Group and Bank
Annual Financial Report
31 December 2022
March 2023
Table of Contents
At a Glance
4
Chairman’s Statement
6
Chief Executive Officer’s Statement
8
Certification of the Board of Directors
9
Board of Directors’ Report
10
Supplementary Report
181
Audit Committee Report
188
Independent Auditor’s Report
195
Statement of Financial Position
204
Income Statement - 12Month
205
Statement of Comprehensive Income
206
Statement of Changes in Equity – Group
207
Statement of Changes in Equity – Bank
208
Cash Flow Statement
209
NOTE 1 General information
209
NOTE 2 Summary of significant accounting policies
211
NOTE 3 Critical judgments and estimates
238
NOTE 4 Financial risk management
240
NOTE 5 Segment reporting
283
NOTE 6 Net interest income
287
NOTE 7 Net fee and commission income
288
NOTE 8 Net trading income / (loss) and results from investment securities and Gains / (losses) arising from the
derecognition of financial assets measured at amortised cost
288
NOTE 9 Net other income / (expenses)
289
NOTE 10 Personnel expenses
289
NOTE 11 Retirement benefit obligation
289
NOTE 12 General, administrative & other operating expenses
293
NOTE 13 Credit provisions and other impairment charges
293
NOTE 14 Restructuring costs
294
NOTE 15 Tax benefit /(expense)
294
NOTE 16 Earnings per share
295
NOTE 17 Cash and balances with central banks
295
NOTE 18 Due from banks
295
NOTE 19 Financial assets at fair value through profit or loss
296
NOTE 20 Derivative financial instruments
296
NOTE 21 Loans and advances to customers
299
NOTE 22 Investment securities
307
NOTE 23 Investment property
308
NOTE 24 Equity method investments
309
NOTE 25 Software
309
NOTE 26 Property and equipment
310
NOTE 27 Deferred tax assets and liabilities
312
NOTE 28 Other assets
313
NOTE 29 Assets and liabilities held for sale and discontinued operations
314
NOTE 30 Due to banks
317
NOTE 31 Due to customers
318
NOTE 32 Debt securities in issue
318
Table of Contents
NOTE 33 Other borrowed funds
320
NOTE 34 Other liabilities
320
NOTE 35 Contingent liabilities, pledged assets and commitments
322
NOTE 36 Share capital, share premium and treasury shares
325
NOTE 37 Tax effects relating to other comprehensive income / (expense) for the period
325
NOTE 38 Reserves & retained earnings
327
NOTE 39 Non controlling interests
327
NOTE 40 Dividends
328
NOTE 41 Cash and cash equivalents
328
NOTE 42 Related party transactions
328
NOTE 43 Acquisitions, disposals and other capital transactions
330
NOTE 44 Group companies
334
NOTE 45 Independent auditor’s fees
335
NOTE 46 Restructuring Plan
335
NOTE 47 Ukraine crisis
336
NOTE 48 Events after the reporting period
337
Disclosures of Greek Law 4261/2014 Art. 81
338
Disclosures of Greek Law 4261/2014 Art. 82
341
Disclosures on a group level of article 6 of Greek Law 4374/2016
342
Availability of the Annual Financial Report
358
At a glance
National Bank of Greece
Who we are
:
National Bank of Greece S.A. (hereinafter “NBG” or the “Bank”) was founded in 1841 and its
shares have been listed on the Athens Exchange since 1880. The Bank’s headquarters are located at 86 Eolou
Street, 10559 Athens, Greece, (Register number G.E.MH. 237901000), tel. (+30) 210 334 1000, www.nbg.gr. By
resolution of the Board of Directors, the Bank can establish branches, agencies and correspondence offices in
Greece and abroad. In its 182 years of operation, the Bank has expanded on its commercial banking business
by entering into related business areas. The Bank and its subsidiaries (hereinafter the “NBG Group” or
“Group”) provide a wide range of financial services including mainly retail, corporate and investment banking,
non-performing management & Specialized Asset Solutions, transactional banking, leasing, factoring,
brokerage, asset management, real estate management and insurance related services. The Group operates
mainly in Greece but also abroad through its branch in Cyprus and its subsidiaries in North Macedonia, Cyprus,
Romania, Bulgaria, Luxembourg, Netherland and U.K. Following the respective Bank’s decision in 2021, the
Group ceased its operation in Egypt, Malta and NBG London Branch; and therefore the NBG Egypt Branch, the
NBG London Branch and the subsidiaries NBG Malta Ltd (formerly known as NBG Bank Malta Ltd) and NBG
Malta Holdings Ltd are currently under liquidation.
The Bank is one of the four systemic banks in Greece and one of the largest financial institutions in Greece by
market capitalization, holding a significant position in Greece’s financial services sector.
Economic and financial review
”.
About our
Purpose:
Our Purpose Statement Is
“
Together We Create Future”
.
Vision:
Our vision is to become the
“Bank of First Choice”
for customers, talent, and
investors. A trustworthy, human, responsive bank, that acts as a growth catalyst and
unlocks potential for households, businesses, communities, and our employees
.
Values:
Human, Trustworthy, Responsive, Α Growth Catalyst
Our Values
Throughout our history, from 1841 until today, we recognize that our successful business activity is mainly
based on the fact that we operate guided by our Purpose, Vision and Values.
Our values are, and will remain etched in our DNA, in order to move forward together to the next day.
Human
Trustworthy
Responsive
Α Growth Catalyst
Your needs and choices are at
the centre of everything we do.
We operate with
transparency, knowledge
and experience.
We provide flexible
solutions tailored to your
needs.
We accelerate progress
and prosperity.
About
In 2021, NBG launched a holistic Environmental, Social and Governance
(“ESG”) effort to ensure compliance with evolving regulatory
framework, fulfilment of its commitment to the Principles for
Responsible Banking (“PRB”) of the United Nations Environment
Program Finance Initiative (“UNEP-FI”) and implementation of ESG best
practices across the organization (covering management of credit and
other types of risk, business strategy, products and services, reporting,
as well as efforts to reduce NBG’s direct and indirect emissions
footprint). In line with 2021 above, NBG continued with further shaping
its strategy and deepening the integration of ESG aspects, starting by
integrating the ESG elements of climate and environmental into our
activity and operations.
Our ESG Management Committee, chaired by the Chief Executive Officer (“CEO”), governs all strategic decisions related to ESG, a new
Board Committee on Innovation & Sustainability has come into force, while a dedicated Group Corporate Social Responsibility &
Sustainable Development Division has been established under the Group Chief Compliance and Corporate Governance Officer to
oversee compliance and reputational risk matters pertaining to corporate social responsibility, sustainability and climate change. NBG
has integrated the management of ESG topics across the three lines of defence, with the appointment of specific roles and
responsibilities within existing organizational units, as well as the establishment of new ESG related teams. In this context, a new
independent sector, the Climate & Environmental Strategy Sector, has been set up to define, coordinate and monitor implementation
of Climate & Environmental Strategy across the front-line.
Key initiatives relevant to the implementation of the Climate & Environmental strategy and related risk management are being
included in the Transfo rmation Program to ensure high level of focus and execution discipline in the aforementioned critical areas (see
Section “
Transformation Program
”).
Non-Financial Statement
”.
Chairman’s Statement
Chairman’s Statement
Gikas A. Hardouvelis
Chair of the Board of Directors
“2022 was a year of major accomplishments. National Bank of
Greece S.A. continued to grow, investing in digital banking and its
people, and emerging as the Bank of First Choice. Operating costs
remained well contained. New production of loans supported the
economy and generated healthy and sustainable interest and fee
income, with core Return on Tangible Equity improving to 9.6%
from 8.2% the year before, and the cost to core income ratio
declining to 46.9% from 52.2% a year earlier.
A new strategic cooperation with EVO Payments Inc. on our
merchant acquiring business is boosting profitability and opens
new opportunities. Our leading capital position in Greece is
growing even stronger, with a fully loaded Common Equity Tier 1
(“CET1”) ratio of 15.7%, which is well above the regulatory
minimum requirement.
Non-Performing Exposures (“NPEs”) continued to decline in 2022,
with the NPE ratio reaching mid-single-digit levels, as the amount
of cured loans consistently exceeded the defaulted ones, thus
producing negative net NPE formation. Opportunities are also
opening from the millions of assets transferred to servicers by the
banks. At NBG, we did not carve out our Troubled Assets Unit but,
instead, created a new division called Specialized Assets Solutions,
which kept the know-how of the troubled loan universe within the
Bank and is now able to service it, providing advice and real
estate" financing.
Our ground-breaking investments in technological infrastructure
such as the replacement of our Core Banking System, are
enhancing our operational efficiency, automating our processes,
and improving our commercial offerings. Independent
technological surveys by consulting companies place our Bank
among the top digital champions globally and the best in Greece,
an assessment which is also verified by the number of our digital
banking users, the largest amongst Greek banks. These efforts and
results are consistent with our vision to optimize our product and
service offering to our clients, thus becoming the “Bank of First
Choice”.
At NBG we aim high, work as a team, and deliver tangible results.
The Bank’s Purpose Statement remains pivotal to our activities:
“Together We Create Future.” Together with our people and our
customers, we adhere to our four-core values, aspiring to a Bank
that is Human, Trustworthy, Responsive and A Growth Catalyst.
The Bank continues placing outmost importance in the
maintenance of top-quality corporate governance and conduct
standards. The Board of Directors and its committees are
constantly overseeing all major developments, following an
enhanced Board Working Model. They meet regularly and hold in
depth lengthy discussions on strategy, current developments, and
important areas such as ESG, Digital, Partnerships, and other.
Consistent with its ESG vision for the future, NBG leads the market
in sustainable energy financing. In 2022 we supported 58
Renewable Energy Source projects with loans of €1.6 billion, up by
45% from the previous year. The Bank also supports its corporate
clients’ transition to sustainable business models in line with both
their sector decarbonization paths and NBG’s own Net-Zero mid-
to long-term strategy. NBG supports inclusion and equal
opportunities as well, participating for the sixth consecutive year
in Bloomberg’s Gender Equality Index.
The wide perimeter of NBG’s ESG presence and digital
transformation is evident in the numerous awards and distinctions
it received in 2022. These include:
•
the “Best Corporate Governance Greece” by Capital
Finance International (“CFI”);
•
the “Diamond Distinction” by Corporate Responsibility
(“CR”) Index;
•
three prizes in the context of the World Finance
Magazine’s international awards “Digital Banking Awards
2022”, as “Best Consumer Digital Bank in Greece”, “Best
Mobile App in Greece” and “Best Digital SME Bank in
Greece”;
•
two prizes in the context of The Digital Banker Magazine’s
international awards “Digital CX Awards 2022”;
•
seven awards in the context of the “Digital Finance
Awards 2022.”
NBG maintains the highest bank credit rating in Greece at BB-
(based on the current rating from Fitch in January 2023),
facilitating the country’s effort to regain Investment Grade. The
latter stands within reach, as the economy remains resilient to the
severe geopolitical challenges from the Ukraine crisis and the
concomitant escalation of energy and commodity-induced
inflation shock.
Greece’s economic performance exceeded expectations in 2022,
with GDP growth outpacing the euro area average by a wide
margin for a second consecutive year. Domestic growth was
approximately 6% in constant price terms, compared with 3.5%, on
average, in the euro area.
The revival of tourism, with revenue rising very close to the all-
time high level of 2019, along with the decisive fiscal support,
cushioned the inflation drag on disposable income. The business
sector overcame the surge in production costs and remained
healthy, with profits climbing to a 12-year high and gross fixed
capital formation rising by 11.6%. The labor market also proved
dynamic, with unemployment remaining on a steady downward
path and labor income rising by 5.6%.
Positive wealth effects in 2022 provided additional support to
domestic demand. Prices of residential real estate – which
accounts for almost 90% of household wealth – rose by 10.4%
year-over-year (“y-o-y”) in September 2022, recording a
cumulative appreciation of nearly 40% from their lowest point
during the Greek crisis. Non-labor sources of personal income
(interest, dividends, and rents) also exhibited a double-digit
growth.
Despite the accelerating monetary tightening by the European
Central Bank (“ECB”), bank liquidity remained abundant and credit
expansion in 2022 to the domestic private sector reached a 13-
year high of c. €7.0 billion. Inward Foreign Direct Investment
(“FDI”) surged to an all-time high of c. €6.5 billion, setting the
stage for increased capital formation.
A strong fiscal performance together with the inflation spike
resulted in a sharp fall in public debt, estimated at c. 25% of GDP,
and a primary deficit of c. 1.5% of GDP or even lower. The
economy is heading to a small primary surplus and a new
substantial decline in debt to GDP ratio in 2023.
All in all, the Greek economy entered 2023 in high gear. It is
heading for an investment-led recovery within a less dynamic
international environment. A strongly adaptable private sector
and the utilization of the Recovery & Resilience Facility (“RRF”) -
related impetus – in which NBG has adopted a leading role
through Ethniki 2.0 - provide support for Greece’s
overperformance in the current year and beyond.
Both the economy and the bank are anticipated to thrive in the
years ahead. On the back of a recovering economy, NBG is focused
on accelerating income growth and value generation, capitalizing
on its strong fundamentals and a solid operating model of digital
development and expansion.
NBG today enjoys the trust of its customers, the appreciation of its
employees and the satisfaction of its shareholders. It thrives as an
ever-transforming, competitive, stable, well-capitalized and highly
profitable bank.”
Athens, 13 March 2023
Gikas A. Hardouvelis
Chair of the Board of Directors
Chief Executive Officer’s Statement
Pavlos K. Mylonas
Chief Executive Officer
“Economic growth in Greece remained strong throughout FY.22
overcoming inflation-induced risks and remains on a solid trajectory,
supported by buoyant tourism, continued fiscal support, strong labor
market conditions, as well as by the sharp recovery in corporate
profitability. For NBG, 2022 was also a year of consistently strong
financial performance, which was reflected across all business lines.
Our net performing loan book expanded by an impressive €2.5 billion
(equivalent to +10% y-o-y), driven by disbursements of €6.7 billon,
mainly to corporates.
Our core operating profit has surged by 56.7% year over year (“y-o-y”)
to almost €700 million, far exceeding the full year guidance of c. €0.5
billion, while the profit after tax attributable to NBG equity
shareholders reached €1,120 million, up by 29.2% y-o-y. This robust
performance reflects the overperformance in all lines of the Income
Statement: strong recovery in net interest income (+13.0% y-o-y),
adding up to core income growth of 14.5% y-o-y.
Operating expenses remained contained, despite inflationary
pressures and increased depreciation charges driven by our strategic
IT investment plan, which includes the ongoing replacement of our
Core Banking System.
Our
robust liquidity, strong capital position and further improved
asset quality, all provide the Bank with strong competitive
advantages. Notably,
full targeted longer-term refinancing operations
(“TLTROs ΙΙΙ”) repayment still leaves NBG’s cash position at c. €7
billion. Our strong capital position was enhanced with Common Equity
Tier 1 ratio and Total Capital ratios at 15.7% and 16.8% respectively,
on a fully loaded basis. Further, Non Performing Exposures formation
remained negative throughout 2022, driving our NPE ratio down to
5.1%, below our FY.22 guidance of c. 6%.
On the transactions´ front, the closing of the Ethniki Hellenic General
Insurance S.A. at the end of 1Q.22 allowed us to exit the 2019 Revised
Restructuring Plan. NPE securitisations continued in 2022 with the
signing of “Frontier II” transaction of c. €1.0 billion, in terms of gross
book value as of 4Q.21, under the provision of Hercules Scheme II. In
addition to NPE transactions, in 2022 we proceeded with our plan of
establishing strategic partnerships with key players in the IT and non-
IT area. First, we established NBG Pay Single Member S.A., a joint
venture with EVO Payments Inc in the merchant acquiring and
payment processing services. Additionally, we are about to sign a new
strategic partnership agreement with the technology company Epsilon
Net S.A. specializing in Enterprise resource planning (“ERP”) service
provision to small business customers, which will support us further to
expand our digital offering and develop a new distribution channel for
our products and services to such customers.
On the back of our solid financial performance, the Bank’s efforts in
the Transformation Program that runs for over 4 years now, continue
unabated to enhance our commercial effectiveness and operational
efficiency. Just a few of its success comprise:
NBG, utilizing its own “Ethniki 2.0” services complementing the
country’s “Greece 2.0” program, was the first bank to approve
financing under the Recovery & Resilience Facility (“RRF”) in March
2022. By year-end 2022, we had a significant market share or c. €0.3
billion in RRF loans, 1/3 of which under the Green transition pillar.
In the retail business, we continued enhancing our digital offering,
which now ranks among the top digital champions globally in the
banking sector as indicated by independent surveys, with digital
subscribers and active users reaching 3.7 million (+7.4% y-o-y) and 2.7
million (+10.5% y-o-y) respectively in 4Q.22.
For our People, the priorities in 2022 were the introduction of
performance management, as well as rewards and upskilling.
Specifically, we successfully launched the new Variable Remuneration
Scheme directly linked to the new Performance Management System,
introducing performance-based rewards. Training courses of more
than 220,000 hours took place both for our Head Office and Branch
Network employees. NBG twice provided additional special wage
supplement to its employees during 2022 as a relief measure in light
of high inflation. We also promoted our cultural transformation based
on our 4 values (human, trustworthy, responsive, growth catalyst).
Centralization and automation efforts continue, through streamlining
and automation of processes and upgrading technology, including the
ongoing replacement of our Core Banking System.
In the area of ESG, the energy crisis further raised the importance of
green transition and our efforts have accelerated towards this
direction. We maintained our leading position in Renewable Energy
Sources financing, incorporated ESG criteria in our corporate credit
assessment process and enhanced measurement of our generated
emissions to enable proper target setting and monitoring. Our
sponsorship program continues with numerous initiatives supporting
our society. Our key sponsorships in 2022 focused in restoring fire-
impacted areas and promoting culture. Our governance standards are
recognized as following best practices.
All the above successes are fully reflected in the upgrades of NBG’s
credit ratings since during 2022 by all rating agencies, reflecting the
structural improvements in our asset quality, capital adequacy and
core profitability, aided also by rising interest rates and economic
growth in Greece. Notably, NBG maintains the highest credit rating in
Greece, at ‘BB-
’.
Looking ahead, the solid fundamentals of the Greek economy should
keep it in positive growth territory in 2023, outperforming the rest of
Eurozone. In this environment and supported by a solid Balance Sheet
and positive profitability momentum, we aspire to enhance our core
Return on Tangible Equity further to over 12% by year-end 2025.
Sustained positive organic capital generation creates options with
regards to shareholder distribution. We also aspire to provide our
clients expeditiously with advantageous products and services,
maintaining their trust and confidence on NBG, the “Bank of First
Choice”.”
Athens, 13 March 2023
Pavlos K. Mylonas
Chief Executive Officer
Chief Executive Officer’s Statement
9
Certification of the Board of Directors
Certification by the Chairman of the Board of Directors, the Chief Executive Officer and the Board of
Directors member pursuant to Article 4 of Greek Law 3556/2007
We, the members of the Board of Directors of National Bank of Greece S.A. certify that to the best of our knowledge:
(1)
The Annual Financial Statements for the year ended 31 December 2022 have been prepared in accordance with the
applicable accounting standards and present a true and fair view of the assets, liabilities, equity and results of operations of
the Bank and of the companies included in the consolidation.
(2)
The Board of Directors Report for the year ended 31 December 2022 fairly presents the evolution, the performance and the
position of the Bank and of the companies included in the consolidation, including the description of the main risks and
uncertainties they face.
Athens, 13 March 2023
THE CHAIRMAN OF THE BOARD OF
DIRECTORS
THE CHIEF EXECUTIVE OFFICER
THE BOD MEMBER
GIKAS A. HARDOUVELIS
PAUL K. MYLONAS
MATTHIEU A. KISS
Chief Executive Officer’s Statement
10
Board of Directors ’
Report
2022
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
11
About NBG’s
Transformation Program
NBG’s Transformation Program capitalises on
our core strengths and addresses our key
challenges to ensure we successfully capture
opportunities and achieve our financial and
operational targets.
Strong governance and cadense
with full sponsorship of management team and Board of Directors
c.40 initiatives / c.90 subinitiatives in 2022
driving sustainable changes in line with our Business Plan
1,000+ colleagues
across the whole organization actively involved in the Transformation Program
Healthy Balance Sheet &
Specialised Asset Solutions
We maintain a healthy balance sheet, while
capturing emerging opportunities in the
ecosystem of servicers and investors
Efficiency &
Agility
We eliminate inefficiencies and tightly manage
spend, improving profitability in a sustainable
manner
Best Bank for
our Clients
We deepen customer relationships, addressing
their needs across channels and expanding our
offering through strategic partnerships
Technology &
Processes
We enhance all aspects of our technological
infrastructure and core processes, enabling
our commercial and efficiency objectives
People, Organisation
& Culture
We revamp our Human Resources platform
and enhance our culture, building a
modern and flexible organisation
Climate &
Environment
We address climate-related and
environmental risks, while capturing
opportunities from the transition of
households and businesses
board of Directors Report
About
NBG’s Transformation Program
Key Highlights
Strategic priorities for 2022-2024
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
12
Adjusted Group profit for the year from continuing operations
€881 million for the year ended 31 December 2022 (31 December 2021: €832
million).
Bank’s new loan disbursements
Loan disbursements reach €6.7 billion +36.7% year-over-year (“y-o-y”), driven
mainly by corporates.
Non-Performing Exposures (“NPEs”)
Group NPE stock amounted to €1.8 billion, with NPE ratio at 5.2%.
Liquidity
Group deposits grew by €1.7 billion to €55.2 billion, Liquidity Coverage Ratio
(“LCR”) and Net Stable Funding Ratio (“NSFR”) stand comfortably above
regulatory requirements.
Common Equity Tier 1 ratio (“CET1”)
The Group’s Common Equity Tier 1 (“CET1”) and Total Capital ratios as at
31 December 2022 were 16.6% and 17.7% respectively, exceeding the OCR ratios
of 11.75% for 2022, post capital relief measures and 14.50% for 2023.
2022
Group
Financial
Results
Adjusted Group profit for the year
from continuing operations at
€881 million, up 5.9% on an annual
basis
The introduction of new digital capabilities in combination with campaigns to
promote digital channels led to a significant acceleration of digital usage and
engagement:
o
Digital active users reach 2.7 million (+10.5% y-o-y).
o
17.5% y-o-y increase in transactions via digital channels.
o
25.1% y-o-y increase in sales via digital channels
.
Digital
functionality
Digital transactions soared, supported by
our efforts to accelerate onboarding &
engagement and enhance the digital
capabilities of our customers
●
Awards & Distinctions
“Best Corporate Governance Greece” – CFI, “CR-Index Award 2021-2022” –
Diamond/Praise for the Society.
●
Gender diversity
At 31% (one Executive Member and three Independent Non-Executive Members
of the Board of Directors) are women.
●
NBG Carbon Footprint initiative
Measurement of our Scope 3 indirect emissions, for both 2020 and 2021 and in
particular of our Scope 3 financed emissions, according to the Partnership for
Carbon Accounting Financials (“PCAF”) methodology.
Selected
Awards & Accomplishments
Non-
financial
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
13
Acceleration of
digital transformation
and new digital
functionalities
A digital leap forward creating a new competitive advantage
Key digital
New digital
functionalities
Onboard
●
Digital subscribers
3.7
million (+7.4%
y-o-y).
●
Mobile app downloads
3.6 million (+22.0% y-o-y).
●
Digital onboarding
enhancements.
●
Online Sole Proprietorship onboarding
Banking (January 2023).
Engage
●
Digital active users (12
months)
2.7 million
(+10.5% y-o-y).
●
Digital active users (1
month):
2.3 million
(+10.6% y-o-y).
●
Contactless Payments via Mobile Banking
: NBG cards on
Google Pay and Apple Pay.
●
FX transfers
●
Request for remittances’ fate and request for amendment
via Internet Banking.
●
Internet & Mobile Banking based on
Accessibility
Compliance
standards for people with disabilities.
●
Instant notifications
●
Second Authentication Factor using
Gross-sell
●
Digital sales
thousand products
(+25.1% y-o-y).
●
Expansion of online repayments to a wide range of
lending
products
.
●
New products added in the digital sales portfolio
credit card offering, Money Box savings tool, New
Generation investment).
●
Increase of
Express personal loan
το €6,000.
Digital transactions soared, supported by our efforts to accelerate onboarding & engagement and to enhance the digital
capabilities of our customers.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
14
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
15
Large scale Transformation Program
Building upon its long-lasting tradition of trust and contribution to
the Greek economy and society, the National Bank of Greece
embarked on a large-scale Transformation Program (see section
“
Transformation Program
”) in the second half of 2018 to transform
the Bank, responding to the challenges and tapping the business
opportunities presented by the rapidly changing economic and
banking landscape.
The Transformation Program addresses the strategic priorities that
leverage on our strengths and address our weaknesses. Through
more than four years of implementation, the Transformation
Program has delivered impressive results in terms of core
profitability – fully in line with the Bank’s financial and business
targets up to 2024 – and tangible improvements to NBG’s business
and operating model. These results are delivered through discrete
workstreams encompassing c.40+ initiatives and involving 1,000+
managers and employees of the Bank.
NPE reduction plan
From December 2015 to December 2022, the Group achieved a
decrease of €22.6 billion of the NPE stock through a combination of
organic and inorganic actions, with Group NPE stock as of 31
December 2022 at €1.8 billion (Bank: €1.6 billion). Similarly, the
NPE ratio dropped from 46.8% to 5.2% post to the Project
“Frontier” derecognition and the Project “Frontier II” classification
as Held for Sale. More specifically, NPE reduction continued in
2022, with the stock of domestic NPEs reduced further by €0.5
billion to €1.6 billion, reflecting mainly inorganic actions (see below
“
Disposal of NPE portfolios
”).
Large scale Transformation Program
NPE reduction plan
Disposal of NPE portfolios
Divestments
Financial highlights
2019 Revised Restructuring Plan
Regulatory developments
Other
Key achievements
and significant
developments of
NBG Group in 2022
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
16
Domestic NPE ratio dropped by c. 190 basis points (“bps”) to 5.1%
in 4Q.22, with NPE coverage at 88.4% from 77.5% in 4Q.21.
International NPE ratio and coverage in 4Q.22 settled at 9.2% and
60.5%, respectively.
Furthermore, as per the regular European Central Bank (“ECB”)
calendar, the revised NPE targets for the 2023-2025 period will be
submitted to the Single Supervisory Mechanism (“SSM”) on 31
March 2023.
Disposal of NPE portfolios
Project “Frontier II”
On 25 November 2021, the Bank decided the disposal of a portfolio
of Greek NPEs in the form of a rated securitization that will utilize
the provisions of the Hellenic Asset Protection Scheme (“Hercules
II”, see below). The Project “Frontier II” accounted for c. €1.0
billion, in terms of gross book value as of 31 December 2021. The
portfolio consists of predominantly secured Large Corporate, Small
and Medium Enterprises (“SMEs”), Small Business Lending (“SBL”),
Mortgage Loans and Consumer Loans. On 29 June 2022, the Bank
announced the submission of the application under Hercules II, for
the securitisation of Project Frontier II. The application relates to
the provision of a guarantee by the Greek State on the senior notes
of an amount up to €460 million.
Subsequently, on 29 July 2022, the Bank announced that it has
entered into a definitive agreement with funds managed by
Bracebridge Capital, LLC, for the sale of 95% of the Mezzanine and
Junior notes. NBG will retain the 100% of the Senior notes and 5%
of the Mezzanine and Junior notes.
The transaction is estimated to be completed within the 2Q.23,
subject to required approvals.
The transaction is being implemented in the context of the Bank’s
NPE deleveraging strategy and is in line with the targets submitted
to the SSM.
Hellenic Republic Asset Protection Scheme
In December 2019, the Greek parliament voted for the creation of a
Hellenic Asset Protection Scheme (“HAPS”) (Greek Law 4649/2019)
also known as the “Hercules Scheme”. The Hercules Scheme will
support banks on deleveraging NPEs through securitization, with
the aim of obtaining greater market stability. The participation in
the Hercules Scheme is voluntary and open to all Greek banks and
it does not constitute state aid as guarantees are priced on market
terms.
Under the Hercules Scheme, the Hellenic Republic will provide
guarantees up to €12.0 billion on the senior bonds of
securitizations of NPEs. The Hercules Scheme will become effective
only when the originator has sold at least 50% plus one of junior
tranches (and mezzanine if any) and the notes are of such amount
that allows the derecognition and the Significant Risk Transfer
("SRT") of the securitized receivables.
Moreover, in July 2021, following the approval from the Directorate
General for the Competition of the European Commission (the “DG
Competition”) on 9 April 2021 and based on the Greek Law
4818/2021, the "Hercules" Scheme (named also as “Hercules II”)
was extended by 18 months, with no material changes in terms.
Project “Pronto”
In December 2021, the Bank decided the disposal of the non-
performing leasing exposures including: the sale of Probank Leasing
S.A. shares, the sale of the Bank’s leasing portfolio (ex-FBB) and the
sale of NBG Leasing S.A. lease portfolio. The gross book value of the
Bank’s and NBG Leasing’s leasing portfolios, as of 31 December
2022, amounted to c. €51 million. The closing of the transaction is
expected to be completed within the 2H.23.
Project “Solar”
In December 2021, the Bank decided to launch the divestment of
the secured portfolio of SMEs (Project “Solar”) with a gross book
value c. €170 million as of 31 December 2021, through a joint
securitization process under HAPS. In August 2022, the Bank
together with the other Greek financial institutions submitted to
the Greek Ministry of Finance a joint application for inclusion of the
senior notes to be issued in the context of the Solar Securitization
in the HAPS scheme.
The transaction is expected to be completed within the 2Q.23,
subject to required approvals.
Divestments
Planned disposal of subsidiary under 2019 Revised
Restructuring Plan commitments
Sale
General Insurance S.A.
On 24 March 2021, the Bank’s Board of Directors approved the sale
of the 90.01% out of 100.00% stake in Ethniki Hellenic General
Insurance S.A. (“Ethniki Insurance” or “NIC”) and authorized the
Bank’s Management to proceed with the signing of the Share Sale
and Purchase Agreement (“SPA”) with CVC Capital Partners (“CVC”)
on 26 March 2021. The transaction was approved by the
Extraordinary General Meeting of NBG’s Shareholders held on 21
April 2021.
The closing of the transaction took place on 31 March 2022,
following the reception of the required supervisory approvals by
national and EU authorities.
Other divestments
CAC Coral Ltd
On 16 October 2020, the Bank announced that it has entered into a
definite agreement with Bain Capital for the disposal of its 100%
stake in a Cypriot Credit Acquiring Company, CAC Coral Ltd (Project
“Marina”), which contains a portfolio of non-performing corporate,
SME and consumer and mortgage loans with total gross book value
of c. €325 million (€200 million of allocated collateral value) as of
30 June 2019. The portfolio consists predominantly of legacy non-
performing loans. The transaction is being implemented in the
context of NBG's NPE deleveraging strategy and in accordance with
the Operational Targets submitted to the SSM.
The closing of the transaction took place on 15 July 2022, following
the reception of the required approvals by the competent
regulatory authorities.
Other transactions
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
17
Strategic Partnership of NBG with EVO Payments Inc
On 17 December 2021, the Bank announced that it has entered
into a long-term strategic partnership with EVO Payments, Inc
(“EVO”) to provide merchant acquiring and payment processing
services.
Following the receipt of all required regulatory approvals, the Bank
announced on 9 December 2022, that it has completed the sale of
51.00% of NBG Pay Single Member Societe Anonyme (NBG
PAY
S.M.S.A.) share capital to EVO for a consideration of €158 million.
NBG
PAY
S.M.S.A. comprises NBG’s Merchant Acquiring Business
following a spin-off. In addition, a long-term exclusive commercial
agreement was signed between NBG, NBG
PAY
S.M.S.A. and EVO,
where NBG will offer to its merchants the market-leading, card
acceptance solutions of NBG
PAY
S.M.S.A., through the proprietary
products and processing platforms of EVO.
Significant value creation is expected from the synergies that the
partnership will create from combining NBG’s wide client base with
EVO’s technological expertise in the payments business.
Strategic Partnership of NBG with Epsilon Net S.A.
On 16 November 2022, the Bank announced the signing of
memoranda of understanding (“MoU”) of a strategic cooperation
agreement and the acquisition of a minority interest of 7.5% in
Epsilon Net S.A., as well as the possibility of acquiring a further
7.5% three years after the completion of the initial transaction. The
respective MoU was performed in the context of the Bank’s
strategy to expand its operations through partnerships in the
fintech space.
Cease of Group’s operations in London, Malta & Egypt
NBG London Branch
In May 2021, the Bank decided to cease its operation in the U.K.
through its branch and is currently under liquidation.
NBG Malta Ltd
In October 2021, the Bank decided to cease its operation in Malta.
Subsequently, on 11 August 2022, the subsidiary surrendered its
banking licence and was placed into liquidation. Therefore, its
name was changed from NBG Bank (Malta) Ltd to NBG Malta Ltd
since it no longer qualifies as a financial institution.
NBG Egypt Branch
In May 2021, an official approval was received by the Central Bank
of Egypt for the downsize and ultimately cease of the Bank’s branch
operations in Egypt (see below “
2019 Revised Restructuring Plan
”).
NBG Egypt Branch is currently under liquidation.
Financial highlights
Adjusted Group profit after tax (“PAT”) from
continuing operations at €881 million with Core
Operating Profit (“COP”) up by 56.7% y-o-y
Adjusted Group profit after tax (“PAT”) from continuing operations
reached €881 million for the year ended 31 December 2022, with
COP up by 56.7% y-o-y, driven by the improved core income by
14.5%, a sharp decrease in loan impairments by 20.5%, and
operating expenses base discipline despite increasing inflationary
pressures (up by 2.8% y-o-y).
Net Interest Income (“NII”) at Group level increased by 13.0% y-o-y
to 1,369 million, mainly reflecting positive loan volume effects,
complemented by accelerating repricing in 2022 and partially offset
by a reduction in loan interest income due to NPE deleveraging and
lower NII from targeted longer-term refinancing operations
(“TLTROs”).
Net fee and commission income reached €347 million, expanding
by 20.9% y-o-y, supported by significant growth in all business
areas, driven by higher transaction demand.
Operating expenses remained contained
Operating expenses for the year ended 31 December 2022
increased by 2.8% y-o-y to €805 million on the back of strong cost
containment efforts, despite the inflationary pressures.
Depreciation and administrative and other operating expenses
(“G&As”) increased by 5.5% and 7.5% respectively y-o-y, mainly
due to charges driven by a reinforced IT investment strategy, and
inflation pressures, respectively.
Domestic performing loans additions accelerated in
FY.22 at €8.0 billion
Disbursements in FY.22 reached at €8.0 billion, pushing net
domestic Performing Exposures (“PE”) higher by €2.5 billion y-o-y
driven mainly by corporates.
ECB exposure to significantly lower funding terms
under TLTRO, while domestic deposit increased by
savings deposits
The Bank continues to benefit from ECB’s temporary liquidity
measures and its participation to the favourable ECB funding as of
31 December 2022, amounted to €8.1 billion (31 December 2021:
€11.6 billion), consisting exclusively of TLTROs, while the Group’s
customer deposit balance stood at €55.2 billion, an increase of €1.7
billion compared to 31 December 2021, mainly due to saving
deposits. Bank’s secured interbank funding transactions decreased
by €1.1 billion compared to 31 December 2021 and amounted to
€0.1 billion as at 31 December 2022.
During the year ended 31 December 2022, interest income
recorded in respect to funding transactions with ECB and included
in Net Interest Income amounted to €19 million (FY.21: €113
million, accrued at a rate of -1%).
2019 Revised Restructuring Plan
The Group was subject to European Commission rules on European
Union (“EU”) State aid in light of the aid received from the Hellenic
Financial Stability Fund (“HFSF”) and the Hellenic Republic. These
rules were administered by the DG Competition. Under these rules,
the Bank’s operations were monitored and limited to the
operations included in the 2019 Revised Restructuring Plan, which
aimed to ensure the Bank’s return to long term viability. The 2019
Revised Restructuring Plan was approved on 10 May 2019 by the
European Commission.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
18
The 2019 Revised Restructuring Plan included a number of
commitments to implement certain measures and actions (the
“2019 Revised Restructuring Plan Commitments”). The 2019
Revised Restructuring Plan Commitments related both to domestic
and foreign operations of the Group. Differentiations to the 2015
Restructuring Plan which expired on 31 December 2018 related to
the deepening of the Bank’s operational restructuring, some
amendments on the commitments and deadlines, as well as a
commitment to sell the remaining stake (32.66%) in NBG Pangaea
REIC (currently Prodea Investments S.A.) in substitution for the
commitment to dispose of Stopanska Banka A.D.-Skopje.
For domestic operations, the 2019 Revised Restructuring Plan
Commitments related to constraining operating expenses, including
the number of personnel and branches. In particular, the
Commitments included the following:
A further reduction of the number of branches in Greece to 420
(by the end of 2019) and 390 (by the end of 2020). As at 31
December 2020, the Bank had reduced its branches to 365. The
Commitment has been attained.
A further reduction of the number of employees in Greece to
8,600 as at 31 December 2019 and 8,000 as at 31 December
2020. As at 31 December 2020, the Bank had reduced the
number of employees at domestic level to 7,762
1
. The
Commitment has been attained.
A further reduction of total operating expenses in Greece to
€845 million as at 31 December 2019 and €800 million as at
31 December 2020. As at 31 December 2020 such costs
amounted to €768
1
attained.
Divestment of domestic non-banking activities: Ιn May 2019 the
Bank had completed the sale of its remaining stake in NBG
Pangaea REIC (currently Prodea Investments S.A.). Regarding the
NIC, the transaction was closed on 31 March 2022 (see above
“
Sale of a majority equity holding in Ethniki Hellenic General
Insurance S.A
.”). The Commitment has been attained.
Divestment from international operations: The Bank reduced its
international activities, by disposing certain subsidiaries in the
years 2016 - 2019. The only non-complete divestment from
international operations, since the Bank complied with its
commitments with the run-off of NBG Cyprus assets, relates to
the Bank’s branch network in Egypt. In May 2021, an official
approval was received by the Central Bank of Egypt for the
downsize and ultimately cease of operations in Egypt.
As communicated by DG Competition in June 2022, the
restructuring period and the mandate of the Monitoring Trustee for
NBG has ended, as NBG complied with its commitments with the
exception of the run-off of NBG Egypt. It is noted, that the size of
asset deleveraging remaining in NBG Egypt is very limited
compared to the overall assets NBG deleveraged, and that NBG
exceeded the overall level of deleveraging required by the
commitments of its Restructuring Plan. The effort to complete the
wind-down of NBG Egypt is in progress.
Regulatory developments
2022 Climate Risk Stress Test
For the 2022 Climate Risk Stress Test that the Bank successfully
completed the 2022, see section “
Risk Management - Management
of Risks - Climate and environmental Risk
”.
MREL Requirements
See section “
Economic and Financial Review – MREL
Requirement
s”).
Other
The Initiative 1821 - 2021 and the 200th anniversary
of the beginning of the Hellenic Revolution
In light to its 181 year long history, NBG which is closely linked to
the creation and development of the Hellenic Republic and to the
philhellene individuals responsible for establishing the Bank – has
turned to the 15 charitable and cultural institutions to provide
input, recognizing their highly commendable work and contribution
to the wider Greek community, in order to create a focus of
understanding for the celebration of our National rebirth.
The purpose of the "Initiative" and its actions
The “Initiative 1821-2021” (www.protovoulia21.gr) regarding the
celebration since the outbreak of the Greek Revolution aims to
highlight a message of unity of purpose, declaring that history
should be a source of inspiration for the future. In this spirit, the
preparation of a variety of actions and events for the celebration of
our National Rebirth, in Greece and abroad, began in 2019,
including conferences, exhibitions, music concerts, educational -
research programs and scholarships, as part of the planned
objectives for the three years 2020-2022.
Ukraine crisis
On 24 February 2022, Russia invaded Ukraine where in addition to
the humanitarian crisis it has caused in the region, it has had
negative economic consequences for the global economy mainly
through higher energy and commodity prices that have fuelled
higher inflation which has produced weaker confidence in
households and business. The extent of these effects will depend to
a great extent on how the conflict evolves. The invasion also
escalated tensions between Russia and the U.S., NATO, the EU and
the U.K.. The US has imposed and is likely to impose material
additional, financial and economic sanctions and export controls
against certain Russian organizations and/or individuals, with
similar actions implemented by the EU and the U.K. and other
1
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
19
jurisdictions. In 2022 the U.S., the EU and the U.K., each imposed
packages of financial and economic sanctions that, in various ways,
constrain transactions with numerous Russian entities and
individuals; transactions in Russian sovereign debt; investment,
trade and financing to and from certain regions of Ukraine. For a
further information on the effect of the Ukrainian crisis see section
“
Economic and Financial Review – Global Economy & Financial
Environment
”.
The Group has taken all necessary measures to comply with
sanctions imposed by the competent authorities. Management is
closely monitoring the developments and assessing periodically the
impact that these may have on the Group’s operations and
financial position.
The Group has an insignificant exposure in any positions in
securities, interbank transactions (secured or unsecured),
derivatives, or commercial transactions, related to Russia or
Ukraine, or to the Ruble, or with any Bank or subsidiary that is
domiciled in these countries.
The Group also examined indirect exposure through its corporate
loan portfolio. Corporate clients that were analysed had one of the
following characteristics:
o
Business Activity
: Companies that sell their
products/services in the affected countries or have local
presence through subsidiaries/ branches.
o
Supplier(s):
countries.
o
Shareholder(s)
: Key shareholder(s) or final beneficiary or
other key stakeholder is of Russian nationality/citizenship.
As a result of the Ukrainian crisis, the expected impact from first
order effects on the underlying obligors, that meet the above
criteria, was deemed immaterial.
The Group also continuously invests in infrastructure to prevent,
detect, and mitigate cyber threats. NBG already has in place a
robust framework supported by experienced staff and appropriate
IT infrastructure to minimize the probability of a cyber intrusion.
From the onset of the crisis, NBG has proactively augmented this
framework with a significant number of preparedness and security
enhancement actions which will help reduce the impact of any such
attacks.
For further information see Section “
Risk Management - Other Risk
Factors - Cyber security
”.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
20
Following a clear mandate from NBG’s Board of Directors, NBG
launched a rigorous Transformation Program in the second half of
2018, committing to the delivery of aspiring financial and
operational targets. Through more than four years of
implementation, the Transformation Program has enabled the
delivery of impressive results in terms of core profitability – fully
in line with the Bank’s financial and business targets – and
tangible improvements to NBG’s business and operating model.
The Transformation Program has been designed and is being
delivered across Workstreams, each led by a senior executive of
the Bank.
Delivering the Transformation
Since its launch, the Transformation Program has been structured
into six-month Seasons. This setup helped gain the necessary pace
in the early years and ensured that the Bank remained focused to
the targets.
From 2022 onwards, recognizing the increased maturity and
ownership of the involved employees, the Transformation Program
transitioned to an annual planning horizon. The Bank maintains its
agility as new Initiatives can be added to the Transformation
Program, while existing ones are adjusted or removed throughout
the year. Each annual cycle begins and ends with a Ceremony,
aiming to review progress made, acknowledge achievements, and
embed lessons learned from each Season in our future planning. In
parallel, a strong Transformation Program Office (“TPO”) has been
established to:
Ensure coherent and consistent planning of Workstreams and
Initiatives, including prioritisation of activities and tracking of
programme-level interdependencies.
Provide project and Transformation Program Management
discipline, support and best practices across Workstreams and
Initiatives.
Deploy a thorough, timely and effective progress (and risk)
reporting mechanism.
The TPO is a fundamental factor in executing the Transformation
Program in a coordinated, timely and disciplined manner.
Transformation
Program
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
21
Transformation Program achievements in 2022
During 2022, more than 1,000 staff have been directly involved in the Transformation Program in at least one of c. 40 initiatives and c.90
sub-initiatives, achieving significant tangible results across all Workstreams:
Workstreams
Key achievements in 2022
Best Bank for our
Clients
●
Operationalization of Ethniki 2.0 program, playing
existing Corporate and Investment Banking (“CIB”) customers and their ecosystems, leveraging the National
Recovery and Resilience Facility (“Greece 2.0”).
●
Roll out of new extroverted Small Business service model in branches and implementation of high impact
productivity improvements in Small Business lending process.
●
Increase in cross-selling and creation of new fee generation streams in Corporate, with a
comprehensive and
tailor-made offering
of services
through the Corporate Transaction Banking (“CTB”) unit.
●
Enhancement of cross-selling in Retail through improved offering in terms of cards, investments &
bancassurance products and analytics-driven campaigns.
●
Acceleration of customers’ migration to digital channels, through the offering of new solutions and customer
experience enhancements:
–
For individuals
: NBG cards live on Google wallet / Apple Pay, new transactions and products available on
internet & mobile banking.
–
For businesses/ corporates
: new business mobile app live and enhancements in online legalisation
services; digital migration to online platforms (Client Trade & i-FX) and continuous development of
innovative solutions via Application Programming Interfaces (“APIs”).
●
Acceleration of branch network transformation, incl. operations streamlining and customer-centricity/ sales
training to all Branch staff.
Healthy Balance
Sheet
●
Revision of Troubled Assets Unit operating model, following completion of NPE clean up.
●
New business setup (“Specialized Asset Solutions”) to capture emerging revenue generation opportunities in
the emerging ecosystem of servicers and investors (e.g., acquisition financing, Real Estate Operating
companies (“REOCo”) financing).
●
Successful containment of NPE flows and organic reduction of legac y NPEs.
Efficiency & Agility
●
Targeted efforts to optimise operating model and capacity efficiencies in selected Head Office functions.
●
Targeted efforts to optimise non-staff costs, including real estate spend factoring in a more flexible working
model.
Technology &
Processes
●
Core Banking System (“CBS”) replacement program in progress.
●
Continued reengineering of core process centralizations (e.g., Small Business lending) and automations (e.g.,
Corporate workflow).
●
Expansion of usage of new technologies, incl. Robotics Process Automation (“RPAs”), Artificial Intelligence
(“AI”), Optical Character Reader (“OCR”) and new Banking Accounting Engine deployed.
People,
Organisation &
Culture
●
Conclusion of the new Performance Management System (“PMS”) for 2021 performance cycle and variable
payment compensation for 2021, in line with PMS results.
●
Delivery of learning programs with a focus on the frontline (incl. customer service & sales training for
branches, and Credit underwriting for Corporate) in the context of NBG Academy.
●
Completion of 2nd Employee Engagement Survey and launch of related action plans.
●
Deployment of SAP Success Factors as the new core HR IT system.
●
Review of talent pool and succession planning across the organisation.
ESG & Enterprise
Risk Management
●
Baselining of Greenhouse Gas (“GHG”) emissions (incl. financed emissions for 2020 - 2021).
●
Roll-out of ESG assessments for new originations and renewals in Corporate.
●
Ongoing alignment to UNEP FI Principles of Responsible Banking (“PRB”) and EU Taxonomy.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
22
Strategic Priorities for 2023-2024
Between now and 2024 the Bank will pursue the following strategic priorities:
Workstreams
Strategic priorities until 2024
Best Bank for our
Clients
●
Boosting revenue generation through an increased focus on cross-selling and fee generation
opportunities in Retail banking, and through deepening large client relationships and broadening the
SME client base in Corporate banking:
–
In the case of Retail banking, we continue to strengthen our relationship managers’ frontline
(primarily for the Small Business and Premium segments), a stronger focus on fee-generating
products (e.g., investment products, cards and bancassurance), and further enhancement of sales
capacity through third party partnerships (e.g., retailers, e-commerce, agents).
–
In the case of Corporate banking, we are strengthening the relationship managers’ frontline with a
comprehensive set of commercial tools, enabling them to spend more time on sales of lending and
non-lending products in collaboration with the Bank’s CTB unit.
–
Across Retail and Corporate, we are enhancing our range of solutions to enable the transition of
households and businesses to a more sustainable model. A core part of our strategy remains to
support Greek businesses in capturing opportunities in the context of the Recovery & Resilience
Facility (“RRF”), including funding for investments in the context of green transition.
●
Across segments, advanced analytics use improves clients’ targeting, while digital channels and
strategic partnerships with third parties play an increasingly important role in onboarding, engaging,
and selling to customers.
Specialized Asset
Solutions
2
●
Completing the clean-up of the bank’s balance sheet, targeting NPEs of c.3% of gross loans by 2025,
while retaining best-in-class capital ratios.
●
Capturing revenue generation opportunities in the emerging ecosystem of investors and servicers (e.g.,
acquisition financing, REOCo financing).
Efficiency & Agility
●
Further enhancing efficiency and productivity through continuous improvements in the Bank’s business
and operating model.
●
Reducing areas of high external spend such as real estate, factoring in a flexible working model.
Technology &
Processes
●
Implementing the new CBS to enable revenue generation and cost efficiencies in the medium term,
enhancing digital and data infrastructure, as well as migrating to a cloud-enabled environment.
●
Rolling out the required infrastructure to transition to a paperless operating model across the
organisation.
●
Further optimizing core processes (both customer-facing and internal) through simplification,
centralization, and automation levers (incl. the application of new technologies, such as RPAs, AI and
OCR).
People,
Organisation &
Culture
●
Continuing to modernise Human Resources processes and practices to attract, mobilise and incentivise
our people.
●
Further developing talent through flagship leadership programs for high potential talent, coupled with
“on demand” learning and targeted curricula for priority roles.
●
Rolling out comprehensive actions to enhance the Bank’s corporate culture and desired behaviours in
line with our core values.
Climate &
Environment
●
Incorporating climate-related and environment considerations in the Bank’s business strategy, incl.
setting specific targets with respect to our direct and indirect GHG emissions.
●
Capturing business opportunities in green, sustainable and transition finance, as households and
businesses transition to a more sustainable model.
2
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
23
●
Addressing the business challenges and managing the risks emanating from climate and environment
change.
●
Adhering to the highest disclosure standards, including non-financial and ESG reporting.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
24
Key developments in the
Macroeconomic and Financial
environment
Global Economy & Financial Environment
Greek Economy
Τhe Macroeconomic Environment and the
Banking Sector in North Macedonia
Financial Results of 2022
Going concern
Trend information
MREL Requirements
Events after the reporting period
Business Overview
Retail Banking
Corporate and Investment Banking
NPE management (Legacy Portfolio) &
Specialized Asset Solutions
Other Activities
Related Party Transactions
The Independent Auditors
Key developments in the Macroeconomic
and Financial environment
Global Economy & Financial Environment
The global economic recovery lost steam in 2022
Renewed lockdowns in China and elevated geopolitical
uncertainty due to the war in Ukraine took their toll on
economic activity
Monetary policy tightening was substantial in order to curb
multi-year high inflation
The European Central Bank
Raised all three policy interest rates by 250 bps in 2022.
Announced an anti-fragmentation tool (Transmission Protection
Instrument, (“TPI”)) to reduce, inter alia, the volatility of euro
area sovereign bond spreads.
Discontinued net asset purchases under Asset Purchase
Program (“APP”) & Pandemic Emergency Purchase Programme
(“PEPP”) and announced the reduction of APP repurchases.
The Federal Reserve
Increased the target range of the Federal Funds Rate by 425 bps
in 2022.
Economic and
Financial Review
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
25
Communicated that ongoing increases in the target range will
be appropriate.
Reduced US Treasury and agency Mortgage -Backed securities
holdings by USD 474 billion to USD 8.0 trillion.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
26
Global growth slowed in 2022, with risks
remaining to the downside
The global economic recovery lost steam in 2022, with real gross
domestic product (“GDP”) increasing by +3.4% from +6.2% in 2021
mainly due to less favourable financial conditions amid faster-than-
expected monetary policy tightening to stem elevated inflation.
Global inflation accelerated to +8.8% in 2022 (annual average) from
+4.7% in 2021, albeit the pace of increase has decelerated in the
final quarter of 2022. In addition, lockdown measures in China to
control COVID-19 infections contributed significantly to the
slowdown of domestic and offshore economic activity. Finally, high
energy costs due to the war in Ukraine and related sanctions on
Russia took their toll on households’ purchasing power and
businesses’ investment decisions.
In that context, the euro area economy has decelerated noticeably
in the second half of 2022, though the slowdown of activity was
less-than-anticipated, as fiscal support was substantial, households
drew down their stock of pandemic-related savings and businesses
adapted to the energy shock. Overall, real GDP growth was +3.5%
in 2022 compared with +5.3% in 2021. The consumer price index
(“CPI”) rose to +8.4% (annual average), with broadening price
pressures, after averaging +2.6% in 2021. In the United States
(“US”), growth slowed to +2.1% in 2022 from +5.9% in 2021 as,
inter alia
, fiscal policy turned restrictive and financing conditions
tightened considerably. Private consumption and business
investment contributed positively. On the other hand, residential
investment has recorded seven quarters of contracting activity and
net exports subtracted from overall growth, as imports increased
faster than exports. CPI Inflation, after rising by +4.7% (annual
average) in 2021, continued to post remarkable increases in 2022
(+8.0%). Finally, economic activity in China recorded its second-
slowest pace since 1976. Real GDP growth decelerated to +3.0% in
2022 from +8.4% in 2021, mainly due to zero-tolerance policies
against COVID-19 and the related drag in activity, as well as the
property market slowdown. CPI
Inflation increased by +2.0%
(annual average)
Monetary policy has tightened in response to surging inflation. The
Federal Reserve (“Fed”) increased its main policy interest rate by
425 basis points in 2022, while stepped down the pace of interest
rate increases to 25 basis points in February 2023, bringing the
target policy rate to a range of 4.5% to 4.75%. The Fed
communicated that ongoing increases in the target range will be
appropriate. According to the Summary of Economic Projections
(“SEP”, December 2022), participants in the Federal Open Market
Committee expect an increase in the Federal Funds rate to 5.1% by
end-2023. In addition, net large-scale asset purchases ceased in
March 2022 and the Fed began reducing US Treasury and agency
Mortgage-Backed securities holdings in June 2022. The Fed will
continue reducing its holdings by USD 95 billion per month, with
the balance sheet standing at USD 8.4 trillion or 33% of 2022 GDP
from USD 8.8 trillion in 2021.
In Europe, the ECB increased all three policy interest rates by 250
basis points in 2022 as inflation pressures have been amplified by
the war in Ukraine, the recovery of the economy post COVID-19
and tight labor markets. The ECB stayed the course in February
2023 with another 50 basis points increase to 3.0% (Main
Refinancing Operations), 3.25% (Marginal Lending Facility) and
2.5% (Deposit Facility Rate). According to the ECB, there is a strong
commitment for an additional interest rate hike of 50 basis points
in March 2023, and then it will evaluate the subsequent path of
monetary policy.
Regarding large-scale asset purchases, the ECB discontinued net
asset purchases under the Pandemic Emergency Purchase
Programme (“PEPP”) in March 2022 and under the APP as of 1 July
2022. The ECB announced in December 2022 that APP repurchases
will be reduced by €15 billion per month, on average, from March
to June 2023, while the subsequent pace will be determined over
time. The ECB will continue to reinvest in full the principal
payments from maturing securities by applying flexibility across
jurisdictions in the PEPP portfolio until, at least, the end of 2024.
Moreover, the favourable cost of funding conditions for
commercial banks, applicable under targeted longer-term
refinancing operations (TLTRO III) ended, as expected, on 23 June
2022. In addition, the ECB adjusted upwards, in October 2022, the
interest rates applicable to targeted longer-term refinancing
operations (TLTRO III) to reinforce the transmission of policy rates
to bank lending conditions, which tightened substantially further in
the fourth quarter of 2022 for loans to businesses and to
households, according to the ECB Bank Lending Survey, offering
banks at the same time additional voluntary early repayment dates.
As a result, the balance sheet of the Eurosystem has declined to
€7.9 trillion or 59% of 2022 GDP from €8.6 trillion in 2021.
At the same time, the ECB announced the TPI, to safeguard the
smooth transmission of monetary policy across jurisdictions. The
TPI can be activated to counter unwarranted, disorderly market
dynamics that pose a serious threat to the transmission of
monetary policy across the euro area. The ECB will be able to
purchase public sector, mainly, bonds in jurisdictions experiencing
a deterioration in financing conditions not warranted by country
specific macroeconomic fundamentals. The scale of TPI purchases
is not restricted ex ante, and it will depend on the severity of the
risks facing monetary policy transmission, while the ECB accepts
“pari passu” treatment with respect to bonds purchased by the TPI.
Potential purchases under the TPI will regard securities with a
remaining maturity of between one and ten years. In addition, the
member states in which the ECB may conduct purchases under the
TPI should pursue sound fiscal and macroeconomic policies,
whereas the following criteria will be applied in the decision
process for the activation of the TPI: i) reliable fiscal policy and not
being subject to an excessive deficit procedure; ii) absence of
severe macroeconomic imbalances; iii) fiscal sustainability and; iv)
complying with the commitments submitted in the recovery and
resilience plans for the Recovery and Resilience Facility and with
the European Commission’s country-specific recommendations.
2022 saw a rise in risk aversion, as surging inflation, central banks’
shift towards more restrictive stance and war-inducing uncertainty
led risk premia and government bond interest rates simultaneously
higher. Global equities recorded significant losses, with the Morgan
Stanley Capital International All Country World Index (“MSCI
ACWI”) declining by -19.8% in USD terms. In a similar vein,
speculative grade corporate bond spreads widened both in the USD
and the EUR spectrum by circa 170 basis points to 480 and 495
basis points, respectively, amid growing risks to the economic
outlook. Nominal long-term Government bond yields increased in
the United States by 237 basis points to 3.9%, while the inversion
of the yield curve -- short term interest rates above long-term bond
interest rates -- reignited recession concerns. German ten-year
nominal Government bond yields rose by 272 basis points to 2.5%,
their highest level since 2011, with euro area periphery
Government bond spreads widening modestly. The euro
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
27
6.2
5.9
5.3
3.4
2.1
3.5
2.9
1.4
0.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
World
US
Euro area
World Real GDP Growth
2021
2022
2023
%
Source:IMF,January 2023
depreciated by -6% against the US Dollar to 1.07, sliding below
parity in the second half of August, though appreciated in nominal
trade-weighted terms by +1.5% in 2022.
A deteriorating economic
environment, particularly in China, took its toll on industrial metals’
prices, whereas energy and agricultural commodities increased,
albeit solely due to gains in the first half of the year. Overall, the
S&P/GS Commodities Index increased by +26% in the first half,
followed by losses of -14% in the second half of 2022. Having said
that, investors’ risk appetite has improved since October 2022 due
to falling inflation rates, lower natural gas prices and the significant
relaxation of COVID-19 restrictions in China, which paves the way
for a complete re-opening of the economy. Global equity prices
have moved higher by +7% since the start of 2023 (“MSCI ACWI”),
with banks at the forefront, and Global Aggregate bond prices have
increased by +2.5% for the same period.
2023 outlook
Looking forward, the cumulative tightening of financial conditions
and the gradual unwinding of fiscal stimulus, is expected to slow
down the growth rate of the global economy to a subpar +2.9% in
2023 from +3.4% in 2022, according to the International Monetary
Fund (IMF). Risks are tilted to the downside, including a faster-
than-anticipated tightening of monetary policy due to persistently
elevated inflation that fails to engineer a soft landing for the global
economy. The prolonged war in Ukraine remains a source of
concern, with any escalation jeopardizing to disrupt gas supplies to
Europe, hurting, initially, the industrial sector of the economy and
pushing up global energy prices, fueling inflation further.
Moreover, the emergence of new COVID-19 variants could cause
renewed economic and supply-chain disruptions. On the positive
side, a potential unwinding of policy-related and international
trade-related uncertainties, could improve the pace of growth of
the global economy, as balance sheets of households and
corporates are lacking the large imbalances that have been built
ahead of the Global Financial Crisis. Moreover, the earlier-than-
expected re-opening of the Chinese economy implies,
inter alia
, a
faster recovery for the international trade, amid easing supply
bottlenecks.
World GDP Growth
Greek Economy
Resilient demand, high private sector
adaptability and fiscal overperformance in 2022
set a solid starting point for 2023
The upward trend in economic activity has been sustained
until end-2022, setting a favorable starting point for 2023,
with the Greek economy successfully responding to the
challenges of the energy/inflation crisis.
Employment increased by 5.4% y-o-y in 12M.22 and the
unemployment rate fell to a 13-year low of 11.6% in
December 2022, with some first signs of modest wage
increases.
The adaptability and resilience of the competitive corporate
sector to sharply rising production costs, combined with
strengthened pricing power, on the back of supportive
demand conditions, led corporate profits (gross operating
surplus, “GOS”) to a 10-year high in 9M.22, of €22 billion.
The revival of tourism and services activities in general,
following the full lifting of COVID-19 restrictions, brought
revenue back to their all-time high of 2019.
Bank lending growth to the private sector accelerated to
6.3% y-o-y in December 2022 – a 14-year high (since July
2009) – on the back of a new surge in credit to non-financial
corporations (+ 11.8% y-o-y) in December 2022.
House prices increased by 11.2% y-o-y in 3Q.22, posting a
cumulative appreciation from their lowest point in 3Q.17
(during the 10-year crisis) of 39.3%.
Economic growth in Greece is expected to exceed the euro
area average in 2023, despite a considerable slowing in
economic growth in European economies, buoyed by
several resilient supportive factors.
Persistent energy-related challenges and underlying
inflation, high geopolitical uncertainty, the lagging impact of
the ongoing monetary policy tightening and limited margins
for additional fiscal support shape the background of key
risk factors for 2023.
The Greek economy remained on a strong growth trend in 9M.22
and is expected to have outperformed the euro area average by a
wide margin in FY.22, for a second consecutive year (GDP growth of
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
28
0
2
4
6
8
10
12
IE
PT
MT
SI
PL
CY
EL
ES
AT
NL
IT
EA
BE
FR
LT
LU
FI
LV
DE
SK
Real GDP (%, annualchange 9M.22)
%, y-o-y
Source: European Commission
0
5
10
15
20
25
30
-16
-12
-8
-4
0
4
8
12
16
20
Dec-12
Aug-13
Apr-14
Dec-14
Aug-15
Apr-16
Dec-16
Aug-17
Apr-18
Dec-18
Aug-19
Apr-20
Dec-20
Aug-21
Apr-22
Dec-22
Employment growth (left axis)
Unemployment rate (right axis)
%
y-o-y
Source:ELSTAT
5.9% y-o-y in 9M.22, compared with 4.0% for the euro area average
and estimated FY.22 growth of 5.3% and 3.5%, respectively)
3
.
Activity losses related to the pandemic have been rapidly reversed,
with FY.22 GDP, in constant price terms, expected to exceed its
2019 level by 3.7%
4
. The economy exhibited remarkable resilience
to the severe energy-related headwinds and the rapid transmission
of imported inflation pressures, capitalizing on i) the adaptability of
the private sector; ii) the revival of tourism and services activities in
general; iii) the additional fiscal support against energy cost
pressures, which exceeded the euro area average in 9M.22; and iv)
the substantial liquidity reserves of financially sound firms and
households.
GDP growth in euro area economies (9M.22, in constant price
terms)
Private consumption increased by 9.5% y-ο-y and gross fixed capital
formation by 10.2% in 9M.22, with the latter climbing to an 11-year
high of 13.6% of GDP
5
. Labour market conditions remained highly
supportive, offsetting part of the inflation hit on disposable income.
Employment increased by 5.4% y-ο-y in 12M (+79K additional
employees y-ο-y in December and +207Κ on average 12M) and the
unemployment rate fell to a 13-year low of 11.6% in December
6
. A
modest adjustment in total private sector wages, bolstered by a
9.7% increase in the minimum wage, which is estimated at c. 2.5-
3%
7
.
Labor market trends
Positive wealth effects and increasing non-wage income supported
household spending. Residential real estate prices, which account
for more than 80% of household wealth, rose by 10.4% y-o-y in
9M.22 (+11.2% y-o-y in 3Q.22), recording a cumulative appreciation
of nearly 40% between 3Q.17 and 3Q.22, thus reducing the
distance from their all-time high in 2008 to c. -20%
8
. Moreover, the
mixed income of households (including proceeds from
entrepreneurial activity, rental, interest, and dividend income) is
estimated to have increased at a double-digit pace for a second
consecutive year (12.2% in 9M.22), at the highest level since 2009
in EUR billion terms
9
.
Gross fixed capital investment increased in 9M.22 (by a solid 10.2%
y-o-y), rising to an 11-year high of 13.7% of GDP, whereas the
capacity utilization rate in industry remained significantly above its
10-year average in 12M.22, with survey data on current production
trends and new orders remaining at expansion territory, above
their respective long-term average levels, despite a modest
weakening compared to 9M.22
10
.
Business turnover increased by 20.5% y-o-y in November 2022
(+42% in 11M.22 or +€102 billion y-o-y in the same period) and
exhibited strong growth, even when excluding industrial sectors
affected by energy-price volatility such as fuels and electricity
(+19.8% y-o-y in November and 27% in 11M.22)
11
. Similar, trends
are observed in the euro area suggesting that the impact of energy
and inflation shocks on activity has proven less severe than initially
feared until end-2022.
GDP: level in billion euro & annual change
3
rd
Commission, Autumn Forecast, November 2022 & NBG Economic Analysis
estimates
4
5
rd
6
7
107675/2021 & NBG Economic Analysis estimates
8
rd
2022
9
rd
10
rd
Greece, Bulletin of Conjunctural Indicators, November-December 2022 &
European Commission Business, and consumer survey database, December
2022
11
and 3
rd
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
29
-20
-15
-10
-5
0
5
10
15
20
34
36
38
40
42
44
46
48
50
4Q.18
1Q.19
2Q.19
3Q.19
4Q.19
1Q.20
2Q.20
3Q.20
4Q.20
1Q.21
2Q.21
3Q.21
4Q.21
1Q.22
2Q.22
3Q.22
%, y-o-y
€billion
GDP (constant prices, left axis)
GDP growth (y-o-y, right axis)
Source:ELSTAT
-15
-10
-5
0
5
10
15
20
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
9Μ.22
-15
-10
-5
0
5
10
15
20
y-o-y
Gross operating surplus & mixed income
Total compensation of employees
Source: ELSTAT
0
1
2
3
4
5
6
7
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
11M.22
TotalFDI inflows in Greece (€bn)
€billion
Source:Bank of Greece
Profits from entrepreneurial activity, as measured by the economy-
wide gross operating surplus, excluding mixed income, increased at
a 10-year high of €45 billion in 9M.22, exhibiting the highest growth
rate in 20 years
12
Gross operating surplus & mixed income
and labor compensation
(national accounts)
The buoyancy of business profits reflects the adaptability and
resilience of the competitive corporate sector to sharply rising
production costs, combined with strengthened pricing power,
aided by favourable demand conditions.
This encouraging performance has been achieved despite a
strongly negative terms-of-trade shock which, has been combined
with strong demand, leading to a further widening of the current
account deficit to the highest level since 2011 (-8.5% of GDP in
11M.22). This deficit is expected to narrow gradually, as global
commodity prices start to subside and import-demand normalizes,
following a spike in 2021-22, offsetting the pressure from a
potential weakening in external demand. Moreover, FDI inflows to
the Greek economy climbed to a new all-time high of €6.2 billion in
11M.22, already exceeding the FY.21 record of €5.4 billion. This
trend sets the stage for additional business and economic
transformation going forward as well as for increased, growth-
enhancing, gross fixed capital formation. A part of these inflows
(€1.3 billion in 9M.22) has been directed to real estate investments,
adding strength to the market
13
.
Greece: Total foreign direct investment (FDI) inflows
Leading indicators of economic activity have exhibited higher-than-
expected resilience in 4Q.22 and January 2023. Economic
sentiment increased to a 4-month high of 104.9 in January 2023
(101.3
in 4Q.22), exceeding the euro area average for a 9th
consecutive month, and reversing the sudden deterioration in
October 2022
14
.
Industrial and retail trade confidence posted healthy m-o-m
increases, services exhibited resilience, whereas consumer
confidence returned at pre-war levels in December 2022 and
January 2023 with an improvement in households’ assessment of
their financial situation in 2023 and a drop in consumers’ inflation
expectations to the lowest point since February 2022.
Economic sentiment indicator
12
rd
13
2022
14
December 2022
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
30
50
60
70
80
90
100
110
120
130
50
60
70
80
90
100
110
120
130
May-19
Sep-19
Jan-20
May-20
Sep-20
Jan-21
May-21
Sep-21
Jan-22
May-22
Sep-22
Jan-23
Greece
Euro area
index
* Horizontal lines refer to
15-yearaverages
Source:European Commission
-4
-2
0
2
4
6
8
10
12
14
-4
-2
0
2
4
6
8
10
12
14
Dec-19
Mar-20
Jun-20
Sep-20
Dec-20
Mar-21
Jun-21
Sep-21
Dec-21
Mar-22
Jun-22
Sep-22
Dec-22
y-o-ypps
Other
Food contribution in CPI (pps, left axis)
Fuel contribution in CPI (pps, left axis)
Electricity contribution in CPI (pps, left axis)
CPI inflation (y-o-y, right axis)
Source:ELSTAT
Greece’s responsiveness to mounting energy challenges was
remarkable, reflected in a 14.3% y-o-y decrease in electricity
demand in December 2022 (-11.2% y-ο-y on average since the
beginning of the war in Ukraine)
15
, as well as by a 19% y-ο-y decline
in natural gas import volume for domestic consumption, combined
with a swift substitution of Russian gas for LNG in the national
energy mix (drop in Russian NG share in total NG imports by 33% y-
o-y in 4Q.22).
16
Energy & food contribution in CPI growth (year-over-year)
Consumer price inflation, as measured by the Harmonized Index of
Consumer Prices (“HICP”), has showed signs of slowing (8.6% y-o-y
in 4Q.22 and 7.6% in December 2022, compared with 11.5% in
3Q.22), declining below the euro area average of 10% y-o-y in
4Q.22, for the first time since end-2021. This improvement
primarily reflected falling energy prices with early signs of
stabilization in core inflation in December 2022 (deceleration to
5.9% y-o-y from 6.8% in November 2022), although food price
growth accelerated to a new high of 15.4% y-o-y in December
2022(12.8% y-o-y in 3Q.22)
17
.
The ongoing deceleration in imported commodity price inflation
and lower energy prices (brent crude oil at 89 USD/barrel in 4Q.22
and 82 USD/barrel in January 2023, compared with 101 USD/barrel
in 3Q.22, and natural gas at 95 €/MWh in 4Q.22 and 62 €/MWh in
January 2023, compared with 200 €/MWh in 3Q.22
18
) bode well for
a slowing in CPI inflation, in 2023, to an estimated average of 5.6%
despite the persistence of core inflation (5.4% y-o-y in 4Q.22 and
2.8% in 9M.22)
19
.
Strong cyclical tailwinds bolstered the fiscal performance vis-à-vis
the upwardly revised fiscal targets for 2022, despite the additional
energy support measures in 4Q.22 and early 2023. Fiscal support to
households and firms in FY.22 is estimated at c. €11.5 billion, in
gross value terms, mostly comprising of subsidies to electricity bills
and other energy-related support
20
. State Budget primary deficit
stood at 3.3% of GDP, 0.9 pps (€1.8 billion) in 12M.22 below the
annual Budget 2023 target (-2.5% of GDP lower compared with
12M.21 or -36% y-o-y) pointing to further upside risks for 2022
fiscal outcome, which is going to be finalized in April 2023. The
Government Budget for 2023 targets to a 0.7% of GDP primary
surplus, from an estimated primary deficit of -1.6% in 2022.
