The big deals financed by the banks in the summer

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By Leonidas Stergiou

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Financing of large business deals, such as Motor Oil-Ellaktor, the refinancing and new lending of El. Venizelos, the investment program of DEDDIE, and even the financing of projects in neighboring countries boosted business confidence. Something that is set to continue, according to bank executives, as there is a backlog of around €10 billion in funding, which may not be filled until the end of the year and create a cushion in 2023.

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In the first four months of the year, loans to small and medium enterprises dominated, mainly due to the availability of co-financed and guaranteed loans from the Pan European Fund and the Hellenic Development Bank. The disbursements of such loans peaked in June, as the first cycle ended, while a continuation is expected from September. Already, the first part of the guarantees received by the four systemic banks, over 1.5 billion euros, has been used up. There are as many guarantees remaining under the contracts signed in late 2021 and early 2022.

Since May, large business loans have started to mature to finance ongoing business deals and investment projects. May’s new allocations were significantly boosted by the financing of the Motor Oil-Ellaktor deal, amounting to around 150 million euros. Together with several loans for working capital and financing of energy, construction, transport, tourism, trade and food enterprises, the total disbursements reached 877 million euros (of which 263 million euros concern small and medium-sized enterprises).

In June and July there is a surge in new loans to levels of more than 3 billion euros per month. Large disbursements aimed at refinancing and new lending to large companies contributed to this.

As an example, the refinancing and new borrowing of Fraport’s airports totaling 980 million euros in June is mentioned. This was followed by the financing of DEDDIE’s investment program with an additional 600 million euros and the second refinancing of Eleftherios Venizelos Airport in the amount of approximately 150 million euros. At the same time, various projects in Turkey were financed for a total amount of 300 million euros.

Thus, the total disbursements of two months exceeded 7 billion euros, which correspond to almost 70% of the total financing to businesses in the seven months.

According to banking executives, demand will remain high, as from 2021 there are pending financing needs for planned investments amounting to 9 billion euros, in addition to the privatization program (2.5 billion euros) and the Recovery Fund. From the privatization program, it is estimated that financing in 2022 will amount to 1.5 billion euros, while from the Recovery Fund, the contracting of loans of 1 billion euros is expected. However, the disbursements of these loans will take place towards the end of the year and will be in the order of 250-300 million euros (the rest will be transferred to 2023).

The demand for business loans is supported by increased liabilities from energy costs, not only for businesses in the sector, but also for businesses, eg in the food sector, due to rising production and raw material costs.

However, net credit expansion is expected to close this year at between €6.5bn and €8.5bn, as large repayments are expected from hotel, catering and trade businesses (high tourism revenue). In addition, the gradual repayment of total loans of 2.5 billion euros that were given to companies for support during the pandemic with a duration of 18 months begins.

Source: Capital

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