,000 people across an international network covering five continents. Across the world, our employees lead seven global voluntary groups that focus on diversity and inclusion in terms of gender, age, ethnicity, LGBT+, faith, working parents and carers, and ability. Women make up more than 58% of our workforce in Greece, and more than 50% of the local Executive Committee positions in Greece are held by women. The bank has global initiatives in place to encourage more diversity and inclusion. In Greece, we also recently launched new initiatives (including mentoring and recruitment programmes), designed to further enable women in achieving their full potential within our organisation.
I think companies should not see diversity and inclusion simply as a human resources or a compliance task, but weave the benefits of inclusion all the way through how they do business to see the real benefits for their colleagues and, of course, their clients.