By Leonidas Stergiou
The recent deals Motor Oil-Ellactor and Cosmos Aluminum-ETEM are two examples of the big business moves that are underway in the Greek market, mainly in the sectors of infrastructure, energy and transport, where banks are called to play the role of advisors and financier, according to bank executives.
Contacts between bankers and large business groups are intensifying as deals are conceived, while economic and market conditions increase the need for financing and refinancing. These are large and long-term investment plans, which are not affected by the uncertainty of the war. It takes several months of discussion and maturation, until the agreements are closed and the financing needs and, finally, the disbursements arise.
Inflation acts as a catalyst because it increases the costs and needs of borrowing and refinancing, while reducing the real cost of borrowing. The energy crisis has increased lending needs in all sectors, but mainly in the energy, construction and transport sectors.
Loans of 1 billion, disbursements of 250 million through the Recovery Fund
At the same time, large investments are already underway, mainly in infrastructure and energy (RES, photovoltaics, electrical interconnections, etc.), with the Recovery Fund operating as a support. Only the loan agreements through the Recovery Fund are estimated to be between 800 million and 1 billion euros this year, with the disbursements by the end of the year amounting to 250 million euros (due to the maturity period, contract, investment and disbursement, as in large loans).
Large business loans 6.5-8.5 billion.
Thus, by the end of 2022, banks estimate that new loans (net credit expansion) to large companies and investment projects will exceed 6.5 billion euros and may reach up to 8.5 billion euros, recording a new record, after 2020. That year, large business loans had risen to close to 5 billion euros, while in 2021 lower to 4.1 billion.
The new data of the BoG
The enriched data on business loans published yesterday by the Bank of Greece confirm the trends observed by bankers. The total amount may be lower in the first quarter of 2022, compared to the corresponding quarter last year. However, the number of loans and the emerging industries are starting to show.
The average loan amount is constantly increasing
According to the data of the Bank of Greece, from 2020 to March 2022 there is a decrease in the total net credit expansion, but an increase in the average amount disbursed. For example, in 2020 there were 17,407 loan agreements with companies with an average loan amount of 574,000 euros. The number of loans in 2021 fell to 12,387, but the average loan jumped to 1.7 million euros.
Amounts and number of loans in the first quarter
The same trend continues in the first quarter of 2022, when business loans of 1 billion euros were disbursed, which are shared between large and small enterprises. The corresponding amount in the first quarter of 2021 was 1.4 billion, with small and medium enterprises receiving loans of 0.9 billion and large 0.5 billion. However, the average loan in the first quarter of 2021 was 330,000 euros (because it mainly concerned small and medium-sized enterprises), while in the first quarter of 2022, the average loan was 523 billion euros (1944 loans in the first quarter of 2022, compared to 4,164 loans in the first quarter of 2021). That is, the trend for even larger loans in 2022 continues.
In small businesses, disbursements in the first quarter were slightly higher than in the first quarter of 2021 and amounted to between 300 and 400 million, according to estimates by bank executives.
Manufacturing, tourism, construction, energy, transportation-logistics and trade absorb the largest amounts of loans. However, there are differences between large and small businesses. For example, there is a sharp decline in loans to small and medium-sized tourism enterprises and a doubling in large enterprises. At the same time, there is a doubling of loans to small and medium-sized transport, storage and logistics.
It is noted that very small companies are considered those with up to 9 employees and a turnover of up to 2 million euros. Small businesses are those that employ up to 50 employees and with a turnover of up to 10 million euros. A small and medium-sized enterprise is one that employs up to 249 employees and has a turnover of up to 50 million euros and a balance sheet of up to 43 million euros. Small and medium-sized enterprises (medium, small and very small) make up 99.9% of Greek companies, according to data from the Commission and the ECB.