This target is achievable with relatively limited impact on activity,
due to the fiscal and macroeconomic overperformance in 2022 and
related positive carryover effects. Greece’s public debt as % of GDP
declined by an outstanding 24.7 pps, on an annual basis, in 3Q.22 –
the largest improvement among euro area countries – to 178.2% of
GDP. For 2023, a further decline to 159.3% is expected according to
the 2023 Budget
21
.
Primary and total general government balance (ESA 2010)
15
Energy Bulletin, December 2022
16
17
database, December 2022
18
databases
19
2022 & NBG Economic Analysis estimates
20
Analysis estimates
21
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
31
-16
-12
-8
-4
0
4
-16
-12
-8
-4
0
4
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022e
2023f
General government primary balance (% GDP)
General government total balance (%GDP)
% GDP
surplus
decifit
Sources:ELSTAT, Hellenic Ministry of Finance, Eurostat, IMF
-10
0
10
20
30
40
50
60
70
-4
0
4
8
12
16
20
24
28
Dec-18
Feb-19
Apr-19
Jun-19
Aug-19
Oct-19
Dec-19
Feb-20
Apr-20
Jun-20
Aug-20
Oct-20
Dec-20
Feb-21
Apr-21
Jun-21
Aug-21
Oct-21
Dec-21
Feb-22
Apr-22
Jun-22
Aug-22
Oct-22
Dec-22
Corporate bonds (€ bn, cumulative net flows, left axis)
Credit to non-financial corp. (€ bn, cumul. net flows, left axis)
Private sector deposits (€ bn, cumulative net flows, right axis)
Sources:Bank of Greece, Thompson Reuters
€billion
€billion
0,0
1,0
2,0
3,0
4,0
5,0
0,0
1,0
2,0
3,0
4,0
5,0
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
10yr Government bond yield
10yr Government bond spread over bund
%
Source: Bank of Greece
Despite the turnaround in the global monetary policy cycle,
financial conditions in Greece remained favorable, with
bank credit growth at 9.1% y-o-y in December 2022, led
by credit to corporations (+12.3% y-o-y), outpacing the
euro area average since 2Q.22, for the first time since
2011 (excluding the 2020 spike which has been driven by
COVID-19-related State guarantee schemes)
22
.
Net bank lending, net corporate bond issuance and bank deposits
(cumulative increase)
Greek banks’ deposits and loans recorded further considerable
increases in 2022. Private sector deposits increased by
€8.6 billion in 12M.22, with the outstanding balance
reaching a 12-year high of €189 billion in total, despite
the further strengthening of private consumption. Bank
lending growth to the private sector accelerated to 6.3%
y-o-y in December 2022 – a 14-year high (since July 2009)
– buoyed by a new surge in credit to non-financial
corporations to 11.8% y-o-y (the highest pace for 2022
next to the +12.3% in September). The cumulative net (of
repayments) flow of bank loans to non-financial
corporations in 12M.22 amounted to €6.8 billion, which is
the highest annual reading in 14 years, aside from the
State guarantee driven rebound in 2020 (€6.7 billion
)23.
10-year Greek government bond yields rose to 4.1% in H2.22,
from 2.6% in H1.22 and 0.9% on average in 2021, due to
the tightening in monetary policy conditions and a broad-
based re-rating of sovereign bond prices to the new
inflation conditions. The spread over bund increased to
240 bps in H2.22 from 220 bps in H1.22, declining further
to 206 bps in January 2023, with the yield of the German
10-year bond also increasing to 1.8% in H2.22 from 0.6%
in H1.22 and -0.33% in 2021. Greece’s sovereign
securities remained eligible in the context of flexible
reinvestments of capital of maturing bonds under PEPP
(after its expiration in March 2022).
The combined impact of the above-described supportive
factors underpinned Greece’s resilient growth
performance in 2022, with the annual GDP growth
expected to exceed 5% according to NBG, official sector
and consensus estimates, accompanied by increasingly
positive economic spillovers across firms and households.
Gross 10-year Greek Government bond yield & spread over bund
Greek Macro Outlook More Resilient than the euro
area average in a Challenging 2023
Greece’s growth performance in the current year, but also in the
medium term, is expected to be supported by the following factors:
◾
Solid investment growth, on the back of a strong pipeline of
private investment and increasing impact of the Recovery &
Resilience Facility (“RRF”). Gross fixed capital formation is
expected to rise at a double-digit pace, for a 3rd consecutive
year, bolstered by positive demand prospects, high capacity-
utilization rates and strong profitability. Moreover, the
impact from the investment of RRF will start to show from
2023 onwards, due to time lags between the funds’
absorption (€11.1 billion of grants and loans, cumulatively,
until early-2023, corresponding to about 1/3 of total available
22
2022 & European Central Bank, Statistical Data Warehouse, December 2022
23
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
32
funding for Greece) and the final capital spending
24
. Similarly,
the €14 billion of inward Foreign direct investment (“FDI”)
investment in 2020-22 sets the stage for a further
strengthening of fixed capital formation
25
.
◾
The positive momentum of services activities and especially
tourism, which are less sensitive to terms-of-trade shocks,
input costs and personal income fluctuations. The experience
of previous years suggests that external demand for tourism
services − especially from euro area countries − exhibits
resilience to economic variability but is highly sensitive to
geopolitical or health-related risks. Moreover, the pricing
power of Greek firms for 2023 has been significantly
strengthened by the outstanding performance of Greek
tourism in 2022, which bodes well for a further quality
upgrade of related services looking forward.
◾
The underlying fiscal stance will remain supportive towards
the most vulnerable population groups and SMEs, to cushion
the impact of energy price volatility and core inflation on
their disposable income. Substantial financial resources,
committed in the 2023 Budget, under far more conservative
forecasts of energy price trends, compared with the latest
market developments. Moreover, the estimated
overperformance in 2022 implies a stronger positive
carryover effect, increasing the country’s fiscal capacity. The
return to a primary surplus of 0.7% of GDP
26
supportive cyclical factors.
◾
Modest wage increases, for the first time since the beginning
of the Greek crisis. The strength of the labor market recovery,
in conjunction with the increase in the minimum wage in
2022, supplemented by an additional hike in 2023 of the
order of 5.5% to 9.5%, could entail an adjustment of average
private sector hourly wage of c. 4-4.5% y-o-y in 2023,
following an estimated 2-3% in 2022
27
. The transmission to
average private sector wages will be partial, and weaker than
the euro area average, preserving Greece’s cost
competitiveness gains in the previous decade.
However, growing concerns, over the impact on 2023 growth, of
protracted energy-related uncertainty, persistent core inflation,
and the ongoing tightening of monetary policy, led to a significant
downward revision of official and private sector forecasts. Although
energy challenges were more manageable in recent months, due to
a combination of slowing demand, supply-side adjustments, and
favorable weather conditions in Europe, it will take time for the
European energy market to reach a new stable equilibrium.
The ambitious EU climate agenda, along with still sizeable
geopolitical risks and heightened uncertainty regarding the speed
of demand recovery in China, could also entail additional energy
risks in 2023 but also prompt more ambitious restructuring efforts
and new investments.
Looking forward, although headline inflation has shown signs of
moderation recently, due to the easing of energy and supply-chain
pressures by end-2022, underlying inflation pressures remain
persistent due to the extreme intensity of the original shock and its
complex transmission process through the production chain.
Moreover, fiscal policy is expected to play a less active role in
supporting activity, as most economies attempt to rebalance their
fiscal positions, following three years of decisive expansion, in
order to cushion the impact of COVID-19 and energy-related
shocks. The inflation drag on disposable income (including lagged
effects from 2022), will remain sizeable in Greece during 2023,
despite the expected moderation in inflation, translating into a
material slowing in consumer spending which will also tend to
weaken the firms’ pricing power from their current robust levels.
The ongoing monetary policy tightening by the ECB will be fully
transmitted to lending costs, over the course of 2023, weighing on
the financial position of households and firms as well as on their
willingness to finance their consumer and investment decisions
through new lending. However, the effective interest rates in the
Greek economy will remain below their long-term averages with
the policy rate increases partly offset by declining country-specific
risk premia and a further risk re-rating of the economy.
Overall, the Greek economy seems well positioned to deal with the
above challenges and continue outperforming its euro area peers,
capitalizing on sustainable growth catalysts and the strong
momentum built in 2021-22. For 2023, the growth rate is expected
to range from 1.0%-2.0%, according to NBG forecasts and the latest
official and private sector consensus estimates, being surrounded
by a broadly symmetric balance of risks, assuming no further
escalation of geopolitical stress. It should be noted that economic
activity in 4Q.22 seems to have held up better than expected in
both Greece and the euro area economies, possibly setting a higher
starting point for 2023.
Furthermore, there are upside risks from a better-than-expected
energy price scenario, as Greece had been more negatively
affected by the energy shock during 2022, due to its relatively high
dependence on energy imports as well as on commodity intensive
inputs, which rallied in 2022. Current trends in energy and non-
energy commodity markets point to a significant easing of
pressures in most segments, compared to the estimates made in
2H.22. A crystallization of this positive trend could pose an upside
risk for 2023 growth. On the other hand, a recurrence of energy
tensions would bring the Greek economy to a disadvantaged
position entailing additional downside risks for economic growth,
given the decreasing capacity for large scale fiscal interventions.
24
25
2022
26
27
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
33
-16
-12
-8
-4
0
4
8
12
16
20
-16
-12
-8
-4
0
4
8
12
16
20
Q1:19
Q2:19
Q3:19
Q4:19
Q1:20
Q2:20
Q3:20
Q4:20
Q1:21
Q2:21
Q3:21
Q4:21
Q1:22
Q2:22
Q3:22
Q4:22
Real GDP (y-o-y % change)
CPI (y-o-y % change, aop)
Source: National StatisticalAgency of North Macedonia
0
3
6
9
12
15
18
0
3
6
9
12
15
18
Dec.
'16
Dec.
'17
Dec.
'18
Dec.
'19
Dec.
'20
Dec.
'21
Sep.
'22
Non Performing Loans (% of Gross Loans)
Capital Adequacy Ratio (%)
Source: National Bank of the Republic of North Macedonia
The Macroeconomic Environment and the
Banking Sector in North Macedonia
28
Against a challenging backdrop, North Macedonia
saw GDP growth slowing down markedly in 2022,
with economic activity returning to pre-COVID-19
levels, albeit with a significant delay compared
with regional economies
GDP growth is estimated to have eased to 2.4% in 2022 from 3.9%
in 2021, a performance weaker than that of regional economies and
the EU (up by an estimated 4.2% and 3.6%, respectively). Gross
capital formation was the main driver of economic growth,
reflecting strong build-up in inventories, in the face of record-high
global energy and food prices, as well as higher public investment.
At the same time, following the re-opening of the economy from
COVID-19 restrictions, and thanks to bold policy support, private
consumption added markedly to economic growth, with its
contribution, however, shrinking significantly compared with 2021,
due,
inter alia
, to surging inflation. Unsurprisingly, against the
backdrop of solid domestic demand and persistent global supply
disruptions, net exports remained a large drag on overall growth.
GDP Growth & Inflation
Amid higher global energy prices, external accounts deteriorated
markedly in 2022, with the current account deficit widening to an
estimated 7.5% of GDP from 3.1% in 2021. Importantly, stronger
non-debt generating foreign direct investment inflows, together
with the proceeds from sovereign debt issuance and financing
support from the EU and the IMF, helped to more than cover the
external financing gap, leading FX reserves to rise by €220 million to
€3.9 billion in December 2022 (covering c. 4 months of imports of
goods and non-factor services).
The performance of the banking sector remained
strong in 2022, despite the challenges lying ahead
Released figures show that the banking sector’s profits increased to
€174 million (annualised) in the first three quarters of 2022 from
€157 million the same period in 2021, with the (annualised) return-
on-average-equity ratio firming slightly to a 13.7%, at the same
time, on stronger pre-provision operating income. Indeed, net
interest income rebounded in the first three quarters of 2022, in
line with solid growth in business volumes (credit to the private
sector increased by 9.7% y-o-y in September against a rise of 6.3%
in September 2021), while net non-interest income continued to
grow at a robust pace, at the same time, driven by net fees and
commission income and FX gains. Stronger net operating income
was only partly offset by higher provisioning charges. Indeed, with
asset quality pressures already building up (the ratio of non-
performing loans to total gross loans rose slightly to 3.3% in
September from a low of 3.1% in early-2022) against an
increasingly challenging economic backdrop, banks increased
provisions markedly in the first three quarters of 2022, albeit from
a low base. Importantly, the sector remained well-capitalised, with
the capital adequacy ratio improving slightly to 17.7% in September
2022, well above the minimum regulatory threshold of 8.0%.
Banking System Fundamentals
Amid still elevated inflation, GDP growth is set to
remain subdued in 2023, in line with weakening
private consumption and net exports
With inflation projected to remain in double-digits until mid-year,
biting seriously into households’ (real) disposable income and
savings, and consumer confidence having already plunged, private
consumption cannot but be significantly affected in the period
ahead. The withdrawal of several policy measures supporting the
labour market should also take a toll. At the same time, in view of
slowing economic growth in the EU (especially in Germany, which
absorbs c. 50% of the country’s total exports), net exports should
remain a large drag on overall growth, despite weaker private
consumption growth and the envisaged easing in strains in global
28
Agency and the Ministry of Finance of the country and processed by the
NBG.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
34
supply chains. In this environment, economic growth should be
mainly underpinned by fixed investment, which is expected to
continue overperforming, led by the public sector.
Policies are not envisaged to sustain economic growth in 2023.
Indeed, amid still elevated inflation and a wide current account
deficit, the central bank cannot but maintain its tightening bias,
raising further its key rate (to a projected 5.25% by mid-year from
4.75% in December 2022 and a low of 1.25% in early-2022). At the
same time, fiscal consolidation is set to continue, albeit at a slow
pace, following the gradual withdrawal of stimulus measures, with
the budget deficit projected to narrow slightly to 4.0% of GDP in
2023, still above its pre-COVID-19 level.
All said, GDP growth is projected at a mere 1.6% in 2023. By then,
the output loss relative to its pre-pandemic growth path would
amount to slightly less than 10.0%, nearly double that of regional
economies, reflecting, inter alia, the higher share of energy and
food in domestic household spending, the economy’s low energy
efficiency as well as the relatively smaller scope for policy support,
amid a sharp deterioration in external imbalances. As far as the
latter is concerned, the precautionary 2-year agreement with the
IMF should provide a critical safety net, in the event external
financing conditions deteriorate abruptly. Worryingly, political noise
is set to remain elevated in the period ahead, mainly surrounding
the controversial deal settling the country’s long-standing dispute
with Bulgaria, which eventually, however, enabled the launch of
accession talks with the EU. Against, this backdrop, and with the
opposition pressing for early elections, further delays in the EU
accession progress may be forthcoming.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
35
Financial Results of 2022
FY.22 Adjusted Group profit after tax (“PAT”) from continuing
operations at €881 million with Core Operating Profit (“COP”)
(excluding trading and other income) at €694 million up by 56.7%
y-o-y
, reflecting the following key Income Statement movements:
●
NII up by 13.0% y-o-y to €1,369 million
, mainly reflecting
positive loan volume effects, complemented by accelerating
repricing in 2022 and increased income from securities, partly
offset by Frontier deconsolidation
and lower TLTRO NII.
●
Net fees and commissions at €347 million in FY.22 up by
20.9% y-o-y
, supported by significant growth in retail and
corporate fees, in all business areas, driven by higher
transaction demand.
●
Net trading income/(loss) & Net other income/(loss) at €344
million in FY.22 down by 14.9%,
incorporating the gains
in derivatives and Bilateral Credit Valuation Adjustment
(“BCVA”) following the increase in the interest rates during
FY.22, while FY.21 benefited mainly from the non-recurring
gains from the Greek government bond swap transaction
amounted to €209 million.
●
Operating expenses up by 2.8% y-o-y
(down by 0.2% in
personnel expenses, G&As up by 7.5% and depreciation up by
5.5%) on the back of strong cost containment efforts, despite
the inflationary pressures. Depreciation and G&A’s increased
mainly due to charges driven by a reinforced IT investment
strategy and inflation pressures, respectively.
●
Loan impairments for FY.22 at €217 million from €273 million
in FY.21,
down by 20.5%, in alignment with the improvement of
the macroeconomic environment.
●
FY.22 Cost: Core Income drops to 46.9% vs 52.2% a year ago
,
driven by strong and sustainable core income recovery and
operating expenses base discipline despite increasing
inflationary pressures.
●
FY.22 Cost of Risk
at 70bps on a normalising trend, consistent
with formation trends and high coverage. Total CoR in FY.21
stood at 98 bps.
NPE performance
●
NPE balance
at Group level as at 31 December 2022 was
reported at €1.8 billion
,
recording a total reduction of €0.5
billion compared to 31 December 2021, mainly attributed to
write-offs and inorganic actions (see section “
Key Highlights-
NPE reduction plan
”).
●
NPE ratio
decreased to 5.2% as at 31 December 2022,
compared to 7.0% (or 13.6% pro-forma, including the senior
bond from the Frontier securitization) as at 31 December 2021.
●
NPE coverage ratio
increasing from 77.2% as at 31 December 2021.
Group deposits up 3.2%
Group deposits
increased by €1.7 billion and stood at €55.2
billion as at 31 December 2022 compared to 31 December
2021. The increase is mainly attributed to the increase of the
most stable deposit class (the savings deposits & other) by €3.0
billion, more than offsetting the decrease of time deposits and
current and sight accounts.
CET1 ratio at 16.6%
●
FY.22 CET1 and total Capital ratio
respectively, exceeding the OCR ratio of 11.75% for 2022, post
capital relief measures, and 14.50% for 2023.
Income Statement
| Group
€ million
FY.22
FY.21
Y-o-Y
Net interest income
1,369
1,212
13.0%
Net fee and commission income
347
287
20.9%
Core Income
1,716
1,499
14.5%
Net trading income / (loss), Net other
income/(loss) and Share of profit / (loss)
of equity method investments
344
404
(14.9)%
Total income
2,060
1,903
8.3%
Operating Expenses
(805)
(783)
2.8%
Core PPI
911
716
27.2%
PPI
1,255
1,120
12.1%
Loan impairments
(217)
(273)
(20.5)%
Core Operating Profit
(1)
694
443
56.7%
Operating Profit
1,038
847
22.6%
Adjusted profit before tax
1,038
847
22.6%
Taxes
(157)
(15)
>100%
Adjusted PAT (continuing operations)
881
832
5.9%
EVO transaction (net of tax)
237
-
-
Discontinued Operations, Non
controlling interest and other
2
35
(94.3)%
PAT attributable to NBG equity
shareholders
1,120
867
29.2%
(1)
Excludes Net trading income / (loss), Net other income/(loss) and Share of profit /
(loss) of equity method investments.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
36
Key Ratios | Group
Profitability
FY.22
FY.21
Δ
NIM (bps)
213
212
1
Cost of Risk (bps)
70
98
(28)
Cost: Income
39.1%
41.1%
(2.0)%
Cost: Core Income
46.9%
52.2%
(5.3)%
Liquidity
31.12.2022
31.12.2021
Δ
Loans-to-Deposits ratio
58.6%
56.9%
1.7%
LCR
259.2%
242.0%
17.2%
NSFR
146.3%
134.5%
11.8%
Capital
31.12.2022
31.12.2021
CET1 ratio
16.6%
16.9%
RWAs (€ billion)
36.4
34.7
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
37
Going concern
Going concern conclusion
The Board of Directors concluded that the Bank is a going concern
after considering:
a)
the significant recurring profitability both at Group and Bank
level;
b)
the current access to the Eurosystem facilities with significant
collateral buffer and LCR and NSFR which is well above 100%
and the current level of ECB funding solely from TLTROs
(already down to €8.1 billion as at 31 December 2022 from
€11.6 billion as at 31 December 2021);
c)
the Group’s CET1 ratio at 31 December 2022 which exceeded
the OCR requirement;
d)
the extensive and continuous fiscal and monetary support of
the European and Greek authorities in response to the
unprecedented COVID-19 crisis in 2020 and 2021;
e)
the activation of new fiscal measures in response to the
inflation pressures; and
f)
the Group’s insignificant exposure to Russia and the Ukraine
and Management’s actions with respect to the Ukraine crisis
(see Section “
Key Highlights - Key achievements and
significant developments of NBG Group in 2022 – Other -
Ukraine crisis
”.
Profitability
The profit attributable to NBG equity shareholders for the year
ended 31 December 2022 amounted to €1,120 million and €813
million for the Group and the Bank, respectively whereas the
corresponding amounts for the year ended 31 December 2021,
amounted to €867 million and €729 million, respectively.
Earnings per share increased from €0.86 in 2021 to €0.97 in 2022
for the Group whereas the corresponding figure for the Bank
increased from €0.80 in 2021 to €0.90 in 2022.
Liquidity
Αs at 31 December 2022, funding from the ECB solely through
TLTROs decreased to €8.1 billion from €11.6 billion as at 31
December 2021 (solely TLTROs). Additionally, as at 31 December
2022, the Bank’s decreased its interbank transactions with foreign
financial institutions to €0.1 billion from €1.2 billion as at 31
December 2021, while the Bank’s liquidity buffer stood at €25.9
billion (cash value), with the LCR and NSFR ratios well above 100%.
Capital adequacy
The Group’s CET1 and Total Capital ratios as at
31 December
2022
were 16.6% and 17.7%, respectively, exceeding the OCR ratio of
11.75% for 2022, post capital relief measures, and 14.50% for 2023
(see Note 4.6 of the Annual Financial Statements).
Macroeconomic developments
Please refer to section above “
key developments in the
Macroeconomic and Financial environment - Greek Economy
”, for
Greece’s economy performance in 2022 and the prospects for
2023.
Events after the reporting period
There are no events after the reporting period.
Dividends
Greek Law 4548/2018 active from 1 January 2019, on Greek
companies imposes restrictions regarding the dividend distribution.
Specifically, the law states that no distribution to the shareholders
can take place, if, on the day on which the last financial year ends,
the total shareholders’ equity, is or, following this distribution, will
be, lower than the amount of the share capital increased by the
reserves the distribution of which is forbidden by law or the Articles
of Association, credit balances in equity (i.e. OCI) the distribution of
which is not allowed and any unrealised gains of the year. Such
share capital amount is reduced by the amount for which payment
has not yet been called.
In addition, the law states that any distributable amount shall not
exceed the profit of the last financial year on an unconsolidated
basis net of tax, plus retained earnings and reserves the
distribution of which is allowed and has been approved by the
General Meeting, less any unrealised gains of the year, any losses
carried forward and any amounts required by law or its Articles of
Association to be allocated towards the formation of reserves.
Due to the above restrictions there were no distributable funds
available by the end of 2021, therefore the Annual General
Meeting of the Bank’s shareholders held on 28 July 2022 took no
decision on dividend distribution.
With regards to the dividend distribution out of the 2022 profits,
the Bank’s Board of Directors will assess its proposal to the Bank’s
Annual Shareholders General Meeting of 2023 on the basis of the
ongoing discussions with the supervisory authorities.
Furthermore, pursuant to the HFSF Law, and in line with the
provisions of the Relationship Framework Agreement with the
HFSF, the HFSF’s representative who sits on the Board of Directors
has a veto right over decisions regarding the distribution of
dividends.
Trend information
Economic activity in Greece remained on an upward trend in y-o-y
terms in 2022, showing resilience to the persistent headwinds from
high inflation and elevated geopolitical uncertainty and outpacing
the euro area average. The revival of tourism and other service
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
38
activities, additional energy-related fiscal support, and self-
sustained improvements in the labor market and business
environment cushioned the inflation drag on disposable income.
The Group’s FY.22 financial results demonstrate sustained strength
across business lines: core operating profit, up by 53.9% y-o-y, the
quality of our balance sheet nears that of European peers, with net
NPEs at €0.8 billion and no signs of pick up in NPE formation and
Group’s CET1 and Total Capital ratios at 31 December 2022 were
16.6% and 17.7%, respectively, exceeding the OCR ratio of 11.75%
for 2022, post capital relief measures, and 14.50% for 2023.
More specifically, in terms of profitability, 2022 Group Core
Operating Profit accelerated to €694 million (+56.7% y-o-y), while
profit for the period attributable to NBG equity shareholders
reached €1,120 million (+29.2% y-o-y). These developments reflect
NII growth mainly due to the expansion from our performing
exposures portfolio, which was up by €5.4 billion y-o-y, the
increased interest rates and increased income from securities.
Furthermore, it reflects impressive net fee and commission income
growth of 20.9% y-o-y, as well as steadily normalizing CoR of
c.70bps, against the remained contained Operating Expenses
despite high inflation.
With regards to asset quality, our domestic gross NPE exposure
dropped to €1.6 billion implying an NPE ratio of 5.1%. More
importantly though, organic NPE formation remains negative with
no sign of a pick-up in the default rate of our clients, previously
under State or Bank sponsored support programs, or the increase
in inflation.
Our capital buffers remain robust, with CET1 and total capital ratios
as at 31 December 2022 standing at 16.6% and 17.7%, respectively,
benefiting from strong profitability far exceeding credit RWA
expansion despite their sharp acceleration.
Looking ahead, the Group will continue building on the strong
momentum of the Group’s successful Transformation Program,
with a steady focus on supporting the clients and the Greek
economy navigate this critical period. At the same time, loyal to our
guidance and continuing on a strong track record of credibility, we
will continue delivering at or above the operational and financial
targets we have set, adding value to our clients and shareholders.
However, underlying inflation pressures remain high and appear
more persistent worldwide, leading major central banks (including
the ECB) to rapidly tighten their monetary policy, with markets
expecting additional interest rate hikes until mid-2023. This
tightening could affect macroeconomic and financial conditions
over the course of 2023, due to the timing lags in monetary policy’s
transmission mechanism. Adverse lagged effects, along with the
persistent impact of the energy crisis, underlie the weakened
economic outlook for the global and European economy for 2023.
The ECB, in its latest publication on macroeconomic forecasts,
expects a slowing of GDP growth in the euro area to 0.5% in 2023
from an estimated 3.4% in 2022. At the same time, the lift of
COVID-19 restrictions in China – which is expected to bolster
demand for commodities – and the continuation of the Ukrainian
crisis, in conjunction with other sources of geopolitical uncertainty
that remain relevant in 2023, could pose additional challenges as
regards the control of inflation and/or the resolution of energy
challenges, which could translate into weaker economic outcomes
in 2023 and beyond. An escalation of the crisis in Ukraine could
have far-reaching economic and social implications for Europe,
which are impossible to credibly quantify, in a period of limited
capacity for additional fiscal or monetary policy interventions.
On a positive note, the Greek economy is expected to outperform
the euro area in the baseline scenario for 2023, on the back of: i)
stronger carryover effects from its solid economic growth
momentum in 2022; ii) a more defensive position in the credit
cycle, with the business sector hardened by multiyear
restructurings and exhibiting lower leverage levels and sizeable
liquidity buffers, fueled further by significant 2022 activity; and iii)
increasing support from the Recovery and Resilience Facility
(“RRF”), providing a significant boost to fixed capital investment in
2023 (see above to the “
Economic and Financial environment -
Greek Economy
”)
.
MREL Requirements
Under the Directive 2014/59 (Bank Recovery and Resolution
Directive or (“BRRD”), as amended by Directive 2019/879 (BRRD II),
banks in the European Union are required to maintain a Minimum
Requirement for own funds and Eligible Liabilities (“MREL”), which
ensures sufficient loss-absorbing capacity in resolution. MREL
includes a risk- and a leverage-based dimension. MREL is therefore
expressed as two ratios that both have to be met: (i) as a
percentage of Total Risk Exposure Amount (“TREA”), (the “MREL-
TREA”); and (ii) as a percentage of the Leverage Ratio Exposure
(“LRE”), (the “MREL-LRE”).
Instruments qualifying for MREL are own funds (Common Equity
Tier 1, Additional Tier 1 and Tier 2), as well as certain eligible
liabilities (mainly senior unsecured bonds). Regulation (EU) No
806/2014 of the European Parliament and of the Council, as
amended by Regulation (EU) No 877/2019 of the European
Parliament and of the Council allows the Single Resolution Board
(SRB) to set in addition to the MREL requirement, a “subordination”
requirement, within MREL, against which only subordinated
liabilities and own funds count.
On 14 December 2022, the Bank as being identified by the SRB as
the Single Point of Entry (“SPE”) of the Group and the only entity
required to maintain an MREL capacity, received from the Bank of
Greece the SRB’s decision that should meet by 31 December 2025
an MREL target of 23.53% of TREA and 5.88% of LRE on a
consolidated basis. In addition, as per the MREL decision the Bank
should always meet from 1 January 2022 onwards, the requirement
of 14.79% of TREA and 5.85% of LRE on a consolidated basis, while
through the linear build-up of the requirements the Bank should
meet from 1 January 2023 onwards, the requirement of 16.91% of
TREA and 5.88% of LRE on a consolidated basis. To the above
requirements the capital buffer requirement (“CBR”) must be
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
39
added, which from 1 January 2022 stands at 3.25% increases to
3.50% from 1 January 2023 and expected to stand at 3.50% until 31
December 2025. The Bank meets both the LRE requirements and
the 1 January 2023 interim non-binding target of 20.41% of TREA
(including CBR).
Finally, according to the abovementioned SRB’s decision, no
subordination requirement is set for the Bank.
More specifically, in 2022 and in the context of the Bank’s strategy
to increase its MREL, the Bank proceeded with the following
issuances:
●
on 15 November 2022, the Bank completed the placement of
€500 million senior preferred bonds with a coupon of 7.25%
and a yield of 7.50%. The bonds mature in five years and are
callable in four years;
●
on 18 November 2022, the Bank completed the placement of
€150 million senior preferred bonds with a coupon and yield
of 6%. The bonds mature in 2.5 years and are callable in 1.5
years; and
●
on 25 November 2022, the Bank completed the placement of
GBP 200 million senior preferred bonds with a coupon and
yield of 8.75%. The bonds mature in 4.5 years and are callable
in 3.5 years.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
40
Business
Overview
Group main activities at a glance:
Continuing operations:
In Greece
Retail banking
Corporate and investment banking
NPE management (Legacy Portfolio) &
Specialized Asset Solutions
Other Activities
Real Estate
Global Transaction Services
Leasing
Factoring
Brokerage
Asset management
Outside of Greece:
Two banking subsidiaries:
- Stopanska Banka A.D.—Skopje (Stopanska Banka) and
- NBG Cyprus Ltd.
Leasing sector
- Leasing DOOEL Skopje.
Discontinuing operations:
In Greece
One subsidiary in the leasing sector
- Probank Leasing S.A.
The Bank is the principal operating company of the Group,
representing 94.7% of the Group’s total assets, excluding non-
current assets held for sale, as at 31 December 2022. The Bank’s
liabilities represent 97.1% of the Group’s total liabilities, excluding
liabilities associated with non-current assets held for sale, as at 31
December 2022.
Activities in Greece
The Bank is one of four systemic banks in Greece and it holds a
significant position in Greece’s banking sector. As at 31 December
2022, the Bank had a total of 345 Units (328 Branches including 9
Retail i-bank Tellerless, 16 Transaction Offices and 1 Branch Annex).
Furthermore, the Bank, through 1,485 ATMs (628 onsite and 857
off-site), offered an extensive network covering – even in the most
remote areas of the country.
Activities in Greece include the Bank’s domestic operations, Ethniki
Leasing S.A (Ethniki Leasing) and Ethniki Factors S.A. (Ethniki
Factors). The Group’s domestic operations accounted for 95.4% of
its total lending activities as at 31 December 2022 (the Domestic
Banking gross loans) and for 96.7% of its deposits (the Domestic
Banking deposits).
Retail Banking
2022 Highlights
Grew lending in Mortgages, Consumer and Small Business
Lending (“SBL”) (new disbursements +80.5% y-o-y for
mortgages, +21.1% y-o-y for fixed term Consumer loans
and +16.5% y-o-y for SBL).
Strengthened the Net fee and commission income by
+24.1% y-o-y, driven mainly by cards, payments and
investments, primarily as a result from the revival of
tourism transaction- based fees, new products and
services.
Doubled mortgage disbursements through brokers
compared to 2021, due to the revised commercial strategy,
implementing new competitive pricing, product flexibilities,
pursuing and activating existing partnerships with Brokers
and Intermediaries, as well as recruiting new ones.
High achievements in all metrics related to Business
Banking clientele resulting in exceeding market share
targets in new financing and achieving a substantial
increase in net fee and commissions income (+9.4%).
Design and introduction of an extrovert service model for
Business Banking clients. Third-party cooperation’s
continued dynamically, with accounting offices and
consultancy firms, aiming at promoting Small Business
Loans.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
41
Signed a significant number of new synergies of strategic
importance for Business to Business (“B2B”) financing. Full
absorption for the retail banking portfolio of the funds
disposed through the Pan-European Guarantee Fund
(“EGF”), for the financing of investment and business plans
of Small and Medium Enterprises (“SMEs”) and Small
Midcaps.
New workflow and organizational redesign incorporating
auto approval swim lanes was successfully implemented,
enabling improved productivity of Small Business
Underwriting Centers.
Successful implementation of Business Banking service
model in Branch Network resulting to high level customer-
centric service to Business Banking clientele.
Enhanced the Bank’s “Embedded Banking” strategy by
establishing a specialized sector with the mission to
manage and boost partnerships and promote holistic
financing solutions to individuals and small businesses (e.g.
financing through car dealers/ merchants/ retailers/
marketplaces/ real estate agents/ agricultural firms and
other).
With 5.7 million cards in circulation its leading position in
the domestic cards market was maintained. Cards issuing
and acquiring turnover grew by 16.3% and 23.6% y-o-y
respectively, including debit, credit and prepaid cards.
Completed the spin-off of our acquiring segment into NBG
Pay and the sale of 49% to EVO Payments Inc.
Significantly grew investment volumes by ~500 million (net
inflows from Mutual Funds of NBG Asset Management S.A.,
and participations for the “New Generation” investment
product) despite turbulent market conditions.
Private Banking maintained its Assets under Management
(“AUM”) base and Return on Asset (“RoA”) levels, despite
market appreciation and turbulence that forced central
banks to increase interest rates repeatedly throughout the
year.
Continued the branch network optimization in terms of
footprint, operating model, performance management,
image and service for the fourth consecutive yea
r.
In-branch transactions decreased by an additional 15.6% y-
o-y contributing to the migration to digital channels effort
(current share at 3.3% of the total monetary transactions
performed within the branch).
Strengthened digital business, proving in practice its
capability to lead the trends in the digital market: 10.5% y-
o-y increase in active users within the last 12 months,
accompanied by a notable 22.0% increase in the Bank’s
mobile application downloads and 31.4% increase in
transactions via mobile banking.
Enriched the digital banking offering with new
functionalities, such as FX transfers and request for
remittances’ fate/request for amendment via internet
banking and extended online repayment to a wide range of
lending products for business customers. The respective
enrichment further contributed to the enhancement of the
digital customer journey and the overall upgrade of digital
customer experience.
Enabled contactless payments via smartphones with
Google Pay & Apple Pay (expanded functionality for credit
cards).
Value Based Methodology (“VBM”) incorporation in regular
reporting and decision-making process.
Concluded strategic review of Mobile Application Waiz
related to account Information services and stopped
operations in August 2022. Reassigned all team members
within Bank’s Digital Banking, Digital Transformat ion and
Loyalty Divisions.
Strategic areas
The strategic objective of the Retail Banking Division is to fully
realize the Bank’s growth potential by delivering sustainable and
increasing results in line with the strategic priorities. The key
strategic areas towards achieving this objective are:
Exploitation of market opportunities as well as the Bank’s
untapped existing customer base potential for the promotion
of lending and fee-generating products & services, through a
revamped customer-centric growth model;
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
42
Restructuring, rationalization, mobilization and service
excellence of the Bank’s extensive, nationwide branch
network;
Delivery of new and innovative products & services, as well as
redesigning existing ones, to meet dynamic customer demand;
and
Leverage of technology to expand the Bank’s digital offering as
a means for providing enriched services to customers, enabling
further the migration of transactions to digital channels, and
providing an engine for robust future growth.
Activity
2022 was a stimulating year for the Retail Banking Division. The
increased geopolitical uncertainty, the resilient inflationary
pressures and the growing uncertainty over potential economic
recession, urged the Bank to react through innovation and
extroversion in order to overcome any impediments, showing
immediate reflexes along with effective leadership. Furthermore,
the Transformation Program continued at its pace, with a wide
range of strategic initiatives being delivered. Hence, in 2022, the
Retail Banking Division continued its overwhelming growth based
on the implementation of the following key initiatives:
Customer-centric service model:
The customer-centric service
model aiming to strengthen customer’s relationship with the
Bank, through increased customer penetration, services usage
and dedicated relationship managers for specific high-value
segments. Organizational business needs are supported by a
staffing model that is yearly redefined through continuous
education on customer experience and integrity selling.
Tellerless type of branches were also introduced during 2022.
To
reinforce customers’ loyalty and engagement, the
“Go4More” program provides an effective tool to promote
products and services to different clientele segments. Thus,
Go4more expanded further its merchant network and
upgraded its technical functionalities to respond to client’s
needs and preferences, strengthening the already aware profile
of the Bank in matters of society and environment. More
precisely, “THE GREEN CITY” recycling rewards program was
added to “Go4More” partners’ network, a collaboration that
enables members of both programs to convert the points from
recycling to Go4More points, supporting in practice Bank’s
commitment to a more sustainable tomorrow.
Mortgage Lending:
actions led to increased disbursements,
achieving Bank’s
targeted market share. More specifically:
●
Increased simplification of the end-to-end mortgage loan
disbursement processes, through centralization and
automation.
●
Optimized the “mortgage loan application” through
internet banking contributed to the further reduction of
Branch Network workload.
●
Adopted a competitive pricing of variable rates products ,
while adding mixed interest rate options for the funding
of Bank’s owned residential properties.
●
Enhanced sales further through existing and new
partnerships with main market brokers, providing new
competitive features.
Consumer Lending:
co-funded “EXOIKONOMO-AUTONOMO” program, regarding
energy efficiency and residence autonomy improvement, with
100% subsidy of interest rate and zero fees.
Moreover, the Bank achieved new partnerships with market-
leading retailers, capturing new marketplaces while grew
existing key partnerships. Finally, through coordinated actions,
it improved its overall positioning regarding car financing
through dealers/ third parties, focusing also on used vehicles.
Small Business Lending:
increased its disbursements and market share mainly due to
the design and implementation of a Small Business value-
proposition, which offers new products, while maintains its
customer-centric approach, supporting small businesses in
these challenging economic times.
Thus, the Bank continued its active participation and
cooperation with State and European programs, providing
products through the European Investment Fund (“EIF”) and
the Hellenic Development Bank (“HDB”). At the same time, it
managed to offer a more preferential pricing for green energy
investment projects, competitive in market respect, either
through special products, such as programs through European
Investment Bank (“EIB”) or through Bank’s own funds.
Moreover, in order to further strengthen disbursements on
business loans, the Bank actively started cooperation with
third-party companies, such as accounting offices, consultancy
firms, and other.
A significant initiative regarding repricing to Key Accounts
segment clientele, was extensively implemented during the
year.
Finally, during 2022, a redesign project was finalized
establishing a new operational model in the underwriting
process, improving the overall performance of Small Business
underwriting centers. Specifically, further automations and
improvements have been introduced in the collection of data
and information for applicants, the required documents
accompanying the applications and use of pricing applications.
In parallel, the new operational model offers a high level of
standardization in the underwriting process and reduces the
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
43
required “time to yes”. These enhancements were also
supported by revised credit sanctioning guidelines and manuals
which introduce alternative swim lanes in credit assessment
based on the fulfillment of a number of criteria related to
operational complexity of applications and the risk profile of
the SMEs / guarantors / applicant’s shareholders .
Cards (issuing & acquiring):
upgrade its products and achieve its strategic goal for
increasing the credit cards’ portfolio, launched three new credit
cards: silver, gold, black, adding new, attractive features such
as concierge service, a wide range of insurance benefits, free
FX, etc.
In addition, cards’ plastics were redesigned in vertical
orientation and aesthetically improved. Inclusion of the entire
card’s portfolio in digital wallets has been completed. The Bank
utilized all its resources, in order to alternate its processes for
card acquisition, so that they become simpler and more
customer friendly. Courier service is activated for sending and
collecting client documents as well as an application was
launched for remote documents signing (e-signature). The Bank
entered into a new strategic agreement with Mastercard
targeting the further growth of NBG cards portfolio.
Completion of the acquiring business carve out via our strategic
partnership with EVO Payments and the formation of NBG Pay
S.M.S.A.
Investments:
The Bank:
a)
Launched and continuously enhanced new and innovative
products and services, namely:
i.
Structured Investment Product “New Generation”:
initially launched with partial capital guarantee and
further enhanced to offer full capital guarantee plus
minimum guaranteed return at maturity.
ii.
Fixed-term Mutual Fund “Delos Extra Income” with
attractive annual dividend and return prospect at
maturity.
b)
Boosted investment fee revenue through the introduction
of a tiered entry-fee pricing scheme.
c)
Enhanced investments on digital offering, enabling
acquisition of selective investment products via internet
banking.
d)
Launched an “end-to-end investment journey”
reengineering initiative within the context of the Bank’s
Transformation program, which has already yielded
significant results.
Deposits:
The Bank:
a)
Expanded fund transfers digital capability whilst deploying
know-your-customer (“KYC”) controls.
b)
Increased deposit and intermediation fee revenues
through re-pricing of specific products and services, such
as deposit bundles and transfer of funds.
Bancassurance:
During 2022, new contract sales continued
recording growth (+ 19.5% y-o-y). In terms of product offering,
a new Unit-linked Single Premium product was launched with
80% “protection”. Moreover, a combined product proposal was
introduced for customers who participate in a new Unit-linked
Single Premium product, to exclusively participate in a “New
Generation” investment product with 100% capital guarantee
and minimum guaranteed return at maturity.
Approximately 26K collateral properties, from a loan portfolio
managed by third party servicer (“Cairo (I & II)” project), were
insured.
Furthermore, in the context of salesforce insurance sales
culture enhancement, classroom sales training courses were
conducted for Branch Network employees in close
collaboration with NIC. Finally, an end-to-end process was
designed for the promotion of Bancassurance products via
outbound telemarketing.
Private Banking:
Sales volumes and RoA remained at 2021
levels with clients rebalancing their portfolios towards lower
risk exposures. Market revaluation effect on AUM was fully
recovered by new AUM additions mainly from existing AUM
deepening and referrals coming from Premium segment.
Portfolio performance was enhanced by a prompt switch from
equities to selective short duration fixed income positions. Cash
and near cash positions presented an anemic increase
compared to 2021 levels.
Premium Banking:
The Bank:
a)
improved premium banking service delivery by (i)
designing and implementing clientele segmentation in a
way to provide discrete service model and value
proposition for each sub-segment, (ii) establishing
scheduled appointments as the leading offer of premium
banking service and (iii) conducting customer surveys;
b)
boosted investment product sales by designing and
implementing: (i) innovative investment products with
partial capital guarantee adapted to premium banking
customers, (ii) focused training workshops and pilot
training programs enhancing premium banking RMs and
(iii) investment training tool in order to allow premium
banking RMs to familiarize with the available options for
each investment profile and develop an integrated
investment plan for the premium banking customers
.
Mass segment:
The Bank:
a)
successfully implemented the annual informational and
promotional campaigns plan, that aimed at
communicating to customers at the right time, via all
available channels, the appropriate offer of high fee
generating products,
b)
strengthened the cybersecurity strategy by improving the
technical infrastructure, developing new card and
account protection functionalities, and implementing
information and education campaigns, aiming at
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
44
maintaining the balance between customer experience
and the transaction security.
Branch network:
migration of transactions to ATM/APS continued (currently 118
onsite lobby ATMs and 358 APSs), with targeted unit mergers,
aiming at saving resources and rationalizing its operation.
Specifically, 12 branch mergers were completed within 2022. As
of 31 December 2022, the NBG Network consisted of 345 Units
(328 Branches including 9 Retail i-bank Tellerless, 16
Transaction Offices and 1 Branch Annex).
Furthermore, the branch network has been equipped with new
PC terminals while the digital signature functionality was
extended. More than 3,000 employees were trained on
customer experience and sales. At the same time, key business
processes re-engineering continued, improving further the
customer experience and freeing time for dedicated staff to
concentrate on other customer-servicing / sales activities.
Indicatively, some of them are:
●
the
automation and/or redesign of transaction controls;
●
the centralization of small business import/export
documentation collection as well as that of corporate and
SMEs administrative activities;
●
the activation of the
eGov-KYC
and
●
the deployment of new scanner equipment at the branch
staff services.
Το
enhance the disengagement οf the Network from non-sales
related operations, a Special Operations Unit was established
and is
hosted in Stadiou Branch, carrying out specific non-cash
operations for selected customers of large branches.
Digital business:
offering to its business customers with new solutions and
functionalities; the Bank expanded online repayment to a wide
range of lending products and set instant notifications service.
In addition, FX transfers and request for remittances’ fate or
amendment were made available via internet banking for all
Bank customers. Furthermore, the Bank enabled contactless
payments via mobile with Google Pay and Apple Pay (expanded
functionality for credit cards), and boosted sales by adding new
products to its digital portfolio of products: new credit cards,
Money Box savings tool, New Generation investment and the
increase of the Express personal loan credit limit to €6
thousands.
Moreover, aiming at further protecting its customers against
phishing, the Bank enabled accounts and cards’ security
settings management via digital banking.
As part of the integration with eGov KYC, customers have the
capability to update their personal ID via digital channels
without uploading any documents or visiting a branch.
Finally, at the end of 2022, the Bank increased customer
convenience by offering all Bank’s cardholders the ability to
simply tap their card on any Near Field Communication (“NFC”)
enabled ATM.
Finally, the Retail Banking Division through its independent
Segment Risk & Control Sector, continued addressing the
following actions across the whole Retail Banking Function:
●
Enhancement of the Internal Control System.
●
Alignment of its activities with those of the Risk and Control
Functions, as well as Group Internal Audit.
●
Achievement of a high degree of readiness & compliance
against all regulatory obligations, as well as increased risk
and control awareness
.
2023 Priorities
In 2023, the Retail Banking Division aims are to concentrate on
providing solutions that will weather client uncertainty in an
increasingly volatile market environment; extending its 2022
success, to achieve the goals & targets set by the 2023-2025
Business Plan, along with the objectives of the Transformation
Program. Nonetheless, the Bank’s main strategic areas remain the
increase in business volumes, the strengthening of the relevant
market shares, the increase in net interest and commission income,
leveraging on all channels to deliver results, while creating value for
and collecting value from its robust / loyal customer base. Existing
partnerships will be strengthened, while extroversion will lead to
further broaden them to new business segments. Finally, the focus
on human resources of the Retail Banking Division will be fortified
through continuous training, technical support, and performance
rewarding. Specifically, there will be efforts to:
Gain market leadership in the “EXOIKONOMO 2021” program
regarding residential energy efficiency improvements;
participate in the new co-funded “SPITI MOU” program, as well
as in the new subsidized/co-funded “EXOIKONOMO-
ANAKAINIZO” program
regarding residential energy efficiency
improvements and renovation works;
mortgage operations/loan process to minimize “time to money”
and improve customer journey; revisit
variable interest rate
products,
increase the respective market shares; increase partnerships
with main market brokers.
Offer all types of consumer loans via internet and mobile
banking; increase consumer lending/ car loans through the
enhancement of existing partnerships as well as the formation
of new ones. The B2B platform and business web-based portal,
aiming at the upgrade of the customers’ as well as partners’
digital experience (customer journey), in 2023, is planned to
support the submission of loan requests for the customers of
other commercial partners beyond the car-selling companies.
Further increase the market share of Small Business loans and
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
45
offer support to small businesses through programs available
from State and European programs; enhance business financing
for the development of Photovoltaic Parks through both Bank’s
own funds as well as in cooperation with third parties (EIB, HDB,
EIF) which design special products for "green loans".
Additional improvements in Small Business underwriting centers
will be implemented to improve efficiency.
Assess all current developments through legislation and/or
Banking Authorities, in order to design and offer lending
products / services that have a climate – environmental
footprint.
Boost credit cards sales by: (i) exploiting the Bank’s clients base
as well as new distribution channels through the new
partnerships with big retailers; and (ii) leveraging on the
capabilities of the new automated procedures.
Expand the contactless card reader functionality and include all
NFC enabled debit, credit, dual, prepaid, and tokenized foreign
or domestic cards.
Strengthen and at the same time promote the investments and
bancassurance value proposition by introducing new products
with a focus on small business, life – investments products with
capital “protection”, as well as specialized products through
digital channels.
Capitalize on 2022 performance and Client satisfaction to
improve market positioning and AUM share. Enhance the open
platform with
third party underwritten structured products.
Continue exploiting opportunities for yield enhancement
available in the bonds market and closely monitor equities for a
trend reversal.
Exploit further the branch network as the key driver/ channel in
achieving results, with a focus on performance management &
service excellence. Increase tellerless branches operation and
extend queue management system.
Integrate gradually operations into paperless procedures. This
project includes training of network users on the new system, to
adopt change.
Maintain its significant market position on internet and mobile
banking, through continuously enriching its list of digital
products and services, focusing on active users and their
engagement with the Bank with new mobile banking application
/ redesign internet banking service dedicated to business and
corporate customers and new revamped mobile banking
application for retail customers.
Launch a new application aiming to attract new, young (18-30
years old) customers.
Increase investment products penetration by enriching value
proposition and improving, among others, Premium Banking
customer experience.
Redesign the Mass Segment overall strategic plan, implement an
improved branch organizational structure to support the new
service model, providing the mass segment team the necessary
tools, both training and systemic.
Keep on improving Business Banking service model through: (i)
Relationship Managers training, (ii) new product and services
development, (iii) improvement of customer experience in all
touchpoints, and (iv) leverage on all financing programs and
instruments to further increase financing footprint in SB market
shares.
Corporate and Investment Banking
2022 Highlights
Major transformation projects which concern the automation of
credit proposal, successful launch of the first modules of Corporate
Customer Relationship Management (“CRM”);
Value Based Methodology (“VBM”) incorporation in regular
reporting and decision-making process;
Design and initial groundwork of Corporate and Investment
Banking (“CIB”), training on new credit proposal and new Service
Model - Centralization of Corporate Service Unit (“CSU”);
Expansion in a majority of portfolio and especially at
transportation-storage, hotel & restaurants, energy- waste
management, etc;
RRF and European Guaranteed Bank (“EGF”) programs
implementation;
Business awareness & actions taken in relation to existing portfolio
quality and the direct implications of the Russia - Ukraine crisis.
Strategic areas
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
46
2022 has been a challenging year, with the
Russia - Ukraine crisis
,
inflation and interest rate increase
still being the primary factors
for economic development around the world. Many major clients
have prepaid their exposures as a result of excess liquidity
combined with the high
benchmark interest rates in global
markets.
The main objective of the Corporate and Investment Banking
(“CIB”) Division is to provide its clients with tailor made solutions,
acting as their main partner bank to facilitate their growth plans,
fully meet their needs in respect of credit and non-credit products
and services, while generating value for both sides of the banking
partnership, thereby ensuring sustainable revenues and
profitability of the Bank.
The Bank offers corporate clients a wide range of products and
services, including financial and investment advisory services,
deposit accounts, loans denominated in euro and other currencies,
foreign exchange services, standby letters of credit and financial
guarantees, insurance products, custody arrangements and trade
finance services.
Activity
CIB,
being aware of
difficult conditions that have arisen from post
COVID-19 pandemic years and
Russia - Ukraine crisis, keeps
providing a high level support to its customers, as it has done in the
past.
The ongoing transformation process has continued with
remarkable results during the latest seasons, focusing on becoming
the Bank of First Choice with superior coverage product, client
experience and processes. The coverage and service model
revamping has been an ongoing process that will offer a unique
experience through new digital capabilities and enhance our
business intelligence capabilities/ tools, in order to create
incremental value for our clients and our shareholders. In 2022, CIB
focused on the following areas:
Growing further the SME segment in strategic sectors with
growth potential;
Enhancing cross selling through Corporate Transaction Banking
(“CTB”) including digital solutions/ Application Programming
Interface (“APIs”);
Exploiting growth opportunities in the booming shipping sector
without sacrificing credit quality;
Taking a leading role in major projects and bond issuing deals
in various sectors, solidifying our position as a core player in
the custom transactions market;
Essentially, NBG’s Investment Banking is issuer advisor, joint
coordinator and lead underwriter in several IPO’s listing on the
ATHEX;
Incorporating the ESG assessment into the loan origination
process (ESG transaction assessment, ESG obligor assessment);
Leveraging the RRF for investment projects on Green
Transition and Digital Transformation;
Attracting specific programs for Green Investments such as EIB
Green Investment Program;
Effectively managing risks through timely initiatives and using
the know-how and experience of the staff in the division.
In 2022 the following were achieved:
Substantially increased revenue and profitability, surpassing
the Net fees and commission budget in all divisions, whilst
focusing on sustainable growth of the corporate portfolio;
Further expanded our digital capabilities with our clients,
providing several conveniences and services (e.g. online
repayments, digital onboarding), as well as enhanced our
internal reporting and management tools;
Participated on first syndication of RRF in Greece;
Launched the first modules of Corporate CRM.
Corporate banking includes the following divisions:
Large corporate:
Large Corporate portfolio is being handled by
two separate divisions with distinctly separate structure and
clientele. One division deals with large groups and companies
with €200 million annual turnover and above (on a consolidated
basis). The other division focuses in mid-capitalization companies
(with €50 million to €200 million annual turnover) and other
specialized categories (such as intragroups, Greek state related
entities etc.).
Structured Financing:
Following its structural reorganization over
the past years, the Structured Financing business is now a core
growth arm of the CIB. It focuses on originating, managing and
executing wholesale, event-driven primarily, financings across
four pillars:
Energy Project Finance
Real Estate Finance
Concessions Project
Finance & Advisory
Leveraged Acquisition
Finance
Transactions are mostly executed on a non-recourse basis, either
in bilateral or syndicated format, mobilizing the team’s in-house
placement capabilities, as required. Beyond customary support of
local sponsors, Structured Financing is particularly focused on
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
47
facilitating foreign direct investment of international sponsors in
Greece across the aforementioned financial sectors.
Medium-Sized Businesses (“SMEs”):
(
including businesses with annual turnover between €2.5 million
and €50 million, or Small Business with total exposure to the
Bank exceeding €1 million, or initially originated from the SME
Division
), was broadly affected by the ongoing pandemic and is in
need of proper support. The timely and targeted actions of the
Division are expected to assist our customers in weathering this
new financial challenge and keep our focus in tapping the
potential of the Greek economy.
In this deteriorated financial environment, the Bank’s long-term
strategy to ensure a steady flow of liquidity to businesses that
continue to invest in competitiveness and innovation, while
promoting extroversion is considered paramount in the Business
Plan’s agenda. At the same time, the Bank participated in several
favorable business financing programs in cooperation with
European organizations, such as the EIB and the EIF.
Shipping Finance:
owning nations with a long-standing tradition in shipping.
Shipping has been one of the most important sectors of the
Greek economy with the Bank being one of the key participants
(including local and international Banks) in Greek shipping
finance, the activities of which are carried out almost exclusively
through its dedicated Piraeus based unit.
The Bank has traditionally provided long-term financing, mainly
to shipping companies trading in the dry bulk and wet bulk
sectors and, to a lesser extent to liner and ferry businesses, with
a consistent view to minimizing risk and enhancing the portfolio’s
profitability.
During the past year,
several events have affected the shipping in
a local or even global scale,
disrupting major shipping routes and
supply chains
: overarching scarcity of equipment and available
space, congestions at ports due to increased consumer demand,
the Russian -Ukraine war leading to higher fuel prices
, COVID -19
induced lockdowns etc.
Despite the market instabilities deriving
from all these factors, the Bank maintained and exp
a
nded its
customer base
. The Bank monitors closely
all
developments
on the shipping industry
, with an increased
focus
in the energy
and commodities
prices
fluctuations, as well as
the
environmentally friendly and sustainable maritime transportation
trend
.
2023 Priorities
Leveraging the Bank’s strong human capital and product structuring
capabilities, a
lo
ng with a revised coverage and service model, CIB
focuses on:
●
Robustly growing the SME segment in strategic sectors with
growth potential;
●
Maintaining a leadership position in large Structured
Finance transactions (i.e. Energy with focus in renewable
energy, Real Estate, Leveraged Acquisition Financing,
Infrastructure);
●
Maximizing the Bank’s share of wallet across products in
large groups;
●
Promoting a more supportive and “next to the client”
business approach;
●
Strong portfolio development in Energy efficiency
investments and Renewable Energy Sources (“RES”)
projects;
●
Streamlining of credit approval implementation;
●
Further enhancement of credit process with the
improvement of the workflow toolkit.
To
this end, the main targets of CIB are:
●
Τo further develop cross selling by expanding and deepening
partnerships across the entire range of products and
services offered to our customers, with a particular focus on
transactional banking and non-capital intensive revenue
streams;
●
Τo further grow the corporate portfolio, increasing the share
of banking cooperation on a selective basis (especially in the
SME segment) and forging sustainable growth of revenues
and profitability, also via the use of various financial
instruments such as the RRF), Infrastructure Fund
(TAMYPOD), EIB Green Investments, European Regional
Development Fund (“ERDF”) Guarantee Fund for SMEs;
●
Τo maintain our focus on providing credit to healthy, export-
oriented medium-sized businesses. Special emphasis is
placed on business sectors such as tourism, energy, logistics,
pharmaceutical manufacturing (particularly generics), agri-
food;
●
To be the leading player in major development transactions,
and generally support sustainable investment projects that
generate value for our customers and the economy as a
whole;
●
To
adapt on the consequences of the inflation pressures and
rapid change in global benchmark interest rates;
●
To empower our corporate coverage teams, freeing-up time
to focus on client support/ advisory and new business
development;
●
To
expertly complete the CIB training cycle regarding the
new credit proposal capabilities and uses;
●
To
develop and launch portfolio dashboard and customer
360 view modules on CRM;
●
To
successfully launch and integrate the new service model -
CSU;
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
48
●
To attract and retain talent while further developing our
people;
●
To further improve our clients’ experience and retain costs
by streamlining our credit underwriting and client on-
boarding processes;
●
To maintain top -class levels of risk management and sound
risk culture;
●
To enhance digital channels’ capabilities and introduce self-
service functionalities;
●
To further diversify our credit exposure and income
generation drivers, especially in Large Groups and Shipping;
●
To expand our shipping portfolio maintaining the quality of
clients and collaterals and at pricing and terms that will
allow to enhance our profitability, always taking into
account the developments and the long-term prospects of
the shipping markets;
●
To further grow our Investment Banking business;
●
To remain committed in advancing NBG’s Transformation
Program and the rapid deployment of the actions and
strategic targets set out therein;
●
To focus on the development and marketing of new
products and services, targeting at enhancing business
access to programs with favorable financing terms, while
offering tailor-made solutions that meet businesses’
financial needs.
Finally, the CIB Division through its independent Segment Risk &
Control Sector, accelerated the enhancement of the relevant
Internal Control system by ensuring that appropriate controls are
designed in the segment’s streamline operations. The continuous
alignment of Segment Risk & Control Sector activities with those of
the Risk and Control Functions, as well as the positive tone set by
the management of the Corporate Banking Division ensures that
awareness and understanding of risk is constantly promoted while
internal control culture is cultivated.
NPE management (Legacy Portfolio) & Specialized
Asset Solutions
2022 Highlights
Revision of Troubled Assets Unit operating model,
following completion of NPE clean up.
Setup Specialized Asset Solutions as a new business in
order to capture emerging revenue generation
opportunities in the emerging ecosystem of servicers and
investors.
Successful containment of NPE flows and organic reduction
of legacy NPEs.
Strategic areas
The key strategic objectives of NPE management & Specialized
Asset Solutions Division are:
The completions of the clean-up of the Bank’s balance sheet,
targeting NPEs of c.3% of gross loans by 2025;
Revenue generation opportunities in the emerging ecosystem
of investors and servicers (e.g., acquisition financing, Real
Estate Operating companies (“REOCo”) financing);
NPE Management (Retail Collection Unit & Special Assets Unit)
The Bank under the Trouble Asset Unit (“TAU”) has established two
dedicated and independent internal units, one responsible for the
management of the Bank’s retail loans (the Retail Collection Unit
(“RCU”)) and the other for the Bank’s corporate delinquent
exposures (the Special Assets Unit (“SAU”)). The two units have the
end-to-end responsibility for their respective troubled asset
exposures. Regarding corporate governance, the units report to the
General Manager – Head of Legacy Portfolio & Specialized Asset
Solutions, as well as to a dedicated Arrears and non – performing
loans (“NPL”) Management Committee, which in turn reports to
the Board Risk Committee. Furthermore, there are tangible Group
initiatives regarding the management of real estate, related to
workout actions (auctions, foreclosures and repossessions) with
strong involvement of the Group Real Estate Management experts
and the monitoring by the Senior Executive Committee. Moreover,
with the appointment of the Segment Risk and Control Officer in
2021 the Division aims to further strengthen the Bank’s effort to
effectively manage operational risks, the design of adequate and
efficient controls and their operating effectiveness, as well as to
ensure adherence to the Bank’s various internal and external
regulatory obligations.
In 2022, Trouble Asset Unit (“TAU ”) reorganized in order to achieve
a more efficient operational model. All Small Business exposures
below €1 million were transferred from SAU to RCU resulting to a
more a transparent NPE management solution for Corporate and
Retail exposures.
Total NPE portfolio at Group level amounted to €1.8 billion as at 31
December 2022 compared to €2.3 billion as at 31 December 2021.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
49
Following NBG’s decision to not proceed with the carve out the
Troubled Assets Unit, the Bank is in the position to:
●
control NPE inflows;
●
preserve balance sheet health; and
●
explore opportunities arising in the secondary market that
evolves from the workout of NPE portfolios that have exited
the banking system.
To
this end, in 2022, the Bank established the Specialized Asset
Solutions Unit (see section below “
Specialized Asset Solutions
”)
responsible for the end to end coverage of the respective market,
by offering a full spectrum of financing solutions (i.e., portfolio
acquisition, REOCo financing, Real Estate financing to end buyers)
to the ecosystem of NPE’s servicers and investment funds.
Corporate Special Assets management
SAU | Organizational Structure
The Special Assets Unit (“SAU”), established in June 2014, is an
independent and centralized unit, with end-to-end responsibility
for the management of Large Corporate, SME, Shipping NPEs.
After reorganization, SAU consists of three divisions and one new
TAU Strategy & Projects sector. Two out of three Divisions focus on
Corporate NPE management/administration and the third on
planning and controlling issues
Borrowers of Corporate NPE management division are segmented
into three categories based on the following criteria:
●
Large Corporates (“LCs”): Group of customers with annual
turnover above €50 million, or initially originated from the
Large Corporate Division and complex deals.
●
SMEs: Customers with annual turnover between €2.5
million and €50 million, or Small Business with total
exposure to the Bank exceeding €1 million, or initially
originated from the SME Division.
●
Shipping: Customers with operations related to the shipping
sector
SAU | Organic Actions for the reduction of NPEs
Significant progress has been made during the last years towards
addressing the issue of corporate NPEs in order to support the
recovery of distressed, but cooperative and viable borrowers. The
main initiatives can be summarized as follows:
Tailored made restructurings aiming to reduce the debt
repayment obligations to sustainable levels;
Assessment of alternatives to reduce the bank debt,
without, however, forgiving a possible future upside,
achieved through debt-to-equity transactions, convertible
bonds, issuance of preferred shares or through profit
participating bonds;
Debt-to-asset transactions or amicable asset sales aiming to
reduce bank debt through the proceeds from the sale of
non-core assets, usually as a part of a holistic solution of the
obligor with the Banks;
Further improvement of interbank cooperation (Project
Solar).
SAU uses a number of different forbearance, resolution and
foreclosure measures, following international best practices, but
tailored to the current economic and legal environment in Greece.
Appropriate tools to measure the viability of debtors, fully
integrated into the IT environment of the Bank, as well as net
present value (“NPV”) analysis for the prioritization of alternative
modification solutions are also used. In 2022 and upon the
successfully completion of prior securitizations and bilateral sales,
SAU performance based mostly on organic actions (curings).
A. Collaboration with the other banks
Regarding corporate exposures SAU collaborates with other banks
for borrowers with common exposures in order to provide a holistic
proposal, ensuring timely cross -bank alignment and consensus on
the appropriate restructuring approach. In complex cases, i.e. in
the entrance of a strategic investor, a rehabilitation process may be
followed, safeguarding the long-term viability of the company and
the debt sustainability after restructuring. On large cases a Chief
Restructuring Officer is usually appointed by the credit banks in
order to monitor the implementation of the restructuring decision.
B. Denounced Portfolio Management
The Bank denounces a loan contract when a borrower is in default
and is non-cooperative and/or non-viable. The denouncement of a
contract can also be decided due to the bankruptcy or dissolution
of the debtor’s company or initiation of legal actions against the
borrower by other creditors. Although the primary strategy for the
denounced portfolio is the recovery through the liquidation of
collateral, settlement solutions are also available, even after the
denouncement through amicable and viable arrangements. During
2022, 193 auctions were expedited by SAU with a total opening
price of €91 million.
SAU Inorganic Actions for the reduction of NPEs
The NPE Management Strategy includes several projects aiming to
an expedited reduction of NPEs through inorganic actions (portfolio
sales, as well as bilateral agreements mainly concerning Large
Corporate cases). The securitizations of Frontier II and Solar
portfolios are in progress and aimed to be completed within early
2023.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
50
Retail collections management
Established at the outbreak of the financial crisis in 2010. RCU is an
independent and centralized unit focused on the management of
delinquent, non-performing and denounced retail loans.
RCU consists of three Divisions, which focus on:
Collections operations, managing all the available client
channels.
Delinquent Retail Underwriting, deciding the
restructuring solution to be offered to each applicant.
RCU Strategy and Support, setting-up and coordinating
the strategic initiatives of RCU and supporting the other
Divisions
.
As at 31 December 2022, RCU managed €2.9 billion of mortgage
loans, consumer loans, credit cards and micro business loans, that
are:
A. 1+ days past due (“dpd”).
B. Current (0 dpd) and classified as Forborne
Exposures (“FPE” & “FNPE”).
RCU leverages all possible channels to reach clients in financial
difficulty and work with them towards finding viable solutions.
Such channels include:
Call centers
(internal collections center (“ICC”) and external debt collection
agencies (“DCAs”))
NPL Hubs
(specialized Branches within regular bank Branches)
Bank Branches
Law offices
(external law firms and internal law office)
Mail
Alternative channels
(SMS, website, etc.)
When managing retail delinquent loans, the following four main
stages can be identified:
COVID-19 - support measures expiration:
supported borrowers during 2022 to resume payments after the
end of payment moratorium and aimed to support borrowers
affected by COVID-19 measures (e.g. Gefyra 1, Ethnogefyra, Gefyra
2) expired in 2022
.
After the initiatives’ expiration,
limited effect
was observed on the portfolio quality.
Adjustment of RC capacity:
During 2022, RC adjusted its capacity to the reduced portfolio
under management. The portfolio reduction can be attributed to
the organic reduction as well as to the Frontier ΙΙ securitization. The
capacity reduction by 48% was facilitated by RCs flexible structure,
that allows the increase or reduction of the capacity based on the
business needs.
Inflation measures:
Due to rising inflation during 2022, a program that supports
vulnerable borrowers with loans covered by primary residence is
expected to initiate in 1Q.23. This program will provide a subsidy to
borrowers verified through a supporting platform.
Small Business SBL Legal Entities Initiatives:
During 2022, RC Small Business Legal Entities portfolio was
transferred from SAU to RC. Initiatives supported the transition and
the application of an effective management strategy.
Strategy & products
The restructuring strategy was aligned with the individuals. New
products were introduced for Small Business
Legal Entities
(Split &
Settle, Restart). The products were aligned with the rest of the
retail portfolio.
Channels
Assigned 100% of the SBL Legal Entities’ portfolio in three Retail
SBL hubs specialized into treatment of Legal Entities.
Double
treatment (utilizing the Internal Collection Center or Legal Offices)
is enabled for 100% of Small Business
Legal Entities
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
51
Restructurings:
Restructurings of the NBG Retail portfolio reached €191 million.
The RCU quarterly restructuring volume
(in € million)
22
Foreclosures / Auctions
The majority of the portfolio with legal actions was included in the
Frontier II portfolio. During 2022, 128 auctions were held, of which
24 auctions were successful.
Introduction of the updated insolvency framework
Regarding the new insolvency framework introduced by Greek Law
4738/2020, 1,897 applications with NBG participation have been
submitted. 208 applications have been implemented (€8.9 million)
following the creditors’ restructuring approvals and the borrowers’
agreements.
2022 RCU and SAU portfolio sales / securitizations
See section “
Key Highlights - Key achievements and significant
developments of NBG Group in 2022 - Disposal of NPE portfolios–
Project “Frontier II
”).
Specialized Asset Solutions
Given the ending phase of the NPE deleveraging process, the
rehabilitation of these portfolios serves as an opportunity for NBG
to diversify and enhance its sources of income. While servicers are
speeding up efforts to meet agreed business plans, NBG aim is to
capture opportunities arising from the workout of sold/securitized
portfolios.
In particular, NBG is focusing on the following key strategies and
aims to be the Bank of first choice in this emerging market:
i)
Acquisition Financing: Selective financing of
NPE portfolio
buyers
in primary & secondary market.
ii)
REOCo financing: Financing of
NPE portfolio buyers
or
Real
Estate portfolio investors
to acquire Real Estate collaterals
(and subsequently sell them).
iii)
Real Estate Financing: Financing of
end buyers of Real Estate
assets
(individuals & businesses) through a referral
framework
with key market participants or ad hoc
transactions.
iv)
Reperforming
portfolio acquisition (as and when the market
matures in accordance with EBA guidelines).
Ultimately, the Specialized Asset Solutions aims to bring
rehabilitated assets and borrowers back into the banking system,
actively supporting in this way the effort to increase the bankable
population of the country after years of crisis and balance sheet
deleveraging, supporting the further growth of the Greek economy.
To this end, the new Unit has managed to complete several
transactions in 2H.22, reaching and exceeding its 2022 target of
€200 million disbursements, while building significant pipeline for
2023.
Other Activities
Group Real Estate
Group Real Estate is responsible for the comprehensive
management of the NBG Group’s total real estate portfolio and for
the provision of valuation and technical services on a fully
integrated basis. The real estate portfolio is composed of
properties owned or leased by the Group to house its operations
(branch network, administrative offices and headquarters), the
portfolio of repossessed assets (“REOs”), and special purpose
vehicles housing large properties.
Over the past few years, Group Real Estate has undertaken an
increasingly more important role in the Bank’s strategic objectives,
expanding its activities beyond its traditional real estate
management activities to include asset repossession, maturation
and divestment of properties, thereby actively contributing to the
Bank’s NPE reduction strategy and the overall targets of the
Healthy Balance Sheet Workstream of the Bank’s Transformation
Program.
2022 Highlights
Despite turbulent market conditions globally, 2022 was the second
year in a row of very successful property sales. REO divestment
targets were exceeded, achieving a historic record period
performance. More specifically:
Total Group real estate sales reached 389 properties with
value of c. €64 million, yielding significant profits.
377 properties with value of c. €44 million from the total
sales were sold through the website portal, either via
electronic tender or through the buy now process.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
52
In the context of the Bank’s Environmental Strategy,
Group Real
Estate
respect to its buildings. The most notable were:
ü
the installation of sophisticated energy monitoring
systems in buildings with high consumption levels;
ü
first year of operation of PV solar panel installation of 1.8
MW capacity on warehouse roofs of Bank’s logistics
subsidiary, covering more than half of total energy
consumption;
ü
property energy efficiency upgrades, in the context of
which lighting, heating and cooling systems were
significantly upgraded;
ü
the installation of water consumption reduction systems
in several buildings;
Strategic areas
REO business
Key drivers for REO’s successful performance were the adoption of
a new strategy for the comprehensive management of all
promotional channels (electronic channels, brokers, branch
network) and the transition from a traditional model of physical
tenders to a more flexible, integrated model, in order to ensure the
efficient exploitation of real estate portfolios with a large
geographical spread.
