The state-backed Hellenic Development Bank (HDB) and its subsidiary the Hellenic Development Bank of Investments (HDBI), established by law in 2019, are to become the reference institutions in the provision of funding mainly for Greek micro and SME companies, which often have trouble accessing finance through the banking system. Greece was one of the few remaining EU countries without a development bank of its own, and this gap was keenly felt during the crisis. Now, as the country exits the recession and embarks on a path of growth, the HDB group hopes to be a driving force for the local economy
The Greek economy has exited eight years of bailout programs, and institutional reforms are underway. What lessons has Greece learned from the years of recession, and how can this recovery be sustained?
After these years of recession, we need to be particularly careful about the overleveraged exposures. But we are finally out of the crisis, reforms are underway and we have the right environment to start the restructuring and development of Greece on a new basis. What we need today is to reduce the high levels of taxation we had in previous years, and which greatly impacted consumption. We also have to support the effort to transform the banking sector. And we need an efficient way of getting liquidity in the market, especially for micro, small and medium (MSME) companies, which are the majority of businesses in Greece. These small companies, representing more than 90% of all businesses, suffered greatly from the crisis. We want to increase productivity and reduce unemployment in the country, and that means supporting MSMEs. The HDB group has a crucial role to play in this, obviously.
What is the history of the HDB and HDBI?
The effort started over two years ago, although there are two earlier entities that the HDB group builds on. The predecessor of the HDB was the Hellenic Fund for Entrepreneurship and Development (ETEAN) and for its subsidiary HDBI was The New Economy Development Fund (TANEO). With the support of the French development bank BPI, we are working together to implement a number of actions. We started new programs in banking loans for MSMEs with €1 billion on the side of loans and close to €1 billion on the side of investment from the two entities. This budget increased by €1 billion for investment products and loan facilities in order to support MSMEs in every aspect where they need liquidity. Aside the traditional loan facilities, the new plans involve credit facilities for factory, leasing etc, which are products HDB we will launch in the coming months, and on the side of investment HDBI will launch thematic and sectoral venture capital funds and co-investment facility products.
Despite the fact that other European countries had development banks, Greece did not. How important is this institution?
It would have been very useful to have this institution during the crisis; now we have it at the end of the road, but we do have it. It’s the right time to have this tool to support development for MSMEs. It’s very important to support young entrepreneurs because so many of them have moved away. We have to make them feel comfortable about doing business in Greece.
What new financial programs and innovative products will you introduce?
Now days we are receiving investment proposals in order to launch investment vehicles able to invest on SMEs for corporate restructurings, bond issues and equity participations supporting export oriented Greek branded products. Furthermore, we are trying to launch specific investment products for energy, infrastructures and cyclical economy. We have modify our business model approach turning from traditional funding solutions to innovative investment tools adopting the philosophy of sharing corporate risk with the entrepreneurs and investment risk with our co-investors. We have strong belief that we should be supportive to the Greek companies with innovative and tailor made solutions as well as reliable for local and foreign co-investors and we are trying to achieve that investing through equity participation and/or bonds linked to the performance of the company.
One of your roles is to act as a Greek ambassador and attract international funds. What are you doing to cooperate with other development banks?
We have already launched cooperation and are discussing investment opportunities with Mubadala in Abu Dhabi, as well as other foreign institutions. It is very important to secure investment capital from abroad and not just Greek money. The reduction of interest rates has been of great support, as we have the ability to lower costs, and on the other hand, it provides better margins for the foreign investment capital which can receives better returns investing in real Greek economy though Greek companies investment participations.
The government wants to make Greece an investment destination. How has the perception of the country changed?
Many things have changed, and even our own approach and philosophy is different. The reforms have a lot to do with it, but we cannot forget that the impact of this crisis was huge. We are more sophisticated now, and will not make the same mistakes that we made in the past. I think that foreign investors are seeing these new opportunities, but we have to make them comfortable that this is a new reality. We have to work harder on building this relationship with foreign investors, who are seeing the signals.
Where do you see investment opportunities, especially for German investors?
German investors are already here as part of green energy projects because they have already seen the opportunities and obviously we will be glad to welcome more. We have a huge gap that we need to close in green energy, it is a sector where Greece has a lot left to do. We have 360 days of sunshine, we have wind, there is available land, so there are opportunities for green projects, and the margins are very high and competitive compared with other countries.
What is the HDBI’s role in supporting Greece in this endeavor to attract investors?
Even if we are out of the monitoring process, we need to complete the transformation for the sake of the country and to create a better investment environment. We have the opportunity to have an organization, the HDB Investments, which can cooperate with other investors. And foreign investors feel more comfortable if you invest with them, because you know the country better than them and can act as a negotiator. We can be a partner of choice.
What would you like your contribution to be in these initial steps?
It is very important to implement what we designed with BPI, to have the most efficient channel for liquidity and the most appropriate products given the market needs today. We are focusing on this, and with support from BPI and other development banks, we are striving to adopt best practices from their side and to develop efficient financial products for Greece. We will also strive to discuss opportunities with foreign investors so they can participate in this effort. I feel that today is the right time for investments in Greece.