“There are signs of a gradual trend of stabilization and reactivation of the global financial system, and a gradual return of the world economy to recovery, initially apparent in the U.S., and with the expectation that it will later spread to Europe. The coordinated response of governments, central banks, supervisory authorities and international organizations, unprecedented in size and scope, has contributed significantly to this improvement”.
Mr Nicholas Nanopoulos, CEO of EFG Eurobank Ergasias, stated the above during his a speech at the Annual General Meeting of Eurobank shareholders today. Mr. Nanopoulos added that “The Greek economy is experiencing the crisis and global recession relatively less forcefully, managing, for now at least, to retain an, even marginally, positive growth. Most forecasts talk about a possible but short recession, i.e. growth rates 3 to 4 percentage points above than the Eurozone average. The Greek economy has defensive characteristics, which, during the crisis, functioned as a protective mechanism: it is relatively closed, it has a large public sector and relies more on services and less on industry and exports. The fact that we are experiencing the crisis in relatively mildly does not mean that we can continue to ignore the serious and chronic structural weaknesses that characterize our economy. These weaknesses undermine our economic stability and the prospect of resuming satisfactory growth rates, once the effects of the crisis are overcome”.
Subsequently, Eurobank’s CEO reported on the structural weaknesses of the Greek economy and stressed that, to overcome the crisis it is imperative to move on towards a new cycle of dynamic and sustainable development, ensuring long term employment and prosperity, i.e. a new cycle of growth that requires a different orientation. The new growth model, said Mr. Nanopoulos, should sustain and support economic openness, export orientation, long-term savings, the upgrading of the quality of domestic production, competitiveness and entrepreneurship.
We should become able to produce products and services with high added value, with a distinct element of quality, and export these under competitive conditions, bringing international credibility, stable growth and employment to the country. He added: “We must support modern export enterprises, especially in sectors with strong competitive advantages. We must support extrovert sectors, such as quality tourism, agriculture and agricultural product processing, the development of alternative energy sources and shipping. Obviously, the parallel strengthening of infrastructure and the development of modern networks that help productivity and the competitiveness of the economy, are absolutely necessary. Accordingly, necessary organizational and institutional reforms are needed to strengthen competition and the opening of closed markets and occupations, to reduce bureaucracy, improve transparency and productivity in the public sector, and upgrade the skills of human resources. In this new model of development, the role of the banking system should be decisive”.
In addition, Eurobank EFG’s Chairman, Mr. Xenofon Nikitas, stated that: “Internationally, everyone is sceptical regarding the time we will need to overcome the crisis that is affecting the real economy. There are however trends and data, albeit limited, leading to the conclusion that the worst part is probably over. Such optimism, however, poses a risk of falsely leading governments and market players to complacency, when they should be maximally alert. We believe however that with continued effort and, of course, learning from the mistakes of the past, from the beginning of next year, we will see a gradual recovery of economies worldwide. In terms of the Eurobank Group, we have a strong capital and are shielded against risk, with foundations for further development”.
Referring to the Greek banking system, Eurobank’s CEO, Mr. N. Nanopoulos, noted that it was less affected by the crisis than the systems of other European countries and continues to support businesses and households at these troubling times. Abroad, the Greek banks responsibly supported Greek investments, contributing to the extrovert orientation of the Greek economy, successfully coping with international competition and winning the trust and recognition of local communities. He stressed:
“Today, facing the emerging challenges, the Greek banks will have to take even greater responsibility in their role. We should support the new growth orientation currently emerging, as the only way for the Greek economy, to comprehensively and substantially support the business and productive forces of our country, giving new impetus to the openness of our economy. Similarly, banks in Greece and internationally should adapt to the requirements of the ‘day after’, when the lessons learned by the crisis will be incorporated both in our structure and operation, as well as in our culture and behaviour. This development will work in favour of banks and banking systems, such as the Greek, which are more focused on traditional banking, with more controlled risk-taking and greater emphasis on cultivating client relations. The emphasis now shifts from the expansion of market shares to greater efficiency and quality in banking. For our Group, the challenge we face is twofold. First, to effectively shield the Group against the shock of the crisis, particularly in the critical areas of capital strength, liquidity and portfolio quality; second, to continue to effectively support our customers, honouring our commitment to always stand beside them. In the face of this double challenge, the Group responds effectively, remaining profitable, with a strong capital and social responsibility. All this can form a strong basis upon which to build a new creative balance in the relations between government - business - banking and society, with a clear vision of a growth strategy based on consensus, in which each side has a role and responsibility”.
“Today, facing the emerging challenges, the Greek banks will have to take even greater responsibility in their role. We should support the new growth orientation currently emerging, as the only way for the Greek economy, to comprehensively and substantially support the business and productive forces of our country, giving new impetus to the openness of our economy. Similarly, banks in Greece and internationally should adapt to the requirements of the ‘day after’, when the lessons learned by the crisis will be incorporated both in our structure and operation, as well as in our culture and behaviour. This development will work in favour of banks and banking systems, such as the Greek, which are more focused on traditional banking, with more controlled risk-taking and greater emphasis on cultivating client relations. The emphasis now shifts from the expansion of market shares to greater efficiency and quality in banking. For our Group, the challenge we face is twofold. First, to effectively shield the Group against the shock of the crisis, particularly in the critical areas of capital strength, liquidity and portfolio quality; second, to continue to effectively support our customers, honouring our commitment to always stand beside them. In the face of this double challenge, the Group responds effectively, remaining profitable, with a strong capital and social responsibility. All this can form a strong basis upon which to build a new creative balance in the relations between government - business - banking and society, with a clear vision of a growth strategy based on consensus, in which each side has a role and responsibility”.
Analyzing Eurobank’s course in 2008, Mr Nanopoulos stressed that the banking group's results show that it has both the expertise and resources to manage the difficult situation with flexibility and adaptability. Despite the crisis, in 2008 the Group maintained healthy profitability, with strong deposit growth, loan growth and a significant slowdown of expenses. Thus, despite the worsening economic climate, non performing loans remained at low levels, while the Group maintained high capital adequacy and liquidity.
Finally, the Bank’s CEO referred to the Group’s priorities for the current year:
- Strengthening pre-provision profitability
- Tighter risk management
- Further improvement in portfolio quality
- Reducing operating expenses in all levels and,
- Growing emphasis on comprehensive client relations
Concluding his speech, Eurobank’s CEO stressed, “We have what it takes to meet the challenges of the future. We have vision, strategy, long experience in successfully executing ambitious business plans, but, most importantly, skilled staff and management. We create new competitive advantages for the future, the conditions for a dynamic and long-term profitable growth for the benefit of our employees, customers, shareholders and the rest of the Greek economy and society”.
The General Meeting approved the Board’s proposal to distribute a scrip dividend issuing 2 new shares for every 98 shares held. It is estimated that, after securing the relevant approvals, the shares will trade ex-scrip dividend in late July and the new shares will be listed on the Athens Exchange in the first week of August.
Shareholders also approved the distribution of free shares to junior-level employees of the Bank, i.e. approximately 4,500 employees, not exceeding 250 shares per employee.
Finally, the discussion on the issue of a callable convertible bond of up to €500 million, was postponed due to lack of quorum, to the Repeat Annual General Meeting of the Shareholders to convene on Tuesday, June 30th 2009, at 10 a.m. at “Bodossaki Foundation Building” (conference room “John S. Latsis”), Amalias Av. 20, Athens.