More specifically, for the promotion of REOs, as well as other
properties of the Group, an Agents’ registry with nationwide
coverage was created and, the web portal www.realestateonline.gr
was significantly upgraded, incorporating a platform for electronic
tenders, ensuring transparency, greater efficiencies and further
enhancing flexibility in real estate transactions.
As of 31 December 2022, there were 1,771 properties with value of
c. €204 million ready for sale through the portal, with an additional
c. 1,118 properties valued at c. €138 million to be uploaded within
2023 and a further c. 946 properties valued at c. €100 million to
follow.
In addition to the above, as part of the Transformation Program,
the remaining properties held in the Bank’s legacy portfolio,
consisting of c. 400 properties, were transferred to the REO
Division for maturation and divestment, a process expected to last
up to five years.
Property Management and Technical Services
The continuation and successful completion of the energy
upgrading of the Group’s buildings is a key target in the coming
years, in order to further reduce the Group’s carbon footprint.
Activities in 2022
In 2022, the Property Management Division intensified its efforts
on the Bank’s Real Estate spending optimization objectives with
respect to the Branch Network and
Headquarters’ Buildings
under
the relevant Transformation Program, reducing overall costs via
lease terminations and subleasing of vacant spaces to third parties.
In addition, the Property Management Division enlisted the
assistance of expert advisors for the resolution of long-standing
issues stemming from burdened legacy assets owned both by the
Bank and Group’s Special Purpose Vehicles (“SPVs”).
Group Real Estate houses all the valuations and related real estate
advisory activities of the Group through the Property Valuations
and Advisory Division (“PVAD”). The
PVAD
conducting all types of valuations, technical assessments &
investment plan appraisals (e.g. hotels, malls, renewable energy
plants, industrial plants) for movable (equipment, machinery,
airplanes, intangible assets, goods & commodities) & immovable
collateral assets. Moreover, it provides multifaceted relevant
services and support to all Group Business Units (Corporate, Retail,
TAU, Leasing, owned real estate assets) and ad hoc appraisal
services to third parties.
The PVAD has a total manpower of 54
experts (engineers & economists) and manages a network of c. 400
External Valuers throughout Greece.
With respect to the PVAD core service area,
2022 was a productive
year with c. 50,000 valuations with a total value of c. €18 billion
and an additional c. 25,000 valuation reviews. Furthermore, thanks
to its professional
third-party institutional clients, the most notable being the
revaluation of OTE Estate’s asset portfolio.
Overall, due to its unique expertise,
PVAD
significant number of regulatory projects and Bank initiatives
, such
as ESG related activities and financings
.
The Technical Services Unit offers a wide spectrum of technical
services to the NBG Group, starting from its services of facility
management of Bank buildings, focusing primarily on
maintenance
and refurbishment of Group infrastructure and facilities (1,204
Sites),
specialized studies and projects,
provision of certifications, surveys, property controls, and fire
safety. In this context, the
Technical
Group’s compliance with all rules and regulations of a technical
nature pertaining to buildings.
In 2022 the most significant project initiatives of c. €25 million
budget, were the:
restructuring of the Branch Network and
renovation of several Branches;
Furthermore, Technical Services Unit provided:
technical advice to the Group’s warehouse subsidiary with
respect to its new logistics expansion investment program
and the extension of solar panel installations for further
energy efficiencies; and
technical support for the development and relocation of
Stopanska Banka’s Headquarter Building in Skopje.
Global Transaction Services Activity
The Global Transaction Services Division (“GTS”) of NBG serves the
transactional product needs of Large Corporates, Small & Medium
Size enterprises, Financial Institutions as well as Small Businesses
and individuals. Products & Services offered include Payments
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
53
Import & Export Collections, Letters of Guarantee (“LG”), Letters of
Credit (“LC”), Stand By Letters of Credits (“SBLCs”), as well as
structured financing solutions facilitating cross border Trade and
covering the entire supply chain.
2022 Highlights
During 2022, GTS:
effected drawdowns of €795 million via structured Trade
financings and maintained a Letter of Guarantee book (incl.
SBLCs) of €4.2 billion;
maintained a leading market share in import and export
products by SWIFT Traffic, as well as in local payments;
won Global Finance “Best Trade Finance Bank” award for the
10th year in a row.
Strategic areas
In the context of the Bank’s strategic Transformation Program that
aims at improving the operational efficiencies and developing the
expertise of GTS, the Bank is constantly investing in new
technologies, with related projects being in full progress, offering
clients integrated flows and instant messaging options.
Leveraging on NBG’s competitive advantages, GTS further develops
the close cooperation and coordination with the Bank’s business
and functional units, targeting “new to Trade” clients, further
penetration to the existing client base and design/implementation
of innovative solutions that will contribute to the improvement of
profitability and operational cost measures.
Moreover, during the post COVID-19 period, GTS managed to
respond in the best possible way to the Bank’s client requests,
offering top quality services and subject matter expertise in
Payments and Trade Finance solutions. Our goal remains to support
in an efficient and consistent way our clients’ business and
expansion plans in the international competitive landscape,
offering specialized quality service, flexible solutions and quick
response times.
Another pillar of the GTS Division is Correspondent Banking. The
Bank maintains one of the largest domestic branch and
international correspondent networks, offering a full range of
transaction banking services, something that distinguishes us as the
“Bank of First Choice” and trusted partner for most of the world’s
leading Financial Institutions. Consistently, we meet the highest
requirements for quality, timely and efficient transaction banking
services supported by our dedicated, on-the-ground, Customer
Service Team (Greek & English speakers).
Activities in 2022
In Trade Finance, on a full year basis, c. 55% of Import transactions
were conducted via digital platform i-bank Trade Finance. GTS has
concluded both the integration and commercialization of the LG
module into the new i-bank Trade Finance platform (with c. 20% of
LGs from Corporate clients being executed via this digital channel),
as well as, the centralization of the Small Business clients’ LG book.
In parallel, we have kicked off the project of Optical Character
Recognition (“OCR”)/Intelligent Character Recognition (“ICR”)
implementation, to further automate Trade Finance transactions’
processing and address compliance challenges, with Funds
Transfers & Collections transactions having gone live in December
2022. LCs & LGs are scheduled to follow in mid-year 2023.
Finally, GTS implemented the digital signature facility for the
signing of Letter of Guarantee Application forms and contracts,
aiming at further improving the clients’ experience and expediting
the issuance & execution processes. The roll out of the digital
signatures to the remaining Trade Finance product portfolio is in
progress.
At the same time, GTS designed specialized and customized
solutions, supporting our Greek clients in the realization of their
business plans, offering access to markets of interest, at the
optimal cost structures. Our trade desk in Cyprus is staffed by
subject matter experts, offering advisory services and market
intelligence.
In parallel, the EIB and European Bank of Reconstruction and
Development (“EBRD”) Trade Facilitation programs, that NBG
actively participates as Issuing Bank provide an extra Trade corridor
for our clients, leveraging on our cooperation with international
and supranational organizations.
In Payments, GTS has upgraded its Payments platform and was the
first Bank in Greece to implement the European Instant Payments.
In addition, GTS has launched Mass payments import files
functionality, offering a Host to Host streamlined payments
processing across corporate banking clientele. GTS also upgraded
the post payment services in e-banking, improving customers’
experience for payments cancellation queries and investigations.
Leasing
The Bank began its leasing activities in 1990 through its subsidiary,
Ethniki Leasing S.A.. Ethniki Leasing S.A. leases land and buildings,
machinery, energy parks, transport equipment, furniture and
appliances, computers and communications equipment.
Furthermore, in 2022 and for fourth consecutive year, Ethniki
Leasing S.A. remains the champion of the new business
implementation amounting to €233 million.
More specifically, the new business carried out in 2022 by all Greek
leasing companies, amounted to €617 million (source: Association
of Greek Leasing Companies, 2022 statistical data), where 37.8%
was covered from Ethniki Leasing S.A.
Factoring
The Bank has been active in the provision of factoring services since
1994. In May 2009, Ethniki Factors S.A. was established as a wholly
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
54
owned factoring subsidiary of the Bank, as part of its strategic
decision to expand its factoring operations in Greece. Ethniki
Factors S.A. offers a comprehensive range of factoring services to
provide customers with integrated financial solutions and high
quality services tailored to their needs.
Brokerage
National Securities S.A. (“NBG Securities”) was established in 1988
and constitutes the brokerage arm of NBG Group. Offering a wide
spectrum of integrated and innovative investment services to both
individual and institutional customers, NBG Securities aims at
providing investment services tailored to their needs.
Since the beginning of 2022, NBG Securities strengthened its
operations, implementing its strategic plan, which includes
initiatives to upgrade several internal functions, resulting in
improved efficiencies and enhanced quality of customer service.
In 2022, NBG Securities increased its market share on the Athens
Stock Exchange to 10.2% from 10.0% in the previous year.
Asset Management
The Group’s domestic fund management business is operated by
NBG Asset Management Mutual Funds S.A. (“NBG Asset
Management”), which is wholly owned by the Group and was the
first mutual fund management company to be established in
Greece. Set up in 1972, NBG Asset Management manages private
and institutional client funds, made available to customers through
the Bank’s extensive branch network. The Company's objective is to
achieve competitive returns in relation to domestic and
international competition.
As of 31 December 2022, total assets under management in mutual
funds and discretionary asset management amounted to €1.7
billion, with NBG Asset Management maintaining a market share in
mutual funds in Greece of 8.9% (Source: Hellenic Fund and Asset
Management Association—report of 31 December 2022). The
number of clients serviced by NBG Asset Management are in excess
of 39,000, including 66 Institutional investors.
€ million
2022
2021
Mutual Funds under management
963
904
Discretionary Funds under management
740
795
Total Funds under management
1,703
1,699
Market Share
8.9%
8.1%
The 22 mutual funds of NBG Asset Management, among them four
in Luxembourg, cover a wide range of investment categories
(Equity, Bond, Balanced and Fund of Funds) in Greece and
International markets. Ιn 2022, NBG Asset Management created a
new innovative mutual fund with the main characteristics to be the
fixed duration, the payment of an annual dividend and the pursuit
of its capital preservation. Such a wide spectrum of investment
products gives great flexibilit y to investors who wish to build their
personal investment plan according to their investment profile and
objectives through mutual fund portfolios with a high degree of
diversification.
In addition to mutual fund management, NBG Asset Management
offers the following services for institutional and private investors:
●
Discretionary Portfolio Management Investment Services;
●
Advisory Services.
It also offers a range of financial products and services that cover
the needs of:
●
Social Security / Pension Funds;
●
Insurance companies;
●
Corporates.
Activities outside Greece
As at 31 December 2022, the Group’s international network
comprised 66 branches, which offer traditional banking services
and financial products and services. The Bank has also two
commercial banking subsidiaries, in North Macedonia and Cyprus .
In 2021, the Bank decided to cease its operation in the NBG London
Branch and NBG Egypt Branch and its banking subsidiary in Malta,
which are currently under liquidation.
The Bank’s international operations accounted for €2.6 billion or
3.4% of the Group’s total assets excluding non-current assets held
for sale as at and for the year ended 31 December 2022. Loans and
advances to customers were €1.6 billion at 31 December 2022,
whereas deposits “Due to customers” amounted to €1.8 billion at
31 December 2022.
Non-Current Assets and Disposal Groups classified as
held for sale and discontinued operations
Non-current assets held for sale at 31 December 2022 comprise of
Probank Leasing S.A. (Project “Pronto”). Furthermore, it also
includes the contemplated loan portfolio disposals relating mainly
to Projects “Frontier II”, “Solar” and “Pronto”.
Related Party Transactions
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
55
Based on the existing regulatory framework, the Group must disclose any transaction between the Bank, its subsidiaries and all its related
parties as defined in IAS 24 “Related Parties”, which took place during the year ended 31 December 2022. Management’s total
compensation, receivables and payables must be also disclosed separately.
Regarding the transactions with the Bank’s main shareholder
HFSF, o
ther than the ordinary shares issued by the Bank and held by HFSF, no material transactions or balances exist with HFSF. The
following table presents the transactions between the Bank and its subsidiaries, while there are no significant transactions with its
associates.
For further details, see Note 42 of the Annual Financial Statements.
Subsidiaries
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
56
(€ million)
Assets
Liabilities
Income
Expenses
Off Balance Sheet (net)
National Securities Single Member S.A.
1
95
3
1
35
NBG Asset Management Mutual Funds S.A.
1
37
4
-
-
Ethniki Leasing S.A.
666
23
14
1
70
NBG Property Services Single Member S.A.
-
1
-
-
-
Pronomiouhos Single Member S.A. Genikon Apothikon Hellados
1
32
-
2
1
NBG Greek Fund Ltd
-
-
-
-
-
National Bank of Greece (Cyprus) Ltd
12
18
1
2
29
NBG Management Services Ltd
-
2
-
-
-
Stopanska Banka A.D.-Skopje
47
11
2
-
-
NBG International Ltd
-
26
-
-
-
NBG Finance Plc
-
51
-
-
-
NBG Asset Management Luxembourg S.A.
-
-
-
-
-
Ethniki Hellenic General Insurance S.A. (Group)*
-
-
6
2
-
KADMOS S.A.
-
-
-
-
-
DIONYSOS S.A.
-
-
-
-
-
EKTENEPOL Construction Company Single Member S.A.
-
1
-
-
-
Mortgage, Touristic PROTYPOS Single Member S.A.
-
1
-
-
-
Hellenic Touristic Constructions S.A.
-
-
-
-
-
Ethniki Ktimatikis Ekmetalefsis Single Member S.A.
-
-
-
-
-
NBG International Holdings B.V.
-
46
-
-
-
NBG Leasing SRL.
3
-
-
-
-
NBG Finance (Dollar) Plc**
-
2
-
-
-
NBG Finance (Sterling) Plc**
-
1
-
-
-
NBG Malta Ltd***
-
191
-
-
-
Ethniki Factors S.A.
554
13
14
-
434
ARC Management One SRL (Special Purpose Entity)
-
-
-
-
-
ARC Management Two EAD (Special Purpose Entity)
-
-
-
-
-
I-BANK DIRECT S.A.**
-
1
-
-
-
Probank Leasing S.A.****
33
6
1
-
-
Probank Insurance Brokers S.A.
-
2
-
-
-
Bankteco EOOD
-
-
-
-
-
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
57
CAC Coral Limited*****
-
-
1
-
-
Stopanska Leasing DOOEL Skopje
-
-
-
-
-
Total
1,318
560
46
8
569
*
The disposal of Ethniki Hellenic General Insurance S.A. and its subsidiaries was completed on 31 March 2022.
**Companies under liquidation.
***In October 2021, the Bank decided to cease its operation in Malta through its subsidiary NBG Bank Malta Ltd and from 31 August 2022, the subsidiaries are under liquidation. NBG Malta
Limited, formerly known as NBG Bank Malta Limited surrendered its banking license on 11 August 2022 and subsequently placed into liquidation.
****Probank Leasing S.A., has been reclassified as Non-current assets held for sale (See Note 29 of the Annual Financial Statements).
*****The disposal of CAC Coral Ltd was completed on 15 July 2022.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
58
The Independent Auditors
The Board of Directors’ Audit Committee reviews the independence of the Independent Auditors, as well as their relationship with the
Group, including monitoring mandates for non-audit services and the amount of audit and non-audit fees paid to the auditors. In
accordance with the requirements set by the Relationship Framework Agreement, the Bank has to rotate its auditors every five years.
According to article 28 par. 2 of Greek Law 4701/2020, HFSF and the financial institutions which have received capital support by HFSF, or
the beneficiary financial institutions that resulted from fully or partial carve-outs of banking operations in the context of Greek Law
4601/2019 (corporate transformation law), may decide to extend the contracts with their external auditors beyond the five-year period, for
a period not exceeding 10 years in total, according to article 17 of Regulation (EU) 537/2014 (L158) provided that the General Meeting of
the financial institution approves the relevant reasoned proposal of the Board of Directors, following the recommendation of the Audit
Committee.
The appointment of PwC was approved by the 2017 Annual General Meeting of the NBG Shareholders held on 30 June 2017 which elected
PwC for the first time as the statutory auditors of the Bank and the Group for the year ended 2017. Following the positive assessment and
proposal of the Audit Committee and subsequent relevant reasoned proposal of the Board of Directors to the Annual General Meeting of
the Bank’s Shareholders of 28 July 2022 in accordance with article 28 par. 2 of Greek Law 4701/2020, the Annual General Meeting of the
NBG Shareholders held on 28 July 2022 appointed PwC as the statutory auditors of the Bank and the Group for the year ended 31
December 2022.
For information regarding the Independent Auditor’s fees, see Note 45 of the Annual Financial Statements.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
Financial Review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
59
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
60
Group Risk Management
Governance Framework
Risk Profile Assessment
Internal Capital Adequacy
Assessment Process (“ICAAP”)
Internal Liquidity Adequacy
Assessment Process (“ILAAP”)
Risk Culture Program
New developments within
2022 and 2023 initiatives
Management of Risks
Other Risk Factors
The Group, as an international organization operating in a rapidly
growing and changing environment, acknowledges its exposure
to risks and the need for these risks to be managed effectively.
Risk management and control forms an integral part of the
Group’s commitment to pursue sound returns to its
shareholders.
Risk management and control play a fundamental role in the
overall strategy of the Group, aiming to both effectively manage
the risks of the organization and to align with the legal and
regulatory requirements.
The Group aims at adopting best practices regarding risk
governance, taking into account all relevant guidelines and
regulatory requirements, as set by the Basel Committee on
Banking Supervision, the EBA, the ECB\SSM, the Bank of Greece,
the Hellenic Capital Market Commission (“HCMC”) legislation, as
well as any decisions of the competent authorities supervising
the Group’s entities.
Group Risk Management Governance
Framework
(Audited)
Group Risk Management has a structured and tiered approach,
based on a number of governance bodies, internal policies,
procedures and control framework.
The Board of Directors bears the ultimate accountability for
NBG’s risk position. It signs off on the risk strategy and risk
appetite and monitors the effectiveness of risk governance and
management advised by its two specialized committees: the
Board Risk Committee (“BRC”) and the Board Audit Committee.
The Bank’s Senior Executive Committee and other committees
supporting the Senior Executive Committee are in charge of daily
management actions and steer of the business. The Group Chief
Risk Officer (“CRO”) is a member of the Senior Executive
Committee. The CRO has direct access to the Board of Directors,
has delegated decision-authority for executive matters over risk
and leads the Group Risk Management Function. Please see
section “
Corporate Governance Statement – D. Board of Directors
and other management, administrative and supervisory Bodies -
Board of Director’s Committees – Board Risk Committee” and
“Management, administrative and supervisory bodies of the
Bank-Executive Committees
”
.
The Group Risk Management Function has specialized teams per
risk type. The Group Risk Management Function’s teams conduct
day-to-day risk management activities according to policies and
procedures as approved by the BRC, the Senior Executive
Committee and other executive committees. The perimeter is
based on the industry standard “Three Lines of Defence” model.
The Group Risk Management Function’s activities are supported
Risk
Management
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
61
by underlying systems and infrastructure. Finally, risk culture is
viewed as a core component of effective risk management, with
the tone and example set by the Board of Directors and the
Senior Management. Objective of the Bank is to establish a
consistent Risk Culture across all units.
The Group’s Risk Management is spread on three different levels,
in order to create Three Lines of Defence.
responsibilities of all lines of defence are clearly identified and
separated, and the relevant units are sufficiently independent.
For the Three Lines of Defence please refer to section “
Corporate
Governance Statement - E. Internal Control System and Risk
Management
”.
The Group Risk Management Function
The organizational chart and reporting lines of Group Risk
Management Function are depicted in the figure below:
The CRO reports to the CEO, has direct access to the BRC and is
its main rapporteur. The CCO, is operating under the CRO,
supervises two Credit Divisions, as above, which are involved in
the credit approval process for the Group’s corporate banking,
retail banking and subsidiaries’ portfolios.
Group Risk Management
The Bank acknowledges the need for efficient risk management
and has established five specialized Divisions and one Unit: the
GCRCD, the GFLRMD, the GORMD, the GSRM, the GRCRPMOD
and the MVU, to properly identify, measure, analyze, manage
and report the risks entailed in all its business activities. All risk
management units of the Group subsidiaries adequately report to
the aforementioned Divisions/Unit.
In addition, the two Credit Divisions, which are independent of
the credit granting units, are involved in the credit approval
process for the Group’s corporate banking, retail banking and
subsidiaries portfolios. They perform an independent assessment
of the credit risk undertaking in respect of each portfolio and
have the right of veto.
Based on its charter, the mission and the
constitution of each Division/Unit are as follows:
Group Credit Risk Control Division
(“GCRCD”)
The mission of the GCRCD is to:
●
design, specify and implement the Bank's policy in matters
of credit risk management (provision, identification,
measurement, monitoring, control) and ensuring the
Bank's capital adequacy, according to the guidelines set by
the Bank’s Board of Directors, emphasizing on rating
systems, risk assessment models and risk parameters;
●
establish guidelines for the development of methodologies
for Expected Credit Loss (“ECL”) and its components, i.e.
Probability of Default (“PD”), Loss Given Default (“LGD”)
and Exposure at Default (“EAD”) for each segment of
corporate and retail asset class;
●
implement a number of clearly defined and independent
credit risk controls on credit risk models, which enable an
effective oversight of risks emerging from credit activities
at all levels. These controls are appropriately executed,
and the results are documented and communicated to the
business units on a quarterly basis. GCRCD itself monitors
these controls on a quarterly basis, assuring they are
operating effectively and remain altogether sufficient for
the purposes they were established and continue to
mitigate the risk identified;
●
provide regular assurance that models continue to perform
adequately, thus complementing the periodic monitoring
and usage reviews;
●
assess the adequacy of methods and systems that aim to
analyze, measure, monitor, control and report credit risk
undertaken by the Bank and other financial institutions of
the Group;
●
coordinate all involved units and stakeholders for the
estimation of Internal Capital against all material risks
(ICAAP), perform scenario and sensitivity analysis for
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
62
specific credit risk cases, prepare and submit the required
ICAAP package to the regulatory authorities;
●
prepare credit risk reports, in collaboration, when
required, with the relevant units, for the purpose of either
internal evaluation and information or supervisory
evaluation procedures;
●
coordinate all involved Units and stakeholders during the
review and update of the Risk Appetite Framework (“RAF”)
document, provide significant input to the update of the
RAF across RAF elements, including, in addition to RAF
indicators and thresholds, governance arrangements,
principles that govern the RAF, promptly inform the upper
management for any threshold breach thereof; and
●
provide advisory support to every other unit of the Bank
and the Group in matters concerning the entire range of its
responsibilities, through models, procedures and analyses.
The GCRCD consists of the:
●
Credit Risk Control & Model Development Sector, which in
turn consists of the Corporate Credit Risk Control
Subdivision, the Retail Credit Risk Control Subdivision, the
Corporate Credit Risk Model Development Subdivision, and
the Retail Credit Risk Model Development Subdivision;
●
Credit Risk Reporting (Regulatory & Internal) Sector, which
in turn consists of the Credit Risk Regulatory Reporting
Subdivision and Credit Risk Internal Reporting Subdivision;
●
ICAAP & RAF Monitoring Subdivision.
Group Financial & Liquidity Risk
Management Division (“GFLRMD”)
The mission of the GFLRMD is to:
●
plan, specify, implement and introduce market,
counterparty, liquidity and Interest Rate Risk in the
Banking Book (“IRRBB”) risk policies, under the guidelines
of the Bank’s Board of Directors;
●
develop and implement in-house models for pricing and
risk measurement purposes;
●
run appropriate tests to ensure that the models continue
to perform adequately, thus complementing the periodic
validation reviews;
●
assess the adequacy of methods and systems that aim to
analyze, measure, monitor, control and report the
aforementioned risks undertaken by the Bank and other
financial institutions of the Group;
●
independently evaluate financial products, assets and
liabilities of the Bank and the Group;
●
estimate Regulatory Capital required in respect with
market risk and counterparty credit risk, calculate the
regulatory metrics for Liquidity Risk and IRRBB and
prepare relevant regulatory and Management Information
System (“MIS”) reports; and
●
provide timely and accurate information to the Bank’s
senior competent bodies (the BRC and the Asset Liability
Committee (“ALCO”) and the Regulator (SSM), with
sufficient explanatory and investigation capabilities on the
materiality and trend of the aforementioned risks, as well
as handle all issues pertaining to market, counterparty,
liquidity and IRRBB risks, under the guidelines and specific
decisions of the BRC, the ALCO and the SSM.
The GFLRMD consists of the:
●
Market Risk & Counterparty Credit Risk Management
Sector, which in turn consists of the
-
Market Risk Management Subdivision
-
Counterparty Credit Risk Subdivision
-
Market Risk and Counterparty Credit Risk Stress-
testing and ICAAP Framework Monitoring Subdivision
●
IRRBB and Liquidity Risk Management Sector which in turn
consists of the:
-
IRRBB Management Subdivision;
-
Liquidity Risk Management Subdivision;
-
ILAAP Framework Monitoring Subdivision;
-
IRRBB Stress-testing Subdivision;
●
Financial Risks’ Models Development Subdivision.
Group Operational Risk Management
Division (“GORMD”)
The mission of the GORMD is to:
●
design, propose, support and periodically validate the
Operational Risk Management Framework (“ORMF”),
ensuring that it is aligned with the best practices, the
regulatory requirements and the directions set by the
Board of Directors;
●
ensure the development of policies, methods and systems
for the identification, measurement and monitoring of
operational risks and their periodic assessment and
ratification;
●
design and implement training programs on operational
risk, the use and implementation of programs, methods
and systems as well as any other action aiming at
knowledge sharing and the establishment of operational
risk culture Group-wide;
●
address all operational risk related issues as per the
directions and decisions of the BRC;
●
continuously monitor and review the Group operational
risk profile and report to the Management and to the
Supervisory Authorities.
The GORMD consists of the:
●
Operational Risk Framework Implementation Sector,
which in turn consists of the Operational Risk Program
Implementation, the Information & Communication
Technology (“ICT”) Risks Oversight and the Operational
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
63
Risk Internal Events Collection Subdivisions;
●
Operational Risk Framework Development Subdivision;
●
Operational Risk Reporting Subdivision; and
●
Operational Risk Awareness and Training Subdivision.
Group Strategic Risk Management
Division (“GSRM”)
The mission of GSRM, as shaped taking into account
the wide spectrum of risks that may be correlated to
the Group’s Strategy, in alignment with the prevailing
business needs, is to:
●
monitoring, analysing & evaluating risks that are evident
or related to the Business Strategy of the Group and may
negatively impact the profitability and the dynamic
structure of the Balance Sheet for both the Bank and/or
the Group;
●
analyzing the hypothesis and assumptions embedded in
the Strategic Planning, Business Planning (business model
mapping) and Future Profitability;
●
analyzing risks related to the implementation of the
Business Strategy;
●
analyzing risks and potential impacts measured via
appropriate Key Risk Indicators (“KRIs”) and stemming
from deviations in relation to the expressed targets set in
the Business Strategy & Business Planning;
●
developing scenarios and the execution of Stress Testing
Exercises;
●
performing sensitivity analyses related to the risks
entailed in the dynamic profitability evolution and of the
Asset & Liability Structure;
●
monitoring the development, execution, and revising of
financial targets related to the Strategy of NPE’s;
●
selecting and using appropriate performance measures
which are adjusted based on risk (risk-adjusted
performance metrics) aiming to evaluate the Strategy
Risks;
●
executing industry wide Stress Test exercises according to
regulatory demands and guidelines (EBA, SSM, etc) in
cooperation with the involved units;
●
executing modelling and sensitivity analyses under
different scenarios;
●
monitoring of the evolution of NPEs;
●
monitoring of the dynamic evolution of Assets & Liabilities
(Dynamic Asset Liability Management (“ALM”)); and
●
exercising a holistic overview on Climate and
Environmental (“C&E”) risk management activities, being
the central C&E reference point within Risk Management
and the primary liaison between Risk Management and
Business Strategy stakeholders for ESG matters, with a
main focus on C&E aspects. It aims to align C&E risk
management processes involving the different risk
divisions/experts across risk types (including the C&E
Stress testing).
The GSRM consists of the:
●
Business Strategy Risk Monitoring Sector which in turn
consists of the Profitability Risk Monitoring Subdivision,
the Business model Risk & Risk Adjusted Performance
Monitoring Subdivision & the Strategic Risk Evaluation &
Action Planning Subdivision;
●
Scenario Planning & Analysis Sector which in turn consists
of the NPE Monitoring Subdivision, the Stress Testing &
Sensitivity Analysis Subdivision & the Integrated
Forecasting & Stress Testing Platform Management &
Strategic Risk Evaluation Tools Subdivision; and
●
Dynamic Modelling & Asset Liability Management
Subdivision.
Group Risk Culture & Risk PMO Division
(“GRCRPMOD”)
The mission of the GRCRPMOD is to:
●
measure, monitor, control and report the Group’s Risk
Culture to Senior Management, as well as to develop and
coordinate, in collaboration with the Risk Culture
stakeholders, the Risk awareness enhancement activities
for the reinforcement of Risk Culture across the Group;
●
coordinate project management activities related to Risk
Management Function projects;
●
support the Risk Management Function’s Units with
regards to activities that fall under the responsibilities of
the Segment Risk and Control Officer (“SRCO”).
The GRCRPMOD consists of the following:
●
the Risk Culture Subdivision;
●
the Risk PMO Subdivision;
●
the Risk Segment Risk & Control Subdivision.
Model Validation Unit (“MVU”)
MVU’s responsibility is to:
●
establish, manage, and enforce the Model Validation
Policy based on applicable regulatory guidance and
requirements;
●
develop new and enhance the existing Model Risk
Management standards;
●
update the Model Validation Policy based on applicable
regulatory guidance and requirements;
●
communicate and escalate model risk assessments to the
Board of Directors, the BRC, the CRO and the Senior
Management;
●
independently validate and approve new and existing
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
64
models based on their materiality;
●
document material model changes in the validation
reports;
●
recertify models on a regular basis, depending on their
materiality and review the results of on-going model
monitoring.
The MVU consists of the:
●
Market Risk Models Validation Subdivision;
●
Retail Credit Risk Models Validation Subdivision; and
●
Corporate Credit Risk Models Validation Subdivision.
Group Corporate Banking Credit
Division (“GCBCD”)
The mission of the GCBCD is to participate in the
independent function of credit risk management of the
corporate portfolio of the Bank and its Subsidiaries and
Branches outside Greece. GCBCDs key responsibilities
are:
●
participation in the Credit Committees for corporate
clients with the right of veto;
●
review all Corporate (incl. SAS and TAU) credit proposals,
submitted for assessment and approval by the competent
credit committees;
●
review the outcome of the individual assessment for
impairment of lending exposures performed by the Credit
Granting units for the corporate portfolio of the Bank;
●
participation in the formulation / revision of Corporate
Credit Policies and Credit Procedures Manuals and other
relative regulations;
●
drafting and circulation of guidelines / instructions for the
effective implementation of relevant policies and
regulations;
●
participation in the classification process of Obligors;
●
monitoring of the implementation and the timely
management of the Early Warning alerts for each
corporate client of the Bank as well as the outcome of
relevant actions;
●
monitoring, on a quarterly basis, the proper use of existing
internal rating models for corporate clients of the Bank;
and
●
monitoring, on a monthly basis, the timely renewal of
credit ratings and limits of corporate clients of the Bank.
Group Retail Banking Credit Division
(“GRBCD”)
The mission of the GRBCD is to provide an independent
assessment of domestic and international retail credit.
This is achieved through the following:
●
manage the Retail Credit Policy in co-operation with
GCRCD;
●
form the relevant Retail Banking Regulations;
●
participate in the development of Retail products in all
stages of the credit cycle (new credit, rescheduling,
restructuring) and determine the framework and dynamic
controls of the relevant credit criteria;
●
set in detail through the frameworks referred in the
relevant Regulations the appropriate approval procedure;
●
participate in decision-making, in accordance with the
approval authority tables, based on the credit proposals of
the relevant Credit Granting units, which are solely
responsible for the correct presentation of the
quantitative and qualitative data contained in those. The
GRBCD reviews the correct implementation of the Credit
Policy and Regulations.
The GRBCD consists of the:
●
Retail Banking Credit Policy Subdivision (Domestic);
●
Applications Assessment Subdivision (Domestic);
●
Portfolio Analysis (Domestic) & International Subsidiaries
Retail Credit Subdivision; and
●
Credit Policy Implementation Review Subdivision.
Each Division/Unit has distinct
responsibilities and covers specific types
of risk and all Divisions/Units report
ultimately to the CRO.
Risk Profile Assessment
In February 2022, the Bank enhanced its Risk Taxonomy and
developed a stand-alone Risk Taxonomy Framework document in
order to define and outline risk types and ensure the full
alignment in ICAAP and RAF.
The Group assesses the materiality of risks in a forward looking,
dynamic approach. The process takes into account information
collected from various sources and internal expertise, in order to
address the full spectrum of risks which may have a material
impact on its capital position. These sources include, but are not
limited to, business and risk analyses, consultation with internal
and external stakeholders, regulatory and supervisory analyses
and publications and audit report findings. With regards to the
risk identification and materiality assessment process, the Bank
follows the gross approach, as suggested by the regulator, using a
common (internal) definition of materiality across all the
employed Business Units. On top of this, qualitative and
quantitative criteria have been established. More specifically, a
risk type is categorised as material, in case at least one of the
following criteria is satisfied:
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
65
●
Quantitative:
estimated in CET1 capital, upon the realization of these
risks.
●
Qualitative:
profitability and capital adequacy of the Bank.
The outcome of the materiality assessment is used in the ICAAP
exercise as described in the following section. The Risk Profile is
also assessed through the RAF Dashboard that is reported on o
monthly basis to the Senior Management, as well as in the
Internal Capital Adequacy Assessment Process (“ICAAP”) Report
where its forward-looking dimension is presented.
Internal Capital Adequacy Assessment
Process (“ICAAP”)
NBG Group has devoted substantial resources to the assessment
of its capital adequacy, relating to both risk and capital
management. The process is continuously developed and
formalized so as to enhance business benefits and support the
strategic aspirations of NBG Group.
ICAAP objectives are the:
proper identification, measurement, control and
overall assessment of all material risks;
development of appropriate systems to measure and
manage those risks;
evaluation of capital required to cover those risks (the
“internal capital”).
The term “internal capital” refers to the amount of own funds
adequate to cover losses at a specified confidence level within a
certain time horizon (both set in accordance with the RAF).
The Group has created an analytical ICAAP Framework for the
annual implementation of the ICAAP. The ICAAP Framework is
formally documented and describes the components of ICAAP at
both Group and Bank level in detail. The respective framework
comprises the following:
Group risk profile assessment;
Risk measurement and internal capital adequacy
assessment;
Stress testing development, analysis and evaluation;
ICAAP reporting;
ICAAP documentation.
Both the Board of Directors and the Bank’s executive committees
are actively involved and support the ICAAP. Detailed roles and
responsibilities are described in the ICAAP Framework document.
The BRC approves the confidence interval for “internal capital”,
reviews the proper use of risk parameters and/or scenarios
where appropriate, and ensures that all forms of risk are
effectively covered, by means of integrated controls, specialized
treatment, and proper coordination at Group level. The Board of
Directors bears ultimate responsibility for the adequacy and
proper execution of the ICAAP.
ICAAP’s Framework concerns the entire Group’s material risks.
The parameters taken into account are the size of the relevant
Business Unit/Group’s Subsidiary, the exposure per risk type and
the risk methodology and measurement approach for each type
of risk.
The identification, evaluation and mapping of risks to each
relevant Business unit/Group subsidiary is a core ICAAP
procedure. Risks’ materiality assessment is performed on the
basis of certain quantitative (e.g., exposure as percentage of the
Group Risk Weighted Assets (“RWAs”)) and qualitative criteria
(e.g. established framework of risk management policies,
procedures and systems, governance framework and specific
roles and responsibilities of relevant units, limits setting and
evaluation).
Following the risk materiality assessment process, the material
risk types are outlined below:
Risk Materiality Assessment
Risk Type (Level 1)
Action following
materiality assessment
Credit Risk
Calculation of internal capital /
Assessment per business unit &
entity
Counterparty Credit
Risk
Calculation of internal capital
Market Risk
Calculation of internal capital
Operational Risk
Calculation of internal capital /
Scenario Analysis
Liquidity Risk
Analytical assessment through
the ILAAP exercise
IRRBB
Calculation of internal capital
Real Estate Risk
Calculation of internal capital
Country Risk (incl.
Sovereign)
Calculation of internal capital
Strategic/Business
Model Risk
Scenario Analysis / Assessment
of Bank’s actions to mitigate risk
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
66
Securitization Risk
Assessment of Bank’s action to
mitigate risk
Credit risk is considered as the most significant risk to capital,
while market, operational, Strategic/Business Model risks and
other risk types have also been identified as material.
Furthermore, the ICAAP process involves the evaluation of
Strategic/Business Model Risk also from a solvency perspective,
as their analysis includes forward looking scenarios, which
primarily intend to inform the strategic planning and decision-
making and increase the Bank’s awareness of potential
vulnerabilities in relation to its Business model/Strategy and
sustainable profitability. In this respect, it is concluded that no
additional internal capital is required to be held against
Strategic/Business Model risk.
The calculation of NBG Group “Total Internal Capital” consists of
two steps: in the first step, internal capital per risk type is
calculated on a Group basis. NBG Group has developed
methodologies allowing the calculation of the required internal
capital for quantifiable risks. These are reassessed on a regular
basis and upgraded in accordance with the global best practices.
In the second step, internal capital per risk type is summed up to
yield the Group’s “Total Internal Capital”.
Capital allocation aims at distributing the “Internal Capital” to the
Business units and Subsidiaries so that ICAAP connects business
decisions and performance measurement.
For 2022, the Bank implemented the ICAAP by estimating the
relevant internal capital for all major risk types at Group level.
Calculations were based on methodologies already developed in
the ICAAP Framework. Moreover, the Group conducted a bank-
wide macro Stress Test exercise, relating to the evolution of its
CET1 capital under adverse scenarios (so as to ensure relevance
and adequacy of the outcome with a realistic and non-
catastrophic forward-looking view of downside tail risks).
In addition to the institution-wide bottom-up solvency stress test,
a number of Business risk and portfolio stress tests as well as
reverse stress tests and sensitivity analysis were also performed,
aiming at increasing the Group’s awareness of its vulnerabilities.
It should be noted that the Bank implements, monitors and uses
the ICAAP aiming at achieving full compliance with the EBA and
ECB guidelines and standards concerning ICAAP/ILAAP, the SREP
and Stress Testing.
Internal Liquidity Adequacy Assessment
Process (“ILAAP”)
The scope of the ILAAP is to assess that the Group has adequate
liquidity sources to ensure that its business operations are not
disrupted, both in a going concern status, as well as under
stressed conditions. Within the ILAAP the Group evaluates its
liquidity and funding risk in the context of a management
framework of established policies, systems and procedures for
their identification, management, measurement and monitoring.
The ILAAP is an integrated process, therefore it is aligned with the
Group’s Risk Management Framework and takes into account its
current operating environment. Moreover, besides describing the
Group’s current liquidity state, it further serves as a forward-
looking assessment, by depicting the prospective liquidity
position, upon the execution of the Bank’s Funding Plan. Finally,
the ILAAP examines the potential impact of the realization of
extreme stress scenarios, on the Bank’s liquidity position,
ensuring that the Group can withstand such severe shocks and
continue operating.
BCBS 239
BCBS 239 is the Basel Committee on Banking Supervision's
(“BCBS”) standard with an overall objective to strengthen the
banks’ risk data aggregation capabilities and internal risk
reporting practices, in turn, enhancing the group risk
management and decision making processes at banks.
NBG initiated the BCBS 239 Program in April 2019 to reach the
desired target state of compliance with the three main pillars,
namely Governance and Infrastructure, Risk Data Aggregation
Capabilities and Risk Reporting Practices, which embed all the
main principles set by the standard. More specifically, the Bank
completed the implementation of a set of mitigating actions,
such as:
●
Development of 40 Service Level Agreements, standardizing
data exchanges between Risk Divisions and Non-Risk Divisions
or Subsidiaries of the Bank and providing a clear mapping of
the data flow and the dependencies among the involved
counterparties.
●
Review of the IRRBB framework.
●
Establishment of a formal adjustment log within Data
Governance Tool and monitoring functionality.
●
Standardization of Risk documentation and alignment to a
common template.
●
Assessment of NPE reporting process and establishment of
quality metrics for the NPE stock.
●
Integration of the BCBS 239 self-assessment function.
The Bank further enhances compliance with all 11 overarching
principles for effective risk data aggregation, governance and
reporting, through actions such as improvement in automation in
data management and reporting process, monitoring and
documentation of data quality controls.
Risk Culture Program
Risk Culture is defined as an institution’s norms, attitudes and
behaviors related to risk awareness, risk taking and risk
management, and the controls that shape decisions on risk. Risk
Culture influences the decisions of management and employees
during the day-to-day activities and has an impact on the risks
they assume.
The objective of the Bank is to establish a sound and consistent
Risk Culture across all Units that is appropriate for the scale,
complexity, and nature of the Bank’s business, in line with
regulatory/supervisory requirements and in accordance with best
business practices, based on solid values which are articulated by
the Bank’s Board of Directors and Group’s Senior Management.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
67
Risk Appetite
Framework
Incentives
Effective Risk
Governance
Incentives
Accountability Tone from the top
Effective
Communication &
Challenge
●
Ownership of risk
●
Escalation process
●
Clear consequences
●
Encouraging behaviours
that optimize the risk &
reward relationship
●
Development of
personnel’s skills on
identifying & managing
risks
●
Lead by example
●
Assess our values
●
Ensure common
understanding and risk
awareness
●
Learn from past experience
●
Open to alternate
views
●
Stature of control
functions
The Group Risk Management Function, as part of the Risk Culture
Program, established the Risk Culture Framework (“RCF”), with
the objective to define and document the principles, processes
and methodologies that pertain to the identification,
measurement, monitoring and reporting of Risk Culture in NBG.
The RCF is a key element fo r the establishment of a sound Risk
Culture within the Group. It constitutes an essential tool for the
Board of Directors and Senior Management to ensure that the
Risk Culture is monitored and measured consistently over time
and risk awareness enhancement actions are taken when
necessary, while at the same time meets the Supervisory
Authorities’ expectations on efficient risk governance, based on
common perception of risk culture-related issues.
NBG has in place an effective RCF that:
1.
Is aligned with the Bank’s Values;
2.
Is formed by both top-down Board and Senior
Management guidance and leadership and bottom-up
involvement of management and other stakeholders,
and is understood and applied across all levels of the
Bank;
3.
Incorporates Risk Culture Principles that are easy to
communicate and assimilate;
4.
Describes the process for the definition and
implementation of personnel’s risk awareness and
corresponding behaviors’ enhancement initiatives;
5.
Incorporates a forward-looking view about the Group’s
Risk Culture profile expectations through setting the
corresponding Risk Culture Principles;
6.
Establishes the governance arrangements for its update
and monitoring.
Risk Culture: Foundational Elements
Risk Culture: Assessment Indicators
Risk Culture Program: Risk Awareness Εnhancement
Ιnitiatives οverview
Given NBG’s objective to promote risk and control awareness,
seeking that all employees are fully aware of the risks arising in
the course of their work and have adequate skills for their
management, including the establishment of adequate and
efficient controls, the Risk Culture Stakeholders develop and
implement, on an annual basis, Risk Awareness Enhancement
Activities around the following:
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
68
Trainings
◾
Mandatory on a Bank-wide scale or targeted
to specific audience.
◾
Driven by new Policies or other Governance
Documents approval.
◾
Familiarization with processes and other
developments.
Workshops
Governance
& Processes
Other
Activities
◾
Support on carrying out duties under
the scope of established Roles &
responsibilities.
◾
Meetings for educating and providing
assistance on implementation issues.
◾
Deep-dive sessions on assessing
projects’ outcome.
◾
Ad hoc activities based on identified
needs.
◾
Communication initiatives: Teasers,
newsletters, postings.
◾
Cross-functional collaboration.
◾
Cross-group collaboration.
◾
OpRisk Forums & OpRisk Portal Access
to Risk Spotlight External Events
Database.
◾
Enhancements in line with regulatory
developments and best practices.
◾
Design and implementation of new
Roles and Methodologies.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
69
Basel III
reforms
(BaselΙV)
Risk
Appetite
Framework
Pricing and
Credit Risk
Models
ESG Risks &
Pillar III
disclosures
New
Reporting
Tool for Credit
Risk Purposes
NBG Risk
Taxonomy
Other
developments
per Risk Type
New developments within 2022 and 2023 initiatives
NBG Risk Taxonomy
In order to integrate Enterprise Risk Management (“ERM”)
practices and enhance the overall risk Group Management
Framework, the Risk Management Function reviewed and
updated the NBG Risk Taxonomy Framework, in collaboration
with all involved parties. NBG Risk Taxonomy Framework was
approved by the Senior Executive Committee in February 2022.
The Framework aims to:
establish a common language allowing for the effective
classification and coverage of the entire range of the risks
that NBG faces;
describe the associated governance and review process;
update and outline the Risk Types that the Group is exposed
to, in order to serve as a unique point of reference for all
relevant risk management processes.
In terms of taxonomy content, Risk Types were reviewed and
updated with additional emphasis on the Non-Financial Risks
(Operational Risk and Strategic Risk) as well as on the pursuit of
alignment with new regulatory requirements (i.e., the
incorporation of ESG risk factors) and best practices.
The Bank recognizes ESG as transversal, cross-cutting risks rather
than stand-alone risks and considers them as drivers of existing
types of financial and non-financial risks. Moreover, for the Non-
Financial Risks (Operational risk and Strategic risk), ESG risks are
treated as distinct Risk Themes as per the table below.
The main objectives of the NBG Risk Taxonomy Framework are to
improve:
Risk identification by providing a benchmark that can be used
as a prompt in determining the particular risks faced by the
organization;
Risk assessment by facilitating comparison and aggregation of
related data and providing a basis for validation;
Risk monitoring by providing a common frame of reference
that enables meaningful analysis and oversight of the outputs
generated by any risk management tool;
Risk reporting by providing a consistent way of describing
risks enabling comparison across different business entities,
business lines and geographic regions.
NBG’s Risk Taxonomy comprises of Risk Types which support a
multi-level tree categorization in which NBG’s risks are classified
and of Risk Themes which are sub-categories of Non-Financial
Risks, the inclusion of which in the NBG Risk Taxonomy
Framework provides an additional dimension improving the
overall risk classification. Risk Themes are also used in order to
accommodate additional regulatory compliance requirements
and internal risk analysis and reporting needs.
Risk Types
Risk Type Level 1
Risk Type Level 2
Credit Risk
Concentration Risk
Residual Risk
Underwriting Risk
Counterparty Credit
Risk
Pre-settlement Risk
Settlement Risk
CVA Risk
Wrong-way-Risk
Concentration Risk
Market Risk
Interest rate Risk
Equity Risk
Foreign Exchange (FX) Risk
Commodity Risk
Vega Risk
Market Liquidity Risk
Credit Spread Risk
Issuer Risk
Concentration Risk
Correlation Risk
Underwriting Risk
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
70
Risk Type Level 1
Risk Type Level 2
Liquidity Risk
Funding Risk
Asset Encumbrance Risk
Concentration Risk
Interest rate risk in the
banking book (IRRBB)
Gap Risk
Basis Risk
Option Risk
Credit spread risk from non-
trading book activities (“CSRBB“)
Real Estate Risk
Pension Risk
Country Risk
Sovereign Risk
Transfer Risk
Convertibility Risk
Strategic/Business Model
Risk
Strategic Positioning Risk
Strategy Execution Risk
Securitization Risk
Operational risk
Internal Fraud
External Fraud
Employment Practices and
Workplace Safety
Clients, products and business
practice
Damage to Physical Assets
Business disruption and systems
failure
Execution, delivery and process
management
Risk Themes
Strategic/Business Model Risk
In the context of the review of the NBG Risk Taxonomy (see
above), the current or prospective risks of the Group’s Business
Model on the viability and sustainability, i.e. the Business Model
becoming obsolete or irrelevant and/or losing the ability to
generate results aligned with the Group’s strategic objectives and
stakeholders’ expectations, were redefined.
These risks are associated with vulnerabilities in Strategic
Positioning or Strategy Execution (delivery) as a result of external
or endogenous risk factors and possible inability to effectively
react thereon.
The impact of Strategic risks is demonstrated through:
1.
failure to deliver the expected results, i.e., material
deviations from a defined Business plan in terms of
Profitability, Capital and/or Brand perception; and
2.
long term deterioration of competitiveness, i.e.,
worsening relative position compared to peers
benchmarks in strategically important areas.
More specifically:
Strategic Positioning risk:
t
he prospective risk in the Group's long-
term competitive position, i.e. the Business model becoming
obsolete or irrelevant. The Strategic positioning risk impact is
demonstrated through relative underperformance compared to
peers benchmarks in strategically important areas. The risk
sources are potential vulnerabilities in the strategic design, lack
of diversification in revenue generation, external disruptive
factors (such as new market entrants) and inability to
effectively/timely adapt the Business model components to the
market dynamics (adaptability in terms of value proposition,
customer segments, servicing channels, partnerships, internal
resources utilization and efficiency).
Strategy Execution risk:
The current or prospective risk to
profitability and/or Franchise (Brand) perception, due to failed or
inadequate delivery of a defined Business plan. Execution risks
are arising from changes in the external business environment
(competition, regulation, market conditions) or from endogenous
failure to successfully conclude strategic initiatives and projects in
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
71
line with the Business plan, and the inability to react effectively
thereon.
Basel III reforms (Basel IV)
The EBA and the ECB affirmed the importance of timely and
faithful implementation of the outstanding Basel III reforms in
the EU, to ensure banks can withstand future crises and a
necessary condition for the proper functioning of the European
and global financial systems, and supported the decision of the
Basel Committee to delay the implementation date of the final
Basel III reforms by two years to 2025.
Thus, Basel IV /Basel III reforms specific modifications are
effective from 1 January 2025. More specifically, the Bank has to
properly implement in its processes, systems and practices the
respective reforms that improve risk capture and risk granularity
of Standardized Approach and in parallel to seek for best
practices, in collaboration with Business Units, regarding loan
granting taking into account the risk diversification implied by the
new rules.
Credit Risk:
The main changes in Credit Risk under Standardized
approach introduced in the legislative package are the following:
•
Increased CCF for off-balance sheet items.
•
Higher RWAs% of 250% and 400% in riskier speculative
investments.
•
Introduction of Grades for the unrated institutions
based on quantitative and qualitative criteria.
•
Introduction of two methods for risk weighting for
Residential/Commercial Real Estate, namely “loan
splitting approach” and “Loan
To
Value (“LTV”)
approach”, each applicable upon satisfaction of specific
eligibility criteria.
•
Introduction of new asset classifications for
Residential/Commercial Real Estate, namely “Income
producing real estate” and “Loans financing land
acquisition, development or construction”.
•
Introduction of new category of performing retail
exposures (transactors) with RWAs% of 45%.
Market Risk:
The revised Market Risk framework under Basel III
(i.e., the Fundamental Review of the Trading Book (“FRTB”)
outlines two approaches for the calculation of the respective
capital requirements:
1.
The Standardized Approach (“SA-FRTB”), with the following
key risk measures:
•
Sensitivity Based Risk Charge (“SBRC”).
•
Default Risk Charge (“DRC”).
•
Residual Risk Add-on (“RRAO”).
2.
The Internal Model Approach (“IMA-FRTB”), with the
following key risk measures:
•
Expected Shortfall (“ES”).
•
Default Risk Charge (“DRC”).
•
Non-Modellable Risk Factors (“NMRFs”).
SA-FRTB serves as a fallback approach and as a benchmark to the
internal model outcome, thus it is compulsory for all banks.
Moreover, SA-FRTB came into effect for reporting purposes in
3Q.21.
Counterparty Credit Risk (“CCR”)
: NBG has fully implemented
and applies the revised standardized approach for the calculation
of CCR capital requirements (“SA-CCR”) on the relevant module
of NBG’s market risk engine since 2Q.21.
Operational Risk:
All existing approaches for the calculation of
own funds requirements for Operational Risk are replaced by a
single, non-model-based approach based on the following
components:
•
Business Indicator
: A financial-statement-based proxy
for operational risk, which comprises three
components: (i) the interest, leases and dividend
component, (ii) the services component, and (iii) the
financial component.
•
Business Indicator Component
multiplying the Business Indicator by a set of regulatory
determined marginal coefficients.
•
Internal Loss multiplier
: A scaling factor based on a
Bank’s average historical losses incurred over the
previous 10 years i.e. the Loss Component and the
Business Indicator Component.
ESG Risks & Pillar III Disclosures
In June 2021, the EBA published its Report on ESG risks
management and supervision. The Report, which is a key
component of the EBA’s broader ESG work, provides a
comprehensive proposal on how ESG factors and ESG risks should
be included in the regulatory and supervisory framework for
credit institutions and investment firms, focusing on the
resilience of institutions to the potential financial impact of ESG
risks across different time horizons.
The Report outlines the impact that ESG factors, especially
climate change, can have on institutions’ counterparties or
invested assets, affecting financial risks, illustrates available
indicators, metrics and evaluation methods that are needed for
effective ESG risk management and identifies remaining gaps and
challenges on this front. It also provides recommendations for
institutions to incorporate ESG risks-related considerations in
strategies and objectives, governance structures, and to manage
these risks as drivers of financial risks in their risk appetite and
internal capital allocation process and calls for a phase-in
approach.
To
that end, NBG has embedded the relevant points in
its ICAAP and RAF whereas it also assesses ESG Risk through
idiosyncratic sensitivity analysis in ICAAP Stress Testing exercise.
Following a public consultation initiated in March 2021, EBA
published in January 2022 binding Implementing Technical
Standards on Pillar III disclosures on ESG risks, to put forward
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
72
comparable disclosures for all the above factors and their ratios,
including the Green Asset Ratio (“GAR”), on exposures financing
taxonomy-aligned activities, such as those set under Paris
Agreement goals.
Institutions will have to start disclosing this information from
June 2022. The first disclosure will be annual and thereinafter it
will be semi-annual. This means that in practice the first
disclosure will take place in 2023 for the disclosure reference
date as of the end of December 2022, with a phase in period for
the disclosures on institutions until June 2024, when the whole
set of the required information (i.e. GHG emissions, GAR, Banking
Book Taxonomy Alignment Ratio (“BTAR ”)) will be disclosed.
The Bank has analyzed the associated instructions and broken
down all relevant information required, is in the process of
determination of relevant involved Units/Owners, set up a
project that is also included as a sub initiative in Transformation
Program in order to properly and effectively seek for all needed
additional information and to be able to respond to the
regulatory requirements starting from 4Q.22. Moreover, the
ultimate goal is to incorporate all the required information in IT
systems leading to a fully automated internal procedure and
controls in order to be able to deliver timely and efficiently the
requested templates.
Risk Appetite Framework (“RAF”)
GCRCD has in place a RAF. The objective of the RAF is to set out
the level of risk that the Group is willing to take in pursuit of its
strategic objectives, also outlying the key principles and rules that
govern the risk appetite setting. The RAF constitutes an integral
part of the Group’s Risk Strategy and the overall Group Risk
Management Framework. The RAF has been developed in order
to be used as a key management tool to better align business
strategy, financial targets and risk management, and enable a
balance between risk and return. It is perceived as a reference
point for all relevant stakeholders within the Bank, as well as the
supervisory bodies, for the assessment of whether the
undertaken business endeavors are consistent with the
respective risk appetite.
An effective RAF is fundamental to a strong risk management and
governance framework. The RAF is not just a Key Performance
Indicator (KPI) monitoring system; it constitutes an essential
mechanism to support the Board of Director’s oversight of the
strategy execution within the risk boundaries that the Group is
willing to operate. Through the RAF, overall aspirations of the
Board of Directors are translated to specific statements and risk
metrics, enabling planning and execution, while promoting firm-
wide thinking. In 2022, the RAF was updated to reflect the latest
developments and to get aligned with the new Business Plan of
the Group.
NBG has in place an effective RAF that:
1.
is formed by both top-down Board of Directors guidance
and leadership and bottom-up involvement of the Senior
Management and other Stakeholders, and understood and
practiced across all levels of the Bank;
2.
incorporates quantitative risk metrics and qualitative Risk
Appetite statements that are easy to communicate and
assimilate;
3.
supports the Group’s business strategy by ensuring that
business objectives are pursued in a risk-controlled
manner that allows to preserve earnings stability and
protect against unforeseen losses;
4.
reflects the types and level of risk that the Bank is willing
to operate within, based on its overall risk appetite and
risk profile, sets the guidelines for new products
development, as well as the maximum level of risk that the
Group can withstand, through the risk capacity;
5.
contributes in promoting a risk culture across the Group;
6.
is aligned with other associated key processes of the Bank.
Within this context, the RAF allows:
1.
to strengthen the ability to identify, assess, manage and
mitigate risks;
2.
to facilitate the monitoring and communication of the
Bank’s risk profile quickly and effectively.
The assessment of the Bank’s risk profile against the RAF is an
ongoing and iterative process. With regards to the timing that the
RAF update takes place (as part of the regular annual update
process), the interaction with other key processes of the Bank is
taken into consideration. Specific focus is placed to RAF’s
interplay with the Business Plan, as the two processes feed into
each other: in certain cases the risk appetite is expected to act as
backstop / constraint to the Business Plan, while for other cases,
the Business Plan provides input for setting risk tolerance levels.
RAF is also interrelated with other key processes such as ICAAP,
ILAAP, Recovery Plan, NPE Plan.
New Reporting Tool for Credit Risk Purposes
Synergies among IT and Credit Risk Units for the architecture and
implementation of a new in-house module for the union and
blending of credit risk data, supported mainly from the IT
infrastructure, as well as, from excel files in order to be
consistent with the Financial Statements, i.e. other assets. The
new module will carry out the automation and integration of all
credit risk reporting requirements according to the Basel III
framework. Moreover, the module will be updated accordingly
with the new rules of Basel IV (Basel III reforms specific
modifications), effective from 1 January 2025.
Pricing and Credit Risk Models
The Bank has in place a well-defined risk-adjusted pricing
framework that is based on fundamental pricing principles and is
governed by relevant guidelines, robust methodologies and tools.
The Bank, in 4Q. 22, has initiated the revision and update of the
components factored in the Risk-based Corporate & Retail Pricing
models, i.e., incorporating actual Funding cost curves,
operational expenses & Credit Risk. The update will be completed
within 2023 and all relevant amendments will be incorporated in
Pricing Guidelines.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
73
Furthermore, the Bank in a continuous effort to improve its
efficiency and the quality of the services provided, is moving to a
more advanced credit risk models suite for the retail portfolios.
Following the previous years’ re-development of the retail
household application scorecards and development of customer
level behavioral scores, a new suite of models for the Small
Business portfolio was developed. The new models will facilitate
the Bank’s strategic expectation regarding Small Business
segment. More specifically, 23 new models were developed,
utilizing a wide range of both company’s and key owners’
information, innovative transactional data (i.e. current accounts
and credit cards transactions), as well as novel elements such as
the
ecosystem of the related companies (network models). The
model outcome is combined with the existing
Small Business
behavioral model and the Retail behavioral model for company
owners’, resulting to enhanced predictive power, while
optimizing the use of different models for different use scenarios:
empowerment of credit approval process, targeted product
offering to non-lending customers, cross selling and marketing
campaigns.
The systemic implementation of the newly developed models and
the alignment with the existing
Small Business
framework is expected to be completed within 2023.
Additionally, a set of new data sources (e.g. open banking data)
will be explored aiming to further enhance
Small Business
modelling.
New Corporate Rating Model
In February 2022, the implementation of the New Corporate
Rating Model (“CRM”) was completed and the model was
launched into production. New CRM which is the core model of
NBG’s Underwriting Platform, “Moody’s CreditLens (CL)”, is an
optimized model, with more recent, representative data which is
also enhanced with Early Warning System capabilities (i.e.,
integration of customer behavioral score in the evaluation
process) and is expected to provide more accurate ratings,
facilitating the Bank’s lending activities.
IFRS 9 Models Review in 2022
IFRS 9 SME Retail PD and LGD
In 2022, NBG finalized and launched two new models for the
Retail SME portfolio, which are utilized for IFRS 9 purposes from
4Q.22 onwards. The new models are considered as major
developments in the Bank because, in contrast to the previous
methodologies used, they have the ability to produce obligor
specific risk sensitive estimates. The SME Retail PD produces
estimates at an account level and the SME Retail LGD considers
three basic model components that lead to the implementation
of conceptually sound estimates.
IFRS 9 / Consumer Term Loans LGD
Within 2022, the Bank re-developed, finalized and launched a
new Consumer Term Loans LGD model which is utilized for IFRS 9
purposes from 4Q. 22 onwards. This fully re-designed new model
incorporates the new Definition of Default, utilizes macro FLI in
all of its components and handles various issues concerning the
initial model version.
IFRS 9 Models Review in 2023
In the context of IFRS 9 Models Review project, a re-development
phase of Retail Non-SME Revolving Products models is underway.
This is the sole remaining loan segment where the initial models’
version is still applied, and the scope of the project is to help the
Bank achieve high quality and sound implementation of IFRS 9
principles that meet regulatory expectations across loan
portfolios.
Moreover, IFRS 9 Corporate and SME Retail EAD models’
development will be finalized and will be implemented in the
Bank’s systems.
In addition, the optimization of the Project Finance scorecard has
been initiated and is expected to be completed and implemented
by the end of 2023. Project Finance is one of the five different
rating models comprising NBG’s Corporate Credit Rating System
(“CCRS”) and is used in order to assess Corporate exposures,
where the purpose is to finance the development or acquisition
of large, complex and expensive installations. The new scorecard
will ensure full alignment with the regulatory expectation.
Update of Credit Risk Model Development Policy
In 2023, the Bank will finalize the update of the Model
Development Policy which will be submitted for approval to the
competent committees. The purpose of the respective policy is to
set out a coherent framework of principles and standards
governing the development, and documentation of credit risk
models, providing guidance for their quantitative monitoring. The
policy applies to all models used for credit risk measurement
purposes, including financial reporting and credit impairment
calculation, regulatory, credit decision making, as well as Internal
Capital Adequacy and Stress Testing purposes. The policy is in line
with the requirements of the regulatory guidelines and market
leading practices and ensures that credit risk models are “fit for
purpose” taking into account their ability to generate accurate
and consistent estimates for the measurement of credit risk on
an on-going basis.
Other developments per Risk Type
o
Market Risk and Counterparty Credit Risk
Given the Bank’s continuous effort to enhance the robustness
and completeness of its Market Risk and Counterparty Credit Risk
management processes and in order to comply with the revised
regulatory framework (Basel III), the key developments related to
these risks within 2022 are summarized below:
●
Following the successful completion of SSM’s onsite
investigation, NBG received ECB’s approval for the inclusion
of Vega risk in the VaR model, which improves the risk factor
coverage, accuracy and robustness of the model and,
Board of Directors’ Report
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Key Highlights
Transformation
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Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
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Statement
74
consequently, the estimation of Market Risk capital charges.
●
Implementation of a new methodology based on ISDA’s
Standard Initial Margin Model (“SIMM”) for the calculation
of the Potential Future Exposure (“PFE”) of derivative
transactions with corporate clients.
Moreover, the following actions are scheduled for 2023:
●
Inclusion of Vega risk in the VaR/sVaR calculations since
January 2nd 2023, based on ECB’s approval letter.
●
Transition of all PFE calculations to a new simulation engine,
which utilizes the existing Market and Counterparty Credit
Risk infrastructure.
●
Implementation of the revised standardized approach for
the calculation of CVA capital charges under Basel III (BA-
CVA), as well as of the current regulatory framework, in the
same risk platform used for Counterparty Credit Risk capital
requirements.
●
Update of Market Risk Policy and Methodology documents,
to reflect the inclusion of Vega risk in the VaR model.
●
Delivery of the EBA 2023 Stress Test templates related to
Market Risk, Counterparty Credit Risk and Liquidity
Reserves.
o
Interest Rate Risk in the Banking Book
Policy interest rates have been increasing steadily since 2H.22,
mainly as a monetary policy response to recent inflationary
pressures linked to the rise of energy prices and exacerbated by
the war in Ukraine. This important development marks the
transition from near-zero to new, substantially increased interest
rate levels, which has propagated to all major market interest
rate benchmarks. The Bank has monitored closely the effect of
these developments to the core interest rate risk metrics of the
Balance Sheet and designed appropriate RAF metrics changes, in
order to better capture the Bank’s Risk Appetite in this shifting
interest rate environment.
In this context, the RAF update project, which is due to be
completed in 1Q.23, will include substantial changes in the IRRBB
NII sensitivity metrics, in order to align the Bank’s Risk Appetite
to this risk type in the current interest rate environment.
Additionally, the GFLRMD formulated and presented to the ALCO
Committee a new framework for monitoring and managing Credit
Spread Risk in the Banking Book, in order to comply with the
updated Regulatory requirements. The Bank plans to conclude
during 2023 the definition of the Credit Spread Risk in the
Banking Book framework, with the completion and approval of
the relevant Policy Document.
o
Liquidity Risk
In the context of continuously improving its Liquidity Risk
Management Framework and respond to the regulatory
requirements, the Bank completed in 2022 the following
exercises/enhancements:
●
The submission of the updated documents “Identification
of Key Liquidity Entities” and “Identification of Key
Liquidity Drivers”, as part of the wider SRB Resolution.
●
The enhancement of operational efficiency of the in-
house liquidity application with the implementation of
archiving and restoring processes.
Moreover, several enhancements and new initiatives are planned
to be implemented during 2023. More specifically:
●
Update of Liquidity Risk Management Policy and
Contingency Funding Plan, as per the supervisory
requirements.
●
Submit the required by SRB document in the context of
the 2023 liquidity in resolution project.
●
Implement the new guidelines for the supervisory
Additional Liquidity Monitoring Metrics (“ALMM”).
o
Operational Risk Management
In a continuous effort to further improve Operational Risk
Management throughout the Group several initiatives were
undertaken during 2022.
A significant accomplishment was the successful implementation
of the Operational Risk Management Module of the Governance,
Risk and Compliance (“GRC”) Platform. The transition to the new
platform was completed on time and the ORM module is fully
operational since 1Q.22. Additionally, GORMD’s certified
personnel provides Group wide training on the new capabilities
of the platform on an ongoing basis. As part of the Enterprise Risk
Management Project which is part of the Bank’s Transformation
Plan, GORMD performed an analysis of the Outsourcing,
Vendor/3d Party and Cyber Attack (Internal/External) Risk
Themes. The scope of the Project comprised the following steps:
●
Definition of Roles & Responsibilities and depiction in a
Responsible, Accountable, Consulted, and Informed
(“RACI”) matrix.
●
Assessment of the adequacy of all related documents
such as Mandates, Policies, Frameworks.
●
Design or update of the reporting and monitoring
procedures.
●
Definition of the relative risk metrics (KRIs).
Another key enhancement was the review & update of NBG’s KRI
Dashboard. All KRIs were reviewed in order to further improve
their relevancy and consistency with Bank’s Risk Profile, whereas
all KRIs thresholds were also reviewed and calibrated.
Furthermore, new KRI Dashboards were developed for major
domestic (NBG Leasing S.A., NBG Factors S.A.) and foreign (NBG
Cyprus Ltd, Stopanska Banka A.D. -Skopje) subsidiaries.
Additionally, a major initiative was the enhancement of the
Outsourcing Risk monitoring process. The Bank updated its
Outsourcing Policy in June 2022 and developed a detailed
Outsourcing Procedure, which encapsulates the whole
outsourcing process lifecycle. GORMD continued with the
ongoing monitoring of the Outsourcing Risk that includes, among
others, the review of all Outsourcing Risk Assessments, the
evaluation of Critical Outsourcing Arrangements and the relevant
Exit Plans, as well as, the preparation of regular reporting to the
Outsourcing Committee and the Board of Directors. The Bank is
also in the process of reviewing and validating the risk
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
75
assessment methodology used to assess the Outsourcing Risk per
Outsourcing Engagement. Other projects which were completed
in 2022 and related to the enhancement of management of
Operational Risk are the following:
●
The Operational Risk Management Framework, as well as,
the relevant Policy & Guidelines documents were revised
in order to incorporate all new regulatory developments
BCBS Principles on the Sound Management of Operational
Risk & Operational Resilience.
●
Aiming at the identification and measurement of potential
future, significant operational risk exposures, the Bank’s
Executive and Senior Management conducted for a fourth
consecutive year, an evaluation of the Group’s main risks
(Top Operational Risks) based on the Scenario Analysis
Methodology.
●
The Risk & Control Self Assessment exercise, which
emphasises in the systematic identification and efficient
mitigation of potential operational risk exposures, was
completed throughout all Bank’s Business Units and
Group’s Subsidiaries as per the Risk & Controls Self
Assessment (“RCSA”) plan.
●
GORMD completed the review and reclassification of the
recorded operational internal loss events, based on the
updated Operational Risk Taxonomy in order to facilitate
better analysis and proactive risk management.
●
The monitoring of Cyber Risk and the review of all ICT &
Business Continuity documents was an additional priority
given by Group Operational Risk in 2022. Besides, GORMD
continued with consulting & advising on services delivered
on Cloud and also participated in the Power Outage
Scenario Implementation.
●
Finally, GORMD reviewed and commented upon
approximately 60 Bank Policies, as well as on New &
Updated Products & Services designed and implemented
by the Bank.
Finally, and in order to establish and develop a number of Risk
Culture initiatives, Group Operational Risk applied an extensive
Operational Risk training program that was provided throughout
the Group. A number of 44 Training Sessions with 2,069 FTE
Training hours was delivered to all SRCOs & URCOs, as well as, to
other Bank employees involved in the implementation of
Operational Risk Programs (RCSA, Internal Events, KRIs). A new
initiative was the training on Outsourcing Risk Management that
was delivered to the Bank’s Business Units Heads in 4Q.22.
Additional training sessions for URCOs have been scheduled for
2023. In addition, GORMD launched Operational Risk Forums
within Greece as well as for international subsidiaries and
continued updating the Operational Risk Portal, which serves as a
centralized access point for all relevant Operational Risk material.
Moreover, a number of enhancements and new initiatives are
planned to be implemented during 2023. More specifically:
Participation in the Transformation Project
●
Engagement in ESG Workstream that includes C&E
Scenario Analysis, Stress testing & Reporting.
●
Additional Enterprise Risk Management initiatives.
GRC Reporting Capabilities
●
Group Operational Risk, works on the development of
GRC reporting templates by utilizing Power BI
capabilities.
Transition to Basel IV
●
Operational Risk Management prepares for the transition
to Basel IV regarding Operational Risk, based on the New
Standardized Approach.
2023 Stress Test
●
GORMD participates in the 2023 Stress Test, along with
all involved Risk Units.
Consulting and monitoring of ICT & Outsourcing Risks
●
GORMD will keep monitoring ICT Risks providing
consultation in Cyber & Business Continuity related
Projects and Initiatives, as well as to Assessments and
other Actions related to the management of Outsourcing
Risk.
Implementation of the annual RCSA Plan
●
GORMD will continue with the implementation of the
2023 RCSA plan and initiation of the RCSA cycle for the
identification and assessment of operational risks and
their associated controls.
