A possible downgrade of Greece's rating by Moody's would not deter National Bank from continuing to buy Greek bonds, the new chief executive of the country's largest lender said today.
Fitch and S&P earlier this month cut their rating on the indebted country to BBB+ from A-, the euro area's lowest level, and Moody's is widely expected to make a move soon.
"A downgrade by Moody's would not affect our decision to fund the Greek state," new chief Apostolos Tamvakakis told reporters in response to a question on how the bank would react if Moody's cut its A1 rating for Greece.
NBG said earlier this month it has a total €18 billion of Greek government bonds in its portfolio.
Should rating agency Moody's downgrade Greece into 'B' territory, as Fitch and S&P have already done, come the end of next year, banks would no longer be able to exchange Greek government debt for cash at ECB refinancing operations.
The premium that investors demand to hold 10-year Greek government bonds rather than euro zone benchmark German Bunds rose to a nine-month high of 278 basis points on Monday, as concerns about the country's fiscal situation continued.
Mr Tamvakakis stressed 2010 will be a crucial year for Greece, but added that the country's banks were in good condition.
"2009 was a particularly difficult year, 2010 will be an especially critical year for Greece, we have a big bet to win: our credibility," he said.
"Greek banks are in good shape in terms of capital adequacy and liquidity. Core Tier I in the Greek banking system is 8.8 percent, NBG's Core Tier I is higher than the average in Greece."
Mr Tamvakakis said NBG planned to pay back some of the funding it got from the European Central Bank. "We have a plan. We will pay back funds to the ECB ... the outstanding funding will drop to €6 billion by the end of 2010," he said.
National bank's ECB funding stood at €9.5 billion at the end of September.
Mr Tamvakakis said NBG's strategy to strengthen its regional role would not change under the new management. The group also operates in Bulgaria, Serbia, Albania, Cyprus, Romania and Turkey.
"NBG's aim to become a regional power will continue, therefore we are always looking for new opportunities," he told reporters. Turkish Finansbank, NBG's largest investment abroad, is doing well, he said, and will remain among the group's top priorities.
Mr Tamvakakis took over at the helm of NBG from Takis Arapoglou, who engineered the bank's foray into Turkey.
He said NBG would not exit the government's liquidity support scheme before May next year. The group got a cash injection of €350 million from the sale of preferred shares to the government.
Reuters