Banks
are showing strong interest in the low-interest loans of the Recovery
and Resilience Fund (RRF) in the first weeks after the official start of
the program.
Credit institutions have already received the first
requests from large and medium-sized entities, some of which are
currently being processed at an advanced stage.
In fact, it is estimated that the first disbursements will have been made by next May.
Bankers
see the 12.70 billion-euro low-interest liquidity available through the
European package as a great opportunity for the domestic business
community.
This is because it could lead to the implementation of
investment projects with a budget of at least 25 billion euros within
the next 5 years.
They also believe that it is a challenge for the
Greek economy, as what the experience of recent months has shown,
ensuring energy independence is a critical parameter for the well-being
of households and the viability of businesses.
The advantages of the RRF
These issues were discussed extensively during the “FIN FORUM 2022”, organized on Wednesday by the Bank of Greece.
Mr.
Dimitris Verelis, Head of Development, Sustainable Banking & Bank
Relations of Piraeus Bank, referred during his speech to the advantages
of the action.
As he said, this is “an important tool for Greek
companies, even in sectors that did not have similar funding
opportunities in the past.”
Mr. Verelis noted that Piraeus Bank
“started accepting the first requests in less than 24 hours from the
publication of the invitation to companies”, adding that now their flow
is normal.
In addition, he listed a number of advantages that the RRF provides to businesses:
• The large “basket” of resources brought about by the really low cost of capital.
•
The widest eligibility, which gives a very important opportunity to
different sectors of the economy to take advantage of the opportunity
given. For example, wholesale trade and the provision of services (other
than tourism) have never had such an opportunity.
• Covers all
the costs required for the implementation and initial operation of an
investment. Indicatively, it covers from land or building purchase costs
up to working capital costs.
• It is fast, it is managed by the
banks, and the mechanisms and the bureaucratic requirements have been
greatly simplified, something that is of particular importance for
several sectors. For example, in tourism, speed usually means that the
business has the ability to exploit the season
• Once the
application is approved, the contracting proceeds and payments begin.
The company does not wait for the completion of the project for
certification and payment, as for example happens with the Development
Law, which leads to a reduction in costs and risk.
• Combines with
resources from the NSRF or the Developmen Lawt, if a business and an
investment plan have other needs that are more efficiently covered by
different resources.
Green transition and constructions
Regarding
the sectors that will flourish in the coming years, Mr. Vassilis
Karamouzis, General Manager of Corporate and Investment Banking of the
National Bank, estimates that “the projects for the green transition and
constructions are expected to exceed 30 billion euros within next
years”.
He made special reference to the green transition, which
he said “is the key priority at European Union level in the context of
the goal of achieving climate neutrality by 2050”.
At the same
time, according to Mr. Karamouzis, it is also a key pillar of
the “Greece 2.0” National Recovery and Sustainability Plan, which will
be funded by the Recovery Fund and is expected to absorb 38% of the
budget of 31 billion euros.
This is an amount of 12 billion euros,
which, leveraged with banking and private resources, will finance green
investments of at least twice the size.
According to Mr.
Karamouzis, green constructions are expected to show great growth in the
coming years due to the actions of the Recovery Fund, the acceleration
of the construction activity and the tourist development.
According
to the National Bank executive, the domestic financial sector has the
necessary experience and know-how to finance new projects.
According
to him, the banks “have high capital adequacy and strong liquidity that
allows them to seamlessly finance investments in a short period of
time.”
At the end of his speech, Mr. Karamouzis referred to the
increase in inflation following the latest developments, arguing that
“the recent energy crisis and the war that has intensified have made the
need for energy independence even clearer.”
As he explained, “it
clearly passes through RES, although transitionally significant use of
natural gas should be made with more options than we have today. “When
this transition is completed, Greek households and businesses will have
safe and cheap access to clean energy.”
Aim for valuable projects
On
his part, the Senior Investment Banking Manager of Alpha Bank, Mr.
Evangelos Kalamakis, referred to the conditions for the effective
utilization of the resources of the Recovery Fund and to the sectors
that will attract the implementation of large investments in Greece.
According
to him, the first signs are positive. “Our experience in negotiating
the Business Agreement was very positive and the response times were
very fast, while there was flexibility of the program managers for
changes and interventions in order to maximize its use and the
allocation of resources.”
“The important advantage of the program
is that the money will be paid in advance to the banks and will be
immediately available to the eligible investment bodies,” said Mr.
Kalamakis.
In addition, he stressed that “on the one hand there
are strict requirements for eligibility, and on the other hand companies
should prepare detailed and thorough investment plans and be willing to
take on additional commitments.”
For this reason, he described as
very important the fact that the lending process has been assigned to
the banks which through the program “will have the opportunity to
fulfill their institutional role, to implement their plans for credit
development and the rapid use of funds, but also to enhance their
profitability “.
The goal of the banks, as Mr. Kalamakis said, “is
to utilize the funds in projects that will give value to the economy,
and not just to be absorbed”.
Regarding the sectors that are most
attractive for the implementation of large investments, he noted that in
the field of green transition, the investments will aim at the
transformation of the production process in the industries, so that they
can develop and operate in a sustainable way.
It suits domestic needs
According
to Mr. Spyros Venetsianos, Deputy General Manager & Head of
Structured Finance, Corporate & Investment Banking of Eurobank, “the
pillars of the RRF, although formed by the EU, come to match very well
with what the Greek economy needs and can take advantage “.
These include RES projects, “green buildings”, digital infrastructure, exports and tourism.
“The
program does not provide funding for business plans that were not
viable anyway. “With the low cost of financing, it comes to facilitate
investors, making their venture more competitive, attractive, but also
safe,” he said.
“Competitiveness stems from the level of lending
that companies in Western Europe have enjoyed so far, while security
stems from the -essentially- reduced cost of servicing lending,” he
explained.
Regarding the interest of the domestic investment
community, Mr. Venetsianos stressed that the first requests have already
been received and the mechanisms that have been formed in the previous
months for their processing are being tested.
Moreover, he
characterized as “revolutionary” of the program the fact that the
interested party does not need to approach either the RRF or the public
sector.
“His request will be treated as in ordinary funding, with
the additional burden of a dossier containing the elements and criteria
of eligibility, for which an effort has been made to organize them,” he
said.
He added that “there will definitely be improvements as the
program progresses, but very important preparation has been made,
through the excellent cooperation with the State, the Fund, the other
banks and the potential auditors”.