The Bank has adopted the Standardized
Approach for the calculation of operational risk
regulatory capital requirements, both on a Bank
and a Group level.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
76
Management of Risks
Credit Risk
(Audited)
Credit risk is the risk of financial loss relating to the failure of a
borrower to honour its contractual obligations. It arises in lending
activities as well as in various other activities where the Group is
exposed to the risk of counterparty default, such as its trading,
capital markets and settlement activities. Credit risk is the largest
single risk the Group faces. The credit risk processes are
conducted separately by the Bank and each of its subsidiaries.
The credit risk procedures established by the subsidiaries are
coordinated by the GCRCD.
The Group’s credit granting processes include:
●
credit-granting criteria based on the particular target
market, the borrower or counterparty, as well as the
purpose and structure of the credit and its source of
repayment;
●
credit limits that aggregate in comparable and meaningful
manner, different types of exposures at various levels;
●
clearly established procedures for approving new credits
as well as the amendment, renewal and re-financing of
existing credits.
The Group maintains on-going credit administration,
measurement and monitoring processes, including in particular:
●
documented credit risk policies;
●
internal risk rating systems;
●
information systems and analytical techniques that
enable measurement of credit risk inherent in all
relevant activities.
The Group’s controls implemented for the above processes
include:
●
proper management of the credit-granting functions;
●
periodical and timely remedial actions on deteriorating
credits;
●
independent, periodic audit of the credit risk
management processes by the Group Internal Audit
Function, covering in particular the credit risk
systems/models employed by the Group.
Additionally, the GCRCD measures and monitors credit risk on an
on-going basis through documented credit risk policies, internal
rating systems, as well as information systems and analytical
techniques that enable measurement of credit risk inherent in all
relevant activities. Thus, the Group achieves active credit risk
management through:
●
the application of appropriate limits for exposures to a
particular single or group of obligors;
●
the use of credit risk mitigation techniques;
●
the estimation of risk adjusted pricing for most products
and services;
●
a formalized validation process, encompassing all risk
rating models, conducted by the Bank’s independent
MVU.
The Credit Policies for the Corporate and the Retail Banking
portfolios of the Bank and its subsidiaries set the minimum credit
criteria, present the fundamental policies, procedures and
guidelines for the identification, measurement, approval,
monitoring and managing of credit risk undertaken in Corporate
and Retail Banking Portfolios respectively, both at the Bank and
Group levels.
The Credit Policy of the Bank is approved by the Board of
Directors upon recommendation of the BRC following proposal
by the CRO to the Senior Executive Committee and the BRC, and
is reviewed on an annual basis and revised whenever deemed
necessary and in any case every two years.
Credit Policies of each subsidiary are approved by the competent
local boards or committees, following a recommendation by the
responsible officers or subsidiaries’ bodies, according to the
decisions of the Bank and the provisions of the Credit Policies.
Each proposal must bear the prior consent of the Group Chief
Credit Officer (“CCO”), or the Head of NBG’s Group Retail Credit
Division depending on the portfolio, in collaboration with the
Head of NBG’s GCRCD for issues falling under their responsibility.
The subsidiaries’ Credit Policies are reviewed on an annual basis
and revised whenever deemed necessary and in any case every
two years.
Through the application of the Retail Banking Credit Policy, the
evaluation and estimation of credit risk, for new as well as for
existing products, are effectively facilitated. NBG’s Senior
Management is regularly informed on all aspects regarding the
Credit Policy. Remedial action plans are set to resolve the issues,
whenever necessary, within the risk appetite and strategic
orientation of the Bank. The Bank’s Retail Banking Credit Policy is
approved and can be amended or revised by the Board of
Directors following recommendation from the BRC and is subject
to periodic revision. Retail Banking Credit Policy is reviewed on an
annual basis and revised whenever deemed necessary and in any
case every two years. All approved policy changes are
incorporated in the Policy Manual.
Concentration Risk
(Audited)
The Bank manages the extension of credit, controls its exposure
to credit risk and ensures its regulatory compliance based on an
internal limits system. The GCRCD is responsible for limits setting,
limits monitoring and regulatory compliance.
The fundamental instruments for controlling Corporate Portfolio
concentration are obligor limits, reflecting the maximum
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
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financial review
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Non-Financial
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Corporate
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permitted level of exposure for a specific obligor, given its Risk
Rating and sector limits, that set the maximum allowed level of
exposure for any specific industry of the economy; industries are
classified in groups on the basis of NACE (General Industrial
Classification of Economic Activities within the European
Communities) codes. Sector limits constitute part of the Bank’s
RAF and are revised at least annually. Excesses of the Industry
Concentration Limits should be approved by the BRC following a
proposal of the General Manager of Group Risk Management
CRO. Any risk exposure in excess of the authorized internal
obligor limits must be approved by a higher level Credit
Approving Body, based on the Credit Approval Authorities as
presented in the Corporate Credit Policy.
Credit risk concentration arising from a large exposure to a
counterparty or group of connected clients whose probability of
default depends on common risk factors is monitored, through
the Large Exposures reporting framework.
Finally, within the ICAAP, the Bank has adopted a methodology to
measure the risk arising from concentration to economic sectors
(sectoral concentration) and to individual companies (name
concentration). Additional capital requirements are calculated, if
necessary, and Pillar 1 capital adequacy is adjusted to ultimately
take into account such concentration risks.
Market Risk
(Audited)
Market Risk is the current or prospective risk to earnings and
capital arising from adverse movements in interest rates, equity
and commodity prices and exchange rates, as well as, their levels
of volatility. The main contributor to market risk in the Group is
the Bank. NBG seeks to identify, estimate, monitor and
effectively manage market risk through a robust framework of
principles, measurement processes and a valid set of limits that
apply to all the Treasury’s transactions. The most significant types
of market risk to which the Bank is exposed are the following:
interest rate risk, equity risk, foreign exchange risk and
commodity risk.
Interest Rate Risk
is the risk arising from fluctuations of interest
rates and/or their implied volatility. A principal source of interest
rate risk stems from the Bank’s interest rate, over-the-counter
(“OTC”) and exchange traded derivative transactions, as well as
from the Trading and the Held to Collect and Sell (“HTCS”) bond
portfolios.
More specifically, the Bank maintains a material derivatives
portfolio of mainly vanilla interest rate products, which are
mostly cleared in Central Counterparties (“CCPs”) or managed
through bilateral International Swaps and Derivatives Association
(“ISDA”) and Credit Support Annexes (“CSAs”) agreements. Their
main function is to hedge the IR risk of the bonds classified in the
HTCS and Held to Collect (“HTC”) portfolios or the exposure of
other derivative products in the Trading Book. Additionally, the
Bank retains a significant securities portfolio, mainly comprising
of Greek and other periphery sovereign bonds, which is primarily
held in the Baking Book and predominantly in the HTC portfolio.
Furthermore, NBG holds a moderate portfolio of bonds issued by
Greek and international banks and limited positions in corporate
bonds. Overall, NBG has moderate exposure to interest rate risk
in the Trading Book, while it enters into vanilla IRS transactions in
order to mitigate the interest rate risk of the bonds listed in the
Banking Book.
Equity Risk
equity indices and/or their implied volatility. The Bank holds
moderate positions in cash stocks traded in the Athens Stock
Exchange and a limited position in equity-index linked exchange
traded derivatives. The cash portfolio comprises of trading (i.e.
short-term) and held to collect and sell (i.e. long-term) positions.
The portfolio of equity derivatives is mainly used for the hedging
of equity risk arising from the Group’s cash position and equity-
linked products offered to customers and to a lesser extent for
proprietary trading. Additionally, the Bank retains positions in
mutual funds, through the embedded options in structured
deposits sold to clients, along with their cash hedge.
Foreign Exchange Risk
currency exchange rates and/or their implied volatility. The Open
Currency Position (“OCP”) of the Bank primarily arises from
foreign exchange spot and forward transactions, as well as from
the mark-to-market of NBG’s OTC derivatives’ trades
denominated in foreign currency. The OCP is distinguished
between trading and structural. The structural OCP contains all of
the Bank’s assets and liabilities in foreign currency (for example
loans, deposits, etc.), along with the foreign exchange
transactions performed by the Treasury Division. Apart from the
Bank, the foreign exchange risk undertaken by the rest of the
Group’s subsidiaries is insignificant. The Group trades in all major
currencies, holding mainly short-term positions for trading
purposes and for servicing its institutional /corporate, domestic
and international customers.
Commodity Risk
commodity prices or commodity indices and/or their implied
volatility. The Bank’s exposure to commodity risk is limited, since
the clients’ positions in commodity derivatives are mostly hedged
with exchange traded commodity futures.
Value at Risk (“VaR”).
dedicated processes to assess and quantify its portfolios’ market
risk, based on best practice and industry-wide accepted risk
metrics. More specifically, the Bank estimates the market risk of
its Trading and HTCS portfolios, using the Variance-Covariance
(“VCV”) VaR methodology. The VaR estimates are used both for
internal management as well as for regulatory purposes. In order
to verify the predictive power of the VaR model, the Bank
conducts back-testing on a daily basis. Moreover, since the daily
VaR estimations refer to “normal” market conditions, a
supplementary analysis is necessary for capturing the potential
loss that might arise under extreme and unusual circumstances in
the financial markets. Thus, the Bank conducts stress testing on a
weekly basis, on both the Trading and HTCS portfolios, based on
specific scenarios per risk factor category (interest rates, stock
index prices, exchange rates). For more details on the VaR model
and the respective results, as well as on the back-testing and
stress-testing procedures, please see Note 4.3 of the Annual
Financial Statements.
The Bank has also established a framework of VaR limits, in order
to control and manage the risks to which it is exposed, in an
efficient way. These limits are based on the Bank’s Risk Appetite,
as outlined in the RAF, the anticipated profitability of the
Treasury Division, as well as on the level of the Bank’s own funds
(capital budgeting), in the context of the Group strategy. The VaR
limits refer not only to specific types of market risk, such as
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
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Economic and
financial review
Risk management
Non-Financial
Statement
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interest rat e, foreign exchange, equity and commodities but also
to the overall market risk of the Bank’s Trading and HTCS
portfolios, taking into account the respective diversification
between portfolios. Moreover, the same set of limits are used to
monitor and manage risk levels on the Trading Book, on an
overall basis and per risk type, since this is the aggregation level
relevant for the calculation of the own funds requirements for
Market Risk, under the Internal Model Approach (“IMA”).
The principles and practices for sound market risk management
at NBG are set forth in the Market Risk Management Policy
(“Policy”) which is subject to ongoing revision, as changes in
business conditions, amendments to existing regulations and
other events may affect market risk practices and controls. The
Policy is established to evidence the Bank’s commitment to
develop and adhere to the highest standards for assessing,
measuring, monitoring and controlling market risk arising from
trading and non-trading activities. Additionally, the VaR model as
well as the processes followed by the GFLRMD for the
measurement and monitoring of Market Risk are described in the
VaR/sVaR Model Methodology document, which is subordinate
to the Market Risk Management Policy and is subject to changes,
in accordance with amendments to the Policy.
The adequacy of the Market Risk Management Framework as a
whole, as well as the appropriateness of the VaR model, were
successfully reassessed by the SSM, in the context of the
Targeted Review of Internal Models (“TRIM”). ECB concluded in
its final Decision that NBG may continue calculating the own
funds requirements for general market risk with the internal
model approach, which verifies the robustness of the Bank’s
Market Risk management model. Furthermore, the Bank’s
independent MVU assesses the validity of the VaR model, on an
annual basis, while the Internal Audit Division evaluates the
effectiveness of the relevant controls, on a periodic basis. Finally,
the GFLRMD implemented the new standardized approach for
the calculation of the Market Risk capital requirements under
Basel III (SA-FRTB), in the current risk engine. The revised
framework came into force for reporting purposes in 3Q.21.
Interest Rate Risk in the Banking Book
(Audited)
IRRBB refers to the current or prospective risk to the Bank’s
capital and earnings arising from adverse movements in interest
rates that affect the Bank’s Banking Book positions. The main
sources of IRRBB are the following:
●
Gap risk
: the risk related to the timing mismatch in the
maturity and re-pricing of assets and liabilities and off-
balance sheet short- and long-term positions;
●
Basis risk:
arises from imperfect correlation in the
adjustment of the rates earned on and paid on different
instruments with otherwise similar repricing
characteristics;
●
Option risk:
arises from embedded options in the Group’s
assets, liabilities or off-balance sheet portfolios.
●
Credit Spread Risk in the Banking Book (“CSRBB”):
the risk
driven by changes in the market perception about the
price of credit risk, liquidity premium and potentially other
components of credit-risky instruments, which is not
explained by IRRBB or by expected credit (i.e., jump-to-
default) risk.
Interest rate fluctuations affect the economic value of the
Group’s assets, liabilities and off-balance sheet items, through
corresponding changes in the cash flows’ amounts and discount
rates and – therefore – their present value. Changes in interest
rates also affect the Group’s earnings by increasing or decreasing
its NII and the level of other interest rate-sensitive income and
operating expenses. It is therefore important to examine IRRBB
from these two complementary views; and quantify the effect of
interest rate changes using both value and earnings measures.
The Group’s Banking Book consists mainly of loans and advances
to customers, reserves with the Central Bank, due from banks,
securities measured at amortised cost and Fair Value through
Other Comprehensive Income (“FVTOCI”) (mainly Greek
government and other EU sovereign fixed rate bonds), due to
customers, due to banks, debt securities in issue, Eurosystem
Funding and other borrowed funds that are measured at
amortised cost. The Group maintains adequate measurement,
monitoring, and control functions for IRRBB, including:
●
measurement systems of interest rate risk that capture all
material sources of interest rate risk and that assess the
effect of interest rate changes in ways that are consistent
with the scope of the Group’s activities;
●
measurement of vulnerability to loss under stressful
market conditions;
●
processes and information systems for measuring,
monitoring, controlling, and reporting interest rate risk
exposures in the Banking Book; and
●
a documented policy regarding the management of IRRBB.
IRRBB is measured, monitored, and controlled by GFLRMD, based
on the Group’s established RAF. Specifically, GFLRMD calculates a
number of risk metrics for the purpose of monitoring and
controlling IRRBB:
●
NII sensitivity, a measure of the effect of interest rate
changes to the Group’s expected interest earnings. NII
sensitivity measures changes to interest income under
varying interest rate scenarios over a one-year horizon
and assuming a constant balance sheet over this period.
Its main purpose is to measure the vulnerability of the
Group’s profitability to changing interest rates conditions.
●
Economic Value of Equity (“EVE”) Sensitivity, a measure of
the Bank’s Balance sheet value vulnerability to interest
rate changes. EVE Sensitivity represents the change in the
net present value of all cash flows in the Bank’s balance
sheet under a set of interest rate stress scenarios and is
calculated on the entire balance sheet under a run-off
assumption, i.e., no replenishment of matured
transactions.
Both metrics are used in establishing the Group’s IRRBB capital
requirements. The evaluation and review of IRRBB measurement
systems and processes is undertaken annually by the Group’s
Board of Directors’ Report
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Internal Audit Division in relation to capital requirements
calculations perform ed for the ICAAP exercise. Furthermore, the
Bank’s independent MVU granted full approval to the IRRBB
model and has included IRRBB to its models’ inventory and
corresponding annual model recertification process.
A set of IRRBB limits are defined in the Group’s RAF in relation to
the EVE sensitivity measure and in alignment with the limits
prescribed in the Supervisory Outlier Test of the latest IRRBB
Regulatory Guidelines. In addition, the Bank has established
internal IRRBB limits of the Bank’s NII sensitivity to interest rate
fluctuations. Both EVE and NII sensitivity limits are monitored and
reported to the BRC as well as the ALCO on a monthly basis. The
Group is exposed to increasing levels of IRRBB, amidst the
current, increasing interest rates environment, which however
remain within the limit structure prescribed in the Regulatory
Guidelines.
Counterparty Credit Risk
(Audited)
Counterparty Credit Risk (CCR) arises from the potential failure of
the obligor to meet its contractual obligations and stems from
derivative and other interbank secured and unsecured funding
transactions, as well as commercial transactions.
Complementary to the risk of the counterparty defaulting, CCR
also includes the risk of loss due to the deterioration in the
creditworthiness of the counterparty to a derivative transaction.
NBG’s CCR predominantly stems from Over the Counter (OTC)
and Exchange Traded (Listed) derivative products and, to a lesser
extent, from interbank secured and unsecured funding
transactions, as well as commercial transactions to which the
Bank has limited CCR exposure.
The Group has established and maintains adequate
measurement, monitoring, and control functions for
counterparty credit risk, including:
●
CCR measurement systems and methodologies that aim to
capture and quantify all material sources of CCR, in ways
that are consistent with the scope of the Group’s activities.
●
The calculation of the key CCR metrics, namely the
Exposure at Default (“EAD”), the PFE and the Credit
Valuation Adjustment (“CVA ”) relevant to the
aforementioned transactions. These metrics are used for
limits monitoring purposes, for the calculation of the CCR
capital requirements, as well as for accounting valuation
adjustment and collateral management purposes.
●
Back-testing procedures, which aim to assure the validity
and robustness of the models used for the calculation of
the PFE of derivative transactions.
●
Adequate and effective processes and information systems
for measuring, monitoring, controlling, and reporting CCR
exposures.
●
Related IT systems are sophisticated enough to capture the
complexity of the trading activities of the Group. Reports
must be provided on a timely basis to the Board of
Directors, Senior Management and all other appropriate
levels, as well as to the Regulatory Authorities.
NBG seeks to further mitigate CCR by standardizing the terms of
the agreements with counterparties through ISDA and Global
Master Repurchase Agreement (“GMRA”) contracts that
encompass all necessary netting and margining clauses. CSAs
have also been signed with almost all active FIs, so that net
current exposures are managed through margin accounts, on a
daily basis, by exchanging mainly cash or debt securities as
collateral. Moreover, NBG performs OTC transactions with CCPs,
either directly or through qualified clearing brokers.
Also, NBG avoids taking positions on derivative contracts where
the values of the underlying assets are highly correlated with the
credit quality of the counterparty (wrong way risk).
All the methodologies and processes followed by NBG for the
estimation, monitoring and management of the counterparty
credit risk, both for internal purposes, as well as for regulatory
compliance are detailed in the Counterparty Credit Risk
Framework document.
Country Risk
(Audited)
Country risk is the current or prospective risk to earnings and
capital caused by events in a particular country, which are at least
to some extent, under the control of the government but not
under the control of a private enterprise or individual. The main
categories of country risk consist of sovereign, convertibility and
transfer risk. Sovereign risk stems from a foreign government’s
lack of capacity and/or unwillingness to repay its debt or other
obligations. Convertibility and transfer risk arise when a borrower
is unable to convert funds from local to foreign currency, in order
to repay external obligations. Therefore, country risk stems from
all cross border transactions, either with a central government, or
with a financial institution, a corporate or a retail client.
The on and off-balance sheet items, which potentially entail
country risk are the following:
●
participation in the equity of the Group’s subsidiaries,
which operate in other countries;
●
interbank secured and unsecured placements and risk that
arises from OTC transactions, with financial institutions
that operate abroad;
●
loans and advances to corporations or financial
institutions that operate abroad, positions in corporate
bonds of foreign issuers and cross-border project finance
loans;
●
funded and unfunded commercial transactions with
foreign counterparties; and
●
holdings of foreign sovereign debt.
In this context, NBG’s exposure to country risk predominantly
arises from the participation in the Group’s subsidiaries operating
abroad, the Bank’s holdings in foreign sovereign bonds, as well as
Board of Directors’ Report
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from cross border activities in the form of interbank/commercial
transactions and corporate lending.
GFLRMD monitors country risk exposure, as defined above, on a
daily basis, mainly focusing on the countries where the Group has
presence. Currently, the Group has limited exposure to country
risk, since the main operations abroad are in Cyprus and
Northern Macedonia.
Liquidity Risk
(Audited)
Liquidity Risk is defined as the risk arising from the institution’s
inability to meet its liabilities when they come due without
incurring unacceptable losses.
It reflects the risk stemming from limited or less stable sources of
funding over the longer term (i.e., funding risk), or from
insufficient available collateral for Eurosystem, secured or
wholesale funding (i.e., asset encumbrance risk) or from a
concentration in unencumbered assets disrupting the Bank’s
ability to generate cash in times of reduced market liquidity for
certain asset classes (i.e., concentration risk). Therefore, Liquidity
Risk captures both the risk of the Bank being unable to liquidate
assets in a timely manner with reasonable terms, and the risk of
unexpected increases in the Bank’s cost of funding.
The Bank’s executive and senior management has the
responsibility to implement the Liquidity Risk appetite approved
by the BRC and to develop the policies, methodologies and
procedures for identifying, measuring, monitoring and controlling
Liquidity Risk, consistent with the nature and complexity of the
Bank’s activities. The Bank’s executive and senior management is
informed daily of the Bank’s Liquidity Risk position, ensuring that
the Group’s Liquidity Risk stays within approved levels.
On a daily basis, senior management receives the Bank’s liquidity
report, which presents a detailed analysis of the Bank’s funding
sources, liquidity buffer, cost of funding and other liquidity
metrics and indicators in line with the Bank’s RAF, Recovery Plan
and Contingency Funding Plan. Risk Management is also able to
produce and report the LCR to executive management daily,
leveraging the capabilities of the in-house developed liquidity
platform. Additionally, Risk Management reports monthly to
ALCO, all approved liquidity metrics and indicators, as well as
liquidity stress testing outcomes, maturity gaps between assets
and liabilities, and cost of funding evolution.
Liquidity Risk management aims to ensure that the Bank’s
liquidity risk is measured appropriately and reported frequently
to confirm that liquidity metrics are within set risk appetite, and
management is promptly informed of any developing liquidity
risks. In addition, the Group’s subsidiaries measure, report and
manage their own individual Liquidity Risk, ensuring they are self-
sufficient in a liquidity stress (i.e., not reliant to the Parent
entity).
Current Liquidity Status
NBG’s robust liquidity position has been successfully tested and
confirmed during the last three years of continuous global
challenges, starting with the COVID-19 crisis, and more recently
with the energy crisis. The Bank’s strong liquidity position stems
from the stability of its funding sources, and from the high level
of its liquidity buffer, making the Bank very resilient to a potential
liquidity stress event.
On 31 December 2022, the Bank’s strong liquidity profile is
representative of a healthy liability side of the balance sheet. The
funding structure has further improved by the inflow of customer
deposits and the Bank’s successful issuances of Senior Preferred
Bonds, whilst the Bank maintains full access to the secured
interbank markets. Moreover, LCR and NSFR, as well as the
Bank’s Liquidity Buffer currently stand at the highest historical
levels.
Funding Sources and Key Liquidity Metrics
The Bank’s principal sources of liquidity are its customer deposits,
Eurosystem funding, which is gradually decreasing, repurchase
agreements (repos) with FIs and wholesale funding through the
issuance of (MREL-eligible) securities. ECB funding and repos with
FIs are collateralized mainly by high quality liquid assets, such as,
EU sovereign bonds, Greek government bonds and T-Bills, as well
as by other assets, such as highly rated corporate loans and own
issued covered bonds.
During 2022, the Bank strengthened its liquidity profile, as
customer deposit balance continued its upward trend and stood
at €53.7 billion on 31 December 2022, driven by an increase in
the Bank’s most stable deposit class, the saving deposits by €2.4
billion. Moreover, MREL capacity was significantly improved, with
the successful issuance of €0.8 billion Senior Preferred bonds in
4Q.22.
Additionally, the Bank’s participation to the ECB
TLTRO III
refinancing operations
, decreased to €8.1 billion in 4Q.22,
compared to €11.6 billion the year prior, driven by the increase,
as announced by the ECB in October
he Bank’s secured
interbank funding transactions decreased by €1.1 billion
compared to 31 December 2021 and amounted to €0.1 billion as
at 31 December 2022 as well.
All the aforementioned developments, increased the Bank’s LCR
and NSFR during 2022, to historically high levels. More
specifically, on 31 December 2022 the Bank’s LCR stood at
250.2% (Group: 259.2%), and the Bank’s NSFR stood at 146.7%
(Group: 146.3%). Finally, Loan-to-Deposit ratio stood at 57.7%
and 58.6% as of 31 December 2022, on a domestic (Greece) and
on a Group level, respectively.
During 2022 the Bank’s funding cost moderately increased by 32
bps and on 31 December 2022 stood at 30 bps, while ECB interest
rates increased by a total of 250bps. The cost of funding increase
was mainly attributed to the 2022 MREL issuances and the
TLTRO-modality changes.
Finally, the Bank’s ample liquidity buffer, which stood at €25.9
billion as at 31 December 2022, increased by €1.4 billion
compared to 31 December 2021. More specifically, it comprises
of €13.6 billion in the form of cash deposited with the Bank of
Greece and other cash deposited in Nostro accounts, €6.4 billion
of collateral eligible for ECB funding and €5.9 billion of
unencumbered collateral that could be used for secured
interbank funding with FIs.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
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Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
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81
Operational Risk
NBG Group defines Operational Risk as the risk of loss resulting
from inadequate or failure in internal processes, people and
systems or from external events. This definition includes legal
risk, excludes strategic and business risk, but takes into
consideration the reputational impact of Operational Risk.
The Group Operational Risk Management Division is responsible
for overseeing and monitoring the risks assessment, providing
appropriate tools and methodologies, coordination and
assistance to the Business Units and proposing appropriate risk
mitigation measures.
Furthermore, regularly reviews the Group’s
ORMF in order to ensure that all relevant regulatory
requirements are met.
NBG has established a Group-wide ORMF that provides the
foundations, principles and governance arrangements for
designing, implementing, monitoring, reviewing and continually
strengthening operational risk management throughout the
Group.
In particular, under this ORMF, NBG aims to:
1)
establish a consistent Group-wide approach to operational
risk management leading to a proactive approach in
avoiding unexpected events and minimizing of operational
risk losses;
2)
support the Group’s business strategy by ensuring that
business objectives are pursued in a risk-controlled manner;
3)
improve the quality of operational risk information leading
to more informed risk decision-making and capital
allocation;
4)
ensure consistency with best practices and compliance with
regulatory (quantitative and qualitative) requireme nts;
5)
promote a Group-wide operational risk awareness and
culture further contributing to process efficiency and control
effectiveness.
The GORMD reports to the Operational Risk Management
Committee (“ORCO”), a sub-committee of the Senior Executive
Committee. ORCO, that has the overview of the ORMF
implementation, meets regularly on a quarterly basis, providing a
semi-annual report to the Senior Executive Committee. In
January 2022 an Outsourcing Committee was established, which
operates in accordance with the applicable legal and regulatory
framework and is responsible for overseeing the outsourcing
arrangements’ risk of the Group.
The overall responsibility for the management of Operational Risk
relies within the First Line of Defence Business Units (please refer
to section “
Corporate Governance Statement - E. Internal Control
System and Risk Management
” of the Board of Directors Report
for the Lines of Defence), that are responsible and accountable
for directly identifying, assessing, controlling and mitigating
operational risk within their business activities in compliance with
the Bank’s policies and procedures.
Operational Risk Management is integrated into the day-to-day
business, adding value to the organization by applying a proactive
approach. A series of techniques and tools have been defined by
the Group in order to identify, measure and assess Operational
Risk. The most important operational risk mechanisms used by
the Group are the following:
●
The RCSA
process performed on an annual basis aiming at the
identification and assessment of the operational risks
faced by the Group. The scope of RCSA extends to all
business lines, thereby to all business, support or
specialized Units;
●
The Internal Events Management
accurate and timely knowledge of operational risk related
internal events and has therefore established an
appropriate event management process that covers the
event life cycle, comprising the event identification,
categorization, analysis, on-going management,
remediation actions and reporting;
●
The Key Risk Indicators definition and monitoring
process: NBG defines as Key Risk Indicator any simple or
combined data variable, which allows the assessment of a
situation exposing the Bank to operational risk, as well as
its trend, by monitoring/comparing its values over time.
Therefore, KRIs are metrics providing early warning signs,
preventing and detecting potential risks and
vulnerabilities in the activities of the Bank;
●
The Scenario Analysis
as the creation of a potential event or consequence of
events that expose the organization to significant
operational risks and can lead to severe operational
losses. Scenario Analysis is the process that reveals all the
long-term exposures to major and unusual operational
risks which can have substantial negative impacts on the
organization’s profitability and reputation;
●
The Training Initiatives and Risk Culture awareness
actions: Group Operational Risk Management Division
designs and implements training programs on operational
risk and the ORMF, the use and implementation of
programs, methods and systems as well as other actions
aiming at knowledge sharing and the establishment of
Operational Risk culture Group-wide.
Model Risk
Model Risk is the potential loss the Group may incur, as a
consequence of decisions that could be principally based on the
output of the models deployed, due to errors in the
development, implementation or use of these models.
Model Risk occurs primarily for two reasons:
●
a model may produce inaccurate outputs due to errors in
its design, methodology, data inputs or implementation;
●
a model may be used incorrectly or inappropriately,
without following the proper considerations regarding its
limitations and assumptions.
Board of Directors’ Report
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Model Risk is measured, monitored, and controlled by the MVU.
Specifically, the MVU has elaborated a set of policies, guidelines,
methodologies and controls that comprise the Model Risk
Management (“MRM”) Framework. The suitable application of
the MRM Framework to cover models’ lifecycle, empowers the
MVU to perform and to be engaged in various control activities as
part of the model validation process. In case that certain
deficiencies are identified following the completion of a model
validation cycle, the MVU raises Required Action Items “RAIs”
which are acted upon
after their
competent
and
effect material changes to the models.
Since 2018, the MVU has organized its tasks towards the
following directions, aiming to thoroughly implement the
mentioned MRM Framework:
●
Key Policy and Governance Elements
: The MVU regularly
updates
introduces in a phased approach, documents and
guidelines subordinate to the Policy to enhance the actual
MRM Framework. Based on them, relevant controls have
been designed and an issue and action plan management
workflow has been inaugurated. The MVU has compiled a
set of business processes in the form of workflows, that
serve the management of models’ lifecycle and has also
developed a Model Risk quantification methodology. The
latter has been approved in April 2020 and is utilized for
ICAAP reporting purposes.
●
Model Risk Management Tools and Platform:
has put in effect automation tools, has developed in-
house processes and has created libraries containing
internally built code, following best practices and
engineering standards, to effectively perform all
quantitative validation tasks
. The MVU is also participating
in the new Common
GRC
platform implementation team.
All necessary actions regarding the Common GRC
platform’s MRM module that will mainly assist the Unit’s
day-to-day business, including the IT configuration of the
platform and the extended UAT phases that have
contributed to the module’s release to production in
December 2020, have been duly completed. The module
has been meticulously customized to comply with the
existing MRM Framework thus facilitating its integration
into the Unit’s and the Bank’s daily processes. An MRM
module User Workbook, which meets the training needs
of the platform’s delegated users by incorporating the
module’s various functionalities, has been compiled by the
Unit. Furthermore, the Unit has already proceeded with
the registration of most material models in the module’s
embedded Model Inventory.
MVU has undertaken further initiatives towards the above two
directions. Firstly, an update of the Model Validation Policy and
its Annexes has been drafted , mainly focusing on their alignment
with the Bank’s internal control mechanisms, their enhanced
integration with the MRM Framework’s recent developments and
the compliance with the requirements of the recent regulatory
developments.
Moreover, the MRM module’s use is scoped to be further
expanded by completing the registration process of all the Bank’s
models being in use, including even those recognized as non-
material, that are not currently contributing to the quantification
of Model Risk. Additionally, MVU plans to formulate processes
related to the existing communication needs through the
issuance of specific directives concerning the adoption of MRM
module’s use and the widened introduction of the comprising
model lifecycle workflows, the training of the appropriate
personnel and finally, will be working towards embedding the
reporting stream produced by various Risk and Control Units into
the Common GRC Platform, integrating all reports being
pertinent to the Model Risk management process as encoded in
the controls developed by the MVU, the related Policy
documents and their Annexes.
The Key aspects of the Model Risk Management framework are:
●
Policies and Processes
:
timely and flowless Model Risk quantification process and
to manage it in its entirety, a comprehensive set of
guidelines regarding the models’ lifecycle being in effect
as well as Policy and methodology documents relevant to
model governance, management and validation have been
elaborated. The set consists of clear and streamlined
workflows and methodology documents resulting from
MVU’s expertise and “deep dive” analysis which are
concerning the Banks’ existing business processes and the
relevant regulatory framework.
●
Model Materiality Tiering and Model Risk Assessment
:
required by the regulator, the scrutiny under which each
model is validated, monitored and managed, is
proportional to the model’s materiality. The MVU has
introduced a model materiality tiering procedure, with the
explicit intent to ascertain the level of each model’s
importance or significance. Furthermore, the mentioned
classification and the models’ validation outcome are
appropriately combined in an internally developed
methodology, with the aim to quantify Model Risk in
terms of internal capital.
●
Issues and Action Plans
:
specific issue tracking business process, implemented in
the Bank’s new Common GRC platform, for the purpose of
communicating model issues to the model owners,
tracking their statuses, approving action plans regarding
the necessary mitigating initiatives, keeping track of their
accomplishment and finally reporting the completion of
issues’ resolution to the BRC. This multitude of processes
ensures that validation exercises are contributing
effectively to maintain the models sound and functional,
keeping them fit for purpose and assisting at the same
time active Model Risk management while ensuring that
their business essence is not to be solely performed for
the fulfilment of reporting need and purposes.
●
Model Inventory and Model Risk Management Module
:
The Group’s Risk Units have worked extensively towards
the adoption of a workflow management system which
aims among other purposes, to automate most of the
procedures being pertinent to the models’ lifecycle. This
need will be covered by the Model Risk Management
Board of Directors’ Report
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module being part of the Common GRC Platform, that also
incorporates a self-contained model inventory comprising
a thorough and concise model registry in terms of model
attributes. These attributes can provide the required
supportive evidence to the mentioned issues workflow
management system. Furthermore, they will be utilized –
in their entirety or partly – as a pool of necessary inputs
for Model Risk estimation purposes. The inventory is
intended to become the Bank’s comprehensive model
repository and to play an essential role in the centralized
and holistic approach of Model Risk assessment.
The structure of the Model Risk Management process followed
by the MVU, is built around a set of distinct phases.
Initially, when the development of a new model is decided, the
model has to be registered in the Model Inventory by its owner.
Effective Model Risk Management requires the maintenance of a
complete and exhaustive inventory, comprising the entirety of
the models employed by the Bank, so that the prioritization of
the validation exercises and also the tiering and the monitoring of
the Model Risk can be adequately supported. During the models’
development phase, the MVU is kept informed of the performed
process’s progress status. Upon model development completion,
the Model Inventory is updated by the model owner with the
essential material that is needed to conclude the model
materiality tiering, the Model Risk assessment and the model
review and finally the completion of the validation process as a
whole.
After a new model is registered, if it is assessed to present
material Model Risk it is determined that the model’s Initial
Validation is required. This process is also a key component of the
efficient Model Risk management, as it allows for an accurate
Model Risk estimation. During an Initial Validation exercise, the
model is examined through a series of controls that cover a
multitude of qualitative and quantitative aspects, being mainly
designed to mitigate specific areas constituting Model Risk
sources, such as input data quality issues, model design
deficiencies, non-adherence to internal or/and external
requirements, improper model use, erroneous model
implementation and inadequate model performance. These
checks are performed utilizing a set of inputs made available by
the model owner through the Common GRC Platform, contained
in the data quality reports, the model development report, the
model use reports etc. The outcome of the model validation
effort is a combined assessment regarding the classification of
the model’s risk rating, the type of model’s approval, an ensuing
list of RAIs if any issues/deficiencies are observed in the model
assessment areas and need to be remediated.
Following the model’s approval by the competent management
level or committee, the model is implemented in the appropriate
system. The implementation phase constitutes an additional
source of Model Risk. The MVU conducts an implementation
review to assess if the implementation process and all available
reports covering the IT and UAT tests were suitably performed
and examined, with the aim to determine if the deployed model
is fit for the intended purpose and functions as expected.
Deployed models and their correct use are regularly monitored
by their owners, while they are also re-visited by the MVU
through ongoing validation exercises (yearly in case of models
that present material Model Risk, or less frequently for the rest of
the models), focusing mainly on models’ discriminatory power,
accuracy and stability. Any validation exercise could potentially
lead to the issuance of RAIs and could possibly trigger the
necessity of creating a new model version in case of required
material model changes. The latter could consequently kick-off a
new model lifecycle and maintenance set of actions, as described
above.
Climate and environmental Risk
Acknowledging the importance and potential impact of ESG risks,
the Bank has proceeded with the identification and materiality
assessment of such risks and their incorporation in the overall
Risk Management Framework, and is committed to monitoring,
assessing and managing the particular risks going forward. More
specifically, the Bank:
●
Incorporated C&E risks in its Risk identification, by
recognizing in its Risk Taxonomy Framework ESG as
transversal, cross-cutting risks rather than stand-alone risks
and considering them as drivers of existing types of
financial and non-financial risks.
●
Developed the methodological approach to assess the
materiality of ESG risks as drivers of existing types of
financial and non-financial risks. The Outcome of the first
Materiality Assessment was included in the 2022 ICAAP
and ILAAP Reports.
●
Assigned the responsibility for the management of C&E
risks throughout its organizational structure, cascading
down through the three lines of defence and
simultaneously established new Committees (Innovation
and Sustainability Committee and ESG Management
Committee) as a proof of effectiveness.
●
Incorporated ESG risks/drivers in the Risk Management
Framework of the existing risk types and implemented the
necessary enhancements into their area of expertise, as
follows:
o
The Bank incorporated the assessment of ESG risks in
its
Credit Granting & Monitoring Process
corporate portfolio. In this context, documentation,
and tools (i.e., ESG process guidelines, user manuals,
ESG scoring methodologies, ESG specific scorecards)
have been developed and are used by the corporate
underwriters in order to assess and classify obligors
and transactions in terms of ESG related risks and
sustainability lending criteria.
o
ESG related qualitative and quantitative risk metrics
(C&E metrics for monitoring purposes) have been
introduced to the
Risk Appetite Framework
Bank.
o
The Bank aligned the
NBG Risk Taxonomy
other
Operational Risk Programs
ESG risks based on the requirements set by the
competent authorities.
o
The Bank incorporated ESG risks in the
ICAAP/Internal
ST Frameworks
.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
84
o
The Bank has leveraged on its existing Stress Testing
processes and infrastructure and complied with the
EU-wide Climate Risk Stress Test
requirements (1H 2022) in terms of completeness and
timeliness. The Bank has proceeded with high priority
data enhancements in this context, utilizing external
sources as well as proxy modelling, which form a basis
for further enhancement of relevant capabilities.
In January 2022, the ECB launched a supervisory Climate Risk
Stress Test to assess how banks are prepared for dealing with
financial and economic shocks stemming from climate risk. The
exercise was conducted in the first half of 2022, after which, the
ECB published aggregate results.
This test was a learning exercise for banks and supervisors as
well. It aimed to identify best practices, as well as vulnerabilities
and challenges banks face when managing climate -related risks.
Importantly, this was not a pass or fail exercise, nor did it have
direct capital implications for supervised institutions.
In July 2022, NBG announced the successful completion of the
2022 Climate Risk Stress Test, with NBG’s overall performance
being in line with the average of the EU-wide participating
institutions. In terms of advancement in the internal climate
stress-testing capabilities (qualitative part of the Exercise), the
Bank ranked above the average of the total EU sample, at
Medium-Advanced level, while in the domestic banking sector,
NBG’s overall transition impact on Business Model viability was
assessed as of relatively lower risk (Advanced scoring).
The 2022 Climate Risk Stress Test outcome reflects the firm
commitment and progress made by NBG, setting the basis for an
effective climate risk management framework and timely
adaptation of processes and strategies, via ambitious plans for
substantial investment in human and technical capabilities.
Going forward, the Bank is planning to further enhance the
incorporation of ESG factors in its Risk Management Framework,
as methodological approaches mature, quantification/analytical
capabilities develop and additional climate and environmental
data become available.
Moreover, key initiatives relevant to the implementation of the
ESG strategy are being included in the Transformation Program to
ensure high level of focus and execution discipline in the
aforementioned critical areas. Planned actions are summarized as
follows:
●
Enhancement of C&E Credit Risk Capabilities through:
o
Integration of C&E risks in lending policies (limits,
thresholds, etc.),
o
Adjustment of risk classification procedure via linking
C&E risks with credit risk,
o
Incorporation of C&E risks into loan pricing, and
o
Regular monitoring of credit risk C&E risks.
●
Launch regular operational Climate risk monitoring,
covering materially affected risk types, for historical/static
KRIs.
●
Execute a pilot set of forward-looking Climate risk Stress
projections (medium-term, under static approach).
●
Develop methodology for measurement of GHG emissions
& target-setting, including complete internal Financed
Emissions’ proxy measurement model, for standard use in
historical measurement.
Other Risk Factors
Cyber security
The Bank is increasingly dependent on information and
communication technologies to achieve its mission and carry out
its day-to-day operation. Timely and valid information is
necessary to support the Bank's business decisions. The Bank
considers its information, as well as that of its Group of
Companies, a strategic asset, and fully recognizes the importance
of protecting and safeguarding it, as it is critical to its operation.
Information and communication technologies are subject to ever-
increasing and complex threats, which exploit known and
unknown system vulnerabilities with potentially serious impact
on business operation, individuals, and critical infrastructure due
to the breach of confidentiality, integrity, and availability of
information that these systems process, store or transmit.
In a continuously evolving and changing digital global landscape,
there is an increase of information security risks in the banking
sector:
●
The rapid growth of important technological breakthroughs
(e.g., Cloud, Quantum computing, 5th generation
networks, artificial intelligence - AI, Internet of Things –
(“IoT”).
●
Unpredictable geopolitical developments.
●
The increased use of new technologies and digital
applications to provide services to consumers and
companies, in the midst of an unprecedented pandemic
(COVID - 19), with shocking consequences for humanity.
In fact, after all, the more the society and the economy rely on
the digitization of processes and services, the more the attack
surface, or else, the perpetrators’ opportunities for malicious
actions increase, compelling all relevant bodies involved, in
timely planning and an effective response.
Therefore, information security is a key success factor in the
Bank's business activities. The need for information security is
particularly important in this modern, sophisticated, and
interconnected business environment.
The Group continuously analyzes its threat environment in order
to identify the most important threats that may undermine the
achievement of its business objectives.
The Bank has implemented appropriate security controls, aiming
to mitigate the risks arising from cyber-attacks (Cyber Risk) and to
facilitate the increase of its resilience to the challenges related to
cybersecurity.
The most essential, among others, controls are outlined below:
●
NBG Group has a designated Group CISO role who oversees
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the Information Security Function as well as the Group’s
Cybersecurity Division.
●
NBG Group Enterprise Information Security Policy is the
cornerstone for the implementation of a complete
Information Security Management System, reflecting
Management’s commitment, the governance framework,
and the Group’s Information Security / Cybersecurity
principles.
●
The NBG Group Enterprise Information Security Policy is
supplemented by an extensive set of Information Security
Procedures and Guidelines (Information Security
Management System), based on international standards,
compliance regulations and best practices.
●
The Bank has attained the ISO 27001 certification.
●
The Bank has attained the PCI DSS certification.
●
The Bank follows a multilayered approach for the
protection of its information assets. This approach includes
but is not limited to DDoS protection, information
intelligence services, perimeter controls such as firewalls,
IDSs / IPSs, Secure Email Gateways, Secure Web Gateways,
Endpoint protection, Data Leakage Prevention (DLP)
solution, Security Information and Event Management
(SIEM) solution, 24X7 Security Operation Center (“SOC”)
etc.
●
The Bank performs a modern Cyber Security Awareness
program.
●
The Bank carries out security reviews regularly, and
whenever deemed necessary in accordance with best
practices. The Bank complies to the applicable Greek and
European regulatory framework and is subject to
cybersecurity audits at least annually from regulators, the
independent Group Internal Audit Function, external
auditors for the Cybersecurity certifications that the Bank
has attained, etc.
●
The Bank has adopted best practices to ensure the Group’s
business continuity, enhancing its resilience to cyber-
attacks.
●
Although all necessary security measures are applied and
enforced, the Bank maintains a cybersecurity insurance
contract in the unlikely event of a successful cyber-attack
or data breach.
NBG Group’s cyber security systems continue to improve with the
strengthening of detection, response, and protection
mechanisms, in order to ensure high quality of customer service,
protection of personal data, increase of service efficiency and
secure business activity.
Deferred tax assets as regulatory
capital or as an asset
Risk related to the recognition of the main part of deferred tax
assets as regulatory capital or as an asset
The Group currently includes deferred tax assets (“DTAs”) in
calculating the Group’s capital and capital adequacy ratios. As at
31 December 2022, the Group’s DTAs, amounted to €4.7 billion
(31 December 2021: €4.9 billion).
The Bank reviews the carrying amount of its DTAs at each
reporting date, and such review may lead to a reduction in the
value of the DTAs on the Bank’s Statement of Financial position,
and therefore reduce the value of the DTAs as included in the
Group’s regulatory capital.
EU Regulation 575/2013 provides that DTAs recognized for IFRS
purposes that rely on future profitability and arise from
temporary differences of a credit institution and exceed certain
thresholds must be deducted from its CET1 capital.
The deduction would have a significant impact on Greek credit
institutions, including the Bank. However, as a measure to
mitigate the effects of the deduction, article 27A of Greek Law
4172/2013, (“DTC Law”), as currently in force, allows credit
institutions, under certain conditions, and from 2017 onwards to
convert DTAs arising from (a) Private Sector Initiative (“PSI”)
losses, (b) accumulated provisions for credit losses recognized as
at 30 June 2015, (c) losses from final write off or the disposal of
loans and (d) accounting write off s, which will ultimately lead to
final write offs and losses from disposals, to a receivable (“Tax
Credit”) from the Greek State. Items (c) and (d) above were
added with Greek Law 4465/2017 enacted on 29 March 2017.
The same Greek Law 4465/2017 provided that the total tax
relating to cases (b) to (d) above cannot exceed the tax
corresponding to accumulated provisions recorded up to 30 June
2015 less (a) any definitive and cleared Tax Credit, which arose in
the case of accounting loss for a year according to the provisions
of par.2 of article 27A, which relate to the above accumulated
provisions, (b) the amount of tax corresponding to any
subsequent specific tax provisions, which relate to the above
accumulated provisions and (c) the amount of the tax
corresponding to the annual amortization of the debit difference
that corresponds to the above provisions and other losses in
general arising due to credit risk.
Furthermore, Greek Law 4465/2017 amended article 27 “Carry
forward losses” by introducing an amortization period of 20 years
for losses due to loan write offs as part of a settlement or
restructuring and losses that crystallize as a result of a disposal of
loans. In addition, in 2021 Greek Law 4831 further amended
article 27 of Greek Law 4172/2013. According to this amendment
the annual amortization / deduction of the debit difference
arising from PSI losses is deducted at a priority over the debit
difference arising from realized NPL losses. The amount of annual
deduction of the debit difference arising from realized NPL losses
is limited to the amount of the profits determined according to
the provisions of the tax law as in force before the deduction of
such debit differences and after the deduction of the debit
difference arising from PSI losses. The remaining amount of
annual deduction that has not been offset, is transferred to be
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utilized in the 20 subsequent tax years, in which there will be
sufficient profit after the deduction of the above debit
differences (PSI & NPL losses) that correspond to those years. As
to the order of deduction of the transferred (unutilized) amounts,
older balances of debit difference have priority over newer
balances. If at the end of the 20-year amortization period, there
are balances that have not been offset, these qualify as tax losses
which are subject to the 5-year statutes of limitation.
As at 31 December 2022, the Group’s eligible DTAs amounted to
€3.9 billion (31 December 2021: €4.1 billion). The main condition
for the conversion of DTAs to a Tax Credit is the existence of an
accounting loss at Bank level of a respective year, starting from
accounting year 2016 and onwards. The Tax Credits will be
calculated as a ratio of IFRS accounting losses to net equity
(excluding the year’s losses) on a solo basis and such ratio will be
applied to the remaining Eligible DTAs in a given year to calculate
the Tax Credit that will be converted in that year, in respect of
the prior tax year. The Tax Credit may be offset against income
taxes payable. The non-offset part of the Tax Credit is
immediately recognized as a receivable from the Greek State. The
Bank is obliged to issue conversion rights to the Greek State for
an amount of 100% of the Tax Credit in favour of the Greek State
and will create a specific reserve for an equal amount. Common
shareholders have pre-emption rights on these conversion rights.
The reserve will be capitalized with the issuance of common
shares in favour of the Greek State. This legislation allows credit
institutions to treat such DTAs as not “relying on future
profitability” according to Capital Requirement Directive (“CRD”)
IV, and as a result such DTAs are not deducted from CET1, hence
improving a credit institution’s capital position.
On 7 November 2014, the Bank convened an extraordinary
General Shareholders Meeting which resolved to include the
Bank in the DTC Law. An exit by the Bank from the provisions of
the DTC Law requires regulatory approval and a General
Shareholders meeting resolution.
If the regulations governing the use of Deferred Tax Credit
(“DTCs”) as part of the Group’s regulatory capital change, this
may affect the Group’s capital base and consequently its capital
ratios. As at 31 December 2022, 64.7% of the Group’s CET1
capital (including the profit for the period) was comprised of DTA
eligible for DTC. Additionally, there can be no assurance that any
final interpretation of the amendments described above will not
change or that the European Commission will not rule the
treatment of the DTCs under Greek law illegal and as a result
Greek credit institutions will ultimately not be allowed to
maintain certain DTCs as regulatory capital. If any of these risks
materialize, this could have a material adverse effect on the
Group’s ability to maintain sufficient regulatory capital, which
may in turn require the Group to issue additional instruments
qualifying as regulatory capital, to liquidate assets, to curtail
business or to take any other actions, any of which may have a
material adverse effect on the Group’s operating results and
financial condition and prospects.
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Non-Financial
Statement
2022 Sustainability Highlights
Memberships, Indices, Ratings and
Certifications
International standards considered in
preparing Non-Financial Statement
ESG Strategy and approach
Non-Financial Statement Issues:
●
Climate and Environmental Issues
●
Social and labour Issues
●
Respect of human rights
●
Combating bribery and issues
related to corruption
●
Personal Data Management Policy
●
Training Programs on Personal
Data Protection
●
Policies for the proper provision
of Investment and Insurance
Services
Our Performance
Information about Article 8 of the EU
Taxonomy Regulation
NBG shares and shareholder structure
Board of Directors’ Report
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2022 Sustainability Highlights
In recognition of its ongoing endeavour to serve the needs of its stakeholders, and to provide full and transparent information on its
sustainability actions, NBG received a number of important awards and distinctions in 2022 including:
Awards & Distinctions
“CR-Index Award 2021-2022”
NBG was awarded the top Diamond distinction for 2021-2022, for the fourth year running, in
recognition of its overall contribution in the areas of Corporate Responsibility and Sustainable
Development, within the Corporate Responsibility (“CR”) Index 2021-2022 of the CR Institute.
“Best Corporate Governance-
Greece” award from CFI
NBG has received for yet another year the “Best Corporate Governance-Greece” award for 2022
from the international organization Capital Finance International (“CFI”), on the basis of the
corporate governance practices that it has in place. CFI enjoys the support of international
bodies and organizations such as the Organisation for Economic Cooperation and Development
(“OECD”), the European Bank for Reconstruction and Development (“EBRD”) and the United
Nations Conference on Trade and Development (“UNCTAD”).
“Best Bank 2022”- HRIMA
Business Awards 2022
NBG received the second "Best Bank Award - 2022" in the context of the Business Awards 2022 –
HRIMA.
“Digital Banking Awards 2022”
NBG was awarded with three prizes in the context of World Finance Magazine’s international
awards “Digital Banking Awards 2022”:
●
Best Consumer Digital Bank in Greece
●
Best Mobile App in Greece
●
Best Digital SME Bank in Greece
“e-volution Awards 2023”
NBG was awarded with
Bronze award
“Best SEO for an e-Business”,
organized
by Boussias Communications.
“Digital CX Awards 2022”
NBG was awarded with two prizes in the context of
The Digital Banker
awards “Digital CX Awards 2022”:
Best Retail Bank for Digital CX - Greece
Best SME Bank for Digital CX – Greece
"Digital Finance Awards 2022"
Organized by Boussias Communications under the auspices of the Labour Inspectorate Body
(SEPE) and with the honorary support of the Electronic Business Lab (ELTRUN) of the Athens
University of Economics and Business, where NBG won seven awards:
Platinum award
in the
category
“Digital Banking”
for the service “
Full Digital Offering for Retail & Business Customers by NBG
”
Gold award
in the category
“Best Merchant Acquiring Digital Initiative”
for the service “
Online POS/e-commerce application for Business Customers by NBG
”
Gold award
“Best Internet Banking”
for the service “
New Corporate Internet Banking by NBG
”
Board of Directors’ Report
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Silver award
“Best Consumer/SME Lending Digital Initiative”
for the service “
Personal Express Loan by NBG
”
●
Silver award
in the category
●
“Best Fintech Solution”
for the service “
FinTech Solution – ERPs' Ecosystem through Direct Integration
”
Bronze award
“Best API Project”
for the service “
Customer Insights - Simplifying Customer's Digital Journey
”
Bronze award
“Best Digital Product Launch”
for the service “
Business Express Loan for Business Customers by NBG
”.
“Loyalty Awards 2022”
●
For yet another year, go4more, NBG's total customer loyalty reward program, stole the limelight
at the Loyalty Awards with six nominations:
●
Platinum award
●
“Best Promo Campaign / Contest”
●
Gold award
●
“Best Promo Campaign / Contest”
●
Silver awards
●
“Banking & Insurance”
●
“Best Short-Term Initiative”
●
“Best Use of CRM”
●
“Best In-house Loyalty Team”
Memberships, Indices, Ratings and Certifications
The Bank’s Memberships / Participations are listed below:
Memberships / Participations
UN Global Compact:
●
As of June 2018, NBG has joined the voluntary initiative of the United Nations, UN Global
Compact as a Participant.
UNEP FI:
●
As of September 2020, recognizing the significance of responsible practices for ensuring the
sustainability of its long-term operation, as well as the creation of value for its shareholders,
customers, employees and the community at large, NBG has endorsed the UNEP FI Principles for
Responsible Banking, aiming at further enhancing its commitment to its long-term strategic
planning for contributing to a sustainable future for all.
Global Compact Network HELLAS:
●
As of June 2018, NBG has been a member of the local network of UN Global Compact, Global
Compact Network Hellas (“GCNH”). Its role is to support UNGC Greek members to implement
the 10 principles of the UN Global Compact and to create opportunities for cooperation and
common actions with stakeholders.
Board of Directors’ Report
for the year ended 31 December 2022
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The Hellenic Network for
Corporate Social Responsibility:
●
As of December 2008, NBG has been a core member of the Hellenic Network for Corporate
Social Responsibility (“CSR Hellas”).
Hellenic Bank Association
(“HBA”):
●
NBG is a core member of the Hellenic Bank Association, the body representing collectively
banks, both Greek and international, operating in Greece. With regard to actions related to
sustainable development, the HBA has set up an interbank Committee of which NBG is an active
member.
Climate Action in Financial
Institutions Initiative (“CAFI”):
●
In April 2020, NBG joined, as the first Greek Bank, the CAFI initiative. As a supporting member,
NBG commits to advance towards the climate mainstreaming / Paris alignment journey and is
therefore present at several events organized by the CAFI. In these events, representatives from
other well recognized initiatives or institutions are sharing their expertise/experience in order to
facilitate and to promote the Paris alignment process.
European Climate Pact:
●
In December 2021, NBG joined the European Climate Pact, showcasing concrete actions taken
for the climate and the environment, through its Carbon Disclosure Project (“CDP”). The
European Climate Pact is a Commission initiative to engage with different stakeholders and civil
society with the aim to commit them to climate action and more sustainable behavior. The
European Climate Pact will create a lively space to share information, debate and act on the
climate crisis. It will offer support for a European climate movement to grow and consolidate.
The Εuropean Climate Pact, is part of the Green Pact and helps the EU achieve its goal of being
the world's first climate-neutral continent.
Indices & Ratings
The Bank’s Indices, Ratings and Certifications are listed below:
Bloomberg Gender Equality Index 2023:
NBG was included for the 6
th
Bloomberg Gender Equality Index 2023. Currently 484 companies covering various sectors and 45
countries make up the index.
FTSE4Good Index Series:
NBG
th
performance by independent analysts and as a result remains a constituent of the FTSE4Good Index
Series.
MSCI ESG Rating:
In
Ratings"). NBG has been covered by MSCI for the 9
th
Carbon Disclosure Project (“CDP”):
NBG published for the 16th consecutive year, information and data on its sustainability and climate
change strategy, policy and actions, through the Independent Not-for-Profit Organization
Carbon
Disclosure Project
, which holds the largest database of primary corporate climate change information.
NBG was assessed and classified during 2022 with Level C "Awareness". Level C includes businesses that
have proven recognition of the impact of climate change on their operation, as well as their own
operation's impact on the environment.
ISS ESG Scores:
In 2022, ISS Corporate Solutions rated NBG with respect to the pillars of “Environment”, “Society” and
“Governance”. The Bank was ranked in the highest Category 1 for the "Environment” and the higher
category 2 for “Society” and “Governance” pillar. NBG has been covered by ISS for the 5
th
Board of Directors’ Report
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Key Highlights
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Climate &
Environmental
Issues
Social and labour
issues
Respect of
human rights
Combating
bribery and
issues related to
corruption
year.
Certifications
Attestation of the implementation of
ISO 26000:2010 on Corporate Social Responsibility
In the context of the Bank’s Compliance with best international practices and Corporate Social Responsibility Standards, the Group
Corporate Governance and Compliance General Division, after being successfully audited by the independent audit organization TÜV
AUSTRIA Hellas, received on 26 September 2019 an Attestation for the implementation, monitoring and coordination of the corporate
social responsibility principles for the Bank and the Group as defined in the international Guidelines of ISO 26000:2010. Following a
demanding and highly successful certification process that was carried out in November 2021, the Bank maintained the abovementioned
certification for yet another year. Currently, the Bank is in process to renew it.
ESG Report external assurance
From 2010 onwards the
ESG Report of the Bank is annually receiving external assurance by an independent Assurance Body
includes performance indicators (KPIs) for Sustainable Development and Corporate Responsibility.
International standards considered in preparing Non-Financial Statement
In accordance with the Articles 151 and 154 of Greek Law 4548/2018 as in force, the Bank is required to include in its Board of Directors
Report a Non-Financial Statement disclosure aiming at the understanding of the development, performance, level and impact of the
activities of the Bank and the Group. In the context of the aforementioned provisions, the Non-Financial Statement includes the
following sub-sections:
Within the scope of the requirement for the disclosure of non-financial information, the Bank took into account international practices and
standards such as the Organization for Economic Co-operation and Development (“OECD”) Guidelines for Multinational Enterprises (2011),
the Global Reporting Initiative (“GRI”) Standards (Core option), the Sustainability Accounting Standards Board (“SASB”) Standards, the
ATHEX ESG Index, RobeccoSAM, the Climate Disclosure Standards Board (“CDSB”), the Task Force on Climate-related Financial Disclosures
(“TCFD”) and the EU Guidelines on non-financial reporting: Supplement on reporting climate-related information.
References required regarding NBG’s business model are available in section “
Economic and financial review – Business Overview
”.
Additionally, the Bank, acknowledging the importance and potential impact of the risks stemming from climate-related and environmental
factors, and aligning with the respective regulatory guidelines:
●
has incorporated them in the NBG Risk Taxonomy, recognizing them as transversal, cross-cutting risks rather than stand-alone risks
and considering them as drivers of existing types of financial and non-financial risks (Risk Themes); and
●
is in the process of conducting the materiality assessment of climate-related and environmental risks in the course of the 2023
Internal Capital and Liquidity Assessment Processes (“ICAAP” and “ILAAP”).
Moreover, the Bank has initiated multiple actions for the incorporation of climate-related and environmental risks in the overall Risk
Management Framework, and is committed to monitoring, assessing and managing these particular risks going forward , in line with
supervisory expectations.
A stakeholder focused approach
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Stakeholders
Investors and
Shareholders
Customers
Suppliers and
partners
Business
Community
(Business
Associations,
Peers, Rating
Agencies/Analysts
etc.)
Employees
State and
Regulators
(i.e.
Ministries, State
Bodies, Regulatory
Authorities,
Intergovernmental
organizations)
Society –
Communities
(i.e. Media, NGOs,
Civil Society
Organizations,
Local Authorities)
The Bank publishes its ESG Report on an annual basis, which provides information and is being evaluated by third parties and various
Rating Services regarding the corporate social responsibility actions carried out. What shall be further noted is that the Bank applies the
AA1000 Accountability Principles Standard (“AA1000 APS”) 2008, in order to include the stakeholders (authorities, State, Non-
Governmental Organisations, media, employees, business people, suppliers, shareholders, investors, etc.) in the process of identifying,
understanding and responding to ESG issues. The AA1000 APS and the Guidelines of GRI Standards, are the basis for the Bank’s ESG Report.
Subsequently, the Bank proceeds in concrete actions aimed at meeting the needs and expectations of stakeholders in order to enhance
cooperation with each group of stakeholders and address their key issues and expectations.
Stakeholders
NBG’s stakeholders are comprised of persons and legal entities who influence and are influenced or are likely to be influenced by NBG’s
business decisions and activities.
The Bank applies specific procedures in order to identify its stakeholders. Accordingly, it recognizes the following basic groups as
stakeholders:
NBG communicates on a regular basis with each stakeholder group understanding the importance of this communication in obtaining the
necessary information to improve its actions.
Stakeholder engagement aims at identifying key topics and mutually acceptable solutions with mutual benefits through correct business
practices. The expectations of stakeholders, as well as the business environment in which the Bank operates, are constantly evolving.
Evaluating the key issues helps us to identify and prioritize the environmental, socio-economic and governance issues that are of highest
concern to stakeholders and the Bank. This process is carried out annually or no later than every two years and was last completed in
October 2021. The main issues of concern including the basic engagement methods and their frequency, as recorded through the Bank’s
communication channels and assessed by the Bank in the context of implementing the AA1000APS.v3 standard, are as follows:
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Main stakeholder
groups
Main issues of concern
Communication and
engagement channels
Frequency of communication and engagement
Daily
Quarterly
Annually
Ongoing
basis
Ad
hoc/On
a case-
by-case
basis
Investors and
Shareholders
Impacts of products and services to the acceleration of
the circular economy (resource efficiency/security).
In-house environmental impacts.
Impacts of products and services to the creation of
employment.
Impacts of products and services to the acceleration of
economic convergence.
Impacts of products and services to supporting inclusive
and healthy economies.
Presentation of Financial
Results
○
●
○
○
○
Annual Financial Report
○
○
●
○
○
Ordinary general
meeting of shareholder
○
○
●
○
○
Customers
Impacts of products and services to the creation of
employment.
Impacts of products and services to the acceleration of
the circular economy (resource efficiency/security).
Impacts of products and services to climate change.
Impacts of products and services to the acceleration of
economic convergence.
Privacy & data security.
Satisfaction surveys
○
○
●
○
○
Contact centre
●
○
○
○
○
Sector for Governance of
Customer Issues
(complaints)
●
○
○
○
○
Suppliers and
partners
In-house environmental impacts.
Impacts of products and services to climate change.
Impacts of products and services to the acceleration of
the circular economy (resource efficiency/security).
Impacts of products and services to the acceleration of
economic convergence.
Impacts of products and services to the creation of
employment.
Evaluation process
○
○
○
●
○
Online participation in
competitions
○
○
○
○
●
Supplier
relationships/complaints
management
●
○
○
○
○
Business
Community
(Business
Associations,
Peers, Rating
Agencies/Analysts
etc.)
Impacts of products and services to climate change.
Impacts of products and services to the acceleration of
the circular economy (resource efficiency/security).
Impacts of products and services to the creation of
employment.
Risk management (i.e. incorporation of ESG Factors in
Credit Analysis).
Impacts of products and services to the acceleration of
economic convergence.
Meetings
○
○
○
○
●
Conferences
○
○
○
○
●
Business organizations
○
○
○
○
●
Employees
Dignity and equality (i.e. equal opportunities, diversity,
human rights).
Occupational health, safety and wellbeing.
Human capital development.
Impacts of products and services to the creation of
employment.
Privacy & data security.
Internal communication
channels with the Bank
●
○
○
○
○
Meetings and
communication between
NBG’s employee unions
and Management
○
○
○
○
●
Staff evaluation
○
○
●
○
○
State and
Regulators
(i.e.
Ministries, State
Bodies, Regulatory
Authorities,
Intergovernmental
Impacts of products and services to climate change.
In-house environmental impacts.
Dignity and equality (i.e. equal opportunities, diversity,
human rights).
Privacy & data security.
Impacts of products and services to the creation of
employment.
Cooperation and
consultation with
institutional
representatives of the
State, the Bank of
Greece and Regulatory
○
○
○
○
●
Board of Directors’ Report
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Main stakeholder
groups
Main issues of concern
Communication and
engagement channels
Frequency of communication and engagement
Daily
Quarterly
Annually
Ongoing
basis
Ad
hoc/On
a case-
by-case
basis
organizations
)
Authorities
Society –
Communities
Impacts of products and services to the creation of
employment.
Impacts of products and services to the acceleration of
the circular economy (resource efficiency/security).
Impacts of products and services to climate change.
In-house environmental impacts.
Impacts of products and services to the acceleration of
economic convergence.
Consultation with local
representatives
○
○
○
○
●
Collaboration with local
authorities
○
○
○
○
●
Sponsorship
○
○
○
●
○
Donations of goods
○
○
○
●
○
Material non-financial topics
Our Strategy has taken into account the GRI Materiality, Completeness, Sustainability Context and the Stakeholder Inclusiveness Principles.
In 2021, we carried out a materiality e-survey that contributed to the shaping of our ESG strategy. Through the materiality e-survey, the
material topics that NBG has identified as relevant to the impact it creates to its stakeholders and the broader economy, society and
environment, were assessed, resulting in the materiality map found below, along with their prioritization.
Note:
The materiality analysis is a fundamental process towards shaping both our ESG Report as well as our ESG Strategy looking at the ESG
impacts of NBG’s activities. It should be noted that the results of the materiality analysis, conducted as part of ESG Report 2020, were also
used for the purposes of the ESG Report 2021, after an internal validation process for 2021.
A new materiality analysis is scheduled to take place for ESG Report 2022, in compliance with GRI materiality methodology 2021. In
accordance with the new methodology, the Bank shall describe:
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●
how it has identified actual and potential, negative and positive impacts on the economy, environment, and people, including
impacts on their human rights, across its activities and business relationships; and
●
how it has prioritized the impacts for reporting based on their significance.
ESG Strategy and approach
NBG ESG strategy overview
Environmental, social and governance topics have evolved so fast and so dramatically that have inevitably become a focal part of banks’
strategic agendas. In this context, banks acknowledge their role in accelerating the transition to a low-carbon world by supporting capital
allocation to ‘greener’ activities, while also financing the transition of businesses and households to a more sustainable operating model
and NBG is attuned to this imperative with a heightened sense of responsibility.
NBG has decided to follow a holistic approach to ESG, defining, to begin with, its ESG strategy in 3 strategic pillars (see table below) that
are closely aligned with the Bank’s purpose to create a more prosperous and sustainable future together with its customers, people, and
shareholders. To this end, we articulated our Environment (‘E’), Society (‘S’) and Governance (‘G’) strategy in 9 themes. These themes stem
from and reflect our recently revamped value system, align with selected UN’s Sustainable Development Goals (“SDGs”), and complement
the Bank’s overall business strategy and transformation as well as our vision to become the undisputed
Bank of First Choice
in Greece. It is
worth noting that our environment -related themes encapsulate our climate change and decarbonization strategy, which is being enhanced
and detailed on an annual basis.
ESG pillars
ESG strategic themes
Our Values
SDGs
Environment
1.
Lead the market in
sustainable
energy financing.
2.
Accelerate transition to a
sustainable economy.
3.
Role-model
environmentally
responsible practices
.
Responsive
Growth Catalyst
Society
4.
Champion
diversity
inclusion
.
5.
Enable
public health
well-being
.
6.
Promote
Greek heritage, culture
&
creativity.
7.
Foster
entrepreneurship
&
innovation
.
8.
Support
prosperity through learning
&
.
Human
Governance
9.
Adhere to the highest
governance
standards
.
Trustworthy
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NBG Group Sustainability Policy
NBG has elaborated and adopted the NBG Group Sustainability
Policy, which is publicly available on its website and is also
communicated to its employees through environmental
awareness announcements at NBG’s website
(
https://www.nbg.gr/en/group/esg/environment/sustainable-
development-policy
).
The Policy adheres to the requirements of the applicable
legislative and regulatory framework, as well as international
practices included in international conventions and initiatives and
aiming at sustainable development, corporate social
responsibility and business ethics. Specifically, the Policy is based
on:
1
The applicable legislation on sustainable development,
sustainable and responsible financing / investment,
management of environmental, social and governance
risks, environmental, sustainable governance and
transparency;
2
The relevant recommendations and decisions of European
and international institutions;
3
The 17 Goals relating to Sustainable Development set by
the United Nations;
4
The UNEP FI’s Principles for Responsible Banking;
5
The Precautionary Principle, as formulated by the UN in
accordance with the proclamation of the Rio Authority for
Environment and Development (Precautionary Principle -
Principle 15 of ‘The Rio Declaration on Environment and
Development’);
6
The Principle of Materiality, as set out in line with GRI
Standards, by which the Group is committed to prioritize,
with the participation of its stakeholders, at least every two
years the most important economic, social and
environmental impacts it creates; as well as all the other
GRI Principles for defining sustainability reports’ content
and quality;
7
The 10 Principles of the United Nations Global Compact;
8
The Task Force on Climate Related Financial Disclosures
(“TCFD”) recommendations.
Fully aware of the significance of our role in contributing to
sustainable development, the purpose of the Policy is to set the
framework for the development of actions that assist in the
management of economic, social, governance and environmental
impacts of the Bank and the Group of Companies and mainly lead
in:
i.
Reducing - and, where possible, offsetting - of our
environmental impacts (including those related to climate
change), as such arises from the financing of our
customers' activities, as well as from the operation of
NBG itself (including energy consumption of buildings);
ii.
Generating long-term value for our Stakeholders, and the
economy at large and the communities where all our
Group companies operate in Greece and abroad;
iii.
Undertaking initiatives and innovative actions in the fields
of Corporate Governance, Corporate Social Responsibility
and Business Ethics, in addition to ensuring compliance
with the current legal and regulatory framework for these
issues, thereby contributing to our vision of making NBG
the Bank of First Choice;
iv.
Protecting the reputation and reliability of the Group and
the cultivation / strengthening of our renewed value
system.
Non-Financial Statement Issues
Climate and Environmental Issues
The Bank, as one of the four systemically significant banks and
one of the largest financial institutions in Greece, considering
that climate and environmental issues are critical, both for the
development of its activities and the decision-making processes,
has already been adjusting to voluntary international practices as
well as to evolving regulatory requirements. In particular, it has
established and implements the
Group Sustainability Policy,
the
Code of Ethics, the Corporate Governance Code, strategic themes
encapsulating our climate change and decarbonization strategy
as part of our overall ESG Strategy, the Sustainable Lending
Criteria Framework and NBG’s Green Bond Framework, while it
has developed since 2004 an Environmental Management System
which is in conformity with the requirements of the international
standard ISO 14001.
Environmental impact and our approach
A key principle of the NBG Group's philosophy is to operate
effectively, in a timely and decisive manner, focusing on its long-
term sustainability and growth, ensuring sustainable
development through innovative ideas and breakthrough
solutions, while contributing to addressing the challenges of
climate change for the benefit of all Stakeholders who trust its
brand and reputation.
