Greek Banks Set for Dividend Return After 16-Year Hiatus

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The Greek banking sector has been undergoing a remarkable transformation, reclaiming a sense of normalcy after enduring three rounds of recapitalizations that ultimately led to their nationalization during the tumultuous financial crisis of the previous decade. Since then, banks have made considerable strides in restructuring their operations, notably slashing their Non-Performing Exposure (NPE) ratios from a staggering 45% in 2016 to below 6% presently. Moreover, they have significantly reduced state ownership and have transitioned towards profitability.

Buoyed by this progress, Greek banks are now seeking approval from the ECB to distribute dividends, aiming to allocate up to 30% of their 2023 profits to shareholders. These proposals, including the dividend distribution plans, were formally submitted to the ECB earlier this year. Sources familiar with the matter have indicated that the ECB is expected to provide a favorable response to these requests in the coming days.

“We anticipate a smooth approval process for the dividend distribution,” remarked one banker, speaking on the condition of anonymity. However, an ECB spokesperson declined to offer any comment on the matter, refraining from confirming the anticipated decision.

Greece’s four major lenders—Eurobank, National Bank, Piraeus Bank, and Alpha Bank—have collectively reported substantial profits, totaling approximately 3.5 billion euros in 2023. This notable achievement has been bolstered by factors such as robust interest rates and a resilient economic expansion. Moreover, bankers anticipate that the favorable economic conditions, coupled with potential adjustments to ECB interest rates, will further enhance profitability in the current fiscal year.

In light of Greece’s robust economic recovery and the promising outlook for the banking sector, expectations are high that the ECB will greenlight the dividend payment request imminently. This anticipated approval signals a significant milestone for Greek banks, reaffirming their resurgence and their pivotal role in driving the country’s economic revitalization.