Greece has been the markets’ whipping boy for most of the past four years. But in the last few months, sentiment has changed and international investors are bottom-fishing – in particular for banking assets.
This gives the country a double opportunity: lenders can use it to clean up their balance sheets by selling non-performing loans; and the state can privatise its stakes in the banks. Both should grab the chance while it lasts.
Greece’s banks have been in a terrible mess as a result of the crisis. Not only were they loaded up with government bonds, which got haircut; even the big four that survived are weighed down by about 65 billion euros of non-performing loans, equivalent to around a third of GDP.
But a 40 billion-euro recapitalisation and restructuring of the sector, financed mainly by bailout money, has helped change investor perceptions. Several hedge funds – including Paulson & Co – have invested in the banks.
Last month Piraeus Bank placed 494 million euros of its shares and warrants with investors after BCP, the Portuguese lender, decided to sell out. Meanwhile, investors are heading to Athens looking to buy packages of non-performing loans on the cheap.