As regards the Bank’s environmental impact in the context of
strengthening its contribution to sustainable development, NBG
is committed to reducing any adverse impact on the environment
arising, primarily, from its financing operations, as well as from its
own operations.
⬥
Environmental Impacts of financing activities
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The Bank’s environmental footprint mainly derives from the
activities facilitated through the provision of financing. Activities
financed by NBG may lead to negative impacts in terms of
increased Greenhouse gases (“GHG”) emissions, resource
depletion, biodiversity loss, pollution etc.
Recognizing climate change as a major environmental challenge
of our times, the Bank commits to enhance its role as a financier
and advisor in the transition effort to net zero. At the same time
the Bank aims at promoting cyclical economy, reduced
dependency on natural resources and environmentally
responsible practices.
To
achieve it:
●
NBG focuses on implementing its overarching climate
and environmental strategy (as an integral part of its
overall ESG strategy) by promoting sustainable finance,
investments, as well as, "green" banking solutions, and
by offering products and services that mitigate climate
change, and contribute to environmental protection
and sustainable development.
●
NBG has enhanced its lending policies and processes,
incorporating environmental (including climate change),
social and governance risks into the credit assessments
for corporate clients, both at an obligor and at a
transaction level, the latter performed with reference
to the internally developed Sustainable Lending Criteria
that are, aligned with the currently available technical
screening criteria for the first two environmental
objectives of the EU Taxonomy.
●
NBG focuses on integrating
climate-related
environmental factors, as prescribed by relevant
regulatory requirements and best market practices, into
its risk management, reporting framework and
governance model, strengthening the identification,
monitoring and mitigation of climate and
environmental issues.
⬥
Environmental impacts of internal operation and
infrastructure
The Bank commits to reduce the environmental footprint and the
associated impacts (including on climate, water, air, land,
biodiversity, use of resources) resulting from its own operation
and management of its infrastructure. In this context, priority
issues are:
●
Improving the energy efficiency of its buildings.
●
Conservation of natural resources and energy.
●
Renewable energy sourcing.
●
Efficient management of paper and solid waste.
●
Rationalization of business-related travel and
encouraging the use of public transport.
●
Enhancement of the staff’s environmental awareness .
●
Compliance with environmental legislation.
●
Deployment of environmental standards in the
procurement process (including, inter alia, more in-
depth supplier assessment).
Actions taken
In line with our three Climate and Environmental Strategic
Themes for leading sustainable energy financing, accelerating
sustainable transition, and role-modelling environmentally
responsible practices, the Bank undertook in 2022 important
initiatives and implemented projects with positive actual and
potential impact. Moreover, important steps have been taken
towards the enhancement of the Bank’s internal practices (e.g.,
reporting and governance) in managing Climate and
Environmental issues and risks, adopting supervisory
requirements and recommendations (see Section “
Risk
Management - Management of Risks - Climate and
Environmental Risk
”). Specifically:
●
Climate and Environmental Strategic Themes:
-
Specific product offerings have been designed and
launched to serve our two Climate & Environmental
Strategic Themes regarding leading the market in
sustainable energy financing and accelerating transition
to a sustainable economy.
-
Ongoing efforts are focusing on the containment of our
carbon footprint, including both non-financed and
financed emissions.
-
More details of our green products’ characteristics &
offering as well as of our GHG emissions measurement
are specified in the respective section of “
Our
performance
” below.
●
UNEP FI – Commitment to the Principles for Responsible
Banking
As a signatory of UNEP FI and for properly and effectively
implementing the UNEP FI Principles for Responsible Banking
(“PRB”) within the designated four-year time frame, NBG
fostered the implementation process by undertaking several
actions, which are highlighted hereunder:
Ø
Establishment of a dedicated Group Climate &
Environmental Strategy Sector in order to further
enhance the alignment process (PRB 5 – Governance and
Culture).
Ø
2 SMART targets have been set, specifically: Target 1 –
Climate: €600 million financing of renewable energy in
2022-2025, Target 2 – Inclusive, healthy economies: 3
million active digital users by the end of 2024 (PRB 2 –
Impact and Target Setting).
Ø
Development of NBG’s PRB target monitoring and review
process (PRB 2 – Impact and Target Setting).
Ø
Submission and publication of NBG’s 1
st
Assessment Report (PRB 6 – Transparency and
Accountability).
Ø
Submission and publication of NBG’s 2
nd
Assessment Report at the end of April 2023
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(PRB 6 – Transparency and Accountability).
Ø
Determination of business specifications for fostering
UNEP FI's systemic developments (PRB 6 – Transparency
and Accountability).
For more information, please refer to NBG 1st PRB Self-
Assessment Report at NBG’s website (https://www.nbg.gr/-
/jssmedia/Files/Group/esg/Ektheseis/Principles-for-Responsible-
Banking.pdf?rev=ddafa2c556cd4458b87b6890b325bd24&hash=E
94397B2121A0C0289C5502ECF745862)
●
Sustainable Lending Criteria and ESG
Questionnaires
●
The Bank has enhanced its lending policies and processes
incorporating environmental (including climate change), social
and governance criteria applied both at the obligor and the
transaction level. In alignment with its broader sustainability
strategy, NBG has established a Sustainable Lending Criteria
Framework (SLCF), in order to identify and classify the activities
included in its corporate lending portfolio, that contribute to
the transition towards a more sustainable economy. The
Framework outlines the logic of classification of an activity as
sustainable, building upon the EU Taxonomy Regulation and the
Sustainability-Linked Loan Principles (SLLP).
●
In conjunction with the SLCF, the Bank introduced in April 2022
new ESG Questionnaires and relevant assessment procedures
(including sector-specific ones) to its lending processes, both for
new lending and refinancings, at borrower and at transaction
level. The aim is not only to fulfil existing and forthcoming
regulatory requirements, but also to address the issue of ESG
data availability and granularity by implementing a robust data
collection process which sources client data useful for multiple
purposes
(https://www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.
202011finalguideonclimate-
relatedandenvironmentalrisks~58213f6564.en.pdf).
●
Green Bond
●
In the context of promoting sustainable energy financing and
playing a leading role in Greece's energy transition, NBG issued
and listed a €500 million Green Preferred Senior Bond on the
Luxembourg Stock Exchange in October 2020, the first Green
Senior Preferred Bond issued by a Greek bank. Within the first
year of the issuance, 70% of the proceeds were allocated to 42
renewable energy projects across Greece.
●
In 2022, the selection of eligible assets for the final allocation of
proceeds has been completed, achieving full utilization by
financing a total of 58 Renewable Energy Sources (“RES”)
projects. The proceeds have been used to finance or refinance
eligible assets, new or existing loans and/or investments in
equipment, development, manufacturing, construction,
operation, distribution and maintenance of Renewable Energy
(“Eligible Assets”) from the generation sources, onshore wind
energy, solar thermal energy and small hydro projects.
●
In addition, these selected eligible assets are expected to
contribute towards the achievement of the SDG 7 (Affordable
and Clean Energy), SDG 9 (Industry, Innovation, and
Infrastructure) as well as SDG 13 (Climate Action).
●
For more details on NBG’s Green Bond please see NBG’s
website (Sustainable and Green Bonds Framework
(
https://www.nbg.gr/en/group/investor -relations/debt-
investors/sustainable-and-green -bonds-
framework).
●
Climate-related Green Bond Ratio: 43.2%.
●
Resolving environmental complaints
●
Regarding the Environmental Management of its operations,
and in the issue of resolving environmental complaints, please
note that during 2022, 7 complaints regarding the Bank's
environmental impact were filed via official grievance
mechanisms and were settled within the year. The said
complaints concerned the following issues: condition of
external areas/facades of Branches, repair of damages and
atmosphere or cleaning inside the Branches.
●
The
relevant regulations and the applicable legislation. In this
context, the Bank completed all the appropriate measures
regarding the cleaning of buildings and the restoration of any
damages.
●
In 2022, the Bank has not identified any non-compliance with
environmental laws and/or regulations, and no fines were
imposed on the Bank regarding the environment.
The road ahead
NBG acknowledges that the journey to establishing sustainable
and sound climate and environmental practices involves a series
of actions within the short-, medium- and long-term horizons. To
that end, the Bank is already pursuing key priorities across the
three strategic themes encapsulating its climate change and
decarbonization strategy as part of its overall ESG Strategy.
More specifically, considering the Bank’s effort to promote
sustainable energy financing
and
following the issuance of the
Green Bond Framework,
a Sustainable Financing Framework is
being developed, which will include additional green financing
categories alongside other -social in orientation- eligibility
categories. NBG’s goal is to further promote energy financing by
leading regional RES projects and promoting sustainable solutions
for small businesses, as well as offering innovative products that
will facilitate the process of energy transition. Through its UNEP
FI PRB Signatory role and target-setting, NBG has committed to
€600 million RES disbursements for the period 2022-2025, a
target on which the Bank remains well on track.
Regarding the Bank’s goal to accelerate the
transition to
a
sustainable economy,
having established a financed emissions
baseline (its GHG emissions inventory for 2020 and 2021, adding
now 2022 in this time series), NBG is in the process of defining an
emissions’ reduction trajectory for specific sectors comprising its
lending portfolios as the most impactful asset class, by applying
science-based methodologies. Considering the results of the
target setting process, the Bank will focus its actions on carbon
intensive sectors, and in cooperation with its clients, will
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formulate specific plans to achieve the reduction in emissions
required by the relevant transition pathway. NBG aims to
strongly support its corporate clients throughout their
decarbonization journey, by offering sustainable financing and
continuous engagement (advisory role). Indicatively, corporate
clients’ initiatives already include the offering of targeted
propositions for green transition in the context of the Ethniki 2.0
program, while new packaged solutions focusing on sustainable
value chains are planned. The offering of targeted products to
meet the increasing demand of retail customers, consumers and
small businesses, for transition financing is being expanded e.g.,
through new partnerships for financing green transportation and
housing ecosystems, over and above existing green products for
the energy upgrades of homes, the purchase of hybrid or electric
vehicles, etc. Additionally, via its Sustainable Financing
Framework, the Bank will be able to channel funding to support
entrepreneurship, innovation and opportunities for
underprivileged groups.
In the context of adopting
climate & environmentally
responsible practices,
the
Bank
will
continue its efforts towards
decreasing its operational (non-financed) emissions aiming to
contribute to the Bank’s net zero goal. NBG will continue
supporting and sponsoring environment-related initiatives and
will further accelerate the improvement of its ESG capabilities
and infrastructure in terms of ESG data and reporting,
governance, risk management, awareness & culture, etc.
Social and labour issues
Socio-economic impact
NBG constantly seeks to ensure that its contribution substantially
impacts the country and its people, always looking ahead to the
next day of Greek society. The Bank undertakes to contribute to
the creation of positive economic and social impacts for its
Stakeholders and more broadly for the economies and societies
where it operates, through its activities (the provision of funds,
products and services), within its role as an employer, as well as
with the development of specific programs for CSR actions. Its
relevant commitments cover the following issues: Contribution to
the creation of jobs, promotion of decent work, economic
development, entrepreneurship, housing, mobility, innovation,
good health, education, gender equality, but also the protection
and preservation of historical and cultural heritage through:
-
the distribution of economic value to stakeholders including
payroll, payments to suppliers, taxes;
-
the allocation of funds, the provision of appropriate
products and services for the needs of customers with the
same standards of completeness, quality and good
behavior and the provision of correct and adequate
information. Note that NBG is in the process of developing
its sustainable financing framework that will incorporate
eligible social activities, for the use of the proceeds of any
future sustainable bond issuance;
-
the protection of customers' financial decisions, of their
data privacy and information concerning them and their
interests in general;
-
the provision of financial services and products with equal
treatment and without exclusions;
-
the access to finance without discrimination or exclusion;
-
the "Responsibility" corporate responsibility program with
actions for the support of social welfare programs,
vulnerable social groups, health, and for contribution to the
arts, culture and education;
-
actions of the Bank’s Cultural Foundation (“MIET”), and
Bank’s Historical Archive;
-
the evolution of a working environment where the Bank
ensures good and safe working conditions for its Staff, with
equal rights and opportunities, with the implementation of
a meritocratic performance appraisal system, and the
provision of significant learning and development programs
(including staff awareness programs on sustainable
development issues) for the continuous enhancement of its
staff’s skills.
The development and retention of highly qualified staff is a
primary concern of the Bank as it understands that its success is
based on its staff. The relevant commitments of the Bank in this
sphere include:
ü
Learning and Development of human capital.
ü
Health, safety and well-being at work.
ü
Dignity and Equality: Respect for Diversity.
ü
No Discrimination, Offensive Behavior or Social Exclusion.
ü
Respect for human rights.
ü
Defending the work-life balance.
Relevant Policies and Codes
Policy on Donations, Sponsorships, Charity Contributions
and other Actions of the Group
The NBG Group has developed and implemented, since May
2016, Policy on Donations, Sponsorships, Charity Contributions
and other Actions of the Group. This Policy aims, among others,
at setting specific principles and rules concerning actions related
to donations, sponsorships, charitable contributions, scholarships
and other related activities in the context of this Policy, at
ensuring high level of ethics on donations, complying with the
applicable legal and regulatory framework regarding actions that
fall into the scope of this policy (e.g. transparency) as well as
adopting procedures that promote transparency in NBG Group’s
donations. According to the Policy, the NBG Group shall not
undertake and / or participate in actions to support political
organizations, parties or movements. This Policy applies in
parallel, complements and is complemented by the provisions set
out in other Group Policies, such as the Conflict of Interest Policy
for Senior Executives and the Anti-Bribery Policy.
Furthermore, in accordance with international best practices
related to donations, sponsorships and other related actions and
in compliance with the provisions of Article 6 of Greek Law
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4374/2016 regarding transparency in the relationships between
banks and media companies and sponsored persons, the Bank
discloses information on all payments made within the relevant
fiscal year, to media companies and sponsored persons.
Code of Ethics
As defined within the NBG Group Code of Ethics, the Bank
constantly aims at ensuring equal treatment of all staff members.
The Bank:
●
Develops a meritocratic system for the assessment of
performance, promotions and remuneration of the staff.
●
Designs and implements actions, development and
incentive systems aiming at the recruitment, selection and
further leverage of human resources.
●
Supports the constant improvement of the staff's skills by
holding significant training and educational programs for
their professional development.
The Bank and the Group’s subsidiaries philosophy is founded on
respect for each employee’s personality. Ιn this context, the Bank
and Group companies express their commitment to observe and
promote values such as integrity, accountability, honesty,
transparency, trust, equality and high ethical standards in all
operations.
To
this end, the Group:
●
Without restricting the independence of employees,
fosters equality, diversity, respect and team spirit in a
positive and fulfilling working environment.
●
Does not tolerate any kind of discrimination or offensive
behavior against one's personality (for example, moral,
sexual or other kind of harassment, intimidation,
persecution and other), or social exclusion or unfair
treatment due to nationality, race, colour, ethnic or social
origin, membership of a national minority, property, birth,
disability, age, sexual orientation, gender, genetic features,
family status, religious or political views or physical
disabilities, veteran status, citizenship status, marital
status, or pregnancy.
●
Highly values the ideas and perspectives of employees
from different backgrounds and who possess diverse
talents and characteristics, which contribute to business
growth and ensures that equal opportunities are provided
to employees.
●
Aims at implementing measures that ensure equal
opportunities for all genders, including with regard to
career perspectives and improving the representation of
the underrepresented gender in management positions.
The Bank highly appreciates the importance of ethics and ethical
behavior. Therefore, the relevant issues are escalated to Board of
Directors level. Specifically, as it is described in the charter of the
Board Compliance, Ethics & Culture Committee , its purpose is to
assist the Board of Directors in performing its duties in respect of
enhance the internal ethics culture and business integrity, by:
-
ensuring that the highest standards of ethics and integrity
are applied throughout all of the activities of the Bank in
accordance with international best practice; and
-
overseeing senior management’s efforts to foster a
culture of ethics and compliance within the Bank and the
Group, to enhance the internal ethics culture and
business integrity and to discourage unethical behavior.
The NBG Group Code of Ethics is posted on the Bank's website
(
https://www.nbg.gr/en/group/esg/corporate
-
governance/corporate
-
governance
-
framework).
The NBG Group Code of Ethics is
periodically reviewed, integrating new principles, updating and
enriching the context of the respective Code, as well as
redesigning the format of the Code, so as to facilitate a better
understanding of the rules of conduct and obligations arising
from the regulatory framework. In 2021, the revised NBG Group
Code of Ethics e-learning program, which is obligatory for all the
Bank's personnel, was launched. The aim of the Code of Ethics e-
learning program, apart from ensuring that its principles and
requirements are properly understood and implemented by the
Bank's and the Group's personnel, was to include, as well the
new/updated provisions of the Code, as well as the Bank’s
Purpose and Values (see Section “
Overview
”) and high ethical
standards in all operations.
NBG Group Policy against Violence and Harassment at
Work
The development of a working environment that respects,
guarantees and promotes the right of every person to work
without violence and harassment is a commitment and priority
for the Group of Companies of the National Bank of Greece.
In this context, the purpose of the newly adopted Policy is to
establish a specialized framework for the prevention and control
of all forms of violence and harassment that occurs, whether
related to or arising from work, including gender-based violence
and harassment, as well as sexual harassment.
It is noted that the Policy is in accordance with the provisions of
the International Labor Convention No. 190 for the elimination of
violence and harassment in the world of work, which was ratified
by Article 1 of Greek Law 4808/2021, as well as the provisions of
article 2 of Greek Law 4808/2021.
NBG Group Internal Violence and Harassment Complaints
Management Policy
To
the same direction, and in order to best implement the
Group’s commitment to tackling and – ultimately – eliminating
violence and harassment in the workplace, the Bank implements
the Internal Violence Complaints Management Policy and
Harassment, which provides guidance on the credible reporting
of an incident or incidents of violence and harassment at work.
In general, the Bank encourages all those involved in the scope of
the Policy to report any form of violence and harassment that
occurs during, or is associated with, the work, including violence
and harassment due to gender and sexual harassment as soon as
it comes to their notice. These reports can be made anonymously
or not anonymously through the established whistleblowing
channels.
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Accordingly, the Bank is committed, both through the Policy and
through its other procedures, to ensuring the complete
confidentiality and protection of the complainant. All complaints
will be taken seriously and investigated with full objectivity and
independence. The Bank assures that those who make
complaints will be protected from retaliation, and that the
personal data of all parties involved will be protected through the
implementation of the necessary technical and organizational
security measures.
Responsible Procurement / outsourcing
Standing by its longstanding commitment to responsible
operations, NBG has adopted policies, regulations and processes
which are given formal substance in relevant Codes of Conduct
ensuring transparency and impartiality as well as avoidance of
conflicts of interest in its supplies and implementation of
technical projects. NBG uses a Suppliers Relationship
Management System (SRM-SAP), which facilitates cooperation
with its suppliers representing most of the business sectors.
Pursuant to the institutional framework, all parties involved in
procurement and technical projects must be aware of and
conform with the Bank’s and the Group’s Code of Ethics, which
also applies to purchasing and technical projects. The Bank
reviews and evaluates its suppliers (in terms of quality,
certifications, respect for human/employee rights, etc.) on an
ongoing basis. Regular sample qualitative and quantitative
controls are carried out for every order and delivery of
goods/equipment, etc.
In 2022, there were no confirmed incidents where contracts with
business partners were terminated or not renewed due to
violations related to corruption. All prospective suppliers are
under the obligation to comply with Corporate Social
Responsibility requirements (documenting compliance by
sending relevant supporting material), as these are stipulated in
the relevant EU Directives, on issues such as:
-
Environmental protection.
-
Child labour.
-
Work health and safety.
-
Social equality/solidarity.
All NBG suppliers resulting from tender procedures comply with
this obligation. Based on the above, it is estimated that c.97% of
the suppliers, associated with the Bank, have been assessed with
regard to environmental criteria as well.
Furthermore, the Bank has developed:
i.
a supplier bribery risk assessment through a specially
designed questionnaire, where the Bank assesses the
bribery/corruption risk its Third Parties may pose to the
Bank; and
ii.
NBG Group’s Outsourcing Policy where among others
enacts the ESG questionnaire for the service providers.
NBG Customer Complaints Management Policy
To
manage effectively customer complaints, the Bank has
introduced a Customer Complaints Management Policy governing
in detail customer complaints management and its key principles.
Also, the Client Conduct Sector which lies in the independent
compliance function undertakes to respond promptly to
grievances filed either directly by the Bank’s customers or by
other bodies. The Board of Director’s Compliance, Ethics and
Culture Committee oversees, among others, conduct issues with
a view to ensuring fair treatment of customers (such as
products/services design and suitability, sales processes,
transparency of fees, satisfaction/complaints) and that the Bank
is conducting business in the right way. More specifically,
regarding the handling of complaints the Committee:
a.
Reviews reports submitted by the Group Compliance
and Corporate Governance Function on customers
issues (such as customer perceptions / customer
satisfaction data (survey results)/ customer complaints
etc).
b.
Monitors and reviews (via the Compliance Function)
the procedures on the basis of which the Bank manages
centrally all complaints submitted by the Bank’s clients
so as to ensure the resolution of the issue in a
transparent, impartial and objective manner, within the
stipulated timeframe, as well as relevant Ombudsman
enquiries and recommendations.
Additionally, the Committee receives and reviews complaints
related to Board of Directors members and Senior Executives of
the Bank.
Customer protection & Marketing practices
In its endeavor to remain fully compliant on an ongoing basis
with its legal and regulatory requirements, the Bank implements
a procedure for controlling newly-launched products and
services, according to the regulation for the introduction,
modification, withdrawal of the products and services of the
Bank. In this context, product characteristics are checked
regarding regulatory compliance while the total text and contents
of contracts, as well as terms of use and forms providing pre-
contractual information, that are intended for contractual
agreements between the Bank and its customers are updated on
the basis of new guidelines, legislation or business decisions by
the Bank’s legal services and the Group’s Compliance function
and then communicated to customers according to procedure
also subject to the applicable regulatory framework.
With a view to coordinating the actions required to promote the
Bank’s corporate identity, the Bank has established the Strategic
Communication Committee. The Committee’s duties include the
approval of programs regarding the promotion of the Bank’s
corporate image, products and services, as well as the evaluation
of proposals for the best development of the Bank’s website and
alternative channels as a means of marketing its products and
services.
Furthermore, specific control procedures are also followed
before the launch of any information/promotional activity
regarding the Bank’s existing and/or new products and/or
services, by the competent Compliance and Legal Units. The
programs we provide are in accordance with the regulations and
optional rules on communication and marketing, aiming at the
customer’s complete information on the benefits of our products
and services. Thus, we ensure that our communications and
promotional material is consistent with the provisions of the
Hellenic Code of Advertising-Communications, the provisions on
unfair competition and consumer protection and the overall
existing Greek legislation. We monitor and strictly adhere to the
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
102
regulations/ guidelines of the Hellenic Communications Control
Council. More information is available in Transparency of banking
transactions (
https://www.nbg.gr/en/individuals/questions/faq/transactions
).
Our People
Training and Development
Selection, Recruitment and Placement
Health and Safety
Gender Equality
Staff number per geographical area
HR Priorities for 2023
Training & Development
In 2022, our Bank further strengthened its Training and
Development momentum in line with its Purpose and Values,
with particular emphasis on strengthening its Executives and
upgrading their skills through extensive, systematic hands-on
educational actions, utilizing a multitude of blended learning
methods and tools.
We focused on the gradual roll-out of NBG Academy’s new
training approach in key roles of Corporate and Investment
Banking, through the design and implementation of a specialized
“Corporate Academy”. The Academy’s main goal is to align the
training offered with the specific needs of the roles of Credit
Analyst and Relationship Manager in Corporate and Investment
Banking.
To
this end, a series of diversified Development
Programs were designed for these two roles to strengthen
targeted knowledge a particular emphasis on cutting-edge skills
(behavioral skills, training in new technologies and trends in
Business Banking, etc.). Over the past year c. 100 Relationship
Managers and Heads of Sectors of the Corporate and Investment
Banking Divisions were trained through this Academy focusing
on:
●
the key principles of Project Management methodology,
ensuring application thereof in the numerous financing
projects they implement and monitor on a daily basis;
●
a targeted Sales Program designed to ensure that they meet
the expectations of their advisory role, fostering long-term
relationships of mutual trust.
Furthermore, large-scale and priority development actions were
launched throughout the year for key populations, supporting the
Bank’s Transformation Program effort.
More specifically, special emphasis was placed throughout 2022
on the development of culture and skills of Branch Network
Officers so as to ensure that they meet the expectations of their
new advisory role, which places the Customer at the center,
promoting first -class customer service and experience as well as
building relationships of trust and mutual value. In addition,
special emphasis was placed on the development of
administrative and coaching skills of Branch Network Managers
and Team Leaders, with a view to strengthening their managing
skills in Customer Service and Sales so that they can efficiently
lead efforts to upgrade the Bank’s services and guide their teams
in delivering the best possible results. A total of 3,122 Branch
Network Officers participated in these actions, in 195 events (a
total of 84,634 man-hours of training).
More specifically, in 2022 the following Programs were
implemented for Branch Network Officers:
●
Sales Skills Development (Integrity Selling): three-day
seminars attended by 960 employees
●
Excellent Customer Service: Separate seminars for employees
and Team Leaders, attended by a total of 2,061 employees
●
Unlocking the Power of Sales: 5-day Coaching seminar with
an emphasis on efficiency, attended by 101 Branch
Managers.
In addition, a long-term Program designed to cultivate and
strengthen skills and the mentality of NBG employees, who will
support the Bank’s management team (135 Managers, Deputy
Managers and Independent Sector Heads), was successfully
completed. The aim of this Program was to ensure that the said
group will be able to address future challenges that the “new
normality” brings, cope with the uncertainty of a rapidly changing
environment, promote change demonstrating flexibility and
empathy and form groups that will operate in a way that will
unleash their creative potential, so that they find solutions and
achieve high performance.
Likewise, it was considered as a top priority to provide for the
development of Project Management skills among a population
of c. 300 Officers with a crucial role in the promotion of the
Bank’s important projects, with a view to gradually creating a
“community” that interacts and works on the basis of a common
approach and methodology and in accordance with modern
principles of Project Management.
For yet another year, particular emphasis was placed on training
a large number of Program Developers in new cutting-edge
technologies and programming codes, in order to support and
further accelerate the Bank’s digital transformation drive, while
through a variety of in-house and external training programs we
focused on:
- developing data management and analysis skills (including
large-scale data) to gain valuable knowledge and draw
useful conclusions,
- helping approximately 70 Operational Support Officers
familiarize with the concepts and benefits of artificial
intelligence, RPA, digital signatures and other digital trends
as well as with the application of these technologies both in
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
103
the wider market and within the Bank with emphasis on the
resulting benefits.
In the context of implementing the regulatory framework
regarding new certifications, 399 investment type a1-b and f2
certificates and 170 insurance agent certificates were obtained.
The renewal process was successful for 99% of the participants,
resulting in the continuation of activity for 2,755 certified
insurance intermediaries and the renewal of 395 investment
certificates for another 5 years.
At the same time, new mandatory e-learning programs were
made available relating to the updated Cyber-Security and Anti-
Money Laundering policies, while e-learning programs on work
ethics, the whistle-blowing policy and internal control continued
to be available to all Group Personnel, significantly backing our
efforts to establish a respective culture among our people.
Finally, the design and implementation of a new training system
was completed as part of our efforts to improve the management
of the training function and to systematically monitor the
development of the desired skills by our staff.
Number of training events
Number of participants
Training Hours
1,351
55,890*
225,584
*
Of which the unique participants amounted to 8,017
.
In 2022 Training and Development expenditure amounted to €2
million.
Talent acquisition & management
In the context of enriching initiatives that promote our people’s
development, we seek ways to enhance general and technical
training, recognizing the importance of talent and of the need to
continuously update and upgrade skills within the Bank in today’s
ever-changing work environment. In 2022, our efforts focused on
identifying employees with great potential in the organization as
well as employees with unique and critical know-how for the
Bank leveraging common, specialized and internationally
recognized methodology and tools. The scope of this action is to
ensure employees’ targeted development by designing personal
development plans and participating in a Mentoring program, in
addition to the utilization of training programs through the
MOOC platform. By identifying and attracting specialized talent
from the labour market we strengthened our workforce, utilizing
new search tools through professional social networks and
bodies, as well as through strategic partnerships with specialized
companies, in guiding or complementing existing teams in key
functional areas. In the context of promoting value-adding
transfers within the Bank with a view to aligning our HR profile
with the competitive market demands on an ongoing basis, we
successfully provided for the staffing of new Bank Units, our main
aim being the strategic centralization of key operations, such as
the new business customer service model and the centralized
task management SB hubs. Further, emphasis was placed on the
provision of advice and guidance through personalized feedback
and coaching sessions by specialized NBG consultants, and
through the participation of targeted groups of employees in
Evaluation & Development Centers. Attracting competent future
executives across the organization remains a key priority as we
expand our transformation efforts. To this end, the Bank
continued to participate in university and career events, and
strengthened its outward orientation by expanding its
cooperation with eminent university bodies and agencies that
boost youth employability.
Employee Experience Survey
In May 2022, the 2
nd
conducted, giving our people the opportunity to express their
views pointing out what they think is working well in NBG and
where there is room for improvements. A “Value Index” was also
introduced in the survey in order to establish whether employees
believe the behaviour of Senior Management and the Heads of
Teams is consistent with the Bank’s Values.
Employees were informed about the results of the Survey
through open discussions held at team level. The aim of these
discussions -108 in total – was the preparation of action plans for
the areas of concern in their day-to-day activities and to explore
how, through targeted actions, they can enhance experience,
cooperation and efficiency. By the end of 2022, 80% of the
expected action plans had already been prepared.
Regular & Open Internal Communication at Bank level
Aiming to enhance transparency and open communication and to
disseminate our strategy and orientation to our people, a
roadmap of senior leadership touchpoints was prepared,
according to which various actions were carried out, such as:
1.
CEO Breakfasts, Management Team Visits to the Branch
Network and customer contacts, meetings at General
Division and/or team level.
2.
Launching “NBG Talks”.
talks given by specialized partners and experts from the
market which are addressed to everyone here at NBG. The
talks focus on 3 main pillars involving contemporary topics
and concern:
-
efficiency in the work environment,
-
cultivation of soft-traits and mindset in the “new era”
that affect the quality of our work experience,
-
matters of well-being, parenting, etc.
3.
Launching NBG Newsletter “The Bank is each and every
one of us”.
the magazine “Leading Ahead” was released. It includes a
host of news and successes from the previous period but
also surprise sections such as
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
104
-
“Special Corners” with interviews of members of the
Management Team and
-
“Expert Talks” with guest professionals and experts from
various sectors
4.
Central NBG Online platform for
conferences/speeches/events.
process for the supply of an online platform for the
management of events and actions was completed, enabling
the performance of virtual and hybrid live
events/actions/conferences for the Bank’s staff and its
customers.
5.
“ASK HR” Function:
In the new “ASK HR” communication channel launched by
the HR Division, employees can communicate by email or
phone, as well as through the ASK HR Intranet site, where
useful FAQs on various topics have been posted.
During the second calendar year of operation of the new
communication channel, ASK HR received 12,094 questions
(9,034 phone calls and 3,060 emails), of which 95.20% were
answered on the same day.
On the ASK HR Intranet site, 23,064 views or hits were
recorded across the various FAQ topics.
Health and Safety
Health and safety in the workplace remain a priority both for the
Bank and the Group companies ensuring a safe working
environment, enhancing the quality of employees’ work
experience, and preventing any associated risks.
In this context, the Bank conducts regular audits to ensure the
appropriateness and adequacy of the existing standards of health
and safety in the workplace, ensures appropriate training and
consultation with employees on such issues, while it has also
prepared emergency plans aimed at preventing occupational
hazards and supporting employees in cases of violent incidents
(robberies and verbal/physical abuse).
The Bank, in implementation of Greek Law 3850/2010, puts into
effect its Regulation for the Protection of the Health and Safety of
NBG employees, which covers all its staff, while for hygiene and
safety issues the Bank has set up the Health and Safety
Committee.
efficiently as possible, the Bank holds seminars on related issues,
such as fire safety (including fire-safety legislation), crisis
management etc.
In 2022, the Incidence Rate (IR) amounted to 0.31 (IR= (total
number of accidents / total working hours) x 200.000).
Gender Equality
In order to achieve essential equality between women and men
at all levels, multiple initiatives have been put in place.
Equal employment opportunities for women and men are a
priority for NBG. The number of employees for the women and
men at Bank’s level and the allocation per age ranges is as
follows:
Number of employees
%
Women
3,608
53.8%
Men
3,098
46.2%
18-29 y
180
2.7%
30-44 y
3,147
46.9%
45-59 y
3,291
49.1%
60+ y
88
1.3%
Staff number per geographical area
The number per geographical area from ongoing activities at
Group level is broken down as follows:
Country
Staff number on
31 December 2022
Greece
6,907
North Macedonia
947
Cyprus
119
Egypt
80
Bulgaria
32
Romania
14
Luxembourg
4
Total
8,103
Human Resources priorities for 2023
Human Resources priorities for 2023 include the following:
training and fostering an ESG culture amongst our people
further strengthening targeted knowledge and cutting-edge
skills of Credit Analysts and Relationship Managers of
Corporate and Investment Banking through their
participation in “Corporate Academy” programs
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
105
gradual roll-out of the new training approach adopted by the
NBG Academy in crucial roles of other NBG business areas,
including IT, Financial Services of the Bank, roles responsible
for identifying, measuring, managing and reporting risks etc.
targeted strengthening of knowledge, team mentoring skills
as well as the customer-centric culture of the Branch Network
training on the basic principles of customer experience
management but also development of a relevant culture in
selected Executives of our Bank who deal with product and
process design, with a view to improving the degree of our
Organization’s response to our Customers’ needs, as well as
increasing the degree of customer satisfaction from crucial
points of their interaction with our Bank.
further development of our staff’s project management skills
design of the Bank’s Succession Plan for critical roles ensuring
leadership continuity
further optimization and simplification of internal HR flows
and procedures with a view to upgrading the level of services
provided to colleagues
investing in People Analytics with a view to creating added
value to company results, through maximum utilization of
data for drawing conclusions and making strategic decisions
revision of the Regulations for the Protection of the Health
and Safety of NBG Employees taking into account the
provisions of Law 4808/2021 concerning the strengthening of
the responsibilities of the Occupational Doctor for the
prevention of violence and harassment at work, the
obligations of employees relating to the implementation of
health and safety rules at the place of remote working, as
well as the measures taken by the Bank for the protection
and safety of its employees in times of health crisis.
implementation of actions related to Values & Behaviours,
seeking, through a more holistic approach, to implement
actions at diverse levels, in order to enhance the
mentality/culture within the Bank, transforming our work
environment into a place that inspires, supports and
empowers.
continuation of
optimization projects and launching of new,
cutting-edge internal communication tools
of a new platform for push notifications/pop-ups.
Respect of human rights
The Code of Ethics sets out clearly the ethical moral principles
and values, as well as the rules of conduct upheld by the Bank
and Group.
To
this end, the Bank, is aware of its responsibility
to respect human rights, meaning avoiding infringing on the
human rights of others and addressing such impacts where they
occur.
For the sixth consecutive year the Bank’s participation in the
international index Bloomberg Gender Equality Index (GEI),
proves the constant dedication to ESG issues, as well as its
commitment to continue and strengthen gender equality
initiatives and eliminate all forms of discrimination.
The Bloomberg Gender Equality Index (“GEI”) is an internationally
recognized gender equality index that is constantly expanding to
a wide range of companies, now reaching 484 companies from 45
countries.
The Bank’s policies on gender equality, non-discrimination (such
as pay, education and development, benefits, etc.) and its
corporate culture for labour equal opportunities were assessed
for Bank’s inclusion in the Gender Equality Index.
No incidents of discrimination have been recorded or reported
across the entire NBG staff and no complaints have been filed by
employees or third parties on discrimination incidents.
Combating bribery and issues
related to corruption
In Greece, bribery (either active or passive) is considered a
criminal act and is punished according to the provisions of the
Penal Code. Furthermore, bribery is one of the main offenses of
Greek Law 4557/2018, as in force, regarding the prevention of
money laundering and the combat of terrorism. Moreover,
Greece has ratified/adopted the following Conventions :
●
The Convention of the OECD on Combating Bribery of
Foreign Public Officials in International Business
Transactions (through Greek Law 2656/1998); and
●
The Convention on Combating Bribery of Foreign Public
Officials of the EU Member States (1997), (through Greek
Law 2802/2000).
The Group’s fundamental values and principles governing its
business activities strongly emphasize the importance of ensuring
ethical conduct at all times, while the Group shows zero
tolerance on corruption and bribery and it is of its high priorities
to prevent and combat them. The Bank’s activities entail
exposure to corruption and bribery phenomena, which if not
appropriately and timely managed, they may present a significant
risk for the Bank, and could adversely affect its financial results,
with a serious impact on the Bank and its subsidiaries’ reputation,
as well as on the further development of its activities, while they
could cause adverse effects on the interests of its clients,
shareholders and employees.
In this context, preventive control mechanisms are applied so as
to safeguard against any potential risk of bribery and corruption
to which the Bank may be exposed in the course of its
business/operations.
To
that end, the Bank’s anti-bribery
program consists of various essential components, such as anti-
bribery and anti-corruption risk assessments, policies and
procedures, tone from the top, financial and non-financial
controls, raising concerns, management information and periodic
reporting, and records’ keeping.
This approach is reflected in the Codes and Policies that the Bank
has adopted, on the controls embedded within the procedures
followed in the Bank’s day-to-day operations and on the
monitoring and audit processes applied.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
106
The Bank has in place procedures and internal controls which
serve to mitigate potential risk and ensure that the Bank is
compliant with laws and regulations, which in the event of non-
compliance could have a material effect on the Financial
Statements. The effective operation of these procedures and
internal controls are independently monitored by the various Risk
and Control Functions and audited periodically by the Group
Internal Audit Function, while the Audit Committee of the Bank’s
Board of Directors and the Board of Directors through its
committees are duly and timely informed through reporting on
internal controls, as well as any material identified incidents, by
the various Risk and Control Functions.
Additionally, in accordance with particular requirements within
the applicable regulatory framework (Bank of Greece Governor’s
Act 2577/2006) imposes in this respect, external auditors review
and assess the effectiveness of the Bank’s Internal Control
System on a three-year basis. The Bank has appointed the
external auditor for the period 2019-2021.
A set of Codes and Policies which the Board of Directors has
approved include several measures against the risk of bribery and
corruption. Indicatively, such measures are incorporated in the
NBG Group Code of Ethics, the Code of Ethics for Financial
Professionals, the Anti-Fraud Policy, the Conflict of Interest Policy
and the Anti-Bribery Policy.
Furthermore, process level controls are in place for the timely
prevention or detection of fraud risks. Such contro l types include
clearly defined approval / authorization levels, verifications,
physical controls, reconciliation controls, controls over
information used in the control and controls with a review
element. The nature of controls in place are a mix of automated,
semi-automated or manual.
At a further level, the Whistleblowing Policy in force, provides for
the existence of appropriate communication channels enabling
the submission of whistle-blowers’ reports, both in case these
may come from within the Bank as well as in case such are being
submitted by third-parties.
The Board of Directors is committed to prevent bribery and
corruption and promotes the establishment of a culture against
them, according to which any form of bribery and corruption is
non-acceptable, while it is responsible for approving the relevant
Policies, as well as overseeing its implementation and periodic
assessment.
Further, mandatory learning programs on the NBG Group’s
applicable Code of Ethics, which, focuses, among others, on
bribery, corruption issues, and Whistleblowing Policy, as well as
an e-learning program dedicated to the Whistleblowing Policy,
are provided to all employees of the Bank, and all personnel has
access to the internal e-communication network of the Bank
(intranet), through which they are able to get prompt and full
information on all key matters regarding Group’s developments
and operations, including internal communication
announcements, internal circulars, policies that the Bank has in
place etc.
In this context, with the Bank laying great emphasis on ensuring
that the highest standards on ethics and integrity are applied
throughout all of its activities in accordance with international
best practices, the Bank has established the Compliance, Ethics
and Culture Committee of the Board of Directors.
Information on the Committee’s responsibilities and workings in
2022 is presented below in the Corporate Governance Statement,
under section “
D. Board of Directors and other management,
administrative and supervisory Bodies
”.
Additionally, detailed information on the responsibilities,
composition and modus operandi of the Compliance, Ethics and
Culture Committee is included in the Charter of the Committee
posted on the Bank’s website,
(https://www.nbg.gr/en/group/esg/cor porate-governance/bod-
committees/compliance-ethics-and-culture-committee).
Lastly, the Group Compliance and Corporate Governance
Functions were certified with the international standard ISO
37001:2016 (Anti-bribery management systems) for the anti-
bribery management systems in line with the above standard.
With a view to the Bank’s full compliance with the current legal
and regulatory framework, as well as international best practices
and guidelines regarding the combating of corruption and
bribery, and considering that these phenomena are very common
in international business transactions and undermine the
effective corporate governance of the companies, the Bank has in
place the following arrangements, Policies and Codes:
Code of Ethics for Financial Professionals
The Code of Ethics for Financial Professionals sets out the key
ethical obligations and standards of conduct applying to persons
who are involved in the procedures for the preparation,
compilation and submission of financial statements and other
financial disclosures of the Bank and the Group companies.
Its main purpose is to promote ethical conduct, including the
prevention of situations where there is actual or potential
conflict of interest, to promote transparency and ethical
conduct during the performance of Financial Professionals’
duties as well as to ensure compliance with the applicable
regulatory framework, complete and accurate preparation of
financial statements and any other financial disclosures, timely
submission of internal reports in the event of the Code’s breach
and binding of Financial Professionals to comply with the
provisions of the Code and the ethical rules underlying the
regulatory framework applying to the Bank and/or the Group
companies.
Group Anti-bribery and Anti-corruption Policy
Aiming to further strengthen the commitment to the ethical
values and credibility of the Bank and recognizing the negative
consequences of its possible involvement in bribery or
corruption events that could jeopardize both its reputation and
its interests, the Bank has set in force the revised Group Anti-
Bribery & Anti-Corruption Policy.
The Policy has been set according to the requirements of the
legal framework for combating bribery and corruption, as well
as, the international best practices and guidelines of
international organizations and bodies for preventing and
combating financial crime (OECD, FATF, Wolfsberg Group, etc.).
The revised Policy was circulated in the Bank in June 2021 and
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
107
respectively communicated to the Group’s Entities in Greece
and abroad for their own actions.
This Policy applies to all activities and operations of the Group,
irrespective of their jurisdiction, country or business including
all activities performed by any Bank Unit, Group subsidiary or
affiliate company, as well as by agents, consultants or others
acting on behalf of or in co-operation with the Group. More
specifically, the Policy:
●
establishes the basic principles of the Bank and the Group
Companies for preventing and combating bribery and
corruption;
●
applies to all third parties who provide services for or on
behalf of the Group;
●
applies wherever the Group does business;
●
aims to manage, monitor and address all types of bribes
that can take place within the context of the Bank’s
operations (e.g. Procurement, Credit, Branches, payments,
disbursements etc.);
●
aims to be embedded in the NBG Group’s culture and its
people’s behavior and attitude.
Whistleblowing Policy
for the Bank and the Group
The Bank has adopted the Whistleblowing Policy for the Bank
and the Group through which procedures are established for
the submission of confidential reports or comments by any
party, either anonymously or not, regarding behaviour of the
Bank and the Group’s executives, which indicate the existence
of an irregular activity or misconduct or omission relating to
breaches in regards to internal Policies and Procedures. The
Policy complies with the provisions of Greek Law 4261/2014
regarding the internal procedures for violation complaints, as
well as the Directive 2019/1937 on the protection of persons
who report breaches of Union law which entered into force in
December 2021. Recently Greek Law 4990/2022 which
transposed the Directive 2019/1937 on the protection of
persons who report breaches of Union law has entered into
force. The Bank is in process of further updating the
Whistleblowing Policy.
A Whistleblowing e-learning program, which is mandatory for
all the Bank’s personnel was launched in June 2021. The e-
learning program, among others, focuses on providing clear
guidance to personnel on reporting, acting in good faith, of an
incident or incidents that they discover while performing, or
relating to, their duties, which indicate the existen ce of
misconduct/serious irregularity; and highlights the fact that full
confidentiality and protection of whistleblowers is ensured.
The Compliance, Ethics and Culture Committee of the Bank’s
Board of Directors is responsible for the establishment and the
continuous monitoring of the implementation of these
procedures, which ensure confidentiality and secrecy of the
reports or comments received.
Contact details for the submission of
available on the Bank’s website www.nbg.gr
(
https://www.nbg.gr/en/group/esg/corporate
-
governance/whistleblowing
).
Anti-Fraud Policy
The Bank, as all credit institutions, is exposed to the risk of fraud
and illegal activities of any type, which, if not addressed in a
timely and effective manner, they could have negative effects
on its business activities, financial condition, results of its
activities and its prospects for success.
Management, has among its highest priorities the prevention
and combating of fraud as well as of any other irregular activity,
and accounting and auditing practice inconsistent with
international practices and applicable provisions, activities
which are contrary to the fundamental Values and Principles
governing the Bank and the Group’s business activities.
Through the Anti-Fraud Policy, and taking into account the
obligations stemming from the institutional, legal and
regulatory framework, at a national and international level, the
Bank aims at:
●
defining specific principles and rules for the prevention and
combating of fraud and developing a single business
conduct for its handling;
●
raising awareness and vigilance of Group employees for
the detection and avoidance of actions related to fraud;
●
encouraging the submission of confidential reports on
suspicions of fraud, through appropriate communication
channels that ensure the protection of the persons and the
proper investigation of the reported incident;
●
developing systems, procedures and control mechanisms
that help to promote prevention and combating of fraud.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
108
Prevention of conflicts of interest
The Bank and the Group Companies place emphasis and take
the appropriate measures to handle cases that may cause or
lead to conflict of interest within the context of the services
they provide. With the purpose of preventing real or potential
cases of conflict of interest, the Bank and the Group has
adopted the following Policies:
●
Policy for avoiding Conflicts of Interest for Board
Members, Senior Executives and other Related Parties of
NBG, to control and manage real or potential conflicts of
interests between the Bank and its Board Members,
Senior Executives and other Related Parties.
●
Conflict of Interest Policy that sets out the framework for
the prevention, detection and management of conflict of
interest between the Bank, the Group and its customers,
as well as among the customers themselves during the
provision of investment and ancillary services.
●
Policy for Connected Borrowers of the Bank and the
Group in Greece, established with the purpose of
ensuring that Connected Borrowers are not treated
preferentially in comparison to non-Connected
Borrowers, i.e., the same criteria as those stipulated by
the relevant Credit Policies of the Bank shall apply for
Connected Borrowers. The Policy establishes the basic
rules applying in extending credits and in the treatment
of requests for contract term modifications concerning
loans of Connected Borrowers, while it facilitates the
monitoring of appropriate implementation of the Policy
through special functionality that has been developed in
the Bank’s system.
Policies for combating money laundering
and terrorist financing issues
The Bank and the Group consider of primary importance the
prevention and combating of money laundering and terrorist
financing phenomena (Anti-Money Laundering / Counter-
Terrorist Financing – (“AML/CFT”)), through the use of their
products and services. These actions are contrary to the
fundamental values and principles governing the conduct of the
business activities of the Group and lead or could lead to
undesirable consequences, with a significant impact on the
Bank and the Group companies’ reputation as well as on the
interests of its customers, shareholders and staff, exposing the
Group to an unacceptable level of associated risks.
For this reason, and in compliance with applicable regulatory
requirements for the prevention and combatting of AML/CFT
issues, the Group has adopted the following Policies:
●
AML/CFT Policy, which incorporates New Customers
Acceptance Policy.
●
AML/CFT Policy on Cross-border correspondent banking
relationships.
●
The NBG Group Sanctions Policy.
●
The NBG Group Policy for Virtual Assets.
The Group AML/CFT Policy and Customer Acceptance Policy is
frequently reviewed and updated, in order to effectively
incorporate the current developments in the legislative and
regulatory framework both at national and at EU level, as well
as to include procedures already adopted by the Bank,
especially regarding the use of digital channels for the
establishment of new business relationships and all the
important international trends regarding the assessment of
ML/TF risks.
The NBG Group Sanctions Policy is one more evident step of the
Group’s commitment to comply with all laws, regulations and
decisions related to sanctions. The Policy describes the required
criteria and the systemic controls that the Group already adopts
and implements in order to handle sanctions and restrictive
measures efficiently and effectively.
The Policy for Virtual Assets, which incorporates all the current
available national and international guidelines and legislation,
supplements the AML/CFT Policy of the Bank and aims to
identify, assess and effectively manage -via commensurate
measures- the ML/TF risk connected to Virtual Assets.
The adoption of the above-mentioned Policies ensures
compliance with the applicable regulatory requirements of the
Supervisory Authorities on combatting ML/TF, averts the
imposition of criminal and/or administrative sanctions against
the Bank and the Group companies on the basis of direct or
indirect involvement in ML/TF issues and protects the Group’s
good reputation by taking timely and appropriate measures
that will prevent the use of its services for ML/TF purposes. The
Policies are accompanied by the necessary procedures,
guidelines and systemic implementations and are supported by
appropriate IT systems for the continuous monitoring and
identification of suspicious or unusual transactions or activities,
aiming at the mitigation of ML/TF risks that are emerging in the
Bank.
Personal Data Management Policy
NBG recognizes and attaches particular importance to the
obligation of both the Bank and its Group companies to comply
with the applicable legislative and regulatory framework, in
general, on the protection of natural persons to the processing of
personal data. The Bank and its Group companies collect and
manage specific information, which concerns their employees,
shareholders, customers with whom they maintain any kind of
business relationship, persons with whom they maintain a
customer relationship, and third parties in the context of any
relationship other than those mentioned above. This information,
which contains personal data, is managed in a lawful manner,
regardless of the means of collection or storage, ensuring
compliance with the current legislative and regulatory framework
and the provisions for confidentiality.
In view of the above, NBG has adopted the “Personal Data
Management Policy”, which has been revised according to the
requirements of Regulation (EU) 2016/679 of the European
Parliament and of the Council of 27 April 2016 on the protection
of natural persons to the processing of personal data and on the
free movement of such data, and repealing Directive 95/46/EC
(General Data Protection Regulation).
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
109
By means of this Policy, the Bank aims to:
Ø
ensure compliance of the Bank and its Group companies
with the applicable legal and regulatory framework
regarding the management of personal data;
Ø
strengthen the information governance system at Group
level and ensure that management of information
containing personal data is carried out in accordance with
the provisions of the applicable local legislation in the
countries where the Group operates;
Ø
ensure the protection of personal data in the context of
integration of the Group’s systems functions;
Ø
clearly define the principles and rules governing the
processing of personal data that come to the knowledge of
the Bank and its Group Companies in the context of a
business or other relationship, in order to protect the rights
and fundamental freedoms of natural persons and
particularly their privacy;
Ø
raise staff awareness and provide guidelines for the
avoidance of actions that could lead to administrative, civil
or criminal penalties for violation of the provisions of the
applicable national and European legislation on the
protection of personal data;
Ø
to safeguard the reputation and credibility of the Bank and
the Group.
The Personal Data Management Policy:
v
is binding on the Bank and the Group companies as it
establishes the basic principles that govern the processing of
personal data;
v
is binding on all members of the Board of Directors, senior
executives, employees of the Bank and the Group companies,
and in general all persons employed in the Group either by
employment contract or otherwise (including Management
Advisors, Special Associates, Staff of companies associated
with the Bank or the Group companies);
v
is binding on all third parties that provide services to the
Group or in the name and on behalf of the Group (including
partners, intermediaries, agents and any other persons who
cooperate with the Group under outsourcing agreements or
otherwise);
v
covers all activities of the Group in Greece and abroad,
including all operations carried out by any Bank Unit, by a
subsidiary or an associated Company, agent, advisor or third
party acting on behalf of or in collaboration with the Group;
v
covers all forms of processing that are carried out in the
context of servicing the operations of the Bank and the Group
companies and relate to the maintenance of either physical
or electronic data.
Training Programs on Personal Data
Protection
To
educate and familiarize the Bank personnel with data
protection issues and raise their awareness, a dedicated e-
learning program has been developed, which is reevaluated
periodically, while specific reference to data protection issues is
included in seminars that are addressed to the Bank’s personnel
regarding the Bank’s products and services.
Policies for the proper provision of Investment and
Insurance Services
The Bank recognizes the need to maintain and operate effective
organizational and administrative arrangements in order to act
honestly, impartially, and professionally in the provision of
investment or, as the case may be, ancillary services to clients as
well as in insurance distribution activities so as to best serve their
interests.
The Bank provides the investment services of
receiving/transmitting and/or executing orders on behalf of
clients in relation to financial instruments/investment products,
and not, the investment services of portfolio management and
investment advice.
To
ensure compliance with the requirements of the EU regulatory
framework on markets in financial instruments (Directive
2014/65/EU on markets in financial instruments/ MiFID II, as
incorporated into Greek legislation with Law 4514/2018) and on
the distribution of insurance products (Directive 2016/97/EU on
the distribution of insurance products, as incorporated into Greek
legislation with Law 4583/2018), the Bank has established a
number of Policies, amongst others, the “Best Execution Policy”,
the “Conflicts of Interest Policy”, the ”Policy for the Control of
Marketing Activities for Financial Instruments & Insurance
Products”, the “Financial Instruments & Insurance Products
Governance Policy” and the “Suitability Policy on Insurance-based
Investment Products”.
Best Execution Policy
The Bank implements the Best Execution Policy which sets out the
basic principles governing the receipt and transmission of orders
to third parties and the execution of orders on behalf of clients.
The Bank systematically monitors the implementation of this
Policy and evaluates its effectiveness. With this Policy, it is able to
demonstrate, whenever requested, that it is implementing all
sufficient and enforceable measures foreseen by the relevant
legislation to achieve the best execution of orders for all financial
instruments whether traded on trading venues or over-the-
counter. This Policy is implemented in accordance with the Law
4514/2018 for all transactions where the Bank receives and/ or
transmits orders to third parties or executes orders on financial
instruments for its clients who have been categorized as “Retail”
or “Professional” according to MiFID II regulatory and legislative
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
110
framework.
Conflicts of Interest Policy
In the context of sound, secure, transparent and effective
provision of investment and/or ancillary services and insurance
distribution activities, including insurance-based investment
products, on behalf of clients, the Bank and the Group have
established, implemented and maintained in written form the
Conflict of Interests Policy concerning the identification and
management of conflicts of interest within the Bank, the Group
and clients, or among the clients themselves.
The Conflict of Interest Policy aims at providing clients with high-
quality investment/ancillary services and insurance distribution
activities, and to prevent or manage conflicts of interest.
Policy for the Control of Marketing Activities for Financial
Instruments & Insurance Products
The Bank implements this Policy, in compliance with the current
legislation, in order to ensure effective control of the marketing
communication of its investment products and/or ancillary
services, as well as insurance products provided to its clients and
potential clients. The Bank ensures that the marketing
communication is fair, impartial, decent, clear, intelligible,
sincere, and not misleading.
Financial Instruments & Insurance Products Governance Policy
This Policy sets out the basic principles of product governance for
manufacturers and distributors of financial instruments and
insurance products that the Bank must follow when operating as
a manufacturer and distributor of investment products and as a
distributor of insurance products.
The Bank ensures that relevant staff participating in the
distribution of financial instruments and insurance products
possess the necessary expertise to understand the characteristics
and risks of the offered products and the services provided as
well as the needs, characteristics and objectives of the identified
target market. The Bank, as distributor has in place adequate
organizational arrangements for receiving from the products’
manufacturers all relevant information and understanding each
product’s features and identified target market.
Suitability Policy on Insurance-based Investment Products
In the context of distribution of Insurance-Based Investment
Products (IBIPs), the Bank has adopted the Suitability Policy on
Insurance-based Investment Products, which complies with the
applicable regulatory and legislative requirements and especially
with the provisions of Greek Law 4583/2018 on the distribution of
insurance products.
In the context of IBIPs distribution, the Bank conducts a suitability
assessment and offers advice, which is reflected in the suitability
statement. During the suitability assessment, the Bank obtains
from the customer or potential customer, such information as is
necessary for it to understand the essential facts and to have a
reasonable basis for determining that its advice (personal
recommendation) to the customer is consistent with such
information. The said information relates to the customer’s
financial standing, including that person’s ability to bear losses,
knowledge and experience in the field of insurance-based
investment products, and investment objectives, including risk
tolerance and any sustainability preferences.
The Bank takes every measure needed to ensure the consistency,
reliability and accuracy of the information received from
customers. Accordingly, customers are encouraged to provide the
information required for the suitability assessment.
Our performance
In line with the Bank’s framework of operations as outlined
above, the sustainable development initiatives that NBG
undertook and developed in 2022, responding to the challenges
and expectations of all stakeholders are presented below.
NBG fully recognizes its role in generating sustainable growth for
its stakeholders, and has been applying increasingly systematic
management techniques in its approach, aiming to promote
economic development, support actions designed to foster
environmentally friendly growth, further enhance the quality of
its workforce, offer more efficient services to its customers, and
contribute, in general, to the community
.
Support to SMEs and professionals:
The Bank continued to launch initiatives within the context
of supporting SMEs and professionals (with turnover up to
€2.5 million) with a view to enhancing their growth and
supporting their sustainability. In 2022, the Bank continued
to launch relevant initiatives:
●
In cooperation with the EIF, NBG:
-
participated in the program launched by the Pan-
European Guarantee Fund (EGF) for the purposes of
financing investment and business plans of SMEs and
small MidCaps. The European Investment Fund (EIF),
acting as EGF’s administrator, offered its guarantee at
a rate of 70% for each loan.
-
participated in the Investment Guarantee Fund,
European structural and investment funds (“ESIF”),
ERDF Greece Guarantee Fund (“EEGGF”), for the
financing of investment and business plans by SMEs
operating in Greece. The EIF guaranteed amounts to
80% of each loan. This guarantee scheme provides
financing to SMEs for the purpose of investing in
tangible and intangible assets, and working capital for
their growth, on favourable terms.
-
continued providing funds through the ESIF EAFRD
Greece guarantee program of the Rural Development
Guarantee Fund to facilitate access by businesses
operating in the agricultural and agri-food sector to
banking finance, NBG. The EIF guarantee amounts to
80% of each loan and is provided for up to 15 years as
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
111
of the execution date of the loan agreement.
●
NBG continued to provide financing through programs and
actions in collaboration with the Hellenic Development
Bank SA (“HDB”), including COVID-19 related forms of
funding.
●
Specifically, in 2022 the following forms of financing were
granted and continue to be granted today:
-
Investment loans to SMEs through the Sub-Program 1
of the TEPIX II Entrepreneurship Fund. Such loans
concern financing with reduced administrative costs at
favourable rates, since 40% of the loan is granted by
the HDB, bearing a zero interest rate.
-
Working capital loans backed by the EAT -TMEDE
Guarantee Fund at a rate of 80% to finance
construction and engineering/planning SMEs which
intend to execute or have already executed works
and/or studies of public interest regardless of the
completion phase of such works and/or studies and
which are active in eligible sectors.
●
In 2022, the following programs were completed:
-
The COVID-19 Business Guarantee Fund Program, in
collaboration with the HDB which provided working
capital financing on favourable terms due to the
guarantee provided, to meet the increased liquidity
needs of businesses arising from the COVID-19
pandemic.
-
The COVID-19 Micro and Small Business Program, in
collaboration with the Regional Development Fund of
Western Macedonia, which aimed at granting new
loans for working capital on favourable terms
(subsidized interest rate for the first two years) to
enhance liquidity of small and micro enterprises
established in the region of Western Macedonia.
●
In collaboration with the European Investment Bank (“EIB”)
and within the context of enhancing financial support for
investments that work towards attaining climate action
objectives, as well as sound businesses supporting female
entrepreneurship and strengthening the presence of
women in leading business positions, NBG continued to run
the respective programs also within 2022.
●
Through dedicated products, such as programs supported
by the EIB, and Bank’s own resources, NBG finances
investment plans for green energy production through a
fixed assets loan product for the implementation of
photovoltaic parks.
●
The BUSINESS EXPRESS loan – financing in the form of an
overdraft limit, amounting from €6,000 to €35,000 – is
continued to be available exclusively through the Bank’s
online banking platform. The product is provided entirely
digitally, from the application through to disbursement,
and is addressed to legal entities and sole proprietors/
freelance professionals with at least one completed
financial year of business operations.
●
Funds were allocated through the POS FINANCING product
to businesses already in partner arrangements with NBG,
which accept customers’ credit/debit/prepaid cards for
payments through an NBG POS terminal. The product
involves an overdraft limit linked to the company’s sight
account, through which its business transactions are
carried out.
●
Continuation of the Government aid facility for the
repayment of business loans for borrowers affected by the
adverse effects of the COVID-19 pandemic (
BRIDGE II
). This
involves a loan instalment subsidy (principal & interest) for
a time period not exceeding 8 months as of the date of
approval.
●
In addition, recognizing the dynamic and growth potential
of the agricultural sector as a key pillar of the primary
sector of the Greek economy, the Bank in recent years has
applied an expanded action plan for the sector’s support
and growth, using funding tools and solutions across the
entire range of banking operations. In this context, NBG has
been participating since 2017 in the initiative of the
Ministry of Rural Development & Food promoting the
distribution of the “Farmer’s Card” to farmers/livestock
breeders. The said product offers to those entitled to
financial support for agricultural activity a boost in liquidity
at favourable terms, so as to be able to cover their
operational needs. In addition, NBG continued in 2022 its
Contract Farming financing program by which it finances
farmers and livestock breeders who work in partnership
with selected agri-food trading or processing companies for
the production of products that are bought by the latter on
the basis of sales agreements between both parties. As a
result, the production and trading cycle of the buyers and
farmers is upgraded, and both sides enjoy significant
benefits (reduction of production costs, better planning of
inventories). For the 2022 production period, more than
700 farmers joined the program.
In addition, as part of supporting the sustainable economy
transition, the Bank has established the Ethniki 2.0 program,
in alignment with the Greece 2.0 vision, which includes
funding of green transition opportunities. The Bank
continued to offer in 2022 green banking products, that have
gained traction, as energy efficiency solutions and related
home energy upgrades are currently in the epicenter of
demand contributing to environmental protection:
●
Loans on favourable terms for energy improvements in
homes (Exoikonomo), co-funded by the HDB amounted to
€35 million, as of 31 December 2022.
●
“Estia Green Home
”, a loan for the purchase, repair or
construction of energy upgraded homes, amounted to €27
million as of 31 December 2022.
●
Consumer
conditions, for financing the purchase of new hybrid
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
112
technology cars and electric vehicles with an outstanding
balance of €15 million, as of 31 December 2022.
●
Green loans are also offered to Small Business customers
for the financing of the installation of solar panels and the
construction of photovoltaic power stations, with an
outstanding balance of €69 million as of 31 December
2022.
●
NBG has continued playing a leading role in financing RES,
with an outstanding balance of €1,570 million in that
sector, as of 31 December 2022. In 2022, the Bank
proceeded to credit approvals for participation in financing
RES investments worth €867 million, contributing to the
country’s overall efforts to improve its environmental
footprint
.
●
NBG also offers 5 ESG mutual funds as part of its
investment offering.
●
Restructuring of retail banking loans (individuals & SMEs)
●
The total
portfolio of restructuring consumer and housing
credit amounted to €111 million, while the total portfolio of
settlement for the respective credit amounted to €3,304
million. The total portfolio of restructuring and rescheduling
SME’s credit amounted to €279 million
.
With a view to optimizing the handling of loan and advances
to customers that require special management and providing
real support to Greek businesses and the economy in
general, the Bank has established two dedicated and
independent internal units, one responsible for the
management of the Bank’s retail loans (the Retail Collection
Unit (“RCU”)) and the other for the Bank’s corporate
delinquent exposures (the Special Assets Unit (“SAU”)).
The respective units seek to provide tailor-made restructuring
aiming to reduce the debt repayment obligations to sustainable
levels. Please refer to section “
Economic and financial review –
Business Overview - NPE management (Legacy Portfolio) &
Specialized Asset Solutions
”.
Staff Learning and Development
Please refer above to section “
People - Training and
development
”.
Environmental footprint
Faced with the severe energy crisis that marked the entire
socio-economic activity of the country and beyond, NBG
showed its reflexes taking a series of practical energy saving
measures, and also guiding and supporting its personnel in
adopting such energy-saving and environment-friendly
behaviours in and outside of work. Such measures come to
add to the Bank’s already rolled out plan of buildings’ energy
upgrades and other important initiatives with a notable
climate impact (e.g. technology-enabled transformations,
such as transition to cloud and paperless, that have a
significant impact also on NBG’s own carbon footprint). In
this context and implementing its Sustainability Policy and
Environmental Management System, the Bank carried out
the following actions and initiatives in 2021 – 2022
:
●
Mainly due to a series of energy saving actions, in 2021,
NBG’s total energy consumption was 201,175,135 MJ,
reduced by 5.3% compared to 2020 (212,498,242 MJ) and
by 15.3% compared to 2019 (237,522,980 MJ). It is
noteworthy, that NBG has achieved a 25% reduction of its
energy consumption from 2018 to 2021 and aims to a
>15% additional reduction until 2025.
Ø
NBG Carbon Footprint
●
Approach to establishing a baseline and emissions
reduction targets:
Ø
As part of our 2050 net-zero strategy
, we
acknowledge that it is fundamental to understand
where our emissions are generated from and
determine the measures and actions towards
emission reduction. While in previous years we had
already gained a good understanding of our
Scope 1
(direct emissions we create) and
Scope 2
emissions resulting from the use of electricity)
GHG
emissions, in 2022 we focused our efforts on
establishing
a baseline of our Scope 3 GHG
emissions
and downstream activities taking place to provide
services to our customers) for the first time. This will
serve as a basis for determining initiatives and
actions towards emissions reduction, while in
parallel developing the Bank’s
Net-Zero roadmap,
for the short (2025)
, medium (2030) and long-term
(2050), in line with the Science Based Targets
initiative (“SBTi”) requirements.
●
What we measured:
Ø
For 2021, NBG’s total
Scope 1
to 2,381 tCO₂e, slightly increased vs. 2020 (+5%).
This is the Bank’s direct GHG emissions (per the GHG
protocol ‘Scope 1 DIRECT’ emissions of the Reporting
Company’s facilities and vehicles), therefore
reflecting the increase in the bank’s own operations.
Ø
Regarding
Scope 2
approaches were used: the location-based approach
and the market-based approach. For 2021, based on
the Guarantees of Origin that the Bank received by
its main electricity provider, and applying the
market-based approach, Scope 2 emissions
displayed a reduction of 99% compared to 2020
levels.
Ø
For
the first time, the Bank added in the recent
baselining exercise, Scope 3 non-financed emissions
categories pertaining to indirect emissions as a result
of the Bank’s supply chain, other than its financing
and investments (i.e., Scope 3, Categories 1-14).
These were included in both measurements of 2020
and 2021 (recalculating for 2020 as needed). In
particular, the Bank calculated the emissions
resulting from its purchased goods and services
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
113
(Category 1), fuel and energy related activities
(Category 3), upstream transportation and
distribution (Category 4), and waste generated in
operations (Category 5), which were evaluated as
most relevant to the Bank’s activities and as most
material in terms of environmental impact. Scope 3
non-financed emissions in 2021 were measured at
30,558 tCO₂e, reduced by 29.6% y-o-y (43,376 tCO₂e
in 2020, recalculated).
Non-financed emissions
2020
2021
Scope 1 emissions
(tCO
2
e)
2,259
2,381
Scope 2 location-based emissions
(tCO
2
e)
20,989
19,161
Scope 2 market-based emissions
(tCO
2
e)
23,419
224
Scope 3 (excl. Cat.15) emissions
(tCO
2
e)
43,376
30,558
Total non-financed emissions*
(tCO
2
e)
69,054
33,163
*
Using the market-based approach for Scope 2
●
Ø
Similarly, for the first time, the Bank calculated
Scope 3 financed emissions. As the case is with all
Financial Institutions, our analysis showed that
‘Investments’ (Scope 3 Category 15) correspond to
the vast majority of our emissions.
Ø
For specific selected parameters - chosen on the
basis of impact and materiality
29
Partnership for Carbon Accounting Financials
(“PCAF”) minimum requirements, we measured
Scope 3 Category 15 emissions and intensities for
2020 and 2021, as noted in the table below:
Financed emissions (“FE”) and Intensities - Scope 3
(Cat.15)
2020
2021
D35 - Electricity, gas, steam & A/C FE
(tCO
2
e)
742,483
978,803
D35 - Electricity, gas, steam & A/C Intensity
(kgCO
2
e/MWh)
245
134
CRE FE
(tCO
2
e)
40,695
42,394
CRE Intensity
(kgCO
2
e/m2)
86
77
Mortgages FE
(tCO
2
e)
318,239
292,301
Mortgages Intensity
(kgCO
2
e/m2)
32
33
●
Ø
Although for certain portfolios, such as sector D35,
financed emissions increased in 2021 due to the
increase of our lending activities, it is noted that
portfolio intensities have declined or remained
stable across portfolios, and compare favorably to
benchmarks available from other European banks.
●
Notes on our financed emissions measurement
methodology:
Ø
In order to measure our emissions generated from
the financing provided to our customers and from
our investments (Scope 3 Category 15), we
implemented the PCAF Standard
30
2021. Specifically, in our analysis we took into
account on-balance sheet drawn amounts of loans
and investments as at 31 December 2020 and 2021
including mortgages, CREs, corporate loans, project
finance and securities (corporate bonds, listed and
unlisted equities). For financing we provide through
corporate loans, project financing and securities
(corporate bonds, listed and unlisted equities) we
placed emphasis on emissions related to power
generation (NACE D35) as the most material sectors
in our portfolio in terms of financed emissions.
Ø
According to the PCAF Standard, financed emissions
of a Bank are calculated by multiplying the
‘’attribution factor’’ by the emissions of NBG’s
borrower or investee. The ‘’attribution factor’’ is
determining the share of the outstanding amount of
loans and investments of NBG over the total equity
and debt of the company, project, etc. (or the
property value of the property for mortgages and
CREs). The most recent available financial data of our
customers (equity and debt) were utilised for our
calculations, along with the reported absolute
emissions of the borrower or investee or financed
asset, where these were available.
Ø
It should be noted that our initial disclosures relied
on our existing data collection processes. Following
the calculation of our financed emissions for the first
time, we have recognized areas for improvement
that are related to our data collection systems, as
well as to closer engagement with our customers. As
we integrate new parameters in our data collection
processes and our systems, the emissions calculation
exercise will be further facilitated and will also
become more efficient, while our data quality will
improve.
Ø
In 2022, NBG avoided 2,483,002 kg CO
2
through production of electrical energy from solar
panels, operating in four of its buildings
(corresponding to 2,510,619 kWh sold to the grid
through net metering).
Ø
NBG received Guarantees of Origin, certifying that
29
Mortgages portfolios, and Bank’s exposures in NACE sector D35
(Electricity, gas, steam and air conditioning supply) across the rest of the
PCAF asset classes (Listed equity and Corporate bonds, Business Loans
and Unlisted Equity, and Project Finance).
30
The Global GHG Accounting and Reporting Standard for the Financial
Industry | PCAF (carbonaccountingfinancials.com)
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
114
100% of the electricity supplied by its main provider,
in 2022, derived from Renewable Energy Sources.
Ø
Recycling programs were implemented with the
participation of employees. Indicatively, 461 tonnes
of paper, 1,887 kg of small and large batteries, and c.
