Meeting of the Financial Services User Group

GREEK SMEs AS USERS OF FINANCIAL SERVICES BEFORE THE CRISIS

Financial & Banking system skewed away from SMEs.

-

- Access to finance for SMEs & use of financial services denote a rather unbanked sector. - Alternatives used: informal investors (mainly family), financing by using post dated checks, etc.

2008 GSEVEE SURVEY FINDINGS ON SME FINANCING

Equity: rely heavily on own funds, reluctant to raise new equity from sources outside the family (new tools venture capital, business angels etc sound as fiction) Debt: have limited access to debt, they would use more, there is a financing gap in their access to debt finance. Grant: marginal for micro and small firms. Information gap & policy design issues.
3

PREVIOUS FINDINGS ON GREEK SMEs AS USERS OF FINANCIAL SERVICES Family members & close relatives provide ~49% of the funding required. Banks provide ~34%, government programs cover ~15% (GEM 2004). Central role of the family in informal investment significantly higher than GEM average (GEM 2006). High amount of informal investment (median in 2004-2007 is ~40.000 vs. less 20.000 in Ireland -where the investment role of family is comparably prominent), indicative of height of required capital, no glut of resources available for the financing of SMEs (GEM 2007).
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CORPORATE CREDIT GROWTH CONTINUES TO SLOW

CREDIT STANDARDS HAVE TIGHTENED IN THE CRISIS

1= tightened considerably; 2= tightened somewhat; 3=remain unchanged; 4=eased somewhat; 5= eased considerably
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FINANCIAL SQUEEZE OF PRIVATE SECTOR

ASSESSMENT OF MARKET CONDITIONS OF PAST SEMESTER (1st semester 2011) -per category-

SECTOR Trade Manufacture Services NUMBER OF EMPLOYEES With no employees 1 person 1,9 2,4 2,4 2,1 4,7

Improved

Deteriorated 83,3 79,7 80,2

No change

NA 14 18,2 14,2 0,9 0,2

85,5 85,5 79,6 74,4 12,7 62,0

11,7 11,7 17,7 19,4 25,4

0,8 0,3 0,3

2-4 persons 2,4 5-9 persons 10 and more persons TURNOVER Below 100 thousand 2,0 6,2

86,1 82,1 74,0

11,9 14,7 19,1

100-300 thousand 3,2 Above 300 thousand AREA Attica 1,6 Rest of Greece
0

6,9

83,6 79,9
10 20 30 40 50 60 70 80

14,4 15,5
90

0,5 0,4
100

4,2

EXPECTATIONS (January 2011) AND PERCEPTIONS (July 2011) FOR THE 1st SEMESTER 2011 COMPARATIVE DATA OF IME GSEVEE SURVEYS JANUARY 2011 JULY 2011

The situation in the 1st half of 2011

The prospects on the 1st half of 2011

81,3

68

6,7

19,9

3,3

5,4 15,1

Improvement Deterioration No change NA

0,3

In the January 2011 GSEVEE survey a negative outlook for the 1st semester was recorded by 68% of the respondents, which was a quite optimistic expectation as in the July 2011 survey the figure on deterioration hikes above 81%. The prospects were confirmed to worsen further.

