The prospects of the banking sector depend on Greece's macroeconomic progress, which is in turn influenced by global developments, Bank of Greece (BoG) Governor Yannis Stournaras said at the Greek-Israeli Chamber of Commerce and Technology on Wednesday.

At a chamber event, Greece's central bank chief said the downturn of international financial conditions in the midst of geopolitical or other upheavals could impact the global financial system negatively, but also affect the financial state of businesses and households in Greece.

Stournaras said bank profitability should be further strengthened, in order for banks to boost their regulatory capital while improving its quality as well. This will lead to a faster amortisation of DTCs. Boosting the CET1 index is necessary for further upgrades of the economy within the investment grade, he underlined, as the health of the banking system is a basic evaluation criterion of international rating agencies.

The high dependence of Greek banks on interest rate revenues, the BoG chief said, increases their vulnerability when interest rates are reduced, such at the current time. For that reason, he has called on bank governors to expand their loan portfolio and boost their revenues from fees, such as those relating to managing private assets and bank insurance products.  

Stournaras reiterated the continuing commitment of Greece's economy to implementing reforms, in order to guarantee a sustainable productivity example that will attract investments. "The achievements registered in recent years are an indication that the economy is on the right path. However, the effort for economic recovery from the ten-year debt crisis and the true convergence of incomes with the European average must continue," he urged.
 

(File photo)