Greece draws investors seeing bad loans come good, says Piraeus chief Sallas


By Christos Ziotis & Nikos Chrysoloras

International investors have started placing money into Greek banks as they anticipate the improving economy will boost profits across the industry, Michalis Sallas, chairman of Piraeus Bank SA, said.

As the country’s deficit narrows and output stabilizes, banks are likely to recover more than they previously projected from struggling borrowers, Sallas said in an interview.

“The prospective reduction of non-performing loans and the continuing decline of deposit rates in Greece mean that profits will rise significantly,” the 63-year-old banker, said at his office in downtown Athens last week.

Piraeus, the country’s second-biggest bank by assets, last month raised 1.75 billion euros ($2.4 billion) in new capital from foreign investors in the latest sign Greek lenders are bouncing back from the sovereign-debt crisis. It also sold 500 million euros of three-year bonds on March 18 in the first public debt sale from a Greek lender since 2009, according to data compiled by Bloomberg.

“Those who invest in Greece are not just looking for short-term gains,” Sallas said. “They include institutional investors, like pension funds and big, long-only funds.”

The Greek economy will probably receive a further boost next year when banks complete their de-leveraging and begin to increase lending to companies and consumers, said Sallas, who trained as an economist in Germany.

Greece, whose debt load is close to 180 percent of gross domestic product, or about 326 billion euros, has narrowed its budget deficit as a condition of the rescue program, backed by euro-area states and the International Monetary Fund. The government and EU predict that Greece will emerge in 2014 from six...

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