OUTLOOK FOR ENTERPISES SITUATION DURING THE NEXT SEMESTER COMPARISON WITH IME GSEVEE PREVIOUS SURVEYS
100

90

80

70

67,1

68

65,2
60

55,4
50

44,6
40

34,8
30

32,9

32

20

Outlook for deterioration Outlook for improvement/ stabilisation

10

FEBRUARY 2010

JULY 2010

JANUARY 2011

JULY 2011

10

LIQUIDITY
OUTLOOK FOR THE NEXT SEMESTER COMPARISON WITH IME GSEVEE PREVIOUS SURVEYS
100

90

80

74,3 66,9

70

64,7
60

55,5
50

44,5
40

35,3
30

33,1 25,7

20

Oulook for decrease Outlook for increase/ stabilisation

10

FEBRUARY 2010

JULY 2010

JANUARY 2011

JULY 2011

11

ASSESSMENT OF THE PAST SEMESTER (1st Semester 2011) SUMMARY CHART

Increase

Decrease

No change

TURNOVER

4,5

80,0

14,8

0,7

DEMAND

5,9

77,9

15,6

0,6

LIQUIDITY

2,9

82,6

13,7

0,8

ORDERS

4,6

79,6

12,6

3,2

INVESTMENTS

4,6

41,5

51,3

2,6

EMPLOYMENT 3,1

20,4

74,6

1,9

10

20

30

40

50

60

70

80

90

100

12

OUTLOOK FOR THE NEXT HALF (2nd half of 2011) SUMMARY CHART

Increase

Decrease

No change

NA

TURNOVER

8,3

64,7

21,7

5,3

DEMAND

9,1

62,8

23,2

4,9

LIQUIDITY

6,2

64,7

23,8

5,3

ORDERS

7,8

63,8

21,1

7,3

INVESTMENTS

4,6

34,6

54,3

6,5

EMPLOYMENT 2,9

17,6

75

4,5

10

20

30

40

50

60

70

80

90

100

13

Which is the amount of your BTB relations made through checks in %?

About 10% About 20% About 30% About 40% About 50% About 60% About 70% About 80% About 90% About 100% I am not using checks in my transactions
0

9,3 3,3

The use of checks is decreasing. 27,8% of enterprises uses mainly checks in its transactions. 17,7 Using checks COMPARATIVE CHART JULY 2011 - JULY 2009

3,5 1,6 6,8

70

63
60

45,5

48,1
50

3,8

40

30

3,4

20

27,8
10

4,3
0

4,8
July 2011 January 2011 July 2009

4,7

53,5 1,0

10

20

30

40

50

60

14

How long does the post date time usually last? -Enterprises using checks in their BTB relations-

up to 2 months 2 months 3 months 4 months 5 months 6 months 7 months 8 months 9 months 10 months 11 months 12 months More than 12 months NA
0

15,2 8,2 20,8 17,7 12,2 14,3 2,3 3,2 0,9 0,9 0,4 1,1 0,7 2,1
5 10

Average post-dating time: 4 months

15 20 25

15

Would you ask for a time limit in checks payment, and if so, how long? Two, four, or six months? - Enterprises using checks in their transactions-

46,4 2 months

4 months

18,3

6 months

14,0

No

17,0

NA

4,3

10

15

20

25

30

35

40

45

50

16

Do you hold checks not covered or insecure? - Enterprises using checks in their transactionsNA 1,1% Yes ("dishonoure d" already) 33,7%

Hold dishonoured checks COMPARATIVE CHART JULY 2011 - JAN. 2011

33,7 37,9
40

35

*
30

No 60,0%

Yes (great risk not to be covered/ insecure) 5,2%

25

20

15

10

July 2011

January 2011

*15,7% of entrepreneurs surveyed

33,7% of respondents already holds dishonoured checks, while 5,2% of entrepreneurs runs great risk of holding dishonoured checks in the near future. Compared to IME GSEVEE previous survey (January 2011), the dishonoured checks hold by enterprises have been decreased, a fact that may be due to the intense suspicion of the entrepreneurial world towards transactions made through checks.

17

Have you officially declared the dishonoured checks that you hold by customers or not? - Entrepreneurs holding dishonoured checks by customers -

Some of them officially declared, some not 24,1%

1,1%

Officially declared 42,2%

Have not officially declared them 32,6%

According to the data of TIRESIAS S.A. (Banking Information Systems S.A.), the number of pieces of dishonoured checks is 111.290 and their value EUR 1.381.356.399. According to IME GSEVEE survey findings, there is a figure of 40% of pieces that are dishonoured and not officially declared. Therefore, TIRESIAS S.A. data understate the actual extent of the problem.
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19

GREEK SMEs AS USERS OF FINANCIAL SERVICES DURING THE CRISIS : OPEN ISSUES

- Banks without banking services for SMEs. More banks more open system. - Financial Services to SMEs not subject to competition compliance assessment. - How to move from informal means (informal investors, post dated checks, diverted financial practices) to normal financial tools.
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