BIOGRAPHY Costas Michaelides became Chairman of NBG in 2017. He served as Global Head of Strategic Change at UBS AG and prior to that as COO at Credit Suisse and COO at Credit Suisse First Boston. He was international COO at Donaldson, Lufkin & Jenrette, CFO and COO at Merrill Lynch EMEA and he also served as treasurer at Salomon Brothers International. He holds an MBA from Columbia Business School, a Doctorate from the University of Denver and an undergraduate degree from Ripon College.

“THE ECONOMY IS BECOMING MORE BALANCED, SELF-SUFFICIENT AND COMPETITIVE, WHILE CREATIVE FORCES ARE GRADUALLY EMERGING.”

WHAT IS THE STATE OF THE GREEK ECONOMY TODAY, ALMOST 10 YEARS INTO THE CRISIS?

The recovery of the Greek economy gains traction, following a decade of recession, and GDP growth is expected to outperform significantly the euro area average for a third consecutive year in 2020. The life-changing experience of the crisis is gradually transforming the Greek economy and society. People have become more pragmatic, more self-conscious, more agile and rational, but remain concerned. They demand fairness, new opportunities and a timely resolution of factors that affect their life options.

The economy is becoming more balanced, self-sufficient and competitive, while creative forces are gradually emerging. Cost competitiveness gains achieved through the “internal devaluation” process during the crisis are maintained. The economic transformation advances, with a rebalanced production structure towards tradable, export-oriented sectors. At the same time, the viable corporate sector exhibits increasing dynamism, having been significantly restructured and achieving better financial results. The performance of larger, more competitive firms is steadily improving and business consolidation in the domestic market is advancing, whereas the balance of new firm openings versus closures has been positive in 2019, for the second year in a row, indicating a pick-up in entrepreneurship. Labor market conditions are also improving steadily (with the unemployment rate declining by another 2% to 10 percentage points below the peak of 2013).

HOW ABOUT INVESTORS’ SENTIMENT? ARE INVESTORS RETURNING TO GREECE?

Investors’ sentiment recorded a remarkable improvement, as exemplified by the sharp compression in Greece’s sovereign bond yields to historic lows and the acceleration in foreign direct investment (FDI) inflows. The credit rating of the Hellenic Republic is only two [to four] notches away from the investment-grade territory, and the current market valuations of Greek bonds indicate that an investment-grade status will be gained in the next two years. For the first time since the eruption of the crisis, the economy benefits from the ECB’s monetary policy easing, having reconnected with the Eurozone’s monetary policy transmission mechanism after several years of isolation. Now, of course, we have to see the impact of COVID-19 both on the global economy as well as on Greece’s economy, which can lead to declines in tourism -a key growth sector for Greece- supply chain disruptions, weaker demand and falling consumer confidence. This is not a Greek issue. It’s a global threat. I am confident that scientists will produce a vaccine soon, while on the other hand, governments and authorities will address this common enemy with resolve, determination, and solidarity.

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“OUR TRANSFORMATION IS GROUNDED ON FOUR

DISTINCT VALUES: THAT IS BEING A HUMAN,

RESPONSIVE AND TRUSTWORTHY BANK AND

ACTING AS A GROWTH CATALYST FOR OUR PEOPLE,

OUR CLIENTS AND OUR SOCIETY.”

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ARE GREEK BANKS IN A POSITIVE TRAJECTORY, GIVEN THE STILL VERY HIGH NPE STOCK THEY STILL CARRY AS A RESULT OF THE CRISIS?

Greek banks are showing credible signs of improving performance, maintaining healthy capital adequacy ratios, on the back of increasing profitability – based on efficient cost control and a pick-up in operational revenue – while they intensify their efforts for enhancing the quality of their balance sheets. Banking activity shows the first signs of recovery, on the back of increasing demand for credit in the corporate segment. Bank deposits remain on a steady upward trend for a 4th consecutive year. Capital controls have been lifted completely as of September 2019, about 4 years after their imposition. Moreover, Greek banks managed to successfully issue Tier II bonds at increasingly competitive costs signifying strengthened investor confidence.

Greek banks managed to reduce their NPEs, by 33% cumulatively or by €36 bn between Q1:2016 and Q3:2019 (from €107 bn in Q1:2016 to €71 bn in Q3:2019). In the past three years, they made increasing use of the options provided by the improved legal and regulatory framework. Still, the NPE ratio is significantly higher than the agreed targets, and this continues to affect critical aspects of the banking activity, which, in turn, has significant economic implications.

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The activation of the “Hercules” framework, following the approval by the DG Comp and the positive assessment by the ECB effectively in late-2019, which introduces an Asset Protection Scheme (APS) supported by sufficient state guarantees to the senior tranche of an ensuing securitization, could cover up to €30 billion of banks’ NPEs (i.e., more than 40% of their current stock). The successful and frontloaded application of this scheme and the concomitant disposal of the worst part of banks’ portfolios could provide a decisive impetus to banking activity and support financial conditions and the economic recovery process.

YOU TALKED ABOUT VISION, PURPOSE AND VALUES. HOW IMPORTANT ARE THOSE ELEMENTS IN THIS TRANSFORMATION JOURNEY?

Amid a transformation, defining our purpose and setting and adhering to our common values, become even more important—providing much-needed alignment, clarity, guidance, and energy. They unleash the energy needed to fuel the transformation by providing an emotional connection that inspires greater commitment. Our transformation is grounded on four distinct values: that is being a Human, Responsive and Trustworthy Bank and acting as a Growth Catalyst for our people’s, our clients’ and our society’s efforts and aspirations. These values will serve as our vital North Star, illuminating the direction and linking and steering all transformation efforts in a way that is logical and accessible to everyone. They will define our attitude, our behavior, and our decision- making every day, on every occasion. Our transformation will not truly unfold without a strong and unwavering commitment to adopt and maintain those values high.