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Statement by the Governor of the Bank of Greece Mr George A. Provopoulos

30/09/2008 - Press Releases

Today, I met with the Presidents of the largest Greek banks and discussed current developments. As is well-known, the turmoil in international financial markets is continuing, exerting strong pressures on several banks in other countries.

The common view in our meeting was that the Greek banking system is sound, safe and stable. This assessment is based on the following:

a. over 90% of bank lending is financed by customer deposits and, therefore, the reliance of Greek banks on international money and capital markets is low. Hence, Greek banks are less affected by the ongoing turmoil in these markets;

b. Greek banks’ exposure to toxic financial products is limited. In the last decade, banks have benefited from a favourable economic environment in Greece and S.E. Europe. This enabled them to take advantage of considerable investment opportunities in traditional banking activities, without engaging in riskier ventures;

c. Greek banks’ capital base is strong, supported by high profitability in the last years. Their leverage ratios stand at reasonable levels, well below those of the banks recently hit most heavily.

The Bank of Greece, as the supervising authority, remains vigilant. It is monitoring developments closely, in order to safeguard the stability of the Greek banking system and to protect depositors and other bank customers. The soundness of the Greek banking system notwithstanding, the continuing turbulence in international markets warrants very cautious steps on the part of banks.

Against this backdrop, our discussion today gave me the opportunity to suggest appropriate courses of action.


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