115 tonnes of electronic and electrical equipment
were recycled. In addition, 468 kg of low voltage
lamps and lighting equipment and 323 kg of plastic
and aluminum were recycled through the expansion
of recycling across the Bank’s branch network. All
these recycling programs were implemented in
cooperation with licensed contractors.
●
In the context of NBG’s environmental footprint efforts,
a series of actions were carried out aiming at saving
energy and natural resources, as noted below:
Ø
Plug-In Hybrid Cars:
In 2022, a total of 51 Plug-in
Hybrid
cars were acquired, with their average
carbon
emissions amounting to 33gr CO
2
carbon
emission reduction for 2022 by this initiative was
estimated at
103 t CO
2
.
Ø
Car chargers:
program of car chargers’ installation in all Bank’s
privately - used parking lots, covering all company
cars parking in those facilities.
Ø
Discontinuation of plastics from NBG Canteens:
By
discontinuing plastic material usage in 4 NBG
canteens, it is estimated that the use of
197,000
pieces of plastic (utensils, cups etc.) was avoided in
2022.
Ø
Ecological cleaners:
By replacing the existing
cleaning materials with 100% ecological, the usage of
harmful cleaners was avoided in 2022 (estimated
25,300 lt
Ø
Photocell taps:
By installing 343 photocell taps in 6
Administrative buildings, it is estimated that c.
6,600
m³
(or 6,600,000 lt) are saved per year.
Ø
Recycling bins (paper / plastic / aluminum):
By
installing recycling bins in 10 buildings, the following
were collected (and recycled as appropriate) in 2022:
o
Ungraded paper:
8,800 kg.
o
Plastic / Aluminum:
323 kg.
●
Τhe ESG projects implemented in 2022, included the
collaboration with a Strategic Energy Consultant for the
Bank’s Environmental Strategy, with respect to its
buildings. In this context, sophisticated energy
monitoring systems were installed in buildings with high
energy consumption levels, whilst the property energy
upgrade program was continued. Actions and initiatives
included:
Ø
Lighting, heating and cooling system upgrades, in
several buildings.
Ø
Installation of water consumption reduction systems,
in several buildings.
Furthermore, noteworthy ongoing projects included:
Ø
The energy efficiency retrofit, accompanied by a
LEED certification of the Bank’s Headquarters
(“Karatza building”);
Ø
acquiring ISO50001 certification for the Bank;
Ø
feasibility study of a large-scale energy efficiency
retrofit project (i.e.: buildings’ energy upgrade,
installation of photovoltaics on NBG Group
buildings).
●
The continuation and successful completion of the
energy upgrading of all of the Bank’s buildings is a key
target in the upcoming years.
●
Also, in 2022, additional measures for rationalizing energy
use were implemented, triggered by the energy crisis in
Europe. Specifically:
1. AIR CONDITIONING (Heating-Cooling-Ventilation).
Reduction of air conditioning operating hours in the
administration buildings, depending on the use of the
building. Setting the thermostats, at a temperature not
higher than 19°C in winter and not lower than 26°C in
summer.
Deactivation of the air conditioning, after the end of the
work and the departure of the workers as well as when the
outside temperatures allow it.
Rational use of natural ventilation, especially on days
when the weather conditions are unfavorable (intense
cold or heat).
2. LIGHTING - Modification of external & internal lighting
operation during the night. Specifically:
Modification of the lighting operation during the night
hours, by switching off the external lighting after 22:00 in
the Administration buildings and in the Branches.
the end of the work and the departure of the workers.
3. OTHER FACILITIES:
ü
Rationalizing the use of water heaters and domestic
hot water, when required.
ü
Rationalizing the use of elevators.
●
The development of processes/transactions with a view
to reducing operating costs, rationalizing printing and
saving natural resources (paper) was continued in 2022.
●
As regards prevention of consumption of natural
resources, note that in the course of the Bank's normal
business activity the bulk of solid waste is paper. Since
2011, the Bank’s correspondence (internal and to third
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
115
parties) is fully managed by the Internal Electronic
Document Management System, resulting in a
significant reduction in printing and paper consumption.
In 2022, 486,488 documents were exchanged through
the Internal Electronic Document Management System,
thus saving c. 1,216,220 page prints. Furthermore, the
use of the e-signature application also contributed
towards limiting paper consumption (c. 7.3 million print-
outs during 2022). Additionally, since 2021, the
connection of myNBG system and internet banking with
e-Gov has been implemented, enabling customers to
update their data digitally, without the need to submit
documents. A total of 216,000 customers already have
digitally updated over 1.3 million confirmation
documents.
●
As regards toner management, the Bank has arranged
since 2014 the outsourcing of Managed Print Services
(“MPS”) printing needs of Central NBG Services hosted
in central buildings and its Branch Network.
Environmentally friendly management of waste
originating from the device consumables, is also part of
this outsourcing arrangement. This program leads to the
reduction of printouts and, as a consequence, the
reduction of paper and toner consumption. The project
establishes centralized management of printing needs.
The number of the system's current users amounts to c.
6,859 individuals. In 2022, the toners supplied through
the MPS system totalled 6,141 items, while 2,884 items
were recycled through the 2,748 MPS units. It is
anticipated that the future benefit for the Bank will be a
25% - 35% reduction in printing costs.
●
Aiming at environmental protection, the Bank launched
its i-bank statement service whereby its customers
receive electronic statements regarding their credit
cards and mortgage or consumer loans and savings
accounts and stopped receiving printed statements.
Moreover, NBG's i-bank delivery channels are being
enriched on an ongoing basis with new services and
more transactions enabling customers to carry out
transactions 24/7 from home or with their mobile
phone. Note that more than 250,000 new users were
registered in 2022 for NBG's Internet/Mobile Banking
services, while transactions through digital channels
increased more than 17% y-o-y.
Other related initiatives:
NBG has further enhanced its social and environmental
awareness profile by adding
THE GREEN CITY
program to its
go4more
partners.
GREEN CITY
of material (paper, plastic, glass etc.) at the GREEN CITY Mobile
Green Points (vans), earning points they can redeem at partnered
businesses. The partnership between go4more and THE GREEN
CITY, enables members of both programs to convert the points
they collect from recycling, into go4more points, providing
€3 &
€6 go4more vouchers
go4more partners. The partnership between the two programs
began in mid-August 2022 and has already been embraced
eagerly by go4more members, as
more than 5,000 vouchers of a
total value of over €16,000 have been awarded
. In 2023, the
range of recyclable materials will be expanded.
●
Fixed asset donations 2022
NBG reuses or donates (in case of depreciation or replacement)
its equipment to various organizations and public services that
need support in kind, in order to reduce its environmental impact
and to enhance circular economy initiatives. For 2022 the Bank
proceeded with 263 donations of 3,967 pieces of office furniture
and electronic equipment.
NBG’s social contribution
Demonstrating resilience against the ongoing adverse global
health conditions, the energy challenges, geopolitical
uncertainty and inflationary pressures which are taking
place at a global level, creating an unfavorable economic
climate, NBG - standing by its commitment to social
support- during 2022 continued its sponsorship program,
including “MIET”, with funds amounting to c. €4.3 million.
The three key pillars of the “RESPONSIBILITY” CSR program
are:
Community - Culture - Environment
.
Specifically:
Community
Society
●
Strengthening of actions to upgrade health services,
with emphasis on the prevention and treatment of
COVID-19.
●
Development of social solidarity programs.
●
Supporting the work of bodies and organizations with
distinguished track records in the alleviation of social
problems.
●
Supporting vulnerable social groups and individuals.
Science / Research / Learning
●
Sponsorship for scholarship programs for bachelor and
master's degrees in Greece and abroad.
●
Contribution to the enhancement of the education
provided and support for educational programs.
●
Sponsorships for research programs, awards, and
support for innovative ideas.
●
Support for scientific work and promotion of research,
predominately in the form of sponsoring scientific
meetings (conferences, workshops) covering the entire
spectrum of sciences.
●
Support for publications, conferences and other events
dealing with investment and financial issues.
Sports
●
Continuation of sponsorship support to sports
organizations and distinguished individual athletes
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
116
preparing for participating in international sporting
events.
Culture Heritage / History /Art
●
Sponsorship of the preservation and showcasing of the
historical and cultural heritage.
●
Sponsorship support for a variety of events and actions,
in the context of celebrating the 200
th
Greek Revolution.
●
Support for actions and events that involve music and
the performing arts.
●
NBG Cultural Foundation (“MIET”)
●
The significant work of the MIET includes the
promotion of literature, science and the arts.
●
ΜΙΕΤ, with its distinguished actions claims a worthy
leading role in Greece’s cultural life.
●
NBG Historical Archive (NBG-HA)
●
Particularly
noteworthy, is the NBG's Historical Archive,
an important centre of documentation with regard to
the economic, political, cultural and social history of the
country, which brings together a complete historical
archive, with time limits almost identical with the
existence of the modern Greek state. Today, the NBG's
Historical Archive operates in the fields of archival,
historical, research, publishing and educational
activities, pioneering in the implementation of new
technologies regarding the management of its archival
material
.
Environment
●
Support for programs and conferences that highlight
the benefits of sustainable development and
environmentally friendly technologies.
●
Support for the production of publications and digital
content in order to enhance environmental awareness
and aiming to mitigate the effects of climate change.
●
Contribution to the work of bodies that are involved in
environmental preservation and sustainable
development actions.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
117
Information about Article 8 of the EU Taxonomy Regulation
Eligibility to EU Taxomony
The Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021, supplementing Regulation (EU) 2020/852 of the European
Parliament and of the Council specifies the content and presentation of information to be disclosed by undertakings subject to Articles 19a
or 29a of Directive 2013/34/EU, concerning environmentally sustainable economic activities, and also specifies the methodology to comply
with that disclosure obligation. More specifically, it establishes the criteria for determining whether an economic activity qualifies as
environmentally sustainable and incorporat es an obligation that companies subject to the Non-Financial Reporting Directive (“NFRD”),
including financial corporations, must disclose how operations align with the Taxonomy .
The Taxonomy Regulation is a key component of the European Commission's action plan to redirect capital flows towards a more
sustainable economy. The primary aim of the Taxonomy is to help investors identify environmentally sustainable investments.
From 1 January 2024, the Group will be required to disclose information on the extent to which its investments contribute to
environmental objectives, the degree of alignment with the EU Taxonomy, and the principal adverse impacts of investment decisions on
sustainability factors. The Group will also be required to disclose the Green Asset Ratio (“GAR”) KPI which measures the extent to which
activities in Group’s balance sheet can be considered environmentally sustainable, according the Taxonomy’s technical standards. These
disclosure requirements aim to increase transparency and enable investors and the users of the Financial Statements to make informed
decisions.
Before publishing the GAR in 2024, under Article 10, para 3 financial undertakings from 1 January 2022 until 31 December 2023, shall
disclose
:
●
the proportion in their total assets of the exposures to Taxonomy non-eligible and Taxonomy -eligible economic activities (see
table below (a));
●
the proportion in their total assets of the total exposures to central governments, central banks, supranational issuers and
derivatives (as referred to in Article 7, paragraphs 1 and 2) (see table below (b));
●
the proportion in their total assets of the total exposures to non-NFRD companies (as referred to in Article 7(3)) see table below
(c));
●
• the qualitative information referred to in Annex XI (see table below (d)).
Credit institutions shall also disclose:
●
the proportion of their trading portfolio and on demand inter-bank loans in their total assets.
Per Reporting Taxonomy eligibility and Taxonomy alignment the Group, prior to January 2024, is required to report on Taxonomy eligibility
only. In this context, as financial undertaking, the respective requirement for the Group as of 31 December 2022, is presented below
(
amounts in € million
):
Article 10 (para 3)
Taxonomy
eligible*
% coverage over
Total Assets
Taxonomy
non eligible**
% over Total
Assets
(a)
Total Assets
9,084
11.6%
69,028
88.4%
of which trading portfolio
224
0.3%
of which on demand inter-bank loans
227
0.3%
(b)
Total exposure to central governments, central
banks and supranational issuers
25,731
32.9%
Total exposure to derivatives
1,962
2.5%
(c)
Total exposure to non-NFRD
1
5,945
7.6%
Annex XI disclosures for qualitative information in support of the quantitative indicators including the scope of assets and activities covered by
the KPIs, information on data sources and limitation
(d)
The taxonomy eligibility has been assessed on the following assets and activities:
-
financial assets at amortised cost;
-
financial assets at fair value through other comprehensive income;
-
investments in joint ventures and associates;
-
financial assets designated at fair value through profit or loss and non-trading financial assets mandatorily at fair value through
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
118
profit or loss;
-
real estate collaterals obtained by credit institutions by taking possession in exchange for the cancellation of debts.
The following assets excluded from taxonomy eligibility assessment:
-
financial assets held for trading;
-
on-demand interbank loans;
-
exposures to undertakings that are not obliged to publish non-financial information pursuant to Article 19a or 29a of Directive
2013/34/EU.
The European Commission has two approaches to calculate the eligibility ratio: mandatory reporting based on information that
counterparties publicly disclose; and voluntary reporting, which is an estimate based on proxies when the information about eligibility of
the counterparties is not available.
The Group’s approach is to include the eligibility exposure for financial and non-financial undertakings under the mandatory approach,
after capturing the data published by these undertakings (both based on average of capital expenditure eligibility and turnover eligibility)
and provided by the internal customer segmentation (i.e. SME, Large corporate, small businesses & professionals).
The Group’s eligible exposures mainly include mortgages and assets acquired through foreclosure proceedings amounted to €8.3 billion,
as well as eligible loans and securities amounted to €770 million issued by Greek companies in the fields of energy, construction and
manufacturing for which official information on the eligibility of the activities of our corporate clients was available when preparing this
Annual Report.
Total exposure to non-NFRD companies mainly includes investment securities exposures to unlisted companies and associates, loans to
SME companies and public sector corporations and exposures to non-large companies with average staff less than 500 employees.
However, a complete data collection has been a constraint when reporting taxonomy -eligible activities. The lack of robust data affects the
presentation and accuracy of ratios for taxonomy-eligible activities, taxonomy non-eligible activities and non-NFRD entities.
The Complementary Delegated Act, which includes activities related to the nuclear and gas sectors, was adopted by the European
Commission in 2022 and entered into force on 1 January 2023. The assessment of the eligibility of exposures for the financial year 2022 is
based on disclosed eligibility KPIs for the financial year 2021, and these KPIs do not include activities under the Complementary Delegated
Act. The Group is expected to have zero exposures connected to the prescribed economic activities.
Notes:
*”Taxonomy -eligible economic activity” means an economic activity that is described in the delegated acts adopted pursuant to Article
10(3), Article 11(3), Article 12(2), Article 13(2), Article 14(2), and Article 15(2), of Regulation (EU) 2020/852, irrespective of whether that
economic activity meets any or all of the technical screening criteria laid down in those delegated acts;
**”Taxonomy -non-eligible economic activity” means any economic activity that is not described in the delegated acts adopted pursuant to
Article 10(3), Article 11(3), Article 12(2), Article 13(2), Article 14(2) and Article 15(2), of Regulation (EU) 2020/852.
1
For companies not obliged to publish non-financial information pursuant to Article 19a or 29a of the Non-Financial Reporting Directive
(“NFRD”) of Directive 2013/34/EU.
As per Transformation Program, Group’s objectives are the ongoing alignment to UNEP FI Principles of Responsible Banking (“PRB”) and EU
Taxonomy. For Group’s activities in 2022, see also above sub-section “
Non-Financial Statement Issues-Climate and Environmental Issues-
Actions taken
”). Furthermore, details regarding Group’s core activities are included in section “
Economic and financial review – Business
Overview
”
.
NBG shares and shareholder structure
NBG Shares
Despite the pandemic and the energy crisis, the positive performance of the Greek economy supported the market capitalisation of a
number of listed companies. The banking sector further benefited from the significant progress made in reducing non-performing loans.
In this context, the General Index of the Athens Stock Exchange increased by 4.1% on an annual basis, with the Energy sector leading the
rise, recording gains of 46.1% followed by the Industrial sector with gains of 24.3%. During this period, trading activity increased with the
average daily value of transactions on the Athens Stock Exchange settling at €74 million in 2022 compared to €71 million in 2021.
Following the upward trajectory of the market, NBG’s share price increased from €2.660 on 8 March 2022 (year low) to €4.060 on 21 April
2022 (year high), closing at €3.747 on 31 December 2022. NBG’s market capitalization on 31 December 2022 stood at €3.4 billion from €2.7
billion on 31 December 2021. Finally, NBG’s annual trading volume amounted to €2.2 billion in 2022, increasing by 57.6% compared to the
previous year.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
119
NBG Stock Market Data
2022
2021
Year-end price (€)
3.7
2.9
Year high (€)
4.1
2.9
Year Low (€)
2.7
1.8
Yearly standard deviation for NBG share price (%)
2.7
2.4
Yearly standard deviation for banking sector (%)
2.8
3.4
NBG market capitalization at year end (€ billions)
3.4
2.7
Annual trading volume (€ billions)
2.2
1.4
NBG to ATHEX trading volume ratio (%)
12.3
8.0
Shareholder Structure
As at 31 December 2022, NBG’s share capital was divided into 914,715,153 common shares of a nominal value of €1.00 each. As at 31
December 2022, NBG’s free float was broad-based, including c. 97,570 institutional and retail shareholders of which 40.39% is held by the
HFSF, while 49.37% was held by international institutional and retail investors, and 6.00% by domestic retail investors. Excluding the HFSF’s
shareholding, the participation of international institutional and retail investors stood at 77.35% while domestic retail investors stood at
12.93%.
NBG’s
Shareholders
as of 31 December 2022
NBG’s
Shareholders
as of 31 December 2022
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
120
Corporate
Governance
Statement
Introduction
In accordance with Article 152 of Greek Law 4548/2018 on
Sociétés Anonymes, the Bank is obliged to include the Corporate
Governance Statement, as a specific part of the Annual Board of
Directors’ Report. As per the said article, the Bank’s Corporate
Governance Statement includes the following sections, in which
additional information required by other applicable framework,
e.g. Greek Law 4706/2020 on “Corporate Governance for
Sociétés Anonymes, Contemporary Capital Market, transposition
of Directive (EU) 2017/828 of the European Parliament and of the
Council, implementation measures of Regulation (ΕU) 2017/1131
and other provisions”, is also included:
A.
Corporate Governance Code
B.
NBG’s Corporate Governance Key
Policies and Practices
C.
General Meeting of Shareholders and
Shareholders’ rights
D.
Board of Directors and Other
Management, Administrative and
Supervisory Bodies
E.
Internal Control System and Risk
Management
It is noted that additional information in relation to public offers
for acquisitions, as mandated by Article 10 of the European
Directive 2004/25/ΕC, required pursuant to par. 1 d) of Article
152 of Greek Law 4548/2018, is included in a separate section of
the Board of Directors’ Report, namely, the Supplementary
Report to the Annual General Meeting of Shareholders.
A.
Corporate Governance Code
The Bank’s Corporate Governance Framework is aligned with the
requirements of Greek and European legislation, the decisions
and acts of the Bank of Greece, the guidance of the European
Central Bank, the guidelines of the European Banking Authority
and the European Securities and Markets Authority, as well as
the decisions and guidance of the HCMC. Additionally, the
stipulations of the Relationship Framework Agreement (“RFA”)
between the Bank and the HFSF as each time in force are applied.
In February 2006, the Bank’s Board of Directors adopted a
directional framework that describes the Bank’s corporate
governance structure and policy, while throughout the years this
framework has been revised as deemed necessary, in alignment
to regulatory provisions, guidelines, best practices and
developments in the Bank’s internal governance arrangements.
As of June 2021, in accordance with article 17 of Greek Law
4706/2020, the Bank has adopted and follows the Hellenic
Corporate Governance Code of the Hellenic Corporate
Governance Council, which constitutes the Hellenic Corporate
Governance Code for Companies with securities listed on the
stock market, in accordance with Article 17 of Greek Law
4706/2020 and Article 4 of the Decision of the Hellenic Capital
Market Commission (Decision 2/905/3.3.2021 of the Board of
Directors of the HCMC). Further, the Bank's Corporate
Governance Code includes additional provisions in compliance
with more specific corporate governance framework applying to
credit institutions, as well as provisions on internal arrangements
and processes that the Bank implements in compliance with the
relevant legal and regulatory framework. The Bank monitors
developments in the applicable framework and relevant
guidelines, as well as best practices in the area of corporate
governance and proceeds to actions deemed appropriate in order
to ensure compliance with the applicable legal and regulatory
framework, as in force, as well as relevant guidelines. The Bank’s
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
121
Corporate Governance Code was lastly amended in February
2022, mainly to incorporate provisions on the newly established
Board Innovation and Sustainability Committee.
The determination of authorities and responsibilities of the
Bank’s management bodies and the delegation of authorities of
the Board of Directors to Bank’s executives are carried out in
accordance with its Articles of Association and the applicable
legislation, as incorporated in the Bank’s internal framework.
The Bank’s internal Corporate Governance framework and the
Hellenic Corporate Governance Code of the Hellenic Corporate
Governance Council can be viewed on the Bank’s website:
www.nbg.gr
(https://www.nbg.gr/en/group/esg/corporate
-
governance/corporate
-
governance
-
framework).
B.
NBG’s Corporate Governance Key
Policies and Practices
The Bank continuously monitors developments in the applicable
framework and relevant guidelines and best practices and
proceeds to the actions deemed appropriate in order to ensure
that the policies followed are in alignment with the prevailing
applicable regulatory framework and relevant guidelines:
Group
Governance
Policy (B.1)
Includes the main corporate
governance principles at NBG Group
level and provisions concerning Group
companies’ governance bodies,
collaborating with NBG, the Internal
Control System and regulatory
requirements, establishing a unified
Corporate Governance Framework for
the Group.
Group
Remuneration
Policy (B.2)
Sets out the general framework for
remuneration throughout the Group
and defines the basic principles on
which the NBG Group approaches
issues regarding the remuneration of
executives and employees.
NBG Board of
Directors’ &
Senior Managers’
Remuneration
Policy (B.3)
Sets out the general framework for the
remuneration of the members of the
Board of Directors and Senior Managers
(General & Assistant General
Managers), in accordance with the
applicable legal and regulatory
provisions, and in alignment with the
principles set out in the NBG Group
Remuneration Policy, and covers the
total remuneration awarded to all
Board Directors (Executive and Non-
Executive), i.e. fixed and variable
remuneration, including benefits,
participation in Committees fees and
other potential compensation, as well
as the total remuneration awarded to
all members of Senior Management (i.e.
General Managers and Assistant
General Managers).
Policy for the
Annual Training
of members
of the Board of
Directors and its
Committees
Establishes procedures with the purpose
of supporting the Board of Directors in
enhancing its performance and
expanding the relevant skill base and
competencies.
More detailed information on this Policy
is included in Section “
D. Board of
Directors and other management,
administrative and supervisory Bodies/
Induction, Continuous Education and
Training of Directors
”.
Board Self-
Assessment
Policy
Sets out the procedures for the
evaluation of the Board of Directors and
Board Committees collective
performance and the evaluation of
Directors on an individual basis with the
view of ensuring the effective workings
of the Board of Directors.
More detailed information on this Policy
is included in Section “
D. Board of
Directors and other management,
administrative and supervisory Bodies/
Evaluation of the Chief Executive Officer,
the Board of Directors and the Board
Committees
”.
Board
Nomination
Policy (B.4)
Sets the framework and describes the
process for the nomination of
candidates to the NBG Board, as well as
the re-appointment of Board members,
while it also includes provisions on the
Target Board Profile.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
122
Board Suitability
Assessment
Policy and
Procedure (B.5)
Sets out the criteria to be used in the
suitability assessment of the Board
members (initial and ongoing), including
the suitability criteria provided on the
applicable regulatory framework and
explains in greater detail the policies,
practices and processes applied by the
Bank when assessing the suitability of
members of the Board.
Board of
Directors
Diversity Policy
Sets out the Bank’s approach for
accomplishing the desired diversity on
its Board of Directors, in order to
achieve a variety of views, experiences
and perceptions which facilitate
independent opinions and sound
decision‐making within the Board.
More detailed information on this Policy
is included in Section
“B.9 Diversity
policy concerning Bank’s management,
administrative and supervisory bodies”
Policy for the
nomination and
suitability
assessment of
Senior
Management
(B.6)
Sets out the principles and process for
the nomination and suitability
assessment of members of Senior
Management with the highest
professional and personal skills and
moral caliber, while conforming to the
applicable regulatory framework,
internal bank regulations and
international best practices.
Insurance Cover
for members of
the Board of
Directors and
Executives
of the Group
companies (B.7)
Covers the civil liability of the Directors
and Executives of all the Group entities,
with respect to the civil liability for
claims against the Bank and its
subsidiaries arising from negligence,
error or oversight by Directors,
Executives and employees, and
damages arising from fraud, including
electronic fraud, as well as cyber
security breaches.
Internal
Regulation of
NBG S.A. (B.8)
Includes information on the Board of
Directors and its Committees, the
organizational structure of the Bank, the
senior executives, the Internal Control
System, compliance and notification
procedures, transactions with related
parties, and the policies of the Bank.
The Regulation is supplementary to the
provisions of the Articles of Association
and the Corporate Governance Code.
●
The Bank has also in place, among others,
the following
policies and practices, which are described in detail in the
section “
Non-Financial Statement – Corporate
Responsibility”
:
●
ΝΒG Group Code of Ethics.
●
Code of Ethics for Financial Professionals.
●
Group Anti-bribery and Anti-corruption Policy.
●
Whistleblowing Policy for the Bank and the Group.
●
Anti-Fraud Policy.
●
Policy for avoiding Conflicts of Interest for Board
Members, Senior Executives and other Related Parties of
NBG.
●
Policy for Connected Borrowers of the Bank and the
Group in Greece.
●
Policy on Donations, Sponsorships, Charity Contributions
and other Actions of the Group.
●
NBG Group Sustainability Policy.
●
Furthermore, the Bank has established policies which ensure
that the Board of Directors is provided with sufficient
information on related parties transactions, by taking into
account the abovementioned Policy in order to avoid
Conflicts of Interest for Board Members, Senior Executives
and other Related Parties of NBG, as well as the Policy for
Connected Borrowers of the Bank and the Group in Greece.
(B.1) Group Governance Policy:
The NBG Group Governance Policy was initially adopted by the
Board of Directors in January 2018 and subsequently revised in
April 2020, with a view to further enhancing the unified
corporate governance framework of NBG Group and further
optimizing the cooperation between the NBG and its Group
companies. One of the main novelties brought forward was the
introduction of the Tiered Subsidiary Governance Model, in
accordance with which the level of implementation of the group
governance framework shall be determined based on the
classification of group entities, thus establishing the appropriate
governance/reporting structures and practices for each
subsidiary.
Within the context of the Group Governance Policy, the Bank as
the parent company aims to appropriately balance the degree of
control that needs to be exercised by the parent company over
the group subsidiaries and the degree of independence that
needs to be provided to the subsidiaries. At the same time, it
should be ensured that the Group places systems and processes
which will assure the Bank’s Board of Directors that the
"downstream governance" of the subsidiaries reflects effectively
the same values, ethics, controls and processes as at the parent
level.
(B.2) Group Remuneration Policy:
The Bank’s and the Group’s remuneration practices are
consistent with the framework provided by Greek Law 4261/2014
(which transposed European Directive 2013/36/EU CRD IV),
as
amended by Greek Law 4799/2021, which transposed Directive
878/2019/EU (CRD V), Greek Law 4548/2018, Greek Law
3864/2010 (“the HFSF Law”), as in force, the Bank of Greece
Governor’s Act 2577/2006, as amended by the Bank of Greece
Executive Committee’s Act 158/10.5.2019, and the Relationship
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
123
Framework Agreement between the Bank and the HFSF, as each
time in force.
The Group Remuneration Policy was revised during 2021. The
revision included alignment of the Policy with provisions of the
Directive 878/2019/EU (CRD V) and the Bank of Greece Executive
Committee’s Act 158/10.5.2019, as well as changes, so that
relevant procedures upheld by the Bank and Group are clearly
outlined. The Bank further monitors developments in the
applicable framework.
Information on the Bank and Group Remuneration Policy and
general remuneration practices is available on the Bank’s website
at www.nbg.gr (https://www.nbg.gr/en/group/esg/corporate-
governance/corporate-governance -framework).
(B.3) Directors’ & Senior Managers’ Remuneration
Policy:
In accordance with Directive (EU) 2017/828, as this has been
(partly) transposed into the Greek legal framework with Greek
Law 4548/2018 on Sociétés Anonymes, listed companies are
required, among others, to establish a remuneration policy as
regards directors and shareholders have the right to vote on the
remuneration policy at the General Meeting. Additionally, in
accordance with article 110 para. 1 of Greek Law 4548/2018, by
statutory provision the Policy may also include in its scope the
key management personnel, as defined in International
Accounting Standard (IAS) 24 para. 9.
The Directors’ Remuneration Policy was initially approved by the
Bank’s Annual General Meeting of Shareholders held on 31 July
2019 and was subsequently revised by the Annual General
Meeting of Shareholders of 31 July 2020. During 2022, the
Directors’ & Senior Managers’ Remuneration Policy was further
revised by the Bank ’s Annual General Meeting of Shareholders,
held on 28 July 2022, following proposal of the Board of
Directors, as assisted by the Corporate Governance and
Nominations Committee and the Human Resources and
Remuneration Committee.
The main amendments brought within the revised Policy include
especially amendments to the methodology for determining
remuneration of Non-Executive Directors; adjustments in
alignment to provisions of the new Greek Law 4941/2022
amending Law 3864/2010 relevant to remuneration; updates in
legal framework and EBA Guidelines references, as per current
provisions applying; and updates in contract termination clau ses
in line with market practice and in accordance also with the years
of service at the Bank. More detailed information may be found
within the Draft Resolutions/Board Remarks on the items of the
Agenda of the Annual General Meeting of Shareholders
(https://www.nbg.gr/en/group/investor -relations/reports/taktiki-
geniki-syneleusi-tis-28-07-2022).
The NBG Board of Directors’ & Senior Managers’ Remuneration
Policy shall be applicable for a period of four years, unless revised
earlier or in cases of temporary derogations, in alignment with
the relevant applicable provisions.
The revised NBG Directors’ and Senior Managers’ Remuneration
Policy was approved by the Annual General Meeting of
Shareholders of 28 July 2022 by 98.81% favourable votes and no
amendments were required to incorporate votes/shareholders’
opinions expressed on the Policy.
The NBG Board of Directors’ & Senior Managers’ Remuneration
Policy is available on the Bank’s website, at www.nbg.gr
(
https://www.nbg.gr/en/group/esg/corporate
-
governance/corporate
-
governance
-
framework).
(B.4) Board Nomination Policy:
The Board Nomination Policy complements the Bank’s
governance framework for nominating candidates to the Board of
Directors and is read and interpreted in conjunction especially
with the Board Suitability Assessment Policy and Procedure and
the Board Diversity Policy, as well as the Bank’s Corporate
Governance Code and Internal Regulation.
The Policy applies to all NBG Board members designated by the
Bank's relevant collective bodies (General Meeting or Board of
Directors, in accordance with NBG' s Articles of Association),
excluding the representative of the Hellenic Financial Stability
Fund (HFSF), for whose appointment the relevant HFSF’s
provisions apply.
The Policy aims
inter alia
and time-efficient nomination process, and ensuring that the
NBG Board is a balanced, diverse and qualified Board and that
the structure of the NBG Board meets the highest individual and
collective suitability standards and requirements in terms of
ethical principles standards and skills, and is fully aligned with the
regulatory framework governing the Bank.
The Policy was lastly revised in November 2022 by the Board of
Directors, following proposal of the Corporate Governance and
Nominations Committee, so as to align among others with the
Board Suitability Policy and with changes in the relevant
regulatory framework (e.g. new HFSF Law, ECB guidance).
More detailed information on this Policy is included in Section
Board of Directors and other management, administrative and
supervisory Bodies/ Directors’ Nomination & Suitability
Assessment”.
(B.5) Board Suitability Assessment Policy and
Procedure:
Within the context of the Bank’s obligations in relation to the
(initial and ongoing) assessment of the suitability of Board
members and the collective suitability of the Board, the Bank as
of September 2020 has in place the Board Suitability Assessment
Policy and Procedure. The Policy was initially adopted by the
Board of Directors, following proposal of the Corporate
Governance and Nominations Committee, while on 30 July 2021,
in alignment to the provisions of Greek Law 4706/2020, the
Policy was approved by the General Meeting of Shareholders, as
submitted by the Board of Directors following proposal of the
Corporate Governance and Nominations Committee.
In 28 July 2022 the Policy was further revised by the Annual
General Meeting of Shareholders, following proposal of the
Board of Directors as per recommendation of the Corporate
Governance and Nominations Committee, with the aim to align
with changes in the applicable relevant regulatory framework
(e.g. revised ECB Guide to Fit and Proper assessments, Bank of
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
124
Greece Executive Committee Act 205/1/18.05.2022, Greek Law
4941/2022 amending Law 3864/2010, all of which include
important provisions relating to Board members’
suitability/eligibility criteria. The revised Board Suitability
Assessment Policy and Procedure was approved by the Annual
General Meeting of Shareholders of 28 July 2022 by 100%
favourable votes. More detailed information may be found
within the Draft Resolutions/Board Remarks on the items of the
Agenda of the Annual General Meeting of Shareholders
(https://www.nbg.gr/en/group/investor-
relations/reports/taktiki-geniki-syneleusi-tis-28-07-2022).
The Policy aims to strengthen the internal fit and proper process
and has incorporated the relevant obligations in alignment with
the applicable framework (especially the Greek Laws 4706/2020,
4261/2014 and 3864/2010 and relevant Hellenic Capital Market
Commission Circulars, the ECB/SSM Guide to Fit and Proper
Assessments, the joint EBA-ESMA Guidelines on the assessment
of suitability of members of the management body and key
function holders, the Bank of Greece Executive Committee Act
142/11.6.2018, as in force), so as to ensure prudent and
effective management of the Bank.
The NBG Board Suitability Assessment Policy and Procedure is
available on the Bank’s website, at www.nbg.gr
(
https://www.nbg.gr/en/group/esg/corporate
-
governance/corporate
-
governance
-
framework
).
More detailed information on this Policy is included in Section
Board of Directors and other management, administrative and
supervisory Bodies/ Directors’ Nomination & Suitability
Assessment”
.
(B.6) Policy for the nomination and suitability
assessment of Senior Management:
Within the context of enhancing the overall process for the
nomination of the Bank’s Senior Management, considering also
the Bank’s obligations in relation to the suitability assessment of
key function holders, in January 2021 the Board of Directors,
following proposal of the Corporate Governance and
Nominations Committee, approved the Policy for the nomination
and suitability assessment of Senior Management. The Policy lays
out the applying Principles and the Nomination processes
followed in the case of Senior Managers’ positions falling within
its scope, in alignment with regulatory provisions and taking also
into account international best practices. Among the key
objectives of the Policy are to establish a transparent, effective
and time-efficient nomination and suitability assessment process;
ensure that the structure of the Bank’s Senior Management
meets the highest suitability requirements in terms of ethical
standards and skills, and is fully aligned with the current
regulatory framework governing the Bank; and ensure the
effective and prudent management of the Bank and the
effectiveness and soundness of the Bank’s governance
arrangements, so as to protect the interests and the reputation
of the Bank and its Group.
(B.7) Insurance Cover for members of the Board of
Directors and Executives of the Group companies:
In compliance with the provisions of the Corporate Governance
Code, the Bank has entered into a multi-insurance contract in
order to cover the civil liability of the Directors and Executives of
all the Group entities, with respect to the civil liability for claims
against the Bank and its subsidiaries arising from negligence,
error or oversight by Directors, Executives and employees, and
damages arising from fraud, including electronic fraud, as well as
cyber security breaches. The Insurance Cover contracts are
subject to annual review and renewal.
(B.8) Internal Regulation of NBG S.A.
The Internal Regulation has been drafted in the context of Greek
Law 4706/2020 on Corporate Governance of Sociétés Anonymes,
taking into consideration the relevant provisions of the legal and
regulatory framework (particularly Greek Law 4548/2018, Law
3016/2002, Greek Law 4514/2018, Law 4261/2014, Law
4799/2021, Directive 2013/36/EU (CRD IV), Directive
2019/878/EU (CRD V), Law 3864/2010 (the “HFSF Law”), as in
force, decisions and acts issued by the Bank of Greece, the
European Central Bank and the Hellenic Capital Market
Commission, as well as the Bank’s obligations as defined in the
Relationship Framework Agreement with the HFSF, as each time
in force.
The Regulation includes information on the Board of Directors
and its Committees, the organizational structure of the Bank, the
senior executives, the Internal Control System, compliance and
notification procedures, transactions with related parties, and the
policies of the Bank.
The Regulation is supplementary to the provisions of the Articles
of Association and the Corporate Governance Code.
A summary of the Regulation is duly published on the Bank’s
website, at www.nbg.gr
(https://www.nbg.gr/en/group/esg/corporate
-
governance/corporate
-
governance
-
framework)
.
The Board of Directors reviews the Regulation whenever
required, in order to ensure its adequacy regarding the principles
adopted and the rules applied by the Group, as well as the
applicable legal and regulatory framework and international best
practices. The Bank ensures that its key subsidiaries draft an
Internal Regulation.
The Internal Regulation was adopted by the NBG Board of
Directors at the meeting held on 30 June 2021.
(B.9) Diversity policy concerning Bank’s
management, administrative and supervisory bodies
In accordance with Greek Law 4261/2014, as in force, which
incorporated Directive 2013/36/EU into Greek legislation, Greek
Law 4706/2020 and applicable guidelines (HCMC Circular No. 60,
Joint European Banking Authority (EBA) and European Securities
and Markets Authority (ESMA) Guidelines on the assessment of
suitability of members of the management body and key function
holders), as well as HFSF Corporate Governance Objectives and
Standards and HFSF Voting Policy, the Bank should engage a
broad set of qualities and competencies when recruiting
members to the Board of Directors and for that purpose shall put
in place a policy promoting diversity on the Board of Directors.
Within this context, the Bank follows practices and policies that
promote diversity both at the level of the Board of Directors, as
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
125
well as at executive level, aiming at promoting a diverse pool of
members of its supervisory and management bodies. In
particular, the Bank aims at engaging a broad set of qualities and
competencies when recruiting members of the Board of Directors
and of its executive management, with a view to achieving a
variety of views and experiences and to facilitating sound
decision making. Collectively, there is a set of skills and expertise
in place so as to contribute to the efficient operation of the
Bank’s supervisory and management bodies, aiming at collective
suitability of the said, while the Board of Directors shall
collectively have the skills to present its views and influence the
decision-making process within the executive management body.
In particular, the Bank gives great emphasis on ensuring diversity
including in terms of gender representation, age, nationality and
variety of educational background, experience and expertise. As
regards the composition of the Board of Directors, which is in
accordance with the Bank’s Board of Directors Diversity Policy,
the Corporate Governance and Nominations Committee during
the process for the selection and appointment of Board
members, as well as during the assessment (collectively and
individually) of Board suitability and succession planning, takes
into account the aforementioned diversity aspects, while also
considering particular provisions on Board members eligibility
criteria to which the Bank is subject to, including the criteria
provided in Article 10 of Greek Law 3864/2010, as each time
applicable.
The Corporate Governance and Nominations Committee, as the
responsible body for monitoring the implementation and
reviewing
the Bank’s Board of Directors Diversity Policy and
relevant procedures, reviews and assesses, both annually and ad
hoc, Board and Board Committees’ composition including on the
basis of the aforementioned diversity aspects and recommends
to the Board any changes required in order to ensure that it
reflects an appropriate range and balance of skills, experience
and backgrounds.
As far as gender representation to the Board, the Bank, in line
with the Board of Directors Diversity Policy, has already achieved
and aims to maintain an adequate representation of at least 30%
Board members of both genders and in any case of no less than
25% of total Board members (rounded to the previous integer).
More specifically, currently the representation of women on the
Board of Directors is at 31% (one Executive Member and three
Independent Non-Executive Members of the Board of Directors
are women).
Further, at General Managers and Assistant General Managers
level the Bank has 8 woman in the positions of: General Manager
of Retail Banking and Executive Member of the Board of
Directors, General Manager – Legacy Portfolio & Specialized
Asset Solutions, General Manager of Group Marketing, General
Manager of Group Human Resources, Assistant General Manager
- Group Chief Control Officer, Assistant General Manager of
Group Real Estate, Assistant General Manager - Corporate Special
Assets and Assistant General Manager - Head of Network.
Additionally, the Bank has 44 women in the position of Directors,
Deputy Directors and Independent Sector Heads.
In terms of age, the age of Board members varies and is in the
range of 50 to 70, except for one Director being over 70, and one
Director being under 50, while the age of Senior Executives is
mainly in the range of 40 to 60.
The Board of Directors of the Bank has a multinational
composition, including six different nationalities, with Greek,
Dutch, French, British, Belgian and Romanian Board members
having international experience among others by previously
being Board members or Senior Executives in a number of
different countries, including the United Kingdom, U.S., France,
China, the Netherlands and Romania.
The Bank’s Directors and Senior Executives have a variety of
educational backgrounds and work experience, including
indicatively educational background in Economics, Business
Administration, certifications and prior experience in Accounting,
Audit and Risk, extensive Banking and Financial Services
experience, corporate governance and legal background, strategy
development, transformation, retail and commercial prior
experience as well as in human resources, culture and in digital
banking, IT and operations. In any case, the purpose is for the
Bank to ensure that areas of knowledge and experience required
in accordance with the Bank’s business activities are covered,
while at the same time also being aligned with the provisions of
the applicable legal and regulatory framework that applies, like
for example as aforementioned in terms of specific eligibility
criteria applying to Board members in accordance with Greek Law
3864/2010 as in force.
The Bank’s Board of Directors Diversity Policy is available on the
Bank’s website, at www.nbg.gr (
https://www.nbg.gr/en/group/esg/corporate
-
governance/corporate
-
governance
-
framework).
C.
General Meeting of Shareholders and
Shareholders’ rights
The Bank’s Articles of Association (Articles 7-16 and 30-35)
describe the modus operandi of the General Meeting of
Shareholders, its key responsibilities and authorities as well as
the Shareholders’ rights, taking into consideration especially the
provisions of Greek Law 4548/2018, Greek Law 3864/2010, as in
force, and the Relationship Framework Agreement between the
Bank and the HFSF, as each time in force.
The Bank’s Articles of Association are available on the Bank’s
website www.nbg.gr
(
https://www.nbg.gr/en/group/esg/corporate-
governance/corporate-governance -framework
).
1. Responsibilities of the General Meeting
The General Meeting is the Bank's supreme, collective body. Its
lawful resolutions are binding to all Shareholders, even to those
absent or dissenting. All of the Bank's Shareholders are entitled
to participate in the General Meeting. Shareholders may be
represented at the General Meeting by other, duly authorised
persons, in line with the applicable provisions of law. Each share
entitles the holder to one vote as stipulated by law. Prior to the
amendment of Greek Law 3864/2010 by means of Greek Law
4941/2022, restrictions used to apply on ordinary shares held by
HFSF which were subject to the provisions of article 7a par. 2 of
Greek Law 3864/2010. However, in accordance with Greek Law
4941/2022, which amended Greek Law 3864/2010, Article 107
par. 2, as of 16 July 2022, the HFSF, pursuant to Article 7a of
Greek Law 3864/2010, as amended by Greek Law 4941/2022 and
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
126
in force, fully exercises voting rights corresponding to the total
shares that it holds, i.e., to 369,468,775 shares, as described in
detail in Section Ε
(“Restrictions to voting rights”
) of the
Supplementary Report of the Board of Directors. The Bank
ensures the equal treatment of Shareholders who hold the same
position.
The General Meeting is the sole corporate body vested with
authority to decide on:
●
amendments to the Bank's Articles of Association; such
amendments shall be deemed to include share capital
increases (ordinary or extraordinary) or decreases;
●
election of the members of the Board of Directors and
the auditors;
●
determination of the type of the Audit Committee, the
term of office, the number and the qualities of its
members, in line with article 44 of Greek Law 4449/2017;
●
approval of the overall management in line with Article
108 of Greek Law 4548/2018 and discharge of the
auditors;
●
approval of the Group and the Bank's Annual Financial
Report, as well as the Group and the Bank's Interim
Financial Report and the Group’s Interim
financial
statements;
●
appropriation of the annual profits;
●
approval of remuneration or advance payment of
remuneration in line with Article 109 of Greek Law
4548/2018;
●
approval of the remuneration policy under Article 110,
which may also apply to senior managers upon relevant
resolution of the General meeting approving the policy,
and of the remuneration report under Article 112 of
Greek Law 4548/2018;
●
approval of the board members suitability policy, under
Article 3 of Greek Law 4706/2020;
●
merger, split-off, transformation, revival, extension of
duration or dissolution of the Bank;
●
appointment of liquidators; and
●
any other matter provided for by law.
The provisions of the previous paragraph do not apply to the
issues provided under Article 117 par. 2 of Greek Law 4548/2018,
as also to other issues provided for in the law and the current
Articles of Association.
2. Operation of the General Meeting
2.1. Convening of General Meeting
a) Ordinarily
The General Meeting decides on all Board of Directors proposals
included in the agenda. It is convened by the Board of Directors,
or as otherwise provided for by law and held on a mandatory
basis at the Bank’s registered office or in the area of another
municipality within the region where the Bank’s registered office
is located, at least once a year, at the latest until the tenth (10th)
calendar day of the ninth month following the end of each
financial yea
r,
in order to approve the annual financial
statements and the election of auditors (ordinary general
meeting). The ordinary General Meeting may decide on any other
matter within its remit.
b) Extraordinarily
●
Subject to Article 121, par. 2 of Greek Law 4548/2018,
the Annual General Meeting may also be convened
extraordinarily whenever deemed expedient, at the
discretion of the Board of Directors.
●
At the auditors' request, the Board of Directors is obliged
to convene a General Meeting within ten days as of the
date such request was submitted to the Chair of the
Board of Directors, determining the agenda thereof as
per the auditors' request.
●
In line with para. 4 of Article 7 of Greek Law 3864/2010,
as amended by Greek Law 4340/2015 and Greek Law
4346/2015, the minimum time limits for the calling of the
General Assembly is seven (7) days and the deadline for
the convocation of the General Meeting that will decide
the share capital increase for the issuance of common
shares, convertible bonds or other financial instruments,
is ten (10) calendar days. The deadline for the
convocation of every repeat or adjourned is reduced to
the one third (1/3) of the deadlines stipulated in Greek
Law 4548/2018, as in force. The previous subparagraph is
applied in every General Meeting convened in the
context of Greek Law 3864/2010 or related thereto.
2.2 Invitation to the General Meetings and relevant
disclosures
a) Invitation
With the exception of repeated General Meetings and General
Meetings deemed similar thereto, the invitation to the General
Meeting shall be published at least 20 full days before the date
set for it. The said 20-day period shall be exclusive of the date the
invitation is published and the date the General Meeting is held.
The invitation to the General Meeting, shall include the
information provided for by law from time to time, including inter
alia the place where the General Meeting is to be held, i.e. the
premises along with the exact address, the date and time
thereof, the items on the agenda, clearly specified, and the
shareholders entitled to participate therein, along with precise
instructions as to the method of participation and exercis e of the
rights thereof in person or by legally authorized proxy or even by
distance participation.
The invitation shall be published within the above 20-day
deadline, and registered with the General Commercial Register
(“GEMI”) in line with the provision s of law, posted on the Bank's
website and published within the same deadline in a manner that
ensures fast and non-discriminatory access thereto, by whatever
means the Board of Directors, at its discretion, considers reliable
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
127
for effective communication of information to investors, such as,
in particular, through printed and electronic media on a national
and European basis.
In the event of repeat General Meetings, the specific provisions
of the current legal and regulatory framework apply.
b) Annual Financial Report
The Annual General Meeting reviews and approves the Annual
Financial Report. The Annual General Meeting elects at least one
certified auditor or audit firm, as specifically provided for under
par. 1 of Article 32 of the Articles of Association.
The Annual Financial Report is available to the Shareholders at
least ten days prior to the Annual General Meeting, and in
accordance with the applicable regulatory framework shall
incorporate: a) the Certifications of the Board of Directors, b)
Board of Directors’ Report, c) Supplementary Report, d) the Audit
Committee Report, e) Independent Auditor’s Report, f) the
Annual Financial Statements including the
separate and
consolidated financial statements and the notes thereto, g)
Disclosures of Greek Law 4261/2014 Art. 81 & Art. 82 &
Disclosures of Greek Law 4374/2016 Art. 6, h) the
Annual Report
for the distribution of capital of the financial year it concerns,
provided that the distribution has not been finalized or that it
was finalized during the second semester, and was drawn from a
share capital increase in the form of cash or upon issuance of a
bond loan, following the references made in the relevant
Prospectus of the issuance, and i) reference to the website where
the Annual Financial Reports at www.nbg.gr
,
(https://www.nbg.gr/en/group/investor
-
relations/financial
-
statements
-
annual
-
interim/financial
-
statements
) and the Annual Financial Statements
consolidated non-listed companies
https://www.nbg.gr/en/group/activities/companies
)
that represent an
amount higher that 3% of the consolidated turnover or the
consolidated assets or the consolidated results after the
deduction of the corresponding part concerning minority
shareholders are published.
2.3. Right to participate and vote
a) General provisions
Persons entitled to participate in and vote at the General
Meeting (initial and repeat), whether in person or by legally
authorized proxy, are those who have shareholder’s status
according to the provisions of Article 124 par. 6 of Greek Law
4548/2018 in the files of the organization holding the securities
of the company.
Shareholder status is evidenced by any means provided by law
and, in any case, by means of the information obtained by the
Bank from the central securities depository, if providing registry
services, or, in any other case, through the registered
intermediaries who are members of the central securities
depository.
In accordance with the provisions of Article 127 of Greek Law
4548/2018, the members of the Board, as well as the auditors are
entitled to be present at the General Meeting. Additionally, the
Chair of the General Meeting may, under their responsibility,
allow the presence of other persons, who do not have
shareholder status or are not shareholders' representatives,
insofar as this is not against the company interest. These persons
are not considered to participate in the Meeting just for having
received the floor on behalf of a present shareholder or at the
invitation of the Chair. The participation of the aforementioned
persons in the General Meeting can also be done by electronic
means, if the invitation of the General Meeting so provides.
In case of a General Meeting that decides the share capital
increase for the issuance of common shares, convertible bonds or
other financial instruments as well as every General Meeting
convened in the context of Greek Law 3864/2010 or related
thereto, Article 7 of Greek Law 3864/2010 shall apply.
The HFSF exercises its voting right in the General Meeting as
stipulated in Article 7a of Greek Law 3864/2010, as amended and
in force.
The procedure and deadline for submitting the legalization
documents of proxies and representatives of the Shareholders
are set out in par. 3 to 5 of Article 128 of Greek Law 4548/2018.
Disclosure of the appointment and revocation of appointment or
replacement of the proxies can be effected in writing or via e-
mail at the address stated in the General Meetings Invitation.
Shareholders that have not adhered to the above provisions, may
participate in the General Meeting, unless the General Meeting
refuses their participation on serious grounds.
In addition, following relevant decision of the Board of Directors,
the shareholders may vote at the General Meeting by distance
voting, either by exercising their voting rights by electronic means
or by mail, prior to the meeting, as per the applicable provisions
of law. In that case, the shareholders shall be specifically notified
on the procedure via the relevant General Meeting Invitation.
Upon relevant decision of the Board of Directors, the General
Meeting may not convene in a place, but may convene entirely
with the participation of the shareholders remotely by electronic
means, in accordance with the provisions and conditions of the
applicable legislation (i.e., Greek Law 4548/2018).
b) Approval of overall management/Discharge of auditors
from liability
Following approval of the Annual Financial Report, the Annual
General Meeting, by virtue of a decision taken by open vote and
as per the Articles of Association, may approve the overall
management carried out during the relevant financial year, as
well as the discharge of the auditors from any liability.
The members of the Board of Directors that are shareholders of
the Bank may take part in the said voting, only on the basis of the
number of shares they hold or as proxies of other shareholders
provided they have obtained relevant authorization with express
and specific voting instructions. The same apply to the Bank’s
employees.
The Bank may waive claims against members of the Board of
Directors or other individuals or proceed with a settlement with
them, only if the conditions of Article 102 par.7 of Greek Law
4548/2018 are met.
2.4. Chairing of the General Meeting
The Chair of the Board provisionally chairs the General Meeting.
Should s/he be unable to attend the General Meeting, s/he will
be replaced by her/his substitute as per par. 3 of Article 20 of the
Articles of Association or by the CEO. Should such substitute be
also unable to attend, the General Meeting will be provisionally
chaired by the Shareholder that owns the largest number of
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shares, or by the proxy thereof. The Chair, or her/his substitute,
shall appoint individuals to serve as provisional Secretaries of the
General Meeting. Subsequently, the General Meeting promptly
elects the Chair and two secretaries, the latter also acting as vote
counters.
2.5. Quorum and Majority required to passing
resolutions
The General Meeting forms a quorum and validly deliberates on
the items on the agenda when Shareholders owning at least 1/5
of the paid-up capital are present or represented thereat.
Should there be no such quorum, the General Meeting must
reconvene within twenty (20) days as of the date of the meeting
that was cancelled, by at least ten (10) full days prior invitation to
this effect; at such repeat meeting, the General Meeting forms a
quorum and validly deliberates on the original agenda
irrespective of the portion of the paid-up share capital
represented.
In the event that no quorum is formed, if the place and time of
the repeat meetings prescribed by law are specified in the
original invitation, no further invitation is required, provided the
repeat General Meeting takes place at least five days after the
cancelled General Meeting.
Exceptionally, with respect to resolutions concerning:
●
a change in corporate nationality;
●
a change in corporate activities;
●
an increase in Shareholder liability;
●
an ordinary share capital increase, unless imposed by law
or implemented through capitalization of reserves;
●
a decrease in share capital, unless carried out in
accordance with Article 21 par. 5 or Article 49 par. 6 of
Greek Law 4548/2018;
●
a change in the profit appropriation method;
●
a corporate merger, split-off, transformation, revival,
extension of duration or dissolution of the Bank;
●
delegation or renewal of powers to the Board of
Directors to decide for the share capital increase as per
para. 1 of Article 24 of Greek Law 4548/2018;
●
a Bond issue in the form of convertible bonds, as per
Article 71 par. 1a of Greek Law 4548/2018;
●
an issue of Warrants as per Article 56 par. 1 of Greek Law
4548/2018;
●
the approval of deviations in the use of capital raised as
per Article 22 of Greek Law 4706/2020, the disposal of
assets as per Article 23 of Greek Law 4706/2020; and
●
in any other case provided for by law.
The General Meeting forms quorum and validly deliberates on
the agenda when Shareholders representing 1/2 of the paid-up
share capital are present or represented thereat. Should no
quorum be formed at the first meeting, as described in the
preceding paragraph, a repeat meeting must convene within
twenty (20) days as of the first meeting, with at least ten (10) full
days prior invitation, and forms quorum and validly deliberates
on the original agenda when at least 1/5 of the paid-up share
capital is represented thereat. If the place and time of the repeat
meetings prescribed by law in the event that no quorum is
formed are specified in the original invitation, no further
invitation is required, provided each repeat General Meeting
takes place at least five (5) days after the cancelled General
Meeting.
Resolutions are adopted by absolute majority of the votes
represented at the General Meeting. Exceptionally, resolutions
on items that require increased quorum are adopted by a
majority of 2/3 of the votes represented at the General Meeting.
The voting results shall be subject to the applicable legislation.
Specifically, for the resolutions for the share capital increase
mentioned in para. 2 of Article 7 of Greek Law 3864/2010,
including the resolutions for the issuance contingently
convertible bonds or other convertible financial instruments, are
taken by the General Meeting, representing at least 1/5 of the
paid-up share capital and with absolute majority of the votes
represented in the General Meeting. If this is not the case, para. 2
of Article 130 of Greek Law 4548/2018 is applied.
2.6. Rules governing amendments to the Articles of
Association
The General Meeting is the sole corporate body vested with
authority to decide on amendments to the Bank's Articles of
Association, in accordance with Article 117 of Greek Law
4548/2018 and Article 9 of the Bank’s Articles of Association. The
General Meeting convened for the purpose of introducing
amendments to the Articles of Association or for the adoption of
resolutions requiring enhanced quorum and majority (statutory
General Meeting) may be ordinary or extraordinary.
3. Minority Shareholder’s Rights
The shareholders’ rights of minority are in accordance with the
applicable provisions of Greek Law 4548/2018, as in force, and
also, with the relevant Articles of Association. In particular:
a) Rights regarding the General Meeting
●
At the request of Shareholders representing 1/20 of the
paid-up share capital, the Board of Directors is obliged to
convene an extraordinary General Meeting setting the date
thereof not later than forty-five (45) days as of the date on
which the request was submitted to the Chair of the Board
of Directors. The request indicates the items on the
agenda.
●
At the request of Shareholders representing 1/20 of the
paid-up share capital, the Board of Directors shall add to
the agenda of the General Meeting that has been
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convoked additional items, provided the respective request
is submitted to the Board of Directors at least fifteen (15)
days prior to the said General Meeting and meets the
requirements of Article 30 par.2 of the Articles of
Association.
●
Shareholders representing 1/20 of the paid-up share
capital may submit, pursuant to Article 123 par.3 of Greek
Law 4548/2018, draft resolutions on the items included in
the initial or the revised agenda, provided the respective
request has been submitted to the Board of Directors at
least seven (7) days prior to the date of the General
Meeting and the draft resolutions be made available to the
shareholders, pursuant to par. 3 Article 123 of Greek Law
4548/2018, at least six (6) days prior to the date of the
General Meeting. The Board of Directors is under no
obligation to take any of these steps if the content of the
respective request by shareholders clearly infringes the law
and decent conduct.
●
Specifically, for the General Meetings convened in
accordance with Article 7 of Greek Law 3864/2010, the
above deadlines are reduced to three (3) and four (4) days
respectively.
●
At the request of Shareholder(s) representing 1/20 of the
paid-up share capital, pursuant to Article 123 par.3 of
Greek Law 4548/2018, the Chair of the General Meeting
shall postpone, only once, decision-making by the General
Meeting, whether it is annual or extraordinary, for all or
certain items in the Agenda, for a new General Meeting to
be held on the continuation date indicated in the
Shareholders’ request, but not later than twenty (20) days
as of the said postponement.
●
Specifically, for the General Meetings convened in
accordance with Article 7 of Greek Law 3864/2010, the
above deadline is reduced to three (3) days.
●
The General Meeting held following such postponement,
being a continuation of the previous General Meeting, is
not subject to publication requirements as regards the
invitation to Shareholders, and new Shareholders may also
participate therein, duly complying with the formalities
regarding participation.
●
At the request of Shareholders representing 1/20 of the
paid-up share capital, decision-taking on the General
Meeting agenda shall be by open vote.
●
At the request of any Shareholder filed to the Bank at least
five (5) full days before the date of the General Meeting,
the Board of Directors provides the General Meeting with
any such specific information on the Bank’s business as
may be requested, insofar as they are relevant to the items
in the Agenda.
●
Specifically, for the General Meetings convened in
accordance with Article 7 of Greek Law 3864/2010, the
above deadline is reduced to three (3) days.
●
The Board of Directors may provide a single answer to
shareholders’ requests that are of similar content. No such
obligation to provide information applies, in the event
that the said information is already available on the
company’s website, particularly in the form of questions
and answers. Moreover, at the request of Shareholders
representing 1/20 of the paid-up share capital, the Board
of Directors informs the General Meeting, provided it is an
annual one, of the amounts paid by the Bank to each
Director or the Managers of the Bank over the last two
years, and of any benefits received by such persons from
the Bank for whatever reason or under any agreement
with the Bank. In all of these cases, the Board of Directors
is entitled to decline the provision of the information
requested, for good reasons, which are recorded in the
minutes. Depending on the circumstances, one such good
reason may be the requesting Shareholders'
representation on the Board of Directors as per Articles 79
or 80 of Greek Law 4548/2018.
●
At the request of Shareholders representing 1/10 of the
paid-up share capital, filed with the Bank at least five (5)
full days before the General Meeting, the Board of
Directors shall provide the General Meeting with
information on the current status of corporate affairs and
assets of the Bank.
●
For the General Meetings convened in accordance with
Article 7 of Greek Law 3864/2010 the above deadline is
reduced to three (3) days.
●
The Board of Directors may decline to supply the
information requested for good reasons, which are
recorded in the minutes. Such good reason may be,
depending on the circumstances, the requesting
shareholders’ representation on the Board of Directors,
pursuant to Articles 79 or 80 of Greek Law 4548/2018,
provided that the respective directors have received the
relevant information in an adequate manner.
In the cases of paragraphs 6 and 7 of Article 30 of the Bank’s
Articles of Association, any dispute as to the validity of the reason
for declining to provide the Shareholders with the information
requested shall be settled by a judgment rendered by the
competent court of the place of the Bank’s registered office. By
virtue of the said judgment, the Bank may be required to provide
the information it had declined. The said judgment shall not be
challenged before Courts.
Under all circumstances, when requesting shareholders exercise
their rights as above, they are required to produce proof of their
shareholder capacity and number of shares, with the exception of
first sub paragraph of par. 6 of Article 30 of the Bank’s Articles of
Association. Shareholder status is evidenced by any means
provided by law and, in any case, by means of the information
obtained by the Bank from the central securities depository, if
providing registry services, or, in any other case, through the
registered intermediaries who are members of the central
securities depository.
b) Rights regarding extraordinary audit
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●
Shareholders representing at least 1/20 of the paid-up
share capital are entitled to file with the competent court a
petition for an extraordinary audit of the Bank in
accordance with the procedure provided for by law. The
said audit is ordered if the acts alleged by the petitioners
are deemed likely to contravene provisions of the law, or
of Articles of Association, or of General Meeting
resolutions. Under all circumstances, audit requests as
above must be filed within three (3) years of approval of
the Annual Financial Statements for the year in which such
acts allegedly occurred.
●
Shareholders representing 1/5 of the paid-up share capital
may file with the competent court a petition for an
extraordinary audit of the Bank if the overall corporate
performance suggests that the management of corporate
affairs has not been based on sound or prudent practices.
Shareholders requesting an audit as above shall provide the court
with proof of ownership of the shares entitling them to the audit
request.
4. Other Shareholder Rights
Additional information on the Shareholder rights and their
exercise is included in the Supplementary Report for the Annual
General Meeting, as required by Article 4 of Greek Law
3556/2007, as in force, which is part of the Bank’s Annual Board
of Directors’ Report.
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D.
Board of Directors and Other Management, Administrative and Supervisory Bodies
Board of Directors of the Bank
The Bank is managed by the Board of Directors, which is responsible for ensuring strategic direction, management supervision and
adequate control of the Bank, with the ultimate goal of increasing the long-term value of the Bank and protecting the corporate interest at
large, in compliance with the current legal and regulatory framework, including the provisions of the Relationship Framework Agreement
between the Bank and the HFSF, as each time in force.
NBG’s Board of Directors composition is as follows:
Gikas Hardouvelis
Chair of the Board
Non-Executive
Number of shares*
3,300
Prof. Gikas A. Hardouvelis is the Chair of the Board of Directors of the National Bank of Greece since
July 2021. In the previous two years, he was already a member of the Board of NBG, serving as the
Senior Independent Director. He is also Professor of Finance and Economics in the Department of
Banking and Financial Management of the University of Piraeus in Greece and a Research Fellow at the
Centre for Economic Policy Research in London.
Currently, he is also active in several non-profit organizations, being the First Vice Chairman of the
Board of Directors and Member of the Executive Committee of the Foundation of Economic and
Industrial Research (IOBE), Member of the Board of Trustees of Anatolia College, a non-profit primary,
secondary and tertiary private educational institution in Thessaloniki, and President of the Cultural
Foundation of the National Bank of Greece (known as MIET) for the support of the Humanities, Fine
Arts, and Sciences.
Prof. Hardouvelis holds a Ph.D. in Economics from the University of California, Berkeley (1985), as well
as a B.A. (Magna Cum Laude) and a M.Sc. in Applied Mathematics from Harvard University (both in
1978). He has taught at Barnard College of Columbia University and the School of Business of Rutgers
University. His academic work in Finance and Macroeconomics has been published in prestigious top-
ranking academic journals.
Prof. Hardouvelis served as a Research Adviser & Senior Economist at the Federal Reserve Bank of New
York (1987-1993) and as an Adviser to the Bank of Greece (1994-1995), where he also acted as an
Alternate to the Governor at the European Monetary Institute (“EMI”) -the precursor to the ECB.
In the private financial sector, he held key managerial positions at the National Bank of Greece (1996-
2004) and Eurobank (2005-2014). He was a founding member of the Board of Directors of the Athens
Derivatives Exchange (1997-2000), presently merged with the Athens Stock Exchange. He has also
been a member of the Academic Council of the Hellenic Bank Association (“HBA”), its President and
the HBA EBF-EMAC (European Banking Federation -Economic and Monetary Affairs Committee)
representative.
His long standing academic and banking career was also accompanied by intermissions for public sector
service in senior government positions. He served as the Minister of Finance of the Hellenic Republic
from June 2014 to January 2015. Prior to being Minister of Finance, Prof. Hardouvelis had already served
twice as the Director of the Economic Office of the Greek Prime Minister from May 2000 to March 2004
and from November 2011 to May 2012.
Pavlos Mylonas
Chair of the Senior Executive Committee, the Senior Credit Committee, the ALCO and the Provisions
and Write-Offs Committee
Mr. Pavlos Mylonas was appointed Chief Executive Officer of National Bank of Greece in July 2018. He
joined NBG in 2000 and served, inter alia, as Deputy CEO, CRO and Head of Strategy.
He worked as a Senior Economist on the staff of the Organisation for Economic Co-operation and
Development (“OECD”) from 1995 to 2000, as well as, at the International Monetary Fund from 1987
to 1995. In the years 1985-1987 he was visiting Assistant Professor at the Department of Economics in
Boston University.
He holds a Bachelor of Science in Applied Mathematics-Economics (Magna cum Laude and Phi Beta
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Executive Board Member
Chief Executive Officer
Number of shares*
3,341
Kappa) from Brown University, as well as a Master of Arts and a Ph.D. in Economics from Princeton
University.
Christina Theofilidi
Executive Board Member
General Manager of
Retail Banking
Number of shares*
Nil
Member of the Senior Executive Committee and the ALCO
Mrs. Christina Theofilidi was elected Executive Board Member in July 2019.
She was appointed as General Manager of Retail Banking and Member of the Executive Committee of
NBG in December 2018. She also serves as a Non-Executive Member at the Board of Directors of
Ethniki Hellenic General Insurance S.A., and a Non-Executive Member at the Board of Directors of
National Bank of Greece Cultural Foundation (“MIET”). She is also a member of the Executive
Committee of the Hellenic Banking Association.
She started her career in the banking sector in 1988 working for Societe Generale and Citibank by
holding positions in Marketing and Branch Network. In 1997, she joined the Eurobank group and held
various senior positions in Retail Banking, as Commercial Manager of Eurobank Cards S.A., as Assistant
General Manager of International Activities of Eurobank, as General Risk Manager of Eurobank
Household Lending S.A. and in 2013 as Managing Director of Eurobank Household Lending S.A. In 2014,
she joined in Eurobank the newly founded Troubled Assets unit and held the position of Retail
Remedial General Manager. From September 2016 up to December 2018, she served as Individual
Banking and Retail Products General Manager.
She holds a Master in Business Administration (“MBA”) Degree from INSEAD (European Institute of
Business Management) and a Bachelor’s Degree with a double major in Economics and Psychology from
Swarthmore College of Pennsylvania, USA.
Avraam Gounaris
Senior Independent Director
Number of shares*
Nil
Member of the Audit Committee and the Compliance, Ethics and Culture Committee
Mr. Avraam Gounaris was appointed as Independent Non-Executive Director of the Board of Directors in
July 2019. On 22 December 2021, the Board of Directors elected Mr. Avraam Gounaris as Senior
Independent Director.
He has diverse managerial experience with an emphasis on restructuring and transition management
and is considered an expert in multiple stakeholder management.
In the past, he held several senior positions in both the public and private sectors and has served, among
others, as non-executive member of the Board of Directors of Euroconsultants, executive member of the
Board of Directors of ECUSA and Chairman of the Board of Directors of Investment Bank of Greece.
He holds a Bachelor of Science in Business Administration (Finance) and an MBA from the University of
Nevada, Reno.
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Claude Piret
Independent
Non-Executive Member
Number of shares*
Nil
Chair of the Board Risk Committee, Vice-Chair of the Audit Committee
Member of the Strategy and Transformation Committee
Mr. Claude Piret has been member of the Board of Directors of National Bank of Greece since November
2016 and for the period of April -December 2021 he was temporarily serving as interim Senior
Independent Director.
He possesses extensive experience in the international financial sector, having a career of over 35 years
in international banking institutions. He has served in high-ranking positions for a number of years at
Dexia Group, and has extensive experience in audit, risk management commercial banking and in the
areas of management of non-performing loans. Currently he is a member of the Board of Directors of
Saint Pierre Hospital in Belgium.
Mr. Piret holds a Diploma in Civil Engineering from The Université catholique de Louvain (Belgium) and a
post-graduate degree in Management (Finance) from The Université Libre de Bruxelles (ULB) - Solvay
Institute.
Wietze Reehoorn
Independent
Non-Executive Member
Number of shares*
Nil
Chair of the Corporate Governance and Nominations Committee and the Strategy and Transformation
Committee
Vice-Chair of the Board Risk Committee
Mr. Wietze Reehoorn was appointed as Independent Non-Executive Director of the Board of Directors
in July 2019.
Mr. Reehoorn is an experienced senior banking executive, having held a number of senior managerial
positions in a market leading international bank. His diverse experience offers skills relating to risk,
strategy and corporate governance.
He was a member of ABN Amro for over 30 years, where he held various positions some of which
include being a member of the Managing Board during the last 8 years (2010- 2017) being the Chief
Risk Officer, as well as the Chief of Strategy/Corporate Development/Investor Relations/Economic
Affairs and he also led the integration of ABN Amro with Fortis. Moreover, he held the position of
Chairman of the Supervisory Board of IFN Group.
Currently, Mr. Reehoorn serves as Chairman of the Supervisory Board of MUFG Bank (Europe) N.V.
(MBE) and MUFG Securities (Europe) N.V. and as member of the Supervisory Board of Anthos Private
Wealth Management B.V. Additionally, he holds the positions of Chairman of the Supervisory Council
of Stichting Topsport Community, member of the Supervisory Council of Frans Hals Museum, member
of the Board of Directors of ABE Bonnema Stichting and member of the Board of Directors of
Koninklijke Hollandsche Maatschappij der Wetencchappen.
Mr. Reehoorn holds a Master’s Degree in law from Rijksuniversiteit Groningen.
Anne Marion-Bouchacourt
Independent
Non-Executive Member
Chair of the Human Resources and Remuneration Committee
Member of the Corporate Governance and Nominations Committee and of the Innovation and
Sustainability Committee
Mrs. Anne Marion-Bouchacourt was appointed as Independent Non-Executive Member of the Board of
Directors of the National Bank of Greece in April 2020.
During her long career, she has served in various positions, gaining extensive expertise in the fields of
human resources and culture, accounting and financial auditing, and having considerable experience in
strategy, organization and business transformation.
Mrs. Anne Marion-Bouchacourt possesses significant experience in the banking sector and has served
in high-ranking positions in international financial organisations and firms.
She has served, among others, as senior executive at Societe Generale Group for over 15 years, in
particular, as Group Chief Country Officer for China (2012 – 2018), as Senior Executive Vice President,
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Number of shares*
Nil
Corporate Human Resources (2006 – 2012), and she has also worked as an auditor (1981 – 1986) and
as a consultant (1986 – 1999) with PricewaterhouseCoopers (PwC), having been appointed Director in
PwC's Financial Services sector, while she had additionally been a consultant in strategy and
organization at Solving International (2002 – 2004) and at Gemini Consulting (1999 – 2002).
Currently, she serves as Chair of Societe Generale Private Banking Switzerland and she also acts as
Societe Generale Group Country Head for Switzerland and CEO of Societe Generale Zurich, as Non-
Executive Member at Credit du Nord, as well as an Independent Non-Executive Member at Ipsos.
Additionally, she serves as President of ‘Conseillers du Commerce extérieur de la France (Suisse)’ and
as Member of the Board of the ‘Association des banques étrangères en Suisse’.
Mrs. Marion-Bouchacourt graduated from the École Supérieure de Commerce de Paris (“ESCP”), she
holds a post-graduate diploma in Finance from the Paris Dauphine University and is a Chartered
Accountant.
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Matthieu Kiss
Independent
Non-Executive Member
Number of shares*
Nil
Chair of the Audit Committee
Vice-Chair of the Strategy and Transformation Committee
Member of the Corporate Governance and Nominations Committee
Mr. Matthieu Kiss was appointed as Independent Non-Executive Member of the Board of Directors of
the National Bank of Greece in December 2020.
Mr. Kiss possesses extensive experience in the banking sector, having served in prominent financial
organizations, and expertise in the area of audit.
He had served as Global CFO, Retail Banking & Wealth Management at HSBC Group, as well as CFO of
HSBC France & Continental Europe. In addition, he has served as member of Boards and Audit
Committees at various financial organisations, including at CCF-Charterhouse and Elysées-bourse (the
brokerage subsidiary of CCF), Aurel-Leven and Charterhouse bank.
Mr. Kiss had been a Member of the
Board at HSBC Asset Management France from 2009 to 2022.
Since 2009, he has been serving as a Member of the Board and the Audit Committee at HSBC Insurance
France, where he has been Chair of the Audit Committee since 2015, while he also serves as Non-
Executive Director at Europe Arab Bank S.A. (EAB).
Mr. Kiss chairs as a volunteer the Finance
Committee of the French arm of the Salvation Army.
He holds a BA in law from the University of Paris II, an MBA Degree from Institut d’études Politique de
Paris and a diploma in Public Administration from L’ École Nationale d’ Administration.
Elena Ana Cernat
Independent
Non-Executive Member
Number of shares*
Nil
Vice Chair of the Human Resources and Remuneration Committee and of the Innovation and
Sustainability Committee
Member of the Board Risk Committee and the Compliance, Ethics and Culture Committee
Mrs. Elena Ana Cernat was appointed as Independent Non-Executive Director of the Board of Directors
in July 2019.
Mrs. Cernat is a highly experienced banker, having held several senior executive and non - executive
positions during her career, with emphasis in business development and innovation. She possesses
substantial experience in retail banking, developing new business, digital and multichannel strategies.
In the past, among others, Mrs. Cernat held the position of an executive member of the Board of
Directors of Alior Bank Warsaw– Bucharest branch and of a member of the Board of Directors of
Euroline Retail Services (member of Eurobank Group).
Currently, she is a Board member at Yoga Vidya Romania.
She holds a B.A. in Philology, Applied Modern Languages from Babes - Bolyai University, Romania, an
MBA, Romanian - Canadian MBA Program Certificate from Bucharest School of Management, as well as
several certifications including among others Certification in Banking Marketing and she is authorized by
the Central Bank of Romania (BNR) in Credit, Risk and Capital Management.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
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Aikaterini Beritsi
Independent Non-Executive
Member
Number of shares*
Nil
Chair of the Compliance, Ethics and Culture Committee
Vice-Chair of the Corporate Governance and Nominations Committee
Member of the Strategy and Transformation Committee
Mrs. Aikaterini Beritsi was appointed as Non-Executive Director of National Bank of Greece in July 2019.
In July 2021, Mrs. Beritsi was appointed Independent Non-Executive Member of the Board.
She has substantial experience in the Greek Banking sector by holding senior positions at major systemic
banks. In addition, she is an expert in corporate governance, following her directorships in three other
Greek banks (two of them systemic), where she had a leading role in introducing best practice and
addressing significant internal control issues.
In the past, she had served as member of the Board of Directors and all statutory committees of Piraeus
Bank and Eurobank, Chairperson of the Board of Directors of New Proton Bank and of Proton Bank S.A.,
as well as member of the Board of Directors of Credit Agricole Group/Emporiki Bank’s subsidiaries in
South Eastern Europe.
Currently, she serves as an independent non-executive member of the Board of Directors and as the
Chair of the Audit Committee and of the Remuneration and Nomination Committee of E.Y.D.A.P. S.A.
She is a graduate of the Department of Economics of the National and Kapodistrian University of Athens
and she has completed the program Modern Governance in Banking at INSEAD, while she has
participated in multiple financial seminars and managerial training programs.
JP Rangaswami
Independent
Non-Executive Member
Number of shares*
Nil
Chair of the Innovation and Sustainability Committee
Member of the Audit Committee and of the Human Resources and Remuneration Committee
Mr. JP Rangaswami was appointed as Non-Executive Member of the Board of Directors of the National
Bank of Greece in October 2020. In July 2021, Mr. Rangaswami was appointed Independent Non-
Executive Member of the Board.
He possesses extended experience of over 35 years in the IT sector and has served in senior positions
in multinational organizations, including financial institutions.
He has served, among others, as Chief Data Officer and Group Head of Innovation at Deutsche Bank, as
well as Global Chief Information Officer at Dresdner Kleinwort Wasserstein.
Currently, he holds the position of an independent non-executive member of Admiral Group Plc,
Allfunds Bank SA, the Daily Mail and General Trust Plc and EMIS Group Plc, he is Board Chairman of
Webscience Trust, member of the Trust Board at Cumberland Lodge, while he is also an Adjunct
Professor in Electronics and Computer Science at the University of Southampton.
He holds a BA in Economics from the University of Calcutta, while he has extended his education having
participated in high level educational programs.
Athanasios Zarkalis
Independent
Member of the Human Resources and Remuneration Committee
Member of the Innovation and Sustainability Committee
Mr. Athanasios Zarkalis was elected as Independent Non-Executive Member of the Board of Directors
of the National Bank of Greece in July 2022.
With more than thirty (30) years in diverse and highly competitive business environments, twenty (20)
of which in the telecommunications sector, Mr. Zarkalis possesses extensive experience having served
in positions of increasing responsibility, culminating in his most recent role as Chairman & Chief
Executive Officer at WIND Hellas Telecommunications S.A. (2009-2022). Mr. Zarkalis started his career
in the fast-moving consumer goods (FMCG) sector (Procter & Gamble, Tasty Goods, Fort James
Corporation), where he remained until 1999, when he moved to the telecommunications industry. In
his 20-year career in telecommunications, he has assumed positions of increasing responsibility,
initially in the commercial sector of Vodafone Greece, and subsequently (2007) at Hellas Online (HOL)
Board of Directors’ Report
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Non-Executive Member
Number of shares*
Nil
as Chief Executive Officer.
Mr. Zarkalis holds a Bachelor of Science Degree in Chemical Engineering from National Technical
University of Athens (Greece), as well as a Master of Science Degree in Chemical Engineering from the
University of Delaware (USA) and an MBA from Henley Business School (UK).
Periklis Drougkas
Representative of the HFSF
Non-Executive Member
Number of shares*
Nil
Member of Board of Directors and Board Committees
Mr. Periklis Drougkas was appointed as Representative of the HFSF at NBG Board of Directors in July
2018.
He has an extensive professional experience in senior-level executive positions in leading regional and
multinational banking and financial services organizations.
He held a series of executive roles with Citibank. From 1994 to 2004 Periklis Drougkas served as
Assistant General Manager, Head of Retail Banking of ING BANK NV, as General Manager, Head of
Retail Banking of Egnatia Bank S.A., while he was also appointed Chairman of the Board and Managing
Director of Egnatia Fin S.A. and General Manager of Egnatia Insurance Broker Co. Ltd. In 2004, he
joined EFG Eurobank Group as General Manager in Open24 S.A. In 2008, he was appointed in Alpha
Bank Serbia AD as Deputy President of Executive Board, Head of Retail Banking Business Unit. In 2012,
he was appointed Chief Executive Officer and Chairman of Management Board of Alpha Bank Albania
SHA.
Furthermore, he held a series of advisory positions and served as Chairman of the Albanian Association
of Banks and President of the Hellenic Business Association in Albania. Currently, he serves as
independent non-executive director of Board of Directors and Audit Committee in a regional bank
(Tirana Bank).
He has graduated from the Athens University of Economics and Business while he has extended his
education in advanced management programs.
Panos Dasmanoglou
Board of Directors and
Board Committees Secretary
General Manager - Group
Compliance
and Corporate Governance
Number of shares*
80
Member of the Senior Executive Committee with no voting rights
Mr Panos Dasmanoglou has been serving as General Manager of Group Compliance and Corporate
Governance at National Bank of Greece since 2016. In parallel, he has been elected as General
Company Secretary of the Board of Directors and its Board Committees.
During the last 20-year period he has served as Senior Executive of the NBG Group, in various senior
executive positions, in the field of International and Corporate Legal Affairs, Compliance and Anti-
Money Laundering, Human Resources Management and Corporate Governance, while from July 2018
to July 2019 he served as Executive member of the Board of Directors of the National Bank of Greece.
He is Chairman of the Board of Directors of National Securities Company and from 2016 to 2022 he
served as Vice-Chairman of the Board of Directors of National Insurance Company, as well as Vice-
Chairman of the Board of Directors of National Asset Management Company. For a number of years,
he has been an active participant in the workings of the Hellenic Bank Association and the European
Banking Federation in the International Affairs Committee. As of September 2022, he has been
assigned Vice-Chairman of the new Management Committee on ‘Banking Regulation, Compliance &
Consumers’ of the Hellenic Bank Association, while at the same time he participates as a member in
the Board of Directors of the Hellenic Ombudsman for Banking-Investment Services.
He holds a law degree (LL.B) from the University of Athens Law School and a Master’s degree in
European Law from the University of Brussels. He has obtained postgraduate international certifications
from INSEAD Business School in the field of modern corporate governance and banking management, as
well as on matters relevant to anti -money laundering and international financial law from Oxford
University.
*Number of common shares as at 31 December 2022.
Board of Directors’ Report
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The composition of the Board of Directors reflects the knowledge, skills and experience required for the discharge of its responsibilities, in
alignment to the Bank’s Board Suitability Policy, its strategy and business model.
The Board of Director’s tasks, key responsibilities and authorities are set out in Greek Law 4548/2018, Greek Law 4261/2014, EU Regulation
468/2014, Greek Law 4706/2020, Greek Law 3864/2010, the Relationship Framework Agreement between the Bank and the HFSF, all as
each time in force, the Hellenic Corporate Governance Code of the Hellenic Corporate Governance Council and the Bank’s internal
Corporate Governance framework, i.e. the Bank’s Articles of Association and the Corporate Governance Code, which is available on the
Bank’s website, at
www.nbg.gr
).
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Appointment of Directors and Operation of the
Board
The members of the Board of Directors are elected by the Bank's
General Meeting of the Shareholders for a term that cannot
exceed three (3) years and ends at the ordinary General Meeting
of the Shareholders of the year in which such provisioned term
expires. Uneven terms of office may be provisioned for each
Director, insofar as this is prescribed by the current legal and
regulatory framework. All members can be re -elected,
subject to
the fulfillment of requirements set by each time applicable legal
and regulatory framework. The General Meeting of Shareholders
determines each time the exact number of the members of the
Board of Directors (the Board of Directors may consist of a
minimum of seven (7) up to a maximum of fifteen (15) members)
and its independent members.
HFSF Representative
Αn HFSF Representative also participates in the Bank’s Board of
Directors, in line with Greek Law 3864/2010, and the RFA
between the HFSF and the Bank, as in force. In accordance with
the RFA between the HFSF and the Bank, as in force, the HFSF is
also entitled to the appointment of an observer (HFSF Observer-
without voting right) to the Board of Directors of the Bank.
Currently, Mr. Christoforos Koufalias is the HFSF’s Observer to
the Bank’s Board of Directors and Board Committees.
Board Members’ Removal and Replacement
The Board of Directors’ members can be removed at any time by
the General Meeting. In the event that a member ceases to
participate in the Board of Directors, due to resignation, disease
or having forfeited their office for whatever reason, and in case
its replacement by deputy members, that have potentially been
elected by the General Meeting is impossible, the rest of the
members may either provisionally elect another member to
cover the unoccupied seat for the period of time that remains
until the replaced member’s term of office ends, or may continue
to manage and represent the Bank without replacing the missing
Director(s), provided that the number of the remaining Directors
shall remain within the range prescribed by the Bank’s Articles of
Association (currently at least seven), which is in accordance with
the applicable framework.
In the event that a new Director is provisionally elected, the
election shall be valid for the remaining term of office of the
Director replaced and is announced by the Board of Directors at
the immediately following General Meeting, which may replace
the Directors even if no relevant item is included on the agenda.
Under all circumstances, the remaining Directors, irrespective of
number, may call a General Meeting solely for electing a new
Board.
Election of Chair and CEO
The Board of Directors elects, by absolute majority from its
members, the Chair and the CEO who manages the affairs of the
Bank and decides on the appointment of executive and non-
executive members of the Board. Moreover, the Board of
Directors may also elect from among its members one or more
Vice Chairs. Furthermore, the Board of Directors decides on the
appointment and duties of the Deputy Chief Executive Officer(s).
The Bank constantly monitors developments internationally in
the field of corporate governance and aims to adopt best
practices and continuously updates its corporate governance
framework, in which context, as well as in accordance with the
current regulatory framework, and best practices in corporate
governance, the Bank distinguishes the role of the Chair from
that of the Chief Executive Officer.
Operation of the Board of Directors
i) Constitution into a Body
The Board of Directors is constituted into a body at its first
meeting following each election of Directors by the General
Meeting, as well as under any circumstances when the Chair’s or
the Chief Executive Officer’s post is vacated for whatever reason.
Until the Board of Directors elects a new Chair or Chief Executive
Officer, the relevant duties are exercised by the substitute
thereof.
Furthermore, the Board of Directors may be constituted
into a body anytime, following relevant decision by majority,
determining anew its executive and non-executive members.
ii) Convocation
The Board of Directors convenes as prescribed by Greek
legislation, the Bank’s Articles of Association and the Corporate
Governance Code, as well as according to the provisions of the
Relationship Framework Agreement between the Bank and the
HFSF, as in force . The Board of Directors is convened by the Chair:
●
upon invitation sent by the Board of Directors Secretary
to the Board of Directors members at least three (3)
business days before the meeting. The invitation must
clearly specify the items on the agenda, otherwise
decisions cannot be reached unless all members of the
Board of Directors’ are present or represented at the
meeting and no member objects to decision-making or
●
at the request of at least two (2) Directors, within seven
(7) days from the submission of the written request,
which should clearly specify the agenda of the Board of
Directors meeting requested or
●
upon written request of the HFSF representative within
seven (7) days from the submission of the request to the
Chair. The relevant request shall include the proposed
items of the agenda.
In case the Board of Directors Chair does not proceed with
convocation of the Board of Directors upon request of at least
two (2) directors or the HFSF representative within the above
deadline or does not include in the invitation all proposed items
on the agenda, then said directors or the HFSF representative
respectively are able to convene the Board of Directors within
five (5) days from expiry of the above deadline of seven (7) days.
The invitation shall be notified to all Board of Directors members
and to the HFSF observer.
iii) Inclusion of Items on the Agenda
●
Any member may request the Chair to include one or
Board of Directors’ Report
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more items on the agenda of the next Board of Directors’
meeting.
●
Two (2) or more members may require the Chair to
include one or more items on the agenda of the next
Board of Directors meeting.
iv) Decision making
The Board of Directors forms a quorum and validly deliberates
when one half plus one of the Board of Directors are present or
represented, but under no circumstances may the number of
Directors present be less than five (5). In case of meetings
concerning the Bank’s financial statements or issues for which
General Meeting approval by increased quorum and majority is
required in accordance with L. 4548/2018, the Board shall form a
quorum as provided by article 5 para 3 of Greek Law 4706/2020.
The Articles of Association describe in detail the requirements of
Directors’ representations for valid resolutions adoption.
v) Board Secretariat System
Since 2016 and in the context of further enhancing the efficient
operation of the Board of Directors, the Bank has implemented
special Board Secretariat system to further support operation of
the Board of Directors, thus providing Board of Directors
members with appropriate information and notifications,
accessing remotely the Board of Directors and Board
Committees’ material and facilitating exchange of opinions and
commenting on issues placed under consideration of the Board of
Directors and Board Committees, signing of meeting minutes and
better monitoring of issues discussed by the Board of Directors
and its Committees.
Responsibilities of the Board of Directors
Among other matters, the Board of Directors is responsible for:
●
reviewing and approving the strategic direction of the
Bank and the Group, including the business plan, the
annual budget and the key strategic decisions as well as
providing guidance to the Bank’s and the Group’s
Management;
●
reviewing the Group’s corporate structure, monitoring its
embedded risks and ensuring the cohesiveness and
effectiveness of the Group’s corporate governance
system;
●
acquiring shareholdings in other banks in Greece or
abroad, or divestment thereof;
●
establishing Branches, Agencies, and Representation
Offices in Greece and abroad;
●
establishing associations and foundations under Article
108 and participating in companies falling under Article
784 of the Greek Civil Code;
●
approving the Bank's internal labour regulations;
●
nominating General Managers and other executives of
the Bank, as appropriate in line with the applicable
framework and accordingly following proposals by the
Bank’s responsible bodies;
●
reviewing and approving the Group and the Bank's
annual and interim financial report;
●
issuing Bonds of any type, with the exception of those for
which the Bank’s General Meeting is exclusively
responsible in accordance with the Greek law;
●
approving and reviewing a Code of Ethics for the
employees of the Bank and the Group and the Code of
Ethics for financial professionals;
●
approving the Bank’s and the Group’s CSR Policy; and
●
approving and reviewing the Group Remuneration Policy
upon decision of its non-executive members, following
recommendation by the Human Resources and
Remuneration Committee of the Board of Directors.
It is noted that, in accordance with the Bank’s Corporate
Governance Code, in setting strategy, the Board should focus on
sustainability and consider among others climate-related and
environmental risks when developing the overall business
strategy, objectives and risk management framework and
exercise effective oversight of climate-related and environmental
risks. Within this context, the Board should ensure that material
environmental and social considerations are integrated into the
Bank’s strategy, business model and risk management system
and addressed in its public disclosures.
Moreover, pursuant to Article 10 of Greek Law 3864/2010 (the
“HFSF Law”), as in force, the representative of the HFSF has the
following veto rights:
i.
Regarding the distribution of dividends and the benefits
and bonus policy concerning the Chairman, the Chief
Executive Officer and the other members of the Board
of Directors, as well as whoever exercises general
manager’ s powers and their deputies for any credit
institutions whose ratio of non-performing loans to
total loans, as calculated in accordance with subsection
(ii), of paragraph 2 of Article 11 of Commission
Implementing Regulation (EU) 2021/451, exceeds 10%.
The HFSF in order to be able to assess whether the
above ratio of non-performing loans to total loans
exceeds or is below 10%, it will be based on publicly
available information.
ii.
Regarding decision to amend the Articles of Association
of the Bank, including the increase or decrease of
capital or the granting of relevant authority to the
Board of Directors, merger, division, conversion,
revival, extension or dissolution of the company,
transfer of assets, including the sale of subsidiary or for
any other issue for which an increased majority is
required according to the provisions of Law 4548/2018
and which decision may significantly affect the
Board of Directors’ Report
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participation of the HFSF in the share capital of the
Bank.
Directors Nomination - Directors Suitability and
Independence Assessment
According to Greek Laws 4548/2018 and 4706/2020, as well as
Article 9 of the Bank’s Articles of Association, the General
Meeting of the Shareholders is the sole corporate body vested
with the authority to elect the members of the Board of
Directors, as well as to determine the independent non-executive
members, while a representative of the HFSF participates in the
Bank's Board, pursuant to Greek Law 3864/2010, as in force. In
particular, according to the Bank’s Corporate Governance Code,
the Board of Directors, assisted by the Corporate Governance and
Nominations Committee, proposes to the General Meeting
candidate Directors on the basis of the Board Nomination Policy
and in alignment with the Board Suitability Assessment Policy and
Procedure and the relevant regulatory framework which requires
them to meet the “fit and proper” criteria and not have any
systematic conflict of interest with the Bank. Exceptionally,
according to the provisions of para. 3 of Article 17 of the Bank’s
Articles of Association and Article 82 of Law 4548/2018, in the
event that as a result of resignation, death or forfeiture for
whatever reason a Director ceases to be on the Board of
Directors and his replacement by substitute Directors elected by
the General Meeting is not feasible, the remaining Directors may
either provisionally elect another Director to fill the vacancy for
the remaining term of office of the Director replaced, or continue
to manage and represent the Bank without replacing the missing
Director(s), provided that the number of the remaining Directors
shall be within the range prescribed by the Bank’s Articles of
Association (currently at least seven), which is in accordance with
the applicable framework. Additionally, particularly with regards
to the independent non-executive members of the Board,
according to the provisions of para. 4 of article 9 of Greek Law
4706/2020, in the event that as a result of resignation, death or
in any other way loss of the status of an independent non-
executive member, the number of the independent non-
executive members becomes less than the minimum required by
law, the Board of Directors appoints as independent non-
executive member until the next General Meeting either an
alternative member, where one exists under article 81 of Greek
Law 4548/2018, or an existing non-executive member or a new
member that is elected for substitution, under the condition that
the independence criteria of par. 1 are fulfilled. When pursuant
to a decision of the competent body of the company, it is
provided for a number of independent non-executive members
greater than the one provided in par. 2 of article 5, and following
the replacement, the number of the independent non-executive
members of the Board of Directors is less than the
aforementioned provided number, a relevant announcement
shall be published to the website of the bank and remains
published until the next General Meeting.
In any case, the election of members of the Board of Directors is
subject to constant review and approval by the SSM.
The nomination of the Bank’s Board of Directors is performed in
accordance with the Bank’s detailed Directors’ Nomination
Policy, the Board Suitability Assessment Policy and Procedure and
the Board Diversity Policy, the provisions of the Bank’s Articles of
Association, the Corporate Governance Code and the Corporate
Governance and Nominations Committee Charter, the provisions
of the relevant regulatory framework (especially, Greek Laws
4706/2020, 4548/2018, 4261/2014 and 3864/2010, and the Bank
of Greece Executive Committee’s Act No. 142/11.6.2018, all as in
force), as well as relevant guidelines of the European Central
Bank and the European Banking Authority, while taking into
account international best practices. Each nominee fulfils such
criteria that ensure the appropriate governance and guidance of
the Bank’s strategy in respect of economic, business and policy
issues, so as to ensure the required approval of the supervisory
authorities in national and European level.
Following each election of Directors by the General Meeting of
the Shareholders, as well as under any circumstances when the
Chair's or the Chief Executive Officer’s post is vacated for
whatever reason, the Board of Directors constitutes into a body
at its first meeting thereof and elects its Chair and the CEO who
manages the affairs of the Bank, by absolute majority from
among its members. According to the Bank’s Corporate
Governance Code, the Bank distinguishes the role of the Chair of
the Board of Directors and the role of the Chief Executive Officer.
Moreover, the Board of Directors has the authority to elect Vice
Chair(s) and to decide on the appointment and duties of Deputy
Chief Executive Officer(s), while also the Board may elect, from
among its independent non-executive members, a Senior
Independent Director.
The Bank’s internal framework (especially, the Corporate
Governance Code, as well as the Board Suitability Assessment
Policy and Procedure) describe specific suitability criteria that
shall be met by candidates as regards their initial and ongoing
suitability, professional competencies that are incompatible with
the position of Board member at the Bank, criteria concerning
independence of non-executive members, participation of
candidates on other boards, as well as other cases that are
incompatible with the position of Board member. The Bank aims
to ensure the best composition for the Board of Directors and
that, in any case and at all times, all members of its Board of
Directors are individually suitable for their respective roles and
that the Board collectively possesses adequate knowledge, skills
and experience to be able to understand the Bank’s activities,
including the main risks.
In order to be considered as a suitable candidate, prospective
nominees should at least: (a) fulfil the minimum requirements
provided in the regulatory framework, the Hellenic Corporate
Governance Code of the Hellenic Corporate Governance Council,
constituting the Hellenic Corporate Governance Code for
Companies with securities listed on the stock market, which the
Bank has adopted, the Bank’s Corporate Governance Code, which
includes additional provisions in compliance with more specific
corporate governance framework applying to credit institutions,
as well as provisions on internal arrangements and processes that
the Bank implements, and internal policies, including with regard
to qualifying criteria for Board membership, directors’
incompatibilities, and independence criteria (where appropriate);
(b) fulfil the minimum eligibility criteria stipulated in Greek Law
3864/2010 (HFSF Law), as in force; (c) meet the minimum
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suitability criteria set out in Article 91 of the CRD, as in force,
namely: (i) experience; (ii) reputation; (iii) conflicts of interest and
independence of mind; (iv) time commitment; and (v) collective
suitability (as further detailed in Annex I of the Policy); (d) have
no systematic conflict of interest with the Bank as per the
applicable regulatory and internal framework (including the
Bank’s Articles of Association, NBG Group Code of Ethics and
Policy for avoiding Conflicts of Interest for Board members,
Senior Executives and other Related Parties of NBG; (e) meet
particular criteria as each time determined for the role and duties
of the specific position.
In selecting and proposing to the General Meeting of the
Shareholders potential members of the Board of Directors, or in
appointing new members in replacement of members who for
whatever reason cease to be on the Board of Directors, the Board
of Directors shall seek to propose candidates whose nomination
ensures that the Board of Directors as a collective body presents
above all the following profile:
●
has a thorough knowledge of the financial industry,
counting among its members individuals who are serving
or have served in the past in leadership positions in
financial institutions. More specifically, Board
membership shall have the appropriate mix and
experience in financial services or commercial banking
and adequate time to provide effective oversight of a
Group that offers a diverse range of financial services and
operates on an international scale. Some of its members
have significant long-time experience in financial
management, accounting, and risk and capital
management and control. Board members are also aware
of the legal and regulatory requirements of the banking
industry;
●
has substantial business and professional experience,
counting among its members individuals who are serving
or have served in the past as Chair, Chief Executive
Officers or senior managers of large organizations that
are active in the areas of banking, audit, risk
management or distressed asset management and have
built a reputation that demonstrates the ability to make
the kind of important and sensitive business decisions
that the Board of Directors is called upon to make;
●
has a full understanding of the structure and dynamics of
NBG’s customer universe, and of the principal markets in
which the Group is currently active;
●
has substantial international experience and can
contribute to NBG's aspirations in the specific
geographical region in which NBG is active;
●
ensures, as far as possible, adequate representation of
both genders, in alignment to respective legal provisions
and the Bank’s Board Diversity Policy;
●
reflects the business model and the financial condition of
the Bank;
●
the principle of diversity is respected in the selection of
Directors for the Board, in alignment to respective legal
provisions and the Bank’s Board Diversity Policy. Diversity
is one factor that can enhance the functioning of the
Board of Directors, as it addresses the phenomenon of
“group think” and facilitates independent opinions and
constructive challenging in the process of decision
making.
The Board’s Corporate Governance and Nominations Committee
monitors on an ongoing basis the suitability of the members of
the Board to identify, in light of any relevant new fact, situations
where a reassessment of their suitability should be performed,
while in any case, the Corporate Governance and Nominations
Committee performs a periodic suitability re-assessment at least
annually.
Particularly in case a member takes on an additional directorship
or starts to perform new relevant activities, the Corporate
Governance and Nominations Committee shall provide clearance
on the assumption of the new position, assessing among others
that the Board member is able to commit sufficient time to
perform their functions in the Bank and whether or not the
limitation of directorships under Article 91(3) of
Directive2013/36/EU, as each time in force, is being complied
with, with the aim to ensure that the Bank operates in full
compliance with the regulatory prescribed limits applying and
avoid any risk of overboarding.
Furthermore, the Bank, in alignment also to the provisions of
Greek Law 4706/2020, affirms on an annual basis fulfilment by
independent non-executive Board members of the independence
criteria set by the applicable framework and particularly Article 9
of Greek Law 4706/2020. Specifically, the Bank has carried out
checks to confirm fulfilment by independent non-executive Board
members of the independence requirements laid down in the
applicable framework, including the independence requirements
of Article 9 of Law 4706/2020, both prior to the Annual General
Meeting of the Bank’s Shareholders of 28 July 2022, as well as
before publication of the present Annual Financial Report.
Furthermore, it is noted that the Board Chairman also meets in
substance the independence requirements laid down in the
applicable framework, however the Bank considers that the
Board Chair position qualifies as non-executive, given the fact
that a service provision contract is in place for the Board Chair
position.
The Bank monitors developments in the applicable framework
and relevant guidelines and best practices and proceeds to the
actions deemed appropriate in order to ensure that the policies
followed are in alignment with each time applicable regulatory
framework and relevant guidelines.
Evaluation of the Chief Executive Officer, the Board
of Directors and the Board Committees
Board of Directors’ Report
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According to the Bank’s Corporate Governance Code and the
Policy and Procedures for the annual evaluation of the Board of
Directors, the Board, assisted by the Corporate Governance and
Nominations Committee, conducts an annual Board effectiveness
review to evaluate its own performance as a collective body and
its members’ contribution in line with the Board of Directors
evaluation procedure formulated by the Corporate Governance
and Nominations Committee, taking also into consideration the
applicable legal and regulatory framework. The evaluation is
carried out every three (3) years by an external consultant whose
oversight is the responsibility of the Corporate Governance and
Nominations Committee.
The Corporate Governance and Nominations Committee
determines the exact timing for the initiation of the annual
evaluation of the Board and its Committees and the assessment
of the Board members on an individual basis, as well as the
evaluation timetable and the methodology that shall be applied
and oversees the evaluation process. The self-evaluation is
carried out through questionnaires to be completed by members
of the Board, while the questionnaires related to the
performance of each Board Committee are completed only by
the members of such Committee. The content of the
questionnaires is reviewed on an annual basis by the Corporate
Governance and Nominations Committee in order to ascertain
that the questionnaires continue to correspond to the conditions
each time prevailing, including the Bank's priorities, the
applicable regulatory framework and the best corporate
governance practices. The results of the overall evaluation of the
Board of Directors and its Committees, as well as anonymous
statistical data regarding members' self-evaluation on an
individual basis are presented and discussed at Board level, while
the individual outcome reports are discussed in individual
feedback sessions, as appropriate.
Taking into account that the last evaluation had taken place fairly
recently and taking also into account the changes made during
2022 on the Board/Board Committees, and the new Board
Working Model which needs to have been applied for some time
before being able to carry out the evaluation effectively, the
Board endorsed the opinion of the Corporate Governance and
Nominations Committee to initiate the next Board evaluation in
2023, so as to allow sufficient time for the changes that have
taken place during 2022 in the structure and functioning of the
Board/Board Committees to be implemented before proceeding
to such evaluation.
Furthermore, during 2022 the Board conducted the CEO
Evaluation for the year 2021, while also reviewed the framework
for the evaluation of the CEO for the year 2022.
Directors Remuneration
Board Directors’ remuneration is determined by the Bank's
Annual General Meeting of Shareholders, upon recommendation
of the Board of Directors (non-executive members), following
proposal by the Corporate Governance and Nominations
Committee. The Executive members do not attend or take part in
the Committee meetings at which their remuneration is
discussed and decided. Prior to its submission to the Annual
General Meeting, the remuneration proposal is subject to
consultation with the competent bodies according to the
applicable governance legal and regulatory framework, as in
force. The proposal is formulated in line with the legal and
regulatory framework to which the Bank is subject, as well as the
Bank’s internal framework (esp. the Directors’ & Senior
Managers’ Remuneration Policy and the Charter of the Corporate
Governance and Nominations Committee of the Board), and
takes into consideration, among others, the general employment
and payment conditions applying to the total of NBG staff,
looking to ensure consistency, the differences in responsibilities
and impact ability of each directorship position and industry best
practices, in a way that adequately reflects the time and effort
the members are expected to contribute to the work of the
Board of Directors, while at the same time promoting
effectiveness of the Board of Directors’ operations.
According to Article 10 of Greek Law 3864/2010, as in force, the
representative of the HFSF can, inter alia, exercise his/her veto
right in the Board decision making process with regards to the
distribution of dividends and the benefits and bonus policy for
Board members for any credit institutions whose ratio of non-
performing loans to total loans, as calculated in accordance with
subsection f(ii), of paragraph 2 of Article 11 of Commission
Implementing Regulation (EU) 2021/451, exceeds 10%. As long as
the credit institution is subject to the provisions of Greek Law
3864/2010 (Article 10 para 3, as currently and as long as it is in
force),
as long as the ratio of non-performing loans to total loans
exceeds ten percent (10%), or for the financial years referring up
to 2022, Directors’ fixed remuneration shall in no case exceed
compensation of the Governor of the Bank of Greece. Any
additional variable remunerations (bonuses) of Directors shall be
abolished throughout the duration of the restructuring plan of
the credit institution submitted to the European Commission in
the context of the approval procedure for the capital assistance
program and until its completion
31
performing loans to total loans exceeds ten percent (10%), or for
the financial years referring up to 2022. Similarly, for the period
of participation of the credit institution in the capital
enhancement program of Article 7 of Greek Law 3864/2010,
variable remuneration may only take the form of shares or stock
options or other instruments within the meaning of Articles 52 or
63 of Regulation 575/2013, in accordance with Article 86 of Law
4261/2014 (Α' 107). In this context during 2022 no variable
remuneration was granted to Board members. With regards to
executive members of the Board of Directors, their remuneration
is determined in accordance with best market practices and
31
agreed between the Hellenic Republic and the Directorate General for the
Competition of the European Commission, because of the State Aid
received by the Bank during the recapitalizations which took place in
2013 and 2015.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
144
aiming to provide a competitive level of remuneration that
reflects skills, experience and time commitment, while it is noted
that Executive Directors do not receive any additional
remuneration for their participation as Board members.
On 28 July 2022, following the proposal by the Board of Directors
after relevant recommendation of the Board’s Corporate
Governance and Nominations Committee, the Annual General
Meeting of the Shareholders approved the remuneration of the
members of the Board of Directors of the Bank for the financial
year 2021, and determined their remuneration through to the
Annual General Meeting of 2023 in accordance with Article 109
of Greek Law 4548/2018.
Moreover, in accordance with Article 9b of Directive (EU)
2017/828 of the European Parliament and of the Council of 17
May 2017 amending Directive 2007/36/EC as regards the
encouragement of long-term shareholder engagement, as this
has been transposed into the Greek legal framework by means of
Article 112 of Greek Law 4548/2018 on Sociétés Anonymes, listed
companies are required, among others, to draw up a
Remuneration Report, providing a comprehensive overview of
the remuneration of individual directors, including to newly
recruited and to former directors, during the most recent
financial year, in accordance with the remuneration policy as per
Article 110 of Greek Law 4548/2018. Within this context, the
Bank’s Annual General Meeting of Shareholders, held on 28July
2022, following proposal by the Board of Directors, as assisted by
the Corporate Governance and Nominations Committee, casted a
positive vote on the fiscal year 2021 NBG Board of Directors’
Remuneration Report, in alignment with the relevant applicable
provisions.
Further information and the NBG Board of Directors’
Remuneration Report are available on the Bank’s website, at
www.
nbg.gr
(https://www.nbg.gr/en/group/investor
-
relations/general
-
meetings
-
all
-
data)
.
Induction, Continuous Education and Training of
Directors
The Bank offers new Board members an introductory informative
program, which includes an induction program, covering among
others, issues concerning the Bank’s corporate governance and
organizational arrangements and including meetings with key
executives of Bank. As part of the induction program, new
Directors are informed about governance, compliance, key
developments at Group level, matters concerning internal audit,
finance and accounting. Upon their appointment, new Board
members are also provided with detailed material that includes a
manual prescribing basic rights and obligations of Board
members in accordance with applicable legislation, the Bank’s
key policies, as well as all other relevant regulatory provisions or
documents concerning for example obligations of the Bank
deriving from the Relationship Framework Agreement with the
HFSF. Additionally, induction and thematic sessions per Board
Committee take place, focused on the particular issues falling
within the competence of each Board Committee.
In this context,
following the election of the new Board member in July 2022
and
the decision that he shall attend training to cover banking
knowledge, the member attended a two-day training hosted by
the Academy of European Law, covering banking topics, while it
has also been arranged for him to attend the “Strategic
Management in Banking” executive education program of
INSEAD. Finally, an Induction training has also been provided by
the Bank to the new Board member.
Further, the Board of Directors has adopted a Policy for the
Annual Training of members of the Board of Directors and its
Committees, with the objective of assisting the Board of Directors
in enhancing its performance by expanding its existing Directors’
relevant skill base and competencies. The Policy establishes the
procedures for the formulation of the Annual Training Plan for
members of the Bank’s Board of Directors and Board Committees
which is developed taking into consideration the Board of
Directors and its Committees’ educational needs, the Bank’s
priorities and requirements and any existing learning and
development programs, in accordance with current
developments in the legal and regulatory framework as well as
best practices in corporate governance. In this context, briefings
and thematic sessions of the Board by Bank’s competent
executives may be arranged on matters with which Directors
should familiarise themselves while also external trainings can
take place as may be deemed appropriate. During 2022, focused
trainings of the Board of Directors members were conducted,
among others, on ESG and Sustainability, Implications of
sanctions on the Russian economy and financial system, the
Bank’s Strategy, Insights on Greek economy - National Recovery
and Resilience Plan “Greece 2.0
”,
Digital Banking, Cybersecurity
and Cyber risks. At Committee level, trainings conducted included
accounting and reporting update (including information on
ESG/climate risk/sustainable finance, IFRS update), 2022 ECB
Climate Risk Stress Test, and NBG Risk Culture Program/Risk
Awareness, while briefings were provided on Regulatory
Compliance and AML issues (e.g. on Compliance Risk Assessment
Methodology), as well as on developments and trends in
Corporate Governance.
Board of Directors – Structure
HFSF Representative
Pursuant to Greek Law 3864/2010, and the Relationship
Framework Agreement between the Bank and the HFSF, as in
force, the HFSF participates in the Board of Directors through the
appointment of a representative. As notified to the Bank by
HFSF's Letter dated 23 July 2018, the duties of the HFSF's
Representative, in the context of Greek Law 3864/2010, as in
force, are exercised by Mr. Periklis Drougkas. The HFSF
representative is entitled to participate in the Board Committees
and has the rights and authorities prescribed by Greek Law
3864/2010 and the Relationship Framework Agreement between
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
145
the NBG and the HFSF, as each time in force. The HFSF
Representative may request an adjournment of any meeting of
the Bank’s Board of Directors for three (3) business days, until
instructions are given by the Fund’s Chief Executive Officer.
Moreover, the Relationship Framework Agreement, as in force,
provides for the appointment of an HFSF Observer (with no
voting rights) at the Board of Directors and all Board Committees.
Senior Independent Director
Furthermore, as of July 2019, the Bank’s Board of Directors
established the role of the Senior Independent Director, who is
selected among its independent non-executive members. The
duties of the Senior Independent Director, as set out in the
Bank’s Corporate Governance Code indicatively include: acting as
a sounding board for the Chair
and serving as an intermediary for
the other Directors; being a key point of contact for shareholders,
regulators and other stakeholders along with the Chair of the
Board; coordinating the non-executive Board members, and
discussing with other Directors issues on which the Chair might
have a conflict of interest and acting as intermediary between
Directors and the Chair, as necessary; acting as a facilitator, to
facilitate and improve relations with shareholders and to assist in
the resolution of conflict in case of crisis or in case of dispute, as
for instance: i) there is a dispute between the Chair and CEO; ii)
shareholders or non-executive directors have expressed concerns
that are not being addressed by the Chair or the Chief Exec utive
Officer; iii) the relationship between the Chair and CEO is
particularly close; and leading the annual evaluation of the Chair
according to the Bank’s Board Evaluation Policy.
In 2021, the Corporate Governance and Nominations Committee
formulated a detailed profile for the role of Senior Independent
Director (“SID”), based on regulatory provisions, international
best practices and relevant HFSF guidelines (role specification),
while in July 2022, the Corporate Governance and Nominations
Committee updated the detailed SID profile, in alignment to the
revised structure of Board Committees. The SID Profile specifies
the role of the SID and the desired skills and qualities given the
key responsibilities of the position, as well as eligibility in
accordance with the current regulatory and legal framework and
international best practice, while also foresees provisions relating
to time commitment and participation in Board Committees. The
profile includes, inter alia, elaborated provisions in the areas of
acting as liaison between Board members and the Board Chair
and fulfilling the role of acting as a sounding Board to the Board
Chair, as suggested by international best practices; in fostering an
environment of open dialogue and constructive feedback; and in
the area of promoting solid and continuous interaction with
shareholders and stakeholders (e.g. regulators, employees,
clients, etc.) and the investor community (existing and potential
shareholders). The selection of the Senior Independent Director
is conducted in accordance with a process which has been
determined by the Corporate Governance and Nominations
Committee, having previously considered relevant international
best practices.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
146
The following table sets forth the current composition of National Bank of Greece Board of Directors:
Position in Board | Name
Start of Term*
End of Term
Profession | Main Expertise, Experience
The Non-Executive Chairman of the Board of Directors
Gikas Hardouvelis
Chair
(Non-Executive)
30 July 2021
2024
Chair of the Board/Professor/Economist/Risk, Strategy and
Corporate Governance Experience
Executive members
Pavlos Mylonas
(CEO)
30 July 2021
2024
Chief Executive Officer
Christina Theofilidi
30 July 2021
2024
Executive Board Member, General Manager of Retail Banking
Independent non-executive members
Avraam Gounaris
(Senior
Independent Director as of
December 2021)
30 July 2021
2024
Economist / Financial Services
Anne Marion-Bouchacourt
30 July 2021
2024
Human Resources and Culture Experience
Claude Piret
30 July 2021
2024
Risk experience/ Financial Services
Wietze Reehoorn
30 July 2021
2024
Risk, Strategy and Corporate Governance Experience
Matthieu Kiss
30 July 2021
2024
Audit experience
Elena Ana Cernat
30 July 2021
2024
Banking/Digital Banking Experience
Aikaterini Beritsi
30 July 2021
2024
Corporate Governance Experience
JP Rangaswami
30 July 2021
2024
IT/Digital Transformation Experience
Athanasios Zarkalis
28 July 2022
2024
Commercial, Retail and Strategy Experience
Non-Executive Representative of the HFSF (Greek Law 3864/2010)
Periklis Drougkas
30 July 2021
2024
Economist
Board and Board Committees’ Secretary
Panos Dasmanoglou
30 July 2021
2024
General Manager of Group Compliance and Corporate Governance
●
* Date of election of the Members of the Board of Directors by the Annual General Meeting of Shareholders of 2021 and 2022.
During 2022 the Board of Directors convened 19 times in total.
During 2022 the Bank’s Board Committees convened 76 times in total.
The 31% (4 out of 13) of the Board of Directors Members are women.
A budget exists for the Board of Directors.
During 2022, the Board was assisted by an international advisory firm on corporate governance projects.
Board activities during 2022
During 2022, the Board focused on a number of key areas, including but not limited to the activities described below, taking into account in
its discussions and decision-making the interests of its stakeholders.
Indicatively, the Board of Directors:
●
continued focusing on sustainable development and strong performance of the Bank, while maintaining high standards in its
corporate governance and conduct arrangements;
●
applied a new Working Model of the Board, with an emphasis on thorough discussion at Board level of issues such as strategic
direction, macroeconomic trends, supervisory issues, etc;
●
revisited Board Committee compositions and reviewed Committee Charters, considering the new Board Working Model and
principles considered for the formulation of Board Committee compositions in line with the Bank's respective Methodology for
reviewing Board Committee compositions;
●
as part of best practice regular corporate governance exercises
,
completed the annual suitability assessment at individual and
collective level and assessment of fulfillment of independence criteria for the independent members of the Board of Directors
prior to the Annual General Meeting, while also updated the Board Suitability Policy and the Nomination Policy, in alignment to
the new ECB Guide to Fit and Proper and considering regulatory developments (i.e. changes in HFSF Law);
●
hosted a 3-Day Strategy Days Off Site event, including important discussions on Board strategic view and initiatives, such as
Organic Business Growth, ESG-Sustainability,
Board Working Model Assessment, Cybersecurity etc.;
●
monitored developments in terms of changing conditions, e.g. macroeconomic environment, geopolitical factors, inflationary
pressure, and of the successful implementation of the Bank’s Business Plan and Budget;
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
147
●
received on a monthly basis, the Monthly business performance reviews
on the Bank’s preliminary results with benchmarks to
the 2022 Budget targets and 2021 Actual results and regular update on the evolution of the Group Regulatory Capital Ratios;
●
reviewed and approved the 2022-2024 Business Plan (incl. stress scenarios and highlights of: NPE plan and Capital plan), as well
as the 2023 Annual Budget, the Capital Planning Framework and 2022-2024 Capital Planning;
●
monitored the Bank’s initiatives in the context of the Bank’s Transformation Program, e.g. for digitalisation and evolution of
systems used, initiatives on Purpose and Values and the Bank’s Culture;
●
carried out oversight of key risks, including for example, credit risk, IT/Cyber risk, outsourcing risk;
●
monitored the effective implementation of important projects and transactions of the Bank;
●
reviewed and approved the Annual Assessment Report on the effectiveness and efficiency of the Bank’s and the Group’s System
of Internal Control;
●
reviewed regular/annual submissions, such as ICAAP, ILAAP, Annual Reports to Supervisory Authorities (e.g. Annual Compliance
and AML Reports), Pillar III disclosures;
●
was briefed on Employee Engagement Survey results.
Moreover, during 2022, the Board of Directors, focused on ESG and Sustainability. In this context, the Board of Directors, during the
Off-Site Strategy Days Meetings was presented and discussed on ESG and Sustainability. Furthermore, the Board of Directors
reviewed the Bank’s initiatives in the context of the Bank’s ESG Strategy and climate risk related initiatives. In particular, the
Board of Directors:
●
reviewed and discussed on the Bank’s Climate and Environment Strategy, with special focus in the area of sustainable energy
financing, transition to a sustainable economy/financed emissions and role-modelling environmentally responsible practices. The
Bank’s Climate and Environment Strategy was also incorporated in the Annual Budget 2023 & Business Plan 2023 - 2025,
reviewed and approved by the Board of Directors in 2022.
●
was informed on the 2022 ECB Climate Risk Stress Test Results.
Additionally, the Board of Directors was presented with the Diagnostic review of the Bank's initiatives for the efficient management of
Environmental, Social and Governance risks, and was updated on the key developments on the ESG ecosystem, and in particular
on Climate risks, ESG disclosures and sustainable finance.
Finally, the Board of Directors, through the Innovation and Sustainability Committee, was informed on ESG governance at
management level, i.e., on the operationalization of the ESG Management Committee chaired by the CEO, on the new Climate
and Environment Strategy Sector that was introduced at the Bank to lead and coordinate efforts of the First Line of Defence, as
well as on the Strategic Risk Management Division that leads efforts within Risk and the Sustainability & CSR Division that leads
efforts within Compliance.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
148
Board of Director’s Committees
Seven Committees operate at Board level:
Audit Committee
Board Risk Committee
Corporate Governance and Nominations Committee
Human Resources and Remuneration Committee
Strategy and Transformation Committee
Compliance, Ethics and Culture Committee.
Innovation and Sustainability Committee
In February 2022, a new Board Committee, the Innovation and
Sustainability Committee ("ISC"), was established by Board
decision (meeting no. 1718/24.2.2022), following the elevation of
the IT & Innovation Advisory Council (established by the Board in
January 2021) to a Board Committee and the enhancement of its
duties. The Charter of the ISC was approved at the same Board
meeting.
In
Committee Charters, all Board Committee Charters were revised
for the purpose of further alignment among them and
adjustment in parts impacted by the establishment of the ISC, as
well as of incorporating certain developments in internal Policies
/ arrangements and being aligned with regulatory developments.
The Charters of the Committees are posted on the Bank’s website,
at www.nbg.gr (https://www.nbg.gr/en/group/esg/corporate
-
governance/boards
-
of
-
directors)
.
Audit Committee
The Audit Committee was established in 1999 and operates in
accordance with the provisions of the Bank of Greece Governor’s
Act No. 2577/2006 and Greek Law 4449/2017 (Article 44), as in
force.
During 2022 the Audit Committee convened sixteen times.
The members of the Committee are appointed by the Board or by
the General Meeting of Shareholders upon recommendation of
the Corporate Governance and Nominations Committee. In any
case, in accordance with Greek Law 4449/2017, as in force, the
structure of the Audit Committee, and the number and capacity
of the Committee members shall be decided by the General
Meeting of Shareholders. The Chair and the Vice Chair of the
Committee should be appointed by its members. In accordance
with its existing Charter, the Committee shall be composed of at
least three (3) Board members. One member shall be the HFSF
representative at the Board of Directors. Furthermore, the
members of the Committee shall not exceed 40% (rounded to the
nearest whole number) of total Board members (excluding the
HFSF Representative on the Board). All members of the
Committee shall be non-executive members of the Board, while
75% (rounded to the nearest whole number) of the members
(excluding the HFSF Representative on the Board), including the
Chair, shall be independent non-executive members of the Board,
as per the definition of director independence included in NBG’s
Corporate Governance Code and in any case according to the
provisions of the legal and regulatory framework in force. At least
one member of the Committee, which is an independent non-
executive member, should have adequate knowledge and
experience in auditing or accounting.
The Committee is currently composed of five non-executive
Members, of which four are independent and one is the HFSF
Representative at the Board of Directors. The mandates of the
Committee members shall automatically expire if they cease to
be members of the NBG Board, while in accordance with Greek
Law 4449/2017, as in force, the term of appointment shall be
decided by the General Meeting of Shareholders. In that context,
pursuant to the resolution of the Annual General Meeting of
Shareholders of 28 July 2022, the term of office of the Committee
members appointed by the Board of Directors in accordance with
Article 44 par. 1 case c) of Greek Law 4449/2017 shall be as
determined by the Annual General Meeting of Shareholders of 30
July 2021, i.e. until the Annual General Meeting of year 2024 and
shall, in any case, automatically expire if they cease to be
members of the NBG Board. The Committee employs a
specialized consultant who reports directly to the Chair of the
Committee. The Committee convenes regularly at least six times
per annum or extraordinarily, whenever deemed necessary,
keeps minutes of its meetings and reports to the Board of
Directors every three months or more frequently if deemed
necessary.
The Committee is comprised of the following members:
Audit Committee
Chair
Matthieu Kiss
Vice-Chair
Claude Piret
Members
Avraam Gounaris
JP Rangaswami
Periklis Drougkas (HFSF representative)
Detailed information on the responsibilities, composition and modus operandi
of the Committee are included in the Committee’s charter (which was last
revised by the Board on 24 March 2022) posted on the Bank’s website, at
www.nbg.gr
(https://www.nbg.gr/en/group/esg/corporate
-
governance/boards
-
of
-
directors)
.
Main responsibilities
●
Review and approval of annual and interim Financial
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
149
Statements and disclosures.
●
Recommendations for appointment & remuneration of
audit firm that conducts the statutory audit.
●
Monitoring & assessment of internal control and regulatory
and compliance environment.
●
Review of Internal Audit Function effectiveness.
●
Review of developments in legal and regulatory framework.
●
Preparation of the annual Audit Committee Report, to be
submitted to the Annual General Meeting of Shareholders
pursuant to Article 44 par. 1 case i) of Greek Law
4449/2017.
●
Review and approval of policies.
2022 Key workings of the Committee include among others
●
Approval of the annual and interim Financial Statements &
review of procedure for their preparation, as well as of the
relevant Financial Results Press Release.
●
Review of the Critical Accounting Judgments and Estimates
made in the preparation of the Annual and Interim
Financial Statements (e.g., going concern, income taxes and
expected losses on loans and advances to customers).
●
Monthly business performance reviews on the Bank’s
preliminary results with benchmarks to the 2022 Budget
targets and 2021 Actual results.
●
Update on 2022 Budget (jointly with the Group Strategy &
Transformation Committee).
●
Regular update on the evolution of the Group Regulatory
Capital Ratios.
●
Regular updates on the activity of Group Internal Audit
Function, approval of its Annual Work Plan for 2023 and the
mid-year revision of the 2022 Group Internal Audit Annual
Plan, revision of Group Internal Audit Charters and
assurance that the Group Internal Audit Function was
appropriately staffed and had the necessary resources.
●
Continued to closely monitor the successful remediation of
overdue audit issues, and audit issues’ evolution, including
audit issues that have been closed due to risk acceptance or
downgraded. Review of the External Quality Assessment of
NBG Group Internal Audit Function as per Institute of
Internal Auditors’ requirements.
●
Update on SSM’s follow-up requests regarding on-site
inspection of the Residential Real Estate and Corporate
portfolios and follow up on SSM audit findings.
●
Recommendation to the Board for the reappointment of
PwC as the Group Statutory Auditors of FY.22 following
alignment of Greek legislation with EU framework allowing
extension of statutory audit services for a period of up to
10 years and provided assurance that the audit fees for the
FY.22 were in accordance with the fee levels agreed in the
tender process.
●
Approval of any additional services, other than the
statutory audit, offered by the Statutory Auditors to the
Bank & its subsidiaries to ensure that these services & their
related fees were permitted by existing EU and Greek
legislation & did not impinge on the independence of the
Statutory Auditors. Briefing on Non-Audit Fees Thresholds
Monitoring Process to provide assurance of the Group’s
compliance with relevant regulatory framework.
●
Regular meetings with the Statutory Auditors throughout
the year, in compliance with the new EU and Greek
legislation.
●
Review of status and accounting implications of the new
Banking Accounting Engine (“BAE”).
●
Review and approval of the Group Internal Control
Function’s Annual Activity Plan for 2022 and informed
quarterly on its progress and results, informed on
amendments to the Group Internal Control Methodology.
●
Updated on the NBG Process Framework Overview and
Facilitation of Control Documentation Journey.
●
Review and approval of the Group Internal Control
Function’s Activity Plan 2023-2024.
●
Review and approval, jointly with the Board Compliance,
Ethics and Culture Committee, of the 2021 Money
Laundering Reporting Officer (“MLRO”) Annual Report and
2022 Plan and the Compliance Function’s 2021 Annual
Report and 2022 Plan, as well as the Report over the
suitability of measures taken by the Bank on 31 December
2021, according to Greek Law 4514/2018 as specified in
executive committee act 147/27.7.2018 (safeguarding of
financial instruments and client funds – MiFID II).
●
Approval of updated Policy of Impairment of Financial
Instruments under IFRS 9 and of the Legal Risk
Management Policy of NBG Group
(jointly with the Board
Risk Committee).
●
Briefings on specific items,
including Group Finance Division
2021 Annual Report; and compliance with hiring former
Auditors’ policy.
●
Regular briefings on legal cases of the Bank and the Group.
●
Regular updates on key regulatory developments.
●
Technical update by PwC on accounting and reporting
matters (including information on ESG/climate
risk/sustainable finance).
●
Preparation of the annual Audit Committee Report for the
year 2021, which was submitted to the Annual General
Meeting of the Bank’s shareholders of 28 July 2022
pursuant to Article 44 par. 1 case i) of Greek Law
4449/2017.
●
Review of Policies (e.g. Policy for Impairment of Financial
Instruments under IFRS 9).
The Audit Committee has received and reviewed (a) the Annual
Assessment Report on the System of Internal Controls of NBG
and its Group for 2021 by the Group Internal Audit Function and
(b) the external (triennial) review of the adequacy of the Internal
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
150
Control System of NBG Group, in accordance with the provisions
of the Bank of Greece Governor’s Act 2577/2006 which are also
submitted to the Bank of Greece through the Audit Committee.
For the Audit Committee Report to the Shareholders on its
activities during 2022, see separate section “
Audit Committee
Report
”.
Board Risk Committee
The Board Risk Committee (“BRC”) was established by Board
decision (meeting no. 1308/20.07.2006) in accordance with the
requirements of Bank of Greece Governor’s Act No.
2577/9.3.2006.
During 2022, the Board Risk Committee convened eleven times.
In accordance with its existing Charter, the BRC shall be
composed exclusively of non-executive Board members. Οne
member shall be the HFSF Representative at the Board of
Directors. Committee members shall be at least three in number,
the majority of which (excluding the HFSF representative),
including the Chair, shall be independent non-executive members
of the Board, in accordance with the definition of independence
specified, as per the definition of director independence included
in NBG’s Corporate Governance Code and in any case according
to the provisions of the legal and regulatory framework in force.
The members of the Committee (including the Chair and Vice-
Chair) are appointed by the Board of the Bank, following
recommendation by the Board's Corporate Governance and
Nominations Committee. The Committee is currently composed
of four non-executive Members, of which three are independent
and one is the HFSF Representat ive at the Board of Directors. The
Committee members shall be appointed for a term of one year,
which shall be automatically renewed for successive one-year
renewal terms, unless otherwise decided. In any case, the
mandates of the Committee members shall automatically expire
if they cease to be members of the NBG Board of Directors.
The BRC convenes regularly at least on a monthly basis, as well as
extraordinarily, whenever deemed necessary by its Chair.
Committee keeps minutes of its proceedings and reports
regularly to the Board of Directors.
The Committee is comprised of the following members:
Board Risk Committee
Chair
Claude Piret
Vice-Chair
Wietze Reehoorn
Members
Elena Ana Cernat
Periklis Drougkas (HFSF representative)
Detailed information on the responsibilities, composition and modus operandi
of the BRC are included in the Committee’s charter of the BRC (which was last
approved by the Board on 24 March 2022) posted on the Bank’s website at
(https://www.nbg.gr/en/group/esg/corporate
-
governance/boards
-
of
-
directors)
.
Main responsibilities
●
Ensuring that the Bank has clearly and adequately defined
the Group’s risk appetite & strategy and ensuring that the
Board is adequately apprised of all matters relating to
NBG’s risk strategy, risk appetite and the Bank and the
Group’s actual risk profile.
●
Ensuring the establishment of risk culture as a core
component of effective risk management.
●
Oversight of the overall effectiveness of risk governance
and risk management, as well as Non-Performing
Loans/Exposures (NPLs/NPEs) issues.
●
Approval of risk strategies, frameworks and policies.
●
Oversight of capital and liquidity management.
●
Oversight of risk management function.
●
Review and approval of policies.
2022 Key workings of the Committee include among others
●
Review and update of ICAAP/ILAAP Annual Review and
Update of ICAAP/Stress Test Frameworks, Risk Appetite
Framework with additions among others in the area of
ESG/Climate & Environmental Risk, New Obligors Leveraged
Transactions, Concentration Risk and
refinements/reclassifications aimed at enhancing oversight
and monitoring processes & Risk and Capital Strategy and
ongoing monitoring of compliance.
●
Enhancements in risk reporting.
●
Review of Operational Risk Management Framework &
Policy documents, incorporating BCBS Principles (Sound
Management of Operational Risk & Operational Resilience)
and aligned to the new NBG Risk Taxonomy Framework and
the role of SRCOs/URCOs.
●
Ongoing-monthly updates on Risk Management issues and
ad hoc briefings on developments.
●
Review of NBG’s Operat ional Risk KRI Dashboard, as well as
KRI Dashboards for major domestic and foreign
subsidiaries.
●
Submission of ICAAP, ILAAP, NPE Plan & NPE Strategy
Implementation report.
●
Oversight of matters/risks relevant to Geopolitical Crisis.
●
Review of regulatory reports and disclosures (Pillar III
Disclosures, Bank of Greece Report of Loans in Arrears,
Annual Report to the Bank of Greece on Risk Management
Function activity).
●
Oversight of the Bank’s Risk related ESG project (e.g.
qualitative scorecard development & calibration, internal
Stress testing framework, to incorporate ESG components
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
151
and other updates).
●
Review of Policies (e.g., Group Property Valuation Policy
Business Continuity and Disaster Recovery Policy), review of
the Recovery Plan.
●
Review of top corporate exposures, NBG Loan portfolio
Quality Benchmarking, NBG cybersecurity posture.
●
Review of Credit Risk Models used (IFRS 9 SME Retail PD,
IFRS 9 SME Retail LGD, IFRS 9 Consumer Term Loans LGD).
●
Briefings and monitoring of results of 2022 ECB Climate
Stress Test.
●
Review of Stress scenarios & sensitivity analyses
contributing to the Strategy setting and evaluation process,
including Budget approval for 2023.
●
Review of NPE Strategy & Targets 2022-24.
●
Implementation of Risk Awareness Enhancement Initiatives.
●
Oversight of NBG Risk Culture Program.
●
Review and monitor the Top Operational Risks of the
Group.
Corporate Governance and Nominations Committee
The Corporate Governance and Nominations Committee was
established by Board decision (meeting no. 1259 on 5 May 2005).
During 2022 the Corporate Governance and Nominations
Committee convened fifteen times.
In accordance with its existing Charter, the Committee shall be
composed of at least three Board members. One member shall
be the HFSF representative at the Board of Directors. The
members of the Committee (including the Chair and Vice-Chair)
are appointed by the Board of the Bank, pursuant to proposal of
the Chair of the Board in consultation with the Chair of the
Corporate Governance & Nominations Committee. All members
of the Committee shall be non-executive Board members, in their
majority (including the Chair,
excluding the HFSF representative)
independent non-executive members of the Board, as per the
definition of director independence included in NBG’s Corporate
Governance Code and in any case according to the provisions of
the legal and regulatory framework in force. The Committee is
currently composed of five non-executive Members, of which
four are independent and one is the HFSF Representative at the
Board of Directors. Committee members are appointed for a one-
year term of office, which shall be automatically renewed for
successive one-year renewal terms, unless otherwise decided. In
any case, the mandates of the Committee members shall
automatically expire if they cease to be members of the NBG
Board. Committee members’ term shall not exceed nine years in
total. The Committee convenes at least three times per annum
and keeps minutes of its proceedings and reports regularly to the
Board of Directors.
The Committee is comprised of the following members:
Corporate Governance and Nominations Committee
Chair
Wietze Reehoorn
Vice-Chair
Aikaterini Beritsi
Members
Matthieu Kiss
Anne Marion-Bouchacourt
Periklis Drougkas (HFSF representative)
Detailed information on the responsibilities, composition and modus operandi
of the Corporate Governance and Nominations Committee are included in the
Committee’s Charter (which was last approved by the Board on 24 March
2022) posted on the Bank’s website, at www.nbg.gr
(https://www.nbg.gr/en/group/esg/corporate-governance/bod-
committees/corporate-governance-and-nomination-committee).
Main responsibilities
●
Review of Board of Directors composition and organization.
●
Oversight of development and implementation of a sound
group corporate governance framework.
●
Development and review of NBG’s Corporate Governance
Code, policies in relation to the nomination and suitability
assessment of the Board and Senior Management, Board
evaluation, succession planning and remuneration, and
other corporate governance policies.
●
Review of Bank’s organizational chart and delegation of
authorities.
●
Proposals on Board’s induction and ongoing training.
●
Suitability Assessment of individual Board members’
knowledge, skills, experience and independence and the
Board collectively, as well as of Senior Management.
●
Board of Director’s Members and Senior Executives
nominations, as well as suitability assessment of candidates
in subsidiary Boards.
●
Review and monitoring of relevant policies and practices.
2022 Key workings of the Committee include among others
●
Board Governance Working Model:
Implementation of the
revised principles on Board Working Model, as determined
by the Board in December 2021 in alignment to supervisory
expectations and with a focus on enhancement of Board
focus on strategic discussion and in-depth analysis of all key
topics concerning the Bank (matters addressed including
attendance in Committee meetings, access to material,
summaries of minutes).
●
Recruitment process of an additional Board member (INED):
Extensive recruitment and selection process carried out in
collaboration with an independent headhunter
(determination of candidate profile including skills sought,
interviews with shortlisted candidates etc), following
discussions that had taken place at the end of 2021 on ideal
size of the Board and after considering Board skills.
●
Annual Suitability and Independence Assessment of the
Board:
Individual and Collective Suitability and the fulfilment of
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
152
independence criteria, conducted prior to the Annual
General Meeting of Shareholders 2022.
●
Review of Board Committees architecture and composition:
During 2022, particular focus was given to exploring the
ideal architecture of Board Committees, including the ideal
size and composition of Board Committees, so as to satisfy
also rotation ambitions and cross participation restrictions.
Following extensive discussions, changes in Board
Committees composition have taken place in February and
July 2022 (the latter following the election of a new Board
member and the reconstitution of the Board), in alignment
to the new Methodology adopted on Board Committee
Compositions Review and supervisory expectations.
●
Establishment of the new Innovation and Sustainability
Committee and adoption of its Charter: Within the context
of the aforementioned review of Board Committees
architecture, in February 2022, following proposal of the
CGNC, the Board established the Innovation and
Sustainability Committee, supporting the Board of Directors
and focusing on continuous monitoring of developments in
terms of long term trends and best practices particularly in
the areas of sustainability and innovation.
●
Corporate Governance Framework – Policies: Revision of
NBG Internal Governance Framework, in alignment to
regulatory developments and global trends in corporate
governance, including:
ü
adjustment of Board Committee Compositions Review
Methodology in alignment with revised Board of
Directors Committees architecture;
ü
review of Board Suitability Policy and Procedures, in
alignment with changes in the relevant regulatory
framework (especially ECΒ Guide, EBA Guidelines) -
approved by the Annual General Meeting 2022 by 100%
favourable votes;
ü
review of Directors' and Senior Managers’
Remuneration Policy, in alignment with changes in the
relevant regulatory framework (i.e., new HFSF Law) and
the revised methodology for determining remuneration
of Non-Executive Directors approved by the Annual
General Meeting of Shareholders 2022 by 98.81%
favourable votes;
ü
update of Board Nomination Policy, in alignment with
changes in the relevant regulatory framework (e.g., new
HFSF Law, ECB guidance) and the Board Suitability
Policy;
ü
adjustments to Corporate Governance Code following
the establishment of new Board Committee and the
update of Board Committee Charters.
●
Governance projects
: Update of the CEO Evaluation
Framework for the year 2022, execution of the CEO
Evaluation for the year 2021, Annual Board Suitability
Assessment, Update of Target Board Profile, Conclusion of
CEO/Executive Management Team Succession Planning
project.
●
Annual General Meeting
: Revision and approval (where
appropriate) of Annual General Meeting Material, including
the Annual General Meeting Invitation Agenda, the
proposal for the increase of the number of Board members
from twelve (12) to thirteen (13) and the Election of a new
independent non-executive member, the proposal for the
redetermination of the Audit Committee members, and the
Directors’ Remuneration Report.
●
Ongoing monitoring of
: regulatory developments and best
practices, respective briefings on all important regulatory
developments in corporate governance (e.g. new HFSF Law,
Governance Trends/ Board of Directors Key Focus areas).
●
Group governance and Oversight
: Nominations to NBG
subsidiaries Boards, eligibility assessment of subsidiary
Board members, presentation on group entities governance
arrangements.
●
Ongoing training and development
: Annual Board Training
Plan for the year 2022, Induction program for new Board
member
Human Resources and Remuneration Committee
The Human Resources and Remuneration Committee ("HRRC")
was established by Board decision (meeting no. 1259/ 5.5.2005).
During 2022, the Human Resources and Remuneration
Committee convened ten times.
In accordance with its existing Charter, the Committee shall solely
consist of non-executive members of the Board, which shall be at
least three in number. One member shall be the HFSF
Representative at the Board of Directors. In their majority
(including the Chair, excluding the HFSF representative)
Committee members shall be independent non-executive Board
members, as per the definition of director independence
included in NBG’s Corporate Governance Code and in any case
according to the provisions of the legal and regulatory framework
in force. The Committee composition shall include members
possessing experience in the financial sector, while at least one
member shall possess adequate expertise and professional
experience in risk management and audit activities, mainly in
alignment of remuneration policy with the risk and capital profile
of the Bank.
The members of the Committee (including the Chair and Vice-
Chair) are appointed by the Board of the Bank, following
recommendation by the Board’s Corporate Governance and
Nominations Committee. The Committee members shall be
selected on the basis of their competence and experience. The
Committee is currently composed of five non-executive
Members, of which four are independent and one is the HFSF
Representative at the Board of Directors. The Committee
members shall be appointed for a term of one year, which shall
be automatically renewed for successive one-year renewal terms,
unless otherwise decided. In any case, the mandates of the
Committee members shall automatically expire if they cease to
be members of the NBG Board. Committee members’ term shall
not exceed nine years in total. The Committee convenes at least
four times a year and keeps minutes of its proceedings and
reports regularly to the Board of Directors.
The Committee is comprised of the following members:
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
153
Human Resources and Remuneration Committee
Chair
Anne Marion-Bouchacourt
Vice-Chair
Elena Ana Cernat
Members
JP Rangaswami
Athanasios Zarkalis
Periklis Drougkas (HFSF representative)
Detailed information on the responsibilities, composition and modus operandi
of the HRRC are included in the Committee’s charter of the HRRC (which was
last approved by the Board on 24 March 2022) posted on the Bank’s website,
at www.nbg.gr (
https://www.nbg.gr/en/group/esg/corporate
-
governance/boards
-
of
-
directors).
Main responsibilities
●
Review and monitoring of Group Human Resources policies
and practices.
●
Oversight of Group’s Remuneration Policy and relevant
procedures.
●
Formulation of a framework for fairly evaluating effort and
rewarding performance. Developing and maintaining a
coherent system of values and incentives for Human
Resources throughout the NBG Group.
●
Proposals on executive contract terms and remuneration.
2022 Key workings of the Committee include among others
●
Monitoring of Performance Management System (“PMS”)
implementation (conclusion of PMS cycle (2021 review,
2022 goal setting).
●
Review of NBG Directors’ and Senior Managers’
Remuneration Policy according to Greek Law 4548/2018.
●
Continuous oversight/monitoring of a number of important
Transformation Initiatives related to Human Resources
issues and Human Resources master plan (Human
Resources Function redesign, redesign of back-office
onboarding processes, upgrade of the Human Resources
Data Structure / reporting enhancement and
standardization, Talent Management/Succession Planning,
Career Framework etc.).
●
Review of variable remuneration cycle (Branch Network,
Head Office Schemes payout, Top Management long term
incentive scheme design).
●
Launch of 2022 Voluntary Exit Scheme (“VES”) – Update on
2022 VES results.
●
Review of Proposals on adjustments of Executive
remuneration terms.
●
Review of Key findings and focus areas of the 2nd Bank –
wide NBG Employee Engagement Survey.
Strategy and Transformation Committee
The Strategy Committee was established by Board decision
(meeting no. 1387/ 29.9.2009), while it was renamed to Strategy
and Transformation Committee by Board Decision (meeting no.
1622/26.07.2018).
During 2022 the Strategy and Transformation Committee
convened eleven times.
In accordance with its existing Charter, the Committee shall solely
consist of non-executive members of the Board, with a total
number of members as each time determined in accordance with
Board resolution. One member shall be the HFSF Representative
at the Board of Directors. The Committee shall be composed of at
least three independent non-executive Board members
(excluding the HFSF Representative), including the Chair, as per
the definition of director independence included in NBG’s
Corporate Governance Code and in any case according to the
provisions of the legal and regulatory framework in force .
The Committee members (including its Chair and Vice-Chair) are
appointed by the Board of Directors upon recommendation of
the Corporate Governance and Nominations Committee. The
Committee members shall be selected on the basis of their
competence and experience and appointed for a one-year term
of office, which can be automatically renewed for successive one-
year renewal terms, unless otherwise decided.
In any case, the
mandates of the Committee members shall automatically expire
if they cease to be members of the NBG Board of Directors. The
Committee is currently composed of five non-executive
Members, of which four are independent and one is the HFSF
Representative at the Board of Directors. The Committee shall
meet at least three times per year, keeps minutes of its
proceedings and reports regularly to the Board of Directors.
The Committee is comprised of the following members:
Strategy and Transformation Committee
Chair
Wietze Reehoorn
Vice-Chair
Matthieu Kiss
Members
Claude Piret
Aikaterini Beritsi
Periklis Drougkas (HFSF representative)
Detailed information on the responsibilities, composition and modus operandi
of the Committee are included in the Committee’s charter (which was last
approved by the Board on 24 March 2022) posted on the Bank’s website, at
www.nbg.gr
(https://www.nbg.gr/en/group/esg/corporate
-
governance/boards
-
of
-
directors).
Main responsibilities
●
Approval and review of Bank’s and Group’s strategic
direction.
●
Review of all significant actions concerning corporate and
Group structure.
●
Oversight of Strategic and Corporate Transformation
Projects implementation.
●
Proposals on Bank and Group Business Plan and review of
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
154
its implementation.
●
Review and monitoring of the Bank and the Group Annual
Budget.
●
Review and monitoring of relevant policies and practices.
2022 Key workings of the Committee include among others
●
Extensive discussions on important strategic matters at
Board level as part of Annual Strategy Days, covering,
among others, organic Business Strategy, best practices on
ESG, practical aspects on data breach/cyber attack crisis.
●
Oversight/monitoring of the implementation of the Bank’s
Transformation Program Initiatives, review of the 2022-
2024 Transformation Masterplan.
●
Review of the 2022-2024 Business Plan (incl. stress
scenarios and highlights of: NPE plan and Capital plan) and
monitoring of its implementation.
●
Monitoring of the implementation of the 2022 Annual
Budget/Review of 2023 Annual Budget.
●
Review of Capital Planning Framework and 2022-2024
Capital Planning
●
Briefing/oversight of Real Estate Masterplan
●
Oversight of Bank’s Strategic Transactions.
Compliance, Ethics and Culture Committee
The Ethics and Culture Committee was established by Board
decision (meeting no. 1622/26.07.2018). In November 2020, the
Committee was renamed to Compliance, Ethics and Culture
Committee and its Charter was revised, aiming to strengthen the
holistic compliance supervision at Board level.
During 2022, the Compliance, Ethics and Culture Committee
convened eleven times.
In accordance with its existing Charter, the Committee shall be
composed of at least three Board members. One member shall
be the HFSF representative at the Board of Directors.
All
members of the Committee shall be non-executive Board
members
,
in their majority (including the Chair, excluding the
HFSF representative) independent non-executive members of the
Board, as per the definition of director independence included in
NBG’s Corporate Governance Code and in any case according to
the provisions of the legal and regulatory framework in force. The
Compliance, Ethics and Culture Committee Chair shall be an
Independent Non-Executive Director with deep knowledge in
Ethics and Compliance and good understanding of Social and
Environmental issues.
The members of the Committee (including
the Chair and Vice – Chair) shall be appointed by the Board of
Directors on the recommendation of the Corporate Governance
& Nominations Committee. The Committee is currently
composed of four non-executive Members, of which three are
independent and one is the HFSF Representative at the Board of
Directors. The Committee members shall be appointed for a term
of one year, which shall be automatically renewed for successive
one-year renewal terms, unless otherwise decided.
In any case,
the mandates of the Committee members shall automatically
expire if they cease to be members of the NBG Board. The
Committee convenes regularly,
keeps minutes of its proceedings
and reports regularly to the Board of Directors.
The Committee is comprised of the following members:
Compliance, Ethics and Culture Committee
Chair
Aikaterini Beritsi
Members
Elena Ana Cernat
Avraam Gounaris
Periklis Drougkas (HFSF representative)
Detailed information on the responsibilities, composition and modus operandi
of the Committee are included in the Committee’s charter (which was last
revised by the Board on 24 March 2022) posted on the Bank’s website, at
www.nbg.gr
(https://www.nbg.gr/en/group/esg/corporate
-
governance/boards
-
of
-
directors)
.
Main responsibilities
●
Monitor and assess the regulatory and compliance
environment.
●
Oversee compliance issues and the compliance function.
●
Promote the highest standards of ethics and integrity in
accordance with international best practices.
●
Oversee senior management’s initiatives on ethics and
culture.
●
Review the NBG Group Codes of Ethics.
●
Review the Code of Ethics for Financial Professionals.
●
Review the Policy on Politically Exposed Persons.
●
Have authority over cases of misconduct and any other
ethical issue.
●
Review the Bank’s Corporate Social Responsibility policies.
2022 Key workings of the Committee include among others
●
Monthly briefings and in-depth discussion on compliance
and regulatory framework developments.
●
Review of compliance reports (such as the Annual
Compliance Report and Plan), report and statistical data on
Complaints, and briefings on related parties’ transactions
and Connected Borrowers.
●
Briefings on Supervisory Priorities and Key Issues.
●
Review of new Compliance Risk Assessment Methodology.
●
Oversight of Compliance / AML Strategic Projects
(European Supervisory Authorities (“ESAs”) Project
implementation, New Financial Services Crime &
Compliance Management (“FCCM”) Roll – out
implementation and phase B).
●
Oversight of Ethical Conduct Framework and Bank
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
155
initiatives on raising awareness on misconduct behaviours
(e.g. Whistleblowing training program, Code of Ethics
Monitoring Program).
●
Monitoring of developments in the regulatory framework
and trends concerning ESG and Bank’s related initiatives.
●
Review and update of Compliance, Conduct, Data/Archive
and ESG Policies (e.g. Market Abuse/Personal Transactions
Policy, Physical Archive Management Policy, Personal Data
Management Policy, Data Governance Policy, Group
Outsourcing Policy, Suitability Policy on Insurance-based
Investment Products, Cost and Charges Policy, Financial
Instruments & Insurance Products Governance Policy).
●
Oversight of Dashboard for the ongoing review of Key
Compliance and Conduct Risk Indicators.
●
Oversight of Compliance Monitoring Program (e.g. review
of Compliance Testing Yearly Results), Compliance
Technology Evolution Initiatives, RegMiner Tool
Implementation Project.
●
Update on the Group’s outsourcing arrangements and their
compliance status.
●
Updates on Group Entities Key Compliance issues.
Innovation and Sustainability Committee
The Innovation and Sustainability Committee ("ISC") was
established by Board decision (meeting no. 1718/24.2.2022),
following the elevation of the IT & Innovation Advisory Council
(established by the Board in January 2021) to a Board Committee
and the enhancement of its duties.
During 2022, the Innovation and Sustainability Committee
convened two times.
In accordance with its existing Charter, the Committee
composition is as each time determined by the Board of Directors
upon proposal of the Corporate Governance and Nominations
Committee. One member shall be the HFSF Representative at the
Board of Directors. The members of the Committee (including its
Chair and Vice-Chair) are appointed by the Board of the Bank, on
the recommendation of the Corporate Governance &
Nominations Committee. The Committee Chair shall be
independent non-executive Board member, as per the definition
of director independence included in NBG’s Corporate
Governance Code and in any case according to the provisions of
the legal and regulatory framework in force. The Committee is
currently composed of five non-executive members, of which
four are
independent and one is the HFSF Representative at the
Board of Directors. The Committee members shall be appointed
for a term of one year, which shall be automatically renewed for
successive one-year renewal terms, unless otherwise decided. In
any case, the mandates of the Committee members shall
automatically expire if they cease to be members of the NBG
Board. The Committee may convene with an estimated quarterly
frequency and keeps minutes of its proceedings.
The Committee is comprised of the following members:
Innovation and Sustainability Committee
Chair
JP Rangaswami
Vice-Chair
Elena Ana Cernat
Members
Anne Marion-Bouchacourt
Athanasios Zarkalis
Periklis Drougkas (HFSF representative)
Detailed information on the responsibilities, composition and modus operandi
of the Committee are included in the Committee’s charter (which was
approved by the Board on February 2022) posted on the Bank’s website, at
www.nbg.gr (
https://www.nbg.gr/en/group/esg/corporate
-
governance/boards
-
of
-
directors).
Main responsibilities
●
Support the Board of Directors in ensuring there is
continuous monitoring and tracking of important
developments and long-term trends related to Innovation,
Sustainability, Information Technology, ESG and Banking.
●
Act as an out-of-the-box thinker, explorer and incubator of
innovative ideas and practices and advise the Board/its
Committees as may be deemed appropriate.
●
2022 Key workings of the Committee include among
others
●
Review of the Bank’s Digital Strategy and ESG Strategy, with
special focus in the area of sustainable energy financing,
transition to a sustainable economy/financed emissions and
role-modelling environmentally responsible practices.
●
Discussion/review of ESG issues such as rating agencies’
assessments on ESG, criteria based on which the Bank’s
targets are set for the businesses, communication of the
Bank’s ESG strategy to investors, etc.
●
Review of data/developments regarding the Bank’s ranking
on digital maturity.
●
Formulation of Proposals/arrangements for Board trainings,
including in the areas of ESG, Digital, Embedded finance.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
156
Attendance of each member of the Board of Directors and the Board
Committees’ meetings (times) in 2022 and their compensation
The table below sets out the attendance of each member of the Board of Directors and the Board Committees’ meetings in 2022, as
follows:
Name
Board
Audit
Committee
Board Risk
Committee
Human Resources
and
Remuneration
Committee
Corporate
Governance and
Nomination
Committee
Strategy &
Transformation
Committee
Compliance,
Ethics &
Culture
Committee
Innovation and
Sustainability
Committee
(1)
Chair (Non-Executive member)
Gikas Hardouvelis
19
-
-
-
-
-
-
-
Executive members
Paul Mylonas
19
-
-
-
-
-
-
-
Christina Theofilidi
19
-
-
-
-
-
-
-
Independent Non-Executive members
Aikaterini Beritsi
(2)
19
-
-
2
15
11
11
-
JP Rangaswami
(3)
17
16
-
9
-
2
3
2
Claude Piret
(4)
19
16
11
-
5
11
-
-
Avraam Gounaris
(5)
19
16
-
-
-
2
11
-
Wietze Reehoorn
(6)
16
2
10
-
15
10
-
-
Elena Ana Cernat
(7)
19
-
11
10
-
2
8
2
Anne Marion Bouchacourt
(8)
18
8
-
10
15
2
3
2
Matthieu Kiss
(9)
19
16
2
-
10
11
3
-
Athanasios Zarkalis
(10)
10
-
-
3
-
-
-
1
Non-Executive member/HFSF Representative
Periklis Drougkas
19
16
11
10
15
11
11
2
Notes:
(1)
by the Board in January 2021) to a Board Committee and the enhancement of its duties.
(2)
Resources and Remuneration Committee until 24 February 2022. Chair of the Compliance, Ethics and Culture Committee from 24 February 2022
(previously a Member of the Committee).
(3)
the Innovation and Sustainability Committee since Committee’s establishment.
(4)
(5)
2022 and Member of the Committee from then on.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
157
(6)
February 2022.
(7)
24 February 2022 Member of the Compliance, Ethics and Culture Committee since 24 February 2022.
(8)
Ethics and Culture Committee until 24 February 2022.
(9)
Governance and Nominations Committee since 24 February 2022. Member of the Board Risk Committee and of the Compliance, Ethics and Culture
Committee until 24 February 2022.
(10)
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
158
As a result of the relationship with the Bank, in 2022, the Chair, the Executive members and the Non-executive members of the Board of
Directors, received compensation (gross amounts), as follows:
Name
Board member
Remuneration
(in €)
Senior
Independent
Non-Executive
Director
Remuneration
(in €)
HFSF
Representative
Remuneration
(in €)
Committee Chair
Remuneration
(Regulated
Committees)
(in €)
Committee Chair
Remuneration
(Non -Regulated
Committees)
(in €)
Gross Annual
Remuneration for
Dependent
Employment
for year
(in €)
Chair (Non-Executive member)
Gikas Hardouvelis
-
-
-
-
-
257,142.75
Executive members
Pavlos Mylonas
-
-
-
-
-
361,607.09
Christina Theofilidi
-
-
-
-
-
281,249.80
Independent Non-Executive members
Aikaterini Beritsi
-
-
-
-
135,000.00
-
JP Rangaswami
-
-
-
-
133,102.23
-
Claude Piret
-
-
-
143,972.18
-
-
Avraam Gounaris
-
135,555.56
-
-
-
-
Wietze Reehoorn
-
-
-
150,750.00
-
-
Elena Ana Cernat
123,504.97
-
-
-
-
-
Anne Marion Bouchacourt
-
-
-
143,850.00
-
-
Matthieu Kiss
-
-
-
144,195.00
-
-
Athanasios Zarkalis
1
53,472.19
-
-
-
-
-
Non- Executive member/HFSF Representative
Periklis Drougkas
-
-
148,049.95
-
-
-
Notes:
1
Mr. Athanasios Zarkalis was elected as new Independent Non-Executive Member of the Board by the Annual General Meeting of Shareholders of the Bank of
28 July 2022.
In 2022, the above individuals did not receive any additional compensation (bonus).
It is further noted that, more detailed information on the remuneration granted to the members of the Board of Directors during 2022 will
be included in the fiscal year 2022 Directors’ Remuneration Report. The fiscal year 2021 Directors’ Remuneration Report had been published,
along with the other documents on the items of the agenda of the Annual General Meeting of 28 July 2022, within the deadline set by Greek
Law 4548/2018. The fiscal year 2022 Directors’ Remuneration Report will be published accordingly, along with the other documents
on the
items of the agenda of the Annual General Meeting of 2023.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
159
Management team
The table below presents the profiles of the Bank’s executive management (other than the Executive Members of the Board of Directors
and the Board of Directors and Board Committees Secretary - General Manager of Group Compliance and Corporate Governance,
described in Section D. Board of Directors and other management, administrative and supervisory Bodies above) that participate in the
Bank’s Senior Executive Committee and the Bank’s key Executive Committees as described below under section “Management,
administrative and supervisory bodies of the Bank-Executive Committees”:
Christos Christodoulou
General Manager
Group Chief Financial
Officer
Number of shares*: NIL
Member of the Senior Executive Committee, the ALCO, the Senior Credit Committee, the
Provisions and Write-Offs Committee and the ESG Management Committee
Christos Christodoulou was appointed Group Chief Financial Officer and a Member of the Executive
Committee of National Bank of Greece in July 2019.
Before rejoining NBG he was Chief Executive Officer and Executive member of the Board of Directors
of National Bank of Greece (Cyprus) Ltd, while before that he served as CFO of United Bulgaria Bank
A.D. (UBB, a former NBG Group subsidiary).
He also serves as a Non-Executive member at the Board of Directors of Stopanska Banka A.D., National
Bank of (Cyprus) Ltd (acting chairman) and Ethniki Insurance (Cyprus) Ltd.
Mr. Christodoulou holds a BSc Honors degree in Economics from the University College London and is
a Fellow Chartered Accountant (FCA) with the Institute of Chartered Accountants of England and
Wales (ICAEW).
Ioannis Vagionitis
General Manager
Group Risk
Management
(Chief Risk Officer)
Number of shares*: NIL
Member of the Senior Executive Committee, the Senior Credit Committee, the ALCO , the
Provisions and Write-Offs Committee and the ESG Management Committee
Ioannis Vagionitis was appointed General Manager of Group Risk Management (Chief Risk Officer) in
September 2017. Since April 2017 he was General Manager - Chief Credit Officer, and previously, in
July 2015, he was appointed Assistant General Manager - Chief Credit Officer.
He has served as a Board Member of Finansbank from January 2014 up to June 2016 and he was
member of the Risk Management Committee, the Audit Committee and the Credit Committee of
Finansbank.
From October 2010 up to November 2013 he was Head of Corporate Banking - Large Corporate
Division of NBG.
From May 2008 up to October 2010 he was Head of Credit Division and International Credit Division of
NBG Group, while from October 2006 up to May 2008 he was Head of Credit Division of National Bank
of Greece. Mr. Vagionitis joined NBG in 2004 under the Group Risk Management Division. He worked
for HSBC for over ten years (1992-2003). He also held executive level positions in the field of corporate
banking at the Bank of Cyprus (2003-2004).
Mr. Vagionitis holds a BSc and an MSc in Mechanical Engineering from the University of Manchester
Institute of Science & Technology (UMIST) and an MBA from Manchester Business School.
Vassilis Karamouzis
Member of the Senior Executive Committee, the Senior Credit Committee, the ALCO and the
ESG Management Committee
Vassilis Karamouzis was appointed General Manager of Corporate and Investment
Banking in February 2020. He joined NBG in September 2017, as Assistant General Manager of
Corporate and Investment Banking.
He worked for eight years (2009-2017) at HSBC in various managerial positions: he started at HSBC in
Greece as Head of Global Market Sales and Debt Capital Markets for Greece and Cyprus. Later on he
moved to HSBC in London, where he worked as Head of Structured Finance Origination for Southern
Europe and Capital Financing for Greece and Cyprus, and, finally, as Managing Director, Member of
EMEA Financing Management and Head of Investment Banking Greece and Cyprus.
He started his professional career in 2001 at Deutsche Bank in London, where he stayed until mid-
2009. Initially he worked in Hedge Fund Sales, while in the period 2006-2009 he held the position of
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
160
General Manager
Corporate and
Investment Banking
Number of shares*: NIL
Head of FX and Commodities Sales for Greece and Middle East.
Vassilis Karamouzis holds an MSc in Finance from Birkbeck College, University of London and a
bachelor degree of Economics from the University of Piraeus.
Ernestos Panayiotou
General Manager
Transformation,
Strategy & International
Activities
Number of shares*: 13
Member of the Senior Executive Committee, the ALCO and the ESG Management Committee
Ernestos Panayiotou was appointed General Manager of Transformation , Strategy and International
Activities in September 2020. He joined NBG in May 2019, as General Manager of Transformation and
Business Strategy.
Before rejoining NBG in 2019, he was Partner at McKinsey & Company, where he worked during the
periods 2001-2005 and 2012-2018. At McKinsey, he focused on serving financial institutions in Greece,
Cyprus, the USA and the Middle East on strategy, transformation and risk management topics. During
the period of 2006-2011, he worked for the NBG Group as strategy advisor.
He holds a Bachelor of Arts in Philosophy, Politics & Economics (First Class Honours) from the
University of Oxford and a Master in Public Administration & International Development from the
Kennedy School of Government, Harvard University.
Fotini Ioannou
General Manager
Legacy Portfolio &
Specialized Asset
Solutions
Number of shares*: NIL
Member of the Senior Executive Committee, the ALCO and participant in the Senior Credit
Committee in discussions on corporate special assets
Fotini Ioannou joined NBG as General Manager of the Legacy Portfolio & Specialized Asset Solutions,
in May 2019, having already served NBG in various positions within Strategy and Corporate Banking
during the period 2006-2017. She is the Chair of the NPL Committee of the Hellenic Bank Association.
Before rejoining NBG, she was Executive General Manager of Corporate & Investment Banking of
Piraeus Bank and member of the Executive Committee, Chairman of the Board of Director of Piraeus
Factoring and Vice Chairman of the Board of Director of Piraeus Leasing.
She holds a BA in Economics from the University of Cambridge and an MSc in Management Science &
Operational Research from the University of Warwick. Ms. Ioannou is a chartered accountant and a
member of the Institute of Chartered Accountants of England and Wales.
Vasileios Kavalos
General Manager
Group Treasury
and Financial Markets
Number of shares*: 1
Member of the Senior Executive Committee and the ALCO
Vasileios Kavalos was appointed General Manager - Group Treasury and Financial Markets in July
2019. In June 2015 he was appointed Assistant General Manager - Group Treasurer and Financial
Markets.
He joined NBG in 1981 and from 2011 up to 2015, he served as Corporate Treasurer with the main
task of securing liquidity and allocating it within the Group.
He holds a BSc in Business Administration from Deree College of American College of Greece and is a
certified Portfolio Manager by the Bank of Greece.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
161
Stratos Molyviatis
General Manager
Group Chief Operating
Officer
Number of shares*: NIL
Member of the Senior Executive Committee and the ESG Management Committee
Stratos Molyviatis was appointed General Manager of Group Chief Operating Officer (Group COO),
managing both IT and Operations, in October 2020. He joined NBG in August 2018, as Assistant
General Manager Group Chief Information Officer .
He started his professional career working for Andersen Consulting in 1998, and continued in its
successor Accenture, where he worked for 15 years. During this period, he was engaged in large core
banking implementations, strategic initiatives, system integration projects and M&As, in Greece,
Europe and Middle East. In 2011 he became the Financial Services lead for Accenture’s Greek Office.
In late 2012, he joined the global payments leader First Data as the CIO for its local office , in 2013 he
undertook Poland and the Baltic countries, whereas in 2015 he was promoted to VP Technology for
First Data Europe. In 2017, he became First Data CIO for Central, Eastern and South Eastern Europe.
He holds a BSc in Mathematics from the National University of Athens and an MSc in Informatics and
Cybernetics from the University of Reading in U.K.
Georgios Triantafillakis
Group General Manager
Group Legal Services
Number of shares*: 1,743
Member of the Senior Executive Committee with no voting rights
Georgios Triantafillakis was appointed General Manager of Legal Services in April 2017.
He joined NBG in 1998 and in June 2015 was appointed as Assistant General Manager of Group Legal
Services, responsible for the supervision and coordination of the activities of the Legal Services
Division and external lawyers providing services to the Bank.
Since 2017, he is President of the Legal Council of the Hellenic Bank Association (“HBA”) and since
2022 member of the HBA’s Executive Committee and President of the HBA’s Legal Steering
Committee. Since 1992 he is Attorney-at-law authorised to practice before the Supreme Court.
Georgios Triantafillakis is Professor of law at the Democritus University of Thrace (“DUTH”) and was
Professor at the National School of Judges. He was member of the Competition Commission for 10
years and member of legislative committees and legal science societies. He is the vice-president of the
scientific association of Greek Commercialists. He was President of the Greek Delegation to the
Working Group established by the European Council in Brussels to assess the Commission’s
Amendment Proposal of the European Insolvency Regulation.
He is a graduate of the University of Athens Law School (with honors) and holds a doctoral degree in
commercial law from the German University of Tübingen Law School.
Ioannis Kyriakopoulos
General Manager
Group Real Estate
Number of shares*: NIL
Member of the Extended Senior Executive Committee and the ESG Management Committee
Ioannis Kyriakopoulos was appointed General Manager of Group Real Estate in July 2019, while during
the period, September 2015 to July 2019, he held the position as Group Chief Financial Officer.
He joined NBG in 1977 and through the course of his career he served as Deputy General Manager of
International Activities from April 2011 to January 2012 and as Deputy Chief Financial Officer from
April 2009 until April 2011 while from August 2002 to April 2009, he was the Director of the Financial
and Management Accounting Division. During the period February 2012 to June 2015 he was the Chief
Financial and Operating Officer of the Hellenic Financial Stability Fund.
He holds a BSc in Mathematics and a BSc in Economics from the University of Athens and an MSc in
Statistics and Operational Research from Loughborough University in the United Kingdom.
Member of the Extended Senior Executive Committee and the ESG Management Committee
Evi Hatzioannou was appointed General Manager of Group Human Resources Officer at National Bank
of Greece in March 2020. She joined NBG in February 2019 as General Manager - Group Human
Resources Strategy & Development.
Before joining NBG, she worked from 2008 to 2019 for the Barilla Group holding various senior
positions in Human Resources Department: Human Resources Manager Greece, Human Resources
Senior Manager Eastern Europe, Human Resources Director Europe and Group Organization Director.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
162
Evi Hatzioannou
General Manager
Group Human
Resources
Number of shares*: NIL
During the period 2003 to 2008 she worked at Elais Unilever Hellas S.A., where from 2005 she
assumed the position of Human Resources Manager.
She is a graduate in Mechanical Engineering from the Aristotle University of Thessaloniki and holds a
MSc in Human Resources Management & Industrial Relations from the University of Manchester.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
163
Chara Dalekou
General Manager
Group Marketing
Number of shares*: NIL
Member of the Extended Senior Executive Committee and the ESG Management Committee
Chara Dalekou was appointed General Manager of Group Marketing in March 2019.
Ms Dalekou has 27 years of experience in commercial roles in Multinational and Greek companies. Her
career started when she joined the Fast-Moving Consumer Goods (FMCG) industry at Unilever in 1996
where she worked initially in sales and then in managerial positions in marketing. In 2004 she was
appointed Commercial Manager of Hellenic Entertainment Parks and in 2008 she joined Sony Ericsson,
where she was a head of Marketing initially for Greece and the Balkans and then for the wider
Southeast Mediterranean region. Her career continued at AEGEAN where she was heading Company’s
Marketing department for 8 years. During these years she also worked systematically for the
development of the Tourism as a member of the Board of Director’s of Marketing Greece and This is
Athens and Partners.
She is a member of the Women's Business Committee of the Hellenic American Chamber of
Commerce.
She holds a Bachelor’s degree in Business Administration from the Athens University of Economics and
Business and a Master’s degree in Marketing from the University of Stirling, Scotland. She
also holds a
Certificate in French Business and Economic Studies from the Commercial and Industrial Chamber of Paris.
Beate Randulf
Assistant General
Manager
Group Chief Control
Officer
Number of shares*: NIL
Member of the Extended Senior Executive Committee
Beate Randulf was appointed Assistant General Manager of Group Chief Control Officer in April 2019,
having already served the NBG Group as the NBG Group external auditor, during the period from
2007-2014.
Before joining the NBG Group, she was the Senior Director of the CFO Office of Piraeus Bank
(November 2017 to March 2019). She has 26 years of public audit practice with Deloitte Greece during
the period 1991-2017 and was an Equity Partner since 2006. During the period 2007 to 2014 she
served as the external audit partner of the NBG Group.
She is a Fellow Certified Charted Accountant (FCCA), a member of the Association of Chartered
Certified Accountants (ACCA) as well as a Greek CPA, she is also a Certified Internal Control Auditor
(CICA) and a member of the Institute of Internal Controls. Beate is Norwegian and holds a Bachelor's
Degree in Business Administration with a major in Accounting and Finance from Deree College of the
American College of Greece.
Kostas Adamopoulos
Assistant General
Manager
Strategic Transactions
Number of shares*: NIL
Member of the Extended Senior Executive Committee
Kostas Adamopoulos was appointed Assistant General Manager of Strategic Transactions in April
2019.
He joined NBG in 2000 and held various positions in Finance and Strategy until 2013. During the period
2013 – 2016, he was appointed as Assistant General Manager of Corporate Strategy & Business
Planning at Piraeus Bank and in 2017 CFO of Credicom Consumer Finance. Up to 2019, he was active in
the Greek NPL space advising NPL servicers and capital providers on NPE transactions.
He holds an MSc in Finance from Queen Mary & Westfield (University of London), a BSc in Economics
from University of Athens and he is a Chartered Financial Analyst (CFA) charterholder since 2004.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
164
Constantinos Vossikas
General Manager
Group Chief Credit
Officer
Number of shares*: 13
Member of the Senior Credit Committee
Constantinos Vossikas was appointed General Manager – Group Chief Credit Officer in May 2019.
He joined NBG in 2005 as a Credit Risk Manager for Group Risk Management and subsequently as a
Senior Credit Officer for Credit Division. Since 2010, he served as Director of NBG Group International
Credit and in 2013 he was appointed Assistant General Manager and Chief Credit Risk Officer. In July
2015 he was appointed Assistant General Manager of Corporate Special Assets and in April 2017, he
was appointed General Manager of Corporate Special Assets.
Before joining NBG, during the period from 1994 to 2005, he worked in the Corporate Banking
Departments of Midland Bank as a Credit Officer and Egnatia Bank, where he held the position of
Head of Corporate and Investment Banking. During the period from 1990 to 1994 he worked in the
audit departments of Moore Stephens and Arthur Andersen, participating in external and internal
audits for companies operating in various sectors of the Greek economy, valuations, feasibility studies,
etc.
Mr. Vossikas is a Certified Public Accountant, member of the Institute of Certified Public Accountants
in Ireland and holds a degree (B.Sc.) in Accounting and Finance from Deree College.
*Number of shares as at 31 December 2022.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
165
Management, administrative and supervisory bodies of the Bank-
Executive Committees
The following executive committees are included in the supervisory, management and administrative bodies of the Bank, being the key
executive committees which have, apart from strategic and executive duties, approval authority as well: 1) the Senior Executive Committee
and Extended Senior Executive Committee, 2) the Asset and Liability Committee (“ALCO”), 3) the Senior Credit Committee, 4) the Provisions
and Write-Offs Committee, 5) ESG Management Committee. The committees are composed of executive Board members, General
Managers and Assistant General Managers of the Bank.
Senior Executive Committee
The Senior Executive Committee was established in 2004 and operates via a specific Charter. It is the supreme executive body that supports
the Chief Executive Officer of the Bank in his duties. The Senior Executive Committee has strategic and executive powers in regard to the
more efficient operation of the Group and the monitoring of the execution of the Bank’s business plan, as well as approval authority that
cannot be delegated to other members of the Bank’s management or to other collective bodies of the Bank, while it exercises supervisory
powers on risk management in accordance with the decisions taken by the Board of Directors and the Board Risk Committee.
The Senior Executive Committee has the authority to decide on matters falling within the authority of the Compliance and Reputational
Risk Committee, whenever deemed necessary by the Chair or Deputy Chair of the Compliance and Reputational Risk Committee.
The Senior Executive Committee is comprised of the following members:
Chair
Pavlos Mylonas
CEO
Members
Christina Theofilidi
Executive Board Member & General Manager – Retail Banking
Vassilis Karamouzis
General Manager – Corporate and Investment Banking
Vasileios Kavalos
General Manager – Group Treasury and Financial Markets
Fotini Ioannou
General Manager – Legacy Portfolio & Specialized Asset Solutions
Ioannis Vagionitis
General Manager – Group Risk Management, Chief Risk Officer (“CRO”)
Christos Christodoulou
General Manager – Group Chief Financial Officer (“CFO”)
Stratos Molyviatis
General Manager – Chief Operations Officer (“COO”)
Ernestos Panayiotou
General Manager – Transformation, Strategy & International Activities
Members without
voting rights
Panos Dasmanoglou
General Manager – Group Compliance and Corporate Governance
Georgios Triantafillakis
General Manager – Group Legal Services
The Committee is convened by its Chair and meets regularly at least twice every calendar month and extraordinarily, whenever deemed
necessary by its Chair.
At the invitation of its Chair, it is possible for (Assistant) General Managers as well as other Bank executives to attend the meetings of
the Senior Executive Committee, the presence of which is deemed necessary.
An Extended Senior Executive Committee also operates which, additionally to the above members, is comprised of the following
members:
Members
Ioannis Kyriakopoulos
General Manager – Group Real Estate
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
166
Evi Hatzioannou
General Manager – Group Human Resources
Chara Dalekou
General Manager – Group Marketing
Beate Randulf
Assistant General Manager – Group Chief Control Officer
Kostas Adamopoulos
Assistant General Manager – Strategic Transactions
The Committee is convened by its Chair and meets regularly at least once every calendar month and extraordinarily, whenever deemed
necessary by its Chair.
The Committee members do not receive any remuneration for their participation in the Committee.
Asset and Liability Committee
ALCO was established in 1993
and operates via a specific Charter
. The Committee’s key purpose is to establish the Bank’s and its Group
financial sector entities’ strategy and policy as to matters relating to the structuring and management of assets and liabilities taking into
account the current regulatory framework and market conditions, as well as the risk limits set by the Bank.
The ALCO Committee is comprised of the following members:
Chair
Pavlos Mylonas
CEO
Deputy Chair and Member
Ioannis Vagionitis
General Manager – Group Risk Management, Chief Risk Officer (“CRO”)
Members
Christina Theofilidi
Executive Board Member & General Manager – Retail Banking
Christos Christodoulou
General Manager – Group Chief Financial Officer (“CFO”)
Vassilis Karamouzis
General Manager – Corporate and Investment Banking
Vasileios Kavalos
General Manager – Group Treasury and Financial Markets
Fotini Ioannou
General Manager – Legacy Portfolio & Specialized Asset Solutions
Ernestos Panayiotou
General Manager – Transformation, Strategy & International Activities
The Committee convenes regularly once a month or extraordinarily, at the invitation of its Chair.
At the invitation of its Chair, it is possible for other executives of the Bank and the Group to attend its meetings.
The Committee members do not receive any remuneration for their participation in the Committee.
Senior Credit Committee
The Senior Credit Committee was established in 2008,
operates via a specific Charter
operation of the risk taking limits.
The Senior Credit Committee is comprised of the following members:
Chair
Pavlos Mylonas
CEO
Members
Vassilis Karamouzis
General Manager – Corporate and Investment Banking
Ioannis Vagionitis
General Manager – Group Risk Management, Chief Risk Officer (“CRO”)
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
167
Constantinos Vossikas
General Manager – Chief Credit Officer
* In the case of meetings where issues regarding corporate special assets are discussed, Mrs Fotini Ioannou, General Manager - Legacy Portfolio & Specialized Asset
Solutions, participates in the Committee.
** In case of impediment or absence of the General Manager – Corporate and Investment Banking, the General Manager of Corporate SMEs and Shipping, Mr.
Georgios Koutsoudakis, shall participate in the Committee, while in case of impediment or absence of the General Manager - Legacy Portfolio & Specialized Asset
Solutions, the Assistant General Manager - Corporate Special Assets, Mr. Dimitris Papadopoulos shall participate in the Committee.
The Committee convenes regularly at least twice every calendar month and extraordinarily, whenever deemed necessary by its Chair.
The General Manager of Group Legal Services is invited and attends the meetings of the Committee.
The Chair can invite other executives of the Bank and Group to attend, if necessary.
The Committee members do not receive any remuneration for their participation in the Committee.
Provisions and Write Offs Committee
The Committee was established in 2010 and operates via a specific Charter. Its purpose is the decision making process on the provisions
and write offs of NBG Group claims of any nature, which are considered by the Committee to be liable of a loss in value in accordance with
the relevant “Provisions and Write Offs Policy” of the Group.
The Provisions and Write Offs Committee is comprised of the following members:
Chair
Pavlos Mylonas
CEO
Members
Christos Christodoulou
General Manager - Group Chief Financial Officer (“CFO”)
Ioannis Vagionitis
General Manager - Group Risk Management, Chief Risk Officer (“CRO”)
The Committee is convened at the invitation of its Chair.
The Chair can invite other executives of the Bank and Group to attend, if necessary.
The Committee members do not receive any remuneration for their participation in the Committee
.
ESG Management Committee
The Committee was established in 2021 and operates via a specific Charter. Its purpose is in the context of its strategic approach and
commitment to continuously promote sustainable development and responsible entrepreneurship, and aiming at effective management of
ESG, sustainability and sustainable financing issues, in line with regulatory requirements and taking into account best practices included in
international treaties and initiatives, the Bank established the ESG Management Committee to contribute to the governance of multiple
aspects of NBG’s ESG strategy and implementation.
The ESG Management Committee is comprised of the following members:
Chair
Pavlos Mylonas
CEO
Members
Christina Theofilidi
Executive Board Member & General Manager – Retail Banking
Panos Dasmanoglou
General Manager – Group Compliance and Corporate Governance
Ioannis Vagionitis
General Manager – Group Risk Management, Chief Risk Officer (“CRO”)
Vassilis Karamouzis
General Manager – Corporate and Investment Banking
Ernestos Panayiotou
General Manager – Transformation, Strategy & International Activities
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
168
Christos Christodoulou
General Manager – Group Chief Financial Officer (“CFO”)
Stratos Molyviatis
General Manager – Chief Operations Officer (“COO”)
Evi Hatzioannou
General Manager – Group Human Resources
Chara Dalekou
General Manager – Group Marketing
Ioannis Kyriakopoulos
General Manager – Group Real Estate
The Committee is convened by its Chair and meets regularly once every calendar month and extraordinarily, whenever deemed necessary
by its members.
At the invitation of its Chair, it is possible for (Assistant) General Managers as well as other Bank executives to attend the meetings of
the ESG
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
169
E.
Internal Control System and Risk
Management
Objectives of the Internal Control System
Aiming to safeguard the reputation and credibility of the Bank
and the Group towards its shareholders, customers, investors
and the supervisory and other independent authorities, the
Board of Directors provides for the continuous enhancement, at
Group level, of its
Internal Control System
(“ICS”)
.
The ICS is designed to ensure effective and efficient operations,
adequate identification, measurement and mitigation of risks
through adequately and efficiently designed and implemented
controls, prudent conduct of business, sound administrative and
accounting procedures, reliability of financial and non – financial
information reported or disclosed (both internally and externally)
and compliance with laws, regulations, supervisory requirements
and the NBG Group Internal Policies, Procedures and Regulations.
“Internal control” is a process effected by the Board of Directors,
Senior Management, Risk Management and other Control
Functions, as well as by the staff within the Organisation to
provide reasonable assurance regarding the achievement of
objectives relating to operations, reporting and compliance. The
Bank uses as a reference the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) 2013
Internal Control Integrated Framework and the ICS is based on
the five integrated, components of Internal Control under COSO:
Control Environment, Risk Assessment, Control Activities,
Information and Communication as well as Monitoring
Activities
. The Internal Control process aims to create the
necessary fundamentals for the entire Group to contribute to the
effectiveness and high quality of internal controls through, for
instance, clear definitions, assignments of roles and
responsibilities and methodologies, tools and procedures.
The ICS aims to achieve, among others, the following key
objectives:
●
Consistent implementation of the Group’s business
strategy through the efficient use of available resources;
●
Pursuit of a risk- based decision making;
●
Identification of the Group’s process universe;
●
Identification and management of all undertaken risks,
including operational risks;
●
Compliance with the local, European and international legal
and regulatory frameworks that governs the operations of
the Bank and the Group, including internal regulations, IT
systems and Code of Ethics;
●
Adequate and efficient design of controls as well as their
operating effectiveness;
●
Completeness, accuracy and reliability of data and
information that are necessary for the accurate, timely
preparation and true and fair view of the Bank and the
Group’s published financial information and financial
performance;
●
Adoption of international Corporate Governance best
practices; and
●
Prevention and detection and correction of any errors and
irregularities that may put at risk the reputation and the
credibility of the Bank and the Group towards its,
shareholders, customers, investo rs and the supervisory and
other independent authorities.
In the context of developing the business strategy and identifying
the main business risks, the
Board of Directors
, with the support
of its Committees, adopts appropriate policies, procedures and
regulations aiming to ensure an adequate and an effective ICS for
the Bank and the Group.
Management
●
the effective design and implementation of adequate and
efficient controls, as well as their operating effectiveness,
arising from adequate and efficient procedures, relevant to
the range, risks and nature of the activities undertaken by
the Bank and the Group,
●
identifying and assessing any ICS’s deficiencies and
●
undertaking the necessary corrective actions through the
establishment of the appropriate and timely action plans.
Specifically, the ICS and Risk Management related activities are
performed by the First and Second Line of Defence. The roles and
responsibilities with respect to Risk Management are divided into
Three Line of Defence, as follows:
●
First Line of Defence (“1loD”),
includes the Business and
Support Functions which are responsible for identifying,
assessing and managing the risks and compliance
obligations they undertake by designing and
implementing adequate and efficient controls as well as
by monitoring their operating effectiveness on a
continuous basis.
●
Second Line of Defence (“2loD”)
, includes the various Risk
and Control Functions that monitor the effectiveness of
risk management, the fulfilment of compliance obligations
and the adequate and efficient design of controls as well
as their operating effectiveness.
●
Third Line of Defence (“3loD”),
Internal Audit (“GIA”) which performs periodic
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
170
assessment, in order to evaluate the adequacy and
effectiveness of the Bank’s and the Group’s governance,
risk management and internal control processes, as these
are designed by the Board of Directors and Management.
The Group Chief Audit Executive reports GIA’s activities to
the Bank’s Board of Directors, through the Audit
Committee, regularly and on an ad-hoc basis.
Roles and responsibilities for the ICS
The Board of Directors and the Senior Management aims at the
continuous enhancement of the ICS in order to mitigate risks
through the establishment of adequate and efficient controls and
ensure their operating effectiveness. The Group Internal Control
Coordination Committee (“ICCC”) which comprises of the Group
Internal Audit and the various Risk and Control Functions assists
in the continuous enhancement of the ICS.
Internal Control Coordination Committee
The ICCC whose aim is to foster collaboration among the various
Risk and Control Functions has as key objectives:
-
the enhancement of synergies among the Group Internal
Audit and the Risk & Control Functions across the Three
Lines of Defence;
-
the adoption of a common methodology framework;
-
the monitoring and reporting of emerging risks;
-
the monitoring and reporting of the effectiveness of the
Internal Control System.
The ICCC is coordinated by the
General Manager of Group
Internal Audit
and its members are the
General Manager of
Group Risk Management (
Group Chief Risk Officer), the
General
Manager of Group
Compliance and Corporate Governance, the
General Manager of Group Legal Services,
the General Manager -
Group Chief Operating Officer, the Assistant General Manager -
Group Chief Control Officer, the Assistant General Manager of
Operations, the Assistant General Manager - Group Chief
Information Officer, the Group Chief Information Security Officer,
the Head of Group Operational Risk Division and the Head of
Regulatory Affairs & HFSF Relations Division.
The
groups supported its key initiatives to deal with the following
matters:
●
Enhancements and support to the roles of the SRCO and
URCO.
●
Update of the Operational Risk, Internal Control and
Compliance Glossary.
●
Design and implementation of the common GRC
Platform for the Bank and the Group.
●
Finalization of a charter for the cross-functional team
with members from all relevant functions responsible to
coordinate the activities regarding the maintenance and
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
171
use of the common GRC Platform.
●
Review of new or updated policies, methodologies and
frameworks of the Risk & Control Functions.
Segment Risk and Control Officers (“SRCO”) and Unit Risk and
Control Officers (“URCO”)
The Senior Management in its effort to further strengthen the ICS
established the roles of the SRCO and the URCO in January 2020.
●
The SRCO reports to the respective business line General
Manager (“GM”)/Assistant General Manager (“AGM”), is
independent from the respective Business Units and liaises
with second and third line of Defence Units with main
responsibility to coordinate efforts in order to ensure that
operational risks are appropriately identified and assessed,
the internal controls are appropriately designed and operate
effectively, as well as to assist in further enhancing the risk,
compliance and control awareness and culture.
●
The URCOs report to the Head of the Division or Independent
Sector to which they belong and cooperate on the
responsibilities set out above with the respective SRCO of the
respective business line.
Common Governance, Risk and Compliance (“GRC”) Platform
As part of the Board of Directors and Senior Management’s
efforts to further enhance the efficiency and the effectiveness in
operational risk management, compliance, internal control and
internal audit activities, the Bank has selected an integrated GRC
Platform to be used by the various Risk and Control Functions
(Operational Risk Management, Internal Control Function,
Compliance, Information Security, Model Validation, Regulatory
Affairs and HFSF Relations and Internal Audit). Following the
common GRC Platform implementation, the Bank will be able to
further enhance the management of its operational risks,
increase Board’s and Management’s oversight and use a
homogenized integrated reporting tool contributing to the
holistic view of the ICS of the Bank and the Group. The GRC
Platform’s implementation is planned to be performed in phases
due to its complexity and the number of the involved functions.
Each phase is supported and closely monitored by a Steering
Committee combining experts from all the above functions. The
Steering Committee has established a Project Management
Office to ensure the successful implementation. Phase 1, Model
Validation Module, was successfully implemented in December
2020. Phase 2, Group Operational Risk Management Module and
Phase 3, Group Internal Audit Module, were successfully
implemented in March 2022 and August 2022, respectively.
Phase 4 that includes the design and implementation of the
module that will be commonly used by the Group Compliance,
the Group Internal Control Function and the Group Information
Security is expected to be implemented by 4Q.23.
Group Internal Control Function
The Group ICF is mainly responsible for:
a)
Contributing to the establishment and enhancement
of a robust control culture and promoting control
awareness within the Bank and the Group.
b)
Developing and regularly reviewing and updating, if
required, the NBG Group Methodology for the Control
Identification & Assessment by the Group Internal
Control Function (NBG Group IC Methodology) based
on the mutually agreed by the members of the
Internal Control Coordination Committee (“ICCC”),
“Common Principles of Operational Risk and Control
Assessment” for the Bank and the Group regarding
roles, responsibilities, policies, procedures, flows of
information and systems required for the appropriate
design and the operating effectiveness of controls.
c)
Ongoing monitoring of the adequate and efficient
design of controls, their operating effectiveness, as
well as the monitoring of the progress of the pending
action plans for the remediation of control
deficiencies identified to ensure their timely and
appropriate execution.
d)
Providing training and support to the Bank’s Units and
the Segment Risk and Control Officers & Team s/Unit
Risk and Control Officers & Team s in the application
of the approved NBG Group IC Methodology as well
as providing specialized knowledge with respect to
the controls.
e)
Collaborating with the Group Companies and
supporting their work, in the application of the NBG
Group IC Methodology.
The Group Internal Control Function consists of:
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
172
Risk &
Control
Functions
Business
Functions
& Support
Functions
Group Internal Control Retail Banking, Branch Network
and Back Office Operations Sector;
Group Internal Control Corporate Banking, Finance and
Back Office Operations Sector;
Group Internal Control IT Sector; and
Group Internal Control Quality Assurance & Project
Management Sector.
During 2022, the Group Internal Control Function achieved the
following:
Successful execution of the Group ICF Annual Activity Plan
2022 in the context of which it:
●
facilitated the
adequate
and efficient controls for very high and high priority
processes as identified by the General Managers /
Assistant General Managers
of the
design effectiveness
the SRCOs;
●
monitored the
progress
Remediation Action
Plans
relating to
control deficiencies
●
reviewed and provided comments
to internal controls on
more than 70 Bank’s
institutional documents
etc.);
●
participated in workshops of critical projects
to provide consultation on matters relating to internal
controls
.
Roll out various training and forum initiatives to enhance
the control awareness and collaboration with SRCOs
.
Approval of the revised NBG Group IC Methodology.
For 2023-2024 the NBG Group Internal Control Function’s Activity
Plan will focus on the following:
Facilitation of the documentation of adequate and
efficient controls
assessment
design
effectiveness
in close collaboration with the SRCOs.
Implementation of the shared module in the GRC
Platform
Compliance, the Group Internal Control Function and
the Group Information Security.
Continue to
provide consulting and advisory services
on matters relating to
internal controls.
Roll out of various
training initiatives
enhance the control awareness.
Management of risks relating to the Internal
Controls over Financial Reporting process
The
Audit Committee
, in accordance with the Greek Law
4449/2017, Article 44 para. 3b, is responsible for the oversight of
the
Internal Controls over Financial Reporting
(“ICFR”)
and
reports any improvements to ensure its integrity to the Board of
Directors. Furthermore, the Audit Committee monitors the
progress of the corrective actions undertaken in the context of
ICS including ICFR.
Management
presentation of the Bank and Group financial statements in
accordance with the International Financial Reporting Standards
(“IFRS”) and for
such Internal Controls over Financial Reporting
as Management determines are necessary to enable the
preparation of these financial statements to be free from
material misstatement, whether due to fraud or error.
Roles and responsibilities are clearly defined in the NBG
Operating Model, where the identification of Financial
Reporting risks along with the implementation of processes
and controls to mitigate these risks lie with the
Business
Functions and Support Functions
Risk & Control
Functions
Reporting risks and the Internal Controls over Financial
Reporting process.
Group Internal Audit
The Internal Audit Function is an independent NBG Group wide
function, which assists the Group to achieve its strategic
objectives as well as enhance and protect the
organization’s
value, by providing risk-based and objective assurance, advice
and insight.
provides the Board of Directors and the Audit Committee with
independent assurance regarding the quality, adequacy and
effectiveness of corporate governance, risk management and
internal control frameworks and processes. The Group Chief
Audit Executive (“CAE”) reports, functionally, to the Audit
Committee and, administratively, to the CEO and has unrestricted
access to:
a) all systems, files, data, physical assets, organizational units of
the Bank and companies of the Group, officers and personnel of
the Bank and the Group and b) all policies, procedures, systems,
files, data and personnel of third parties (outsourcers), in the
ICS
Overseeing,
Monitoring &
Controlling
Identification of
Financial Reporting
risks and
implementation of
processes and
controls
Group
Internal Audit
Functions
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
173
context of an outsourcing contract with the Bank or a company of
the Group.
In addition, the CAE has direct and unrestricted access to the
Bank's Audit Committee and may attend the meetings of the
Audit Committees of the Group companies.
The CAE or senior executives of Group Internal Audit, authorized
by him, may attend as observers the meetings of the Committees
of the Board of Directors, the Executive Committee and other
Bodies of the Bank or its subsidiaries, either upon a relevant
invitation from the Chairman of the Body or upon a CAE’s request
submission to the Chairman of the Body, when deemed
necessary, in the context of the function of the Internal Audit.
Group Internal Audit, through a risk-based approach, covers all
entities and activities of NBG Group. It evaluates the risk
exposures relating to, among others, the:
●
achievement of the Group’s strategic objectives,
●
compliance with applicable regulatory framework and
supervisory requirements,
●
adherence to policies, procedures and contracts,
●
reliability of financial and operating information,
●
implementation of information systems and projects,
●
conduct of operational activities, and
●
safeguarding of assets.
Executive management is responsible for ensuring that issues
identified by Group Internal Audit are addressed within an
appropriate and agreed timeframe.
Group Internal Audit uses:
●
an audit methodology, which is in compliance with the
Committee of Sponsoring Organizations of the Treadway
Commission (“COSO 2013”) principles and the International
Internal Auditing Standards of the Institute of Internal
Auditors (“IIA”);
●
an information systems audit methodology that is based on
the Control Objectives for Information and Related
Technologies (“COBIT”) framework of the Information
Systems Audit and Control Association (“ISACA”);
●
a web-based software platform, which allows for the
effective management and documentation of the audit
activities and provides: (i) real time monitoring of the audit
function activities across all subsidiaries, (ii) information
and knowledge sharing among the Group’s internal
auditors and (iii) standardisation of the audit methodology.
Moreover, audit efficiency and effectiveness are ensured
through established key performance indicators and
internal quality assessments;
●
an artificial intelligence-based software that provides near
real time risk assessment in selected areas and automated
testing of selected automated controls. The same software
is used for the detection and prevention of internal fraud.
As of 31 December 2022, Group Internal Audit of the Bank
employed 74 internal auditors with in-depth knowledge and
experience in banking and audit, independent to the audited
activities and with no involvement in the design, selection,
implementation or operation of the Group’s internal controls.
Internal auditors continuously adapt to the use of new
technology and advance their skills and knowledge through
training and international professional certifications.
Each year, Group Internal Audit, based on a multi-factor risk
assessment process, prepares an annual audit plan, at Group
level, ensuring synergies and adequate audit coverage of the
business areas. Group Internal Audit, as part of its 2022 Audit
Plan, covered risks related to, among others, NPE management
strategy implementation, ICAAP & ILAAP processes and internal
risk models, impairment of financial assets, Early Warning
System, Retail and Corporate Lending, Resolution Plan, Debit-
Credit Cards, AML/CFT system (“FCCM”), outsourcing / third
parties, Recovery Plan, Global Transaction Services, Treasury and
Investment operations, IT System Development Life Cycle
(“SDLC”) and change management, cloud implementations,
climate risk stress test, compliance with PSD II and other
regulations / internal policies. Group Internal Audit also
performed branch network and subsidiaries’ audits, follow up of
open audit issues, anti-fraud and continuous auditing as well as
several consulting engagements. For 2023, the Audit Plan will
focus, among others, on the following areas:
NPE Management Strategy Implementation & Early Warning
System
Risk Appetite Framework
Capital and Liquidity Adequacy
Retail and Corporate Banking
Trade Finance Services
Compliance & AML / CFT
Outsourcing / Third Party Management (including ESG
aspects)
Taxation
Treasury
Legal Services
Network and Telecommunications
Digital Business and e-Banking
Enterprise Data Warehouse (EDW)
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
174
IT Governance
Cybersecurity
Anti-fraud and continuous auditing
Follow up of the open audit issues including issues identified
by the Joint Supervisory Team (“JST”).
The
use of
data analysis
technology is an on-going strategic
objective for Group Internal Audit. During 2022, Group Internal
Audit further enhanced its Continuous Auditing and Fraud
Detection software capabilities, by developing additional
scenarios, for both fraud and continuous auditing purposes,
across various product and business areas.
In August 2022, Group Internal Audit migrated its audit work to a
new more advanced Governance, Risk and
Compliance (“GRC”)
platform.
In 2022, Group Internal Control Coordination Committee
continued its mandate to improve the alignment and cooperation
between Internal Audit, Risk Management, Compliance and 1
st
line control functions.
As required by the IIA standards, an external quality assessment
was performed, within 2022, on the operation and activities of
the Group Internal Audit Function. The conclusion of the quality
assessment was that Group Internal Audit “Generally Conforms”
(highest possible IIA rating) to the International Standards for the
Professional Practice of Internal Auditing and was benchmarked,
among peer Banking Internal Audit Functions in Europe, as
exceeding the advanced level, with a score of 4.48/5, where 5
indicates the leading level.
This is the second consecutive assessment with high IIA Standards
and Benchmarking scores for the Group Internal Audit Function
since the previous assessment (2018) concluded with similar
results.
Risk Management Governance Framework
See section “
Risk Management
”.
Regulatory Compliance and Corporate Governance
Within the context of appropriately incorporating the applicable
Greek and EU legal and regulatory framework and best practices
into the Group’s operation, Group Compliance and Corporate
Governance Functions, oversee all compliance matters, in line
with the applicable Greek and EU regulatory framework and
supervisory authorities’ decisions, as well as all Corporate
Governance and Shareholder activities. In particular, the Group
Compliance and Corporate Governance Functions include distinct
Divisions, having competence over Corporate Governance,
Corporate Social Responsibility, Regulatory Compliance,
AML/CFT. It is noted that, the Group Compliance and Governance
Functions have been re-organized, focusing on enhanced
compliance monitoring initiatives and ESGs.
The Group Compliance and Corporate Governance Functions
continuously monitor developments in the applicable framework
and best practices, each in their field of responsibility, and
provide guidelines and support to the Bank Units and the Group
Entities, while they monitor implementation of the applicable
provisions.
In that context, Group Compliance and Corporate Governance
Functions in 2022, continued to focus on the establishment of an
adequate and effective compliance environment, in order to
safeguard the reputation and credibility of the Bank and the
Group against all stakeholders, including shareholders,
customers, Supervisory and other Authorities.
Moreover, the Group Compliance and Governance Functions,
throughout 2022, in the context of their traditional role as key
advisors and partners to the business continued to play a vital
role providing ongoing support and guidance, to the Bank's
governance bodies, the management and the Bank’s Units. In
order to comply with the regulatory framework in force, the Bank
has set up policies and procedures. The monitored areas include
among others Corporate Governance, AML/CFT, Tax and other
Public Authorities requests, Consumer Protection, Banking
secrecy, Personal Data Protection etc.
Given the particular emphasis which the Group places in ensuring
constant enhancement of corporate governance arrangements
and practices applied, during 2022, the Group Corporate
Governance Division has continued to monitor, on an ongoing
basis, all regulatory developments and best practices, and
proceeded with incorporating these in the corporate governance
policies, arrangements and practices (for further details see
section “
A. Corporate Governance Code
” and section “
B. NBG’s
Corporate Governance Key Policies and Practices
” above),
providing continuous support to the Board of Directors and Board
Committees in a number of initiatives such as in the reform of the
Board Working Model, the review of Board Committee
compositions, while it has also catered for the effective
adjustment of the Bank's Internal Governance Framework to the
new legal and regulatory framework provisions (e.g., revised ECB
Guide to Fit and Proper assessments, Bank of Greece Executive
Committee Act 205/1/18.05.2022, Greek Law 4941/2022
amending Greek Law 3864/2010). Moreover, in the context of
further enhancement of the Directors’ Induction and ongoing
training and development, Group Corporate Governance
Function, updated the introductory informative program for the
new Board member, covering, among others, issues concerning
the Bank’s Corporate Governance and organizational
arrangements.
The Group Corporate Governance Division also proceeded with
informing the Board Corporate Governance and Nominations
Committee on developments in the legal and regulatory
framework and latest trends and practices in corporate
governance, while it also briefed the competent Board
Committee on related parties’ transactions.
Board of Directors’ Report
for the year ended 31 December 2022
Key Highlights
Transformation
Program
Economic and
financial review
Risk management
Non-Financial
Statement
Corporate
Governance
Statement
175
Additionally, the Compliance and Corporate Governance
Functions also provided support, advice and guidance to the
Bank’s Units in the context of ensuring the alignment and
compliance of the Bank to the new regulatory framework and
proceeded to actions regarding changes in policies and
procedures, as well as, compliance with EU and national
legislation. Furthermore, the Compliance and the Corporate
Governance Functions continued to support the Bank's transition
to a new era and its further development in line with evolution of
the banking sector, new trends and customer habits, in ensuring
that the appropriate compliance control mechanisms are in place
to protect the Bank and safegu ard its operation in adherence to
high standards of conduct and compliance, whilst at the same
time protecting at all times the interests of stakeholders and
contributing to the Bank's effective correspondence to
stakeholder needs and priority areas. Within this context, the
Compliance and the Corporate Governance Functions continued
to help all business lines embed compliance vision, strategy, and
principles into the Bank's culture and day-to-day operation and
activities by strengthening their accountability as risk owners and
grasping good compliance as a business enabler. Finally, the
Compliance and Corporate Governance Functions continued to
systematically follow and monitor developments and compliance
in accordance with the applicable framework, handled,
participated and contributed to the successful implementation in
a number of major projects of the Bank, such as projects
regarding the digitalization/automation of Bank's operations and
the provision of products and services, provided continuous
support and advice to the competent Units regarding customers'
service, and personnel remote working to ensure and maintain
Business Continuity, while in parallel also being involved in the
submission of a series of regular and ad hoc reports to
supervisory Authorities and constituting the point of contact and
liaison between the Authorities and the Bank.
Non-audit related fees in 2022
The fees of the independent auditor PwC for non-audit related
fees in 2022 amounted to €0.4 million for the Group and €0.3
million for the Bank, with no impact on the auditor’s objectivity
and independence. For the monitoring of the auditors fees, see
“
Board of Director’s Committees – Audit Committee – Main
responsibilities
”.
Information provided pursuant to Directive 2004/25/EU of the European
Parliament and Council
The information of Directive 2004/25/EU of the European Parliament and Council, required pursuant Article 152 of Greek Law 4548/2018
on Sociétés Anonymes are included to the Supplementary Report to the Annual General Meeting of Shareholders, which is a separate
section of this Annual Financial Report.
Athens, 13 March 2023
THE CHAIRMAN OF THE BOARD OF DIRECTORS
THE CHIEF EXECUTIVE OFFICER
GIKAS A. HARDOUVELIS
PAVLOS K. MYLONAS
Board of Directors’ Report
for the year ended 31 December 2022
176
Important Information
ESMA Alternative Performance Measures (“APMs”), definition of financial data and ratios used
The Board of Directors’ report contains financial information and measures as derived from the Group and the Bank’s financial
statements for the year ended 31 December 2022 and 2021, which have been prepared in accordance with International Financial
Reporting Standards (“IFRS”), as endorsed by the EU. Additionally, it contains financial data which is compiled as a normal part of our
financial reporting and management information systems. For instance, financial items are categorized as foreign or domestic on the
basis of the jurisdiction of organization of the individual Group entity whose separate financial statements record such items.
Moreover, it contains references to certain measures which are not defined under IFRS, including “pre-provision income” (“PPI”), “net
interest margin” and others, as defined below. These measures are non-IFRS financial measures. A non-IFRS financial measure is a
measure that measures historical or future financial performance, financial position or cash flows but which excludes or includes
amounts that would not be so adjusted in the most comparable IFRS measure. The Group believes that the non-IFRS financial measures
it presents allow a more meaningful analysis of the Group’s financial condition and results of operations. However, the non-IFRS
financial measures presented are not a substitute for IFRS measures.
Name
Abbreviation
Definition
Adjusted Profit before Tax
PBT
Profit before tax, excluding the gain from the sale of 51.00% of NBG Pay S.M.S.A., the
additional social security contribution for LEPETE to e-EFKA, restructuring cost and
other one-off costs. More specifically, for the year ended 31 December 2022, net other
income excludes the gain from the sale of 51.00% of NBG
PAY
S.M.S.A. of €297 million.
Furthermore, operating expenses exclude personnel expenses of €35 million related to
defined contributions to LEPETE, VES cost of €59 million, restructuring cost of €8
million and other one-off costs of €78 million. For the year ended 31 December 2021,
operating expenses exclude personnel expenses of €35 million related to defined
contributions for LEPETE to e-EFKA, VES cost of €83 million, restructuring cost of €28
million, one-off ECL release of €0.2 billion relating to Project “Frontier” closing and
other one-off costs of €103 million.
Adjusted profit for the period
(PAT) from continuing
operations
Adjusted
PAT
Profit for the period from continuing operations, excluding the gain from the sale of
51.00% of NBG Pay S.M.S.A., the additional social security contribution for LEPETE to e-
EFKA, restructuring cost and other one-off costs. More specifically, for the year ended
31 December 2022, net other income excludes the gain from the sale of 51.00% of
NBG
PAY
S.M.S.A. of €297 million. Furthermore, operating expenses exclude personnel
expenses of €35 million related to defined contributions to LEPETE, VES cost of €59
million, restructuring cost of €8 million and other one-off costs of €184 million. For the
year ended 31 December 2021, operating expenses exclude personnel expenses of €35
million related to defined contributions for LEPETE to e-EFKA, VES cost of €83 million,
restructuring cost of €28 million, one-off ECL release of €0.2 billion relating to Project
“Frontier” closing and other one-off costs of €103 million.
Balance Sheet
Statement of Financial Position
Common Equity Tier 1 ratio
CET1
CET1 capital including the period
PAT,
as defined by Regulation No 575/2013, with the
application of the regulatory transitional arrangements for IFRS 9 impact over RWAs.
CET1 ratio fully loaded
CET1FL
CET1 capital including the period
PAT,
as defined by Regulation No 575/2013, without
the application of the regulatory transitional arrangements for IFRS 9 impact over
RWAs.
Core Income
Net Interest Income (“NII”) + Net fee and commission income.
Core Operating Profit / (Loss)
Core income less operating expenses and loan impairments.
Core Pre-Provision Income
Core PPI
Core Income less operating expenses.
Core return on Tangible Equity
Core RoTE
Core Operating Profit / (Loss) for the period/ year + Taxes, over average tangible equity
Cost of Risk
CoR
Loan impairments of the period/year over average loans and advances to customers,
excluding the short term reverse repo facility of €3.2 billion as at 31 December 2022.
Cost-to-Core Income ratio
C:CI
Operating expenses over core income.
Cost-to-Income ratio
Operating expenses over total income.
Deposits
Due to customers.
Depreciation
Depreciation and amortisation on investment property, property & equipment and
software & other intangible assets
Board of Directors’ Report
for the year ended 31 December 2022
177
Name
Abbreviation
Definition
Disbursements of loans
Loan disbursements for the period/year, not considering rollover of working capital
repaid and increase of unused credit limits.
Domestic banking activities
Refers to banking business in Greece and includes retail, corporate and investment
banking. Group’s domestic operations includes operations of the Bank in Greece,
Ethniki Leasing S.A (Ethniki Leasing) and Ethniki Factors S.A. (Ethniki Factors).
Funding cost
The weighted average cost of deposits, ECB refinancing, repo transactions, covered
bonds and securitization transactions.
Gross loans
Loans and advances to customers at amortised cost before Expected Credit Loss
(“ECL”) allowance and loans and advances to customers mandatorily measured at
FVTPL.
Interest earning assets
Interest earning assets include all assets with interest earning potentials and includes
cash and balances with central banks, due from banks, financial assets at fair value
through profit or loss (excluding Equity securities and mutual funds units), loans and
advances to customers and investment securities (excluding equity securities and
mutual funds units).
Liquidity Coverage Ratio
LCR
The LCR refers to the liquidity buffer of High Quality Liquid Assets (“HQLAs”) that a
Financial Institution holds, in order to withstand net liquidity outflows over a 30
calendar-day stressed period as per Regulation (EU) 2015/61.
Loan Impairments
Impairment charge for ECL, excluding for 2021 the positive impact of €0.2 billion from
Project “Frontier”.
Loans-to-Deposits Ratio
Loans and advances to customers over due to customers, at period/year end,
excluding the short term reverse repo facility of €3.2 billion as at 31 December 2022.
Net Fees & Commissions / Fees
/ Net Fees
Net fee and commission income.
Net Interest Margin
NIM
Net interest income over average interest earning assets. Net Interest Margin equals
net interest income divided by the average of interest earning assets (the average of
interest earning assets at the end of the current period/year and the end of the
previous period/year and all quarter ends in between (5 periods) for the period/year
end).
Net Stable Funding Ratio
NSFR
The NSFR refers to the portion of liabilities and capital expected to be sustainable over
the time horizon considered by the NSFR over the amount of stable funding that must
be allocated to the various assets, based on their liquidity characteristics and residual
maturities.
Net trading income/ (loss), Net
other income/ (loss) and Share
of profit / (loss) of equity
method investments
Net trading income / (loss) and results from investment securities (“trading
income/(loss)”) + Gains / (losses) arising from the derecognition of financial assets
measured at amortised cost + Net other income / (expense) (“other income /
(expense)”) + Share of profit / (loss) of equity method investments, excluding the gain
from the sale of 51.00% of NBG Pay S.M.S.A. More specifically, for the year ended 31
December 2022, net other income excludes the gain from the sale of 51.00% of NBG
PAY
S.M.S.A. of €297 million.
Non-Performing Exposures
NPEs
Non-performing exposures are defined according to EBA ITS technical standards on
Forbearance and Non-Performing Exposures as exposures that satisfy either or both of
the following criteria:
a.
Material exposures which are more than 90 days past due.
b.
The debtor is assessed as unlikely to pay its credit obligations in full without
realization of collateral, regardless of the existence of any past due amount or of
the number of days past due.
Non-Performing Loans NPLs
NPLs
Loans and advances to customers at amortised cost that are in arrears for 90 days or
more.
NPE Coverage Ratio
ECL allowance for loans and advances to customers at amortised cost divided by NPEs,
excluding loans and advances to customers mandatorily measured at FVTPL, at
period/year end.
NPE formation
Net increase / (decrease) of NPEs, before write-offs.
NPE Organic Formation
NPE balance change, excluding sales and write-offs
NPE ratio
NPEs divided by loans and advances to customers at amortised cost before ECL
allowance and loans and advances to customers at FVTPL at the end of the
period/year, excluding the short term reverse repo facility of €3.2 billion as at 31
December 2022.
Operating Expenses
Personnel expenses + General, administrative and other operating expenses (“G&As”)
+ Depreciation and amortisation on investment property, property & equipment and
software and other intangible assets, excluding the additional social security
contribution for LEPETE to e-EFKA and other one-off costs. More specifically, for the
year ended 31 December 2022, operating expenses exclude personnel expenses of €35
Board of Directors’ Report
for the year ended 31 December 2022
178
Name
Abbreviation
Definition
million related to defined contributions to LEPETE and other one-off costs of €15
million. For the year ended 31 December 2021, operating expenses exclude personnel
expenses of €35 million related to defined contributions for LEPETE to e-EFKA and
other one off-costs of €97 million.
Operating Profit / (Loss)
Total income less operating expenses and loan impairments.
Other impairments
Impairment charge for securities and Other provisions and impairment charges
Pre-Provision Income
PPI
Total income less operating expenses, before loan impairments.
Risk Adjusted NIM
NIM minus CoR
Risk Weighted Assets
RWAs
Assets and off-balance-sheet exposures, weighted according to risk factors based on
Regulation (EU) No 575/2013.
Staff Costs/ Personnel expenses
Personnel expenses excluding the additional social security contribution for LEPETE to
e-EFKA and one-off costs. More specifically, for the year ended 31 December 2022,
personnel expenses exclude defined contributions to LEPETE of €35 million and other
one-off costs of €7 million. More specifically, for the year ended 31 December 2021,
operating expenses exclude personnel expenses of €35 million related to defined
contributions to LEPETE and other one-off costs of €76 million.
Tangible Equity / Book Value
Equity attributable to NBG shareholders less goodwill, software and other intangible
assets.
Taxes
Refers to tax benefit / (expense) excluding one-off taxes of amount €106 million.
Total Capital Ratio
Total capital as defined by Regulation No 575/2013, with the application of the
regulatory transitional arrangements for IFRS 9 impact over RWAs.
Total Income
Refers to Net interest income, Net fee and commission income, Net trading income /
(loss) and results from investment securities, Gains / (losses) arising from the
derecognition of financial assets measured at amortised cost, Net other income /
(expense) and Share of profit / (loss) of equity method investments, excluding the gain
from the sale of 51.00% of NBG Pay S.M.S.A. More specifically, for the year ended 31
December 2022, net other income excludes the gain from the sale of 51.00% of NBG
PAY
S.M.S.A. of €297 million.
Disclaimer
The information, statements and opinions set out in the Board of Director’s Report (the “Board of Director’s Report”) have been provided
by National Bank of Greece S.A. (the “Bank”) (together with its consolidated subsidiaries (the “Group”)). They serve informational only
purposes and should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing
or selling securities or other financial products or instruments and do not take into account particular investment objectives, financial
situation or needs. It is not a research report, a trade confirmation or an offer or solicitation of an offer to buy/sell any financial
instruments.
Accuracy of Information and Limitation of Liability
Whilst reasonable care has been taken to ensure that its contents are true and accurate, no representations or warranties, express or
implied are given in, or in respect of the accuracy or completeness of any information included in the Board of Director’s Report. To the
fullest extent permitted by law in no circumstances will the Bank, or any of its respective subsidiaries, shareholders, affiliates,
representatives, directors, officers, employees, advisers or agents be responsible or liable for any direct, indirect or consequential loss or
loss of profit arising from the use of the Board of Director’s Report, its contents (including the internal economic models), its omissions,
reliance on the information contained within it, or on opinions communicated in relation thereto or otherwise arising in connection
therewith.
Recipients of the Board of Director’s Report are not to construe its contents, or any prior or subsequent communications from or with the
Bank or its representatives as financial, investment, legal, tax, business or other professional advice. In addition, the Board of Director’s
Report does not purport to be all-inclusive or to contain all of the information that may be required to make a full analysis of the Bank.
Recipients of the Board of Director’s Report should consult with their own advisers and should each make their own evaluation of the Bank
and of the relevance and adequacy of the information.
The Board of Director’s Report includes certain non-IFRS financial measures. These measures are presented in this section under “
ESMA
Alternative Performance Measures (APMs), definition of financial data and ratios used
”. Section herein may not be comparable to those of
other credit institutions. Reference to these non-IFRS financial measures should be considered in addition to IFRS financial measures but
should not be considered a substitute for results that are presented in accordance with IFRS.
Due to rounding, numbers presented throughout the Board of Director’s Report may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
Forward-Looking Statements
The Board of Director’s Report contains forward-looking statements relating to management’s intent, belief or current expectations with
respect to, inter alia, the Bank’s businesses and operations, market conditions, results of operation and financial condition, capital
adequacy, risk management practices, liquidity, prospects, growth and strategies (“Forward Looking Statements”). Forward Looking
Board of Directors’ Report
for the year ended 31 December 2022
179
Statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words
“may”, “will”, “believes”, “expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”,
“would”, “could” or similar expressions or the negative thereof. Forward Looking Statements reflