Greek banks that have come to play a major role in their country’s ship financing scene may be able to expand their loans even further after major credit rating agency S&P Global improved their ratings.
Generalist lenders National Bank, Alpha Bank, Eurobank, Piraeus Bank, and boutique shipping lender Aegean Baltic Bank (ABBank), saw S&P improve their ratings to one or two notches below investment grade.
In actions issued on 4 July, S&P upgraded the long-term credit rating of National and Eurobank to BB+ from BB, and Alpha and Piraeus to BB from BB-.
ABBank’s new rating is BB- from B+.
That is a huge improvement from a few years ago when the four systemic lenders were effectively bankrupt during the country’s financial crisis and had to be bailed out by the European Union and the International Monetary Fund.
The key reason for the upgrade is that they managed to clean up about €80bn ($86.6bn) of bad legacy assets over the past five years.
Greek banks used their improved financing conditions to aggressively expand lending to local shipowners — a market partly abandoned by some big, traditional European lenders.
According to a long-term survey into Greek ship finance, conducted annually by Petrofin Research, the volume of home-grown loans to domestic shipowners rose for a seventh consecutive year in 2023 to $15.8bn.
As a result, Greek banks’ share in traditional lending to their country’s shipowners climbed to a record 31%.
Banks’ improved fortunes have also turned ABBank into an attractive acquisition target for Aristotelis Mistakidis, a billionaire investor and former Glencore trader, who is about to take a controlling stake in the niche shipping lender.
S&P said in its report this week that it expects ABBank to continue focusing on its core shipping business following the takeover.
“Thanks to the bank’s proven expertise in the shipping industry, we expect asset quality to remain resilient, with the NPE [non-performing exposures] ratio standing at 1% to 3%, from 0.8% at year-end 2023,” S&P analyst Pierre Hollegien wrote.
Increased merger and acquisition activity around ABBank is also reflected in the fact that Scope Ratings, a European credit rating agency recognised by the European Central Bank, launched coverage of the firm on 26 June with a stable BB rating.
“While the shipping industry is highly cyclical, it is largely decoupled from the Greek economy, which enabled [ABBank] to weather the domestic sovereign crisis,” Scope said.
