Cash to be chan­neled to healthy firms

Credit sec­tor will try to save the 30 pct of en­ter­prises that can sur­vive, and not the mori­bund 45 pct

Kathimerini English - - Front Page - BY YIAN­NIS PAPADOYIANNIS

Banks ex­pect 2014 to bring sweep­ing changes to the cor­po­rate map of Greece, as the re­duced cash flow and the ex­haus­tion of the fat cre­ated in the growth years mean that lenders and en­ter­prises will have to make rad­i­cal de­ci­sions.

Ac­cord­ing to es­ti­mates by se­nior bank of­fi­cials, about 45 per­cent of the en­ter­prises op­er­at­ing in the coun­try to­day are plagued by such great prob­lems that they have no gen­uine hope of re­cov­ery. The of­fi­cials add that the ter­mi­na­tion of those busi­nesses, through the process of bank­ruptcy and res­o­lu­tion, is in­evitable.

Another 30 per­cent of com­pa­nies may be fac­ing se­ri­ous is­sues but it is be­lieved that they will be able to fi­nally stand on their own feet and emerge stronger from the cri­sis through com­bined in­ter­ven­tions such in­creas­ing their own funds, along with merg­ers, loan re­duc­tions and other moves. The re­main­ing 25 per­cent is the ro­bust sec­tion of Greek busi­ness, con­sist­ing of com­pa­nies with high pro­duc­tiv­ity, an ex­por­to­ri­ented char­ac­ter and ra­tional man­age­ment, which are the main hope for the coun­try’s cor­po­rate fu­ture.

Ear­lier this week, Bank of Greece Gov­er­nor Gior­gos Provopou­los called on banks to chan­nel liq­uid­ity to healthy com­pa­nies only, adding that it is point­less and dan­ger­ous to al­low per­ma­nently weak and overindebted en­ter­prises to con­tinue op­er­at­ing. Bank of­fi­cials told Kathimerini that keep­ing un­healthy com­pa­nies alive on me­chan­i­cal sup­port – by is­su­ing them loans they do not de­serve – not only se­cures no ben­e­fits for the econ­omy but is also dam­ag­ing for the healthy ones, thereby de­stroy­ing the cor­po­rate fiber.

That 45 per­cent of mori­bund com­pa­nies are not only overindebted; they are also char­ac­ter­ized by their ob­so­lete pro­duc­tion struc­tures and are ac­tive in mar­kets or sec­tors where they can­not com­pete with their for­eign ri­vals.

The big chal­lenge for the coun­try is the re­demp­tion of the 30 per­cent of en­ter­prises that can be saved. They pro­duce and are com­pet­i­tive enough, but have huge debts which date to the times of growth and may have made poor busi­ness de­ci­sions. A case in point is fish farm­ing, with Greece be­ing Europe’s leader in pro­duc­tion that is mainly ex­ported, but the sec­tor’s com­pa­nies are overindebted and strug­gling to sur­vive.

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