[ M A R K E T R E V I E W | G R E E C E ]
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 , competition 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 mandates 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 institutional 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 , we are largely divesting from these markets .” With Greece ’ s sovereign rating acting as a disincentive 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 together ,” says Prof . Gikas Hardouvelis , professor of finance and economics in the department of banking and
44 Global Custodian Summer 2018