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ver the years, Greek banks active in
securities services have built up a range
of expertise that goes well beyond vanilla
sub-custody. Prior to the crisis, competi-
tion was keen for international mandates
with a choice of well-rated providers from
both domestic and foreign banking groups.
From a foreign investor perspective, that landscape
has changed over the past eight years. While the
same choices are still available in principle, the Greek
sovereign debt crisis and the ensuing capital controls
have seen many cross-border clients shift their man-
dates to Greek branches of foreign banks, primarily
Citi and BNP Paribas. “Over the past few years,
foreign investors and their global custodians have
been constrained in their selection of agent banks
in some markets by the impact of sovereign ratings,”
says Panos Papapetrou, head of strategy planning for
Piraeus Bank’s securities services division. “Greece is
one of those markets, but the limitations referred to
mask a vibrant local provider capability.”
Restructuring imperatives as a result of the crisis
have also played their part. “Some foreign institution-
al investor clients came our way through a network
we maintained in the region outside Greece,” says
Christos Dallis, director, treasury and investment
operations, National Bank of Greece. “As part of the
restructuring plans all Greek banks had to undertake,
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Global Custodian
Summer 2018
we are largely divesting from these markets.”
With Greece’s sovereign rating acting as a disin-
centive for foreign institutional investors to appoint
local financial institutions as service providers, these
banks have been looking both to attract new client
segments and service new asset classes. “My view is
that the sovereign ratings downgrades did have an
impact. However, our name and reputation partially
counterbalanced country risk considerations and
we were managing pretty well, even having lost our
investment grade rating for a couple of years,” adds
Dallis. “It was capital controls that really had the
major impact, since risk tolerances for Greece were
set to zero. To win back substantial foreign clients,
we will have to see a total lifting of capital controls.
The good news is that they are now relaxing at an
accelerated pace.”
As far as future prospects for local securities services
businesses are concerned, much depends on the
bigger picture, both regarding the health of the Greek
banking sector and the economy as a whole. “In
Greece, banks and the state go up and down togeth-
er,” says Prof. Gikas Hardouvelis, professor of finance
and economics in the department of banking and