Athens Digest 02.09.2019

• PM wraps up European stops ahead of address on economy

• Bruegel’s Demertzis upbeat on Greece

• Capital controls finally end after 50 months, economic sentiment boost in August

• Migration: Government vows to boost deportations, maritime patrols

• Piraeus Bank marks profitable 2019, NPE improvement

# Prime Minister Mitsotakis ends a round of European visits in The Hague tomorrow and is to meet Dutch Prime Minister Mark Rutte _ ending a tour aimed at underscoring his new government’s pro-business agenda. The Netherlands trip follows meetings with French President Emmanuel Macron and German Chancellor Angela Merkel. In Berlin, the talks focused on boosting German investment, energy, climate change as well as Athens’ plans to curb migrant smuggling in the Aegean, backed with European Union border guard assistance. Merkel praised Mitsotakis’ reform agenda, arguing that it would help attract investment and help Athens meet its post-bailout commitments. The Greek PM is now preparing for the annual address on the state of the Greek economy and the Thessaloniki International Trade Fair, with businesses waiting to see if more detailed plans will emerge,

# The deputy director of the Brussels-based think-tank Bruegel says Greece’s new government has made a positive international impression but cautioned that talk of revising key post-bailout targets is premature. “Greece’s image has changed overnight and that is very interesting,” Demertzis told the Athens Digest’s John Papageorgiou ahead of Bruegel’s annual meetings this week in Brussels. She added: “The issue of (targets for primary budget) surpluses, in my opinion, should remain as has been agreed for now. We must first take the measures needed that will demonstrate a structural change in Greece before returning to the issue.”

# After four years of banking restrictions, Greece has finally lifted remaining capital controls, a move announced by the prime minister who said the decision would end a “cycle of insecurity” that had hurt the country’s economy. Meanwhile, economic sentiment saw a strong improvement in August, despite modest gains across the euro area. The Greek index surged to 108.4 points from 105.3 in July and the June score of 101. The euro area index was 103.1 points in August, nudging upwards from 102.7 in June. Greek borrowing rates continued their favourable run, the yield on the 10-year government bond now at 1.63 percent.

# Greece has promised a shift in migration policy following a spike in island arrivals in recent days. The government promised to speed up deportations of migrants with rejected asylum applications before their appeals are heard, as well as to boost maritime surveillance and enforcement. The measures were announced after a meeting of top state security officials at the prime minister’s office. They also include immediate measures to reduce acute overcrowding at island camps. New arrivals took the population at Moria camp on the island of Lesvos to over 10,000, more than three times capacity. The government accused its predecessors of backlogging the system by failing to follow up on asylum claim rejections.

On our Radar: Piraeus Bank marks profitable 2019, NPE improvement
Piraeus Bank has announced a net profit of EUR 38 million for the first half of 2019, from losses a year earlier, and pre-tax profits of EUR 57 million, helped by its continued progress in reducing the volume of non-performing loans. The country’s largest bank by assets said non-performing exposures dropped to EUR 26.1 billion at the end of June from EUR 29.4 billion a year earlier, while provisions for impaired loans fell to EUR 146 million from EUR 186 million in the previous quarter. Piraeus Bank CEO Christos Megalou highlighted the bank’s recent partnership agreement with Stockholm-based Intrum credit management services. “The first half of 2019 encompassed significant developments for Piraeus Bank,” he said. “The bank proceeded with two landmark transactions: the issue of a Tier 2 instrument, the first one by a Greek bank in a decade, and the strategic partnership with Intrum regarding the servicing of NPEs and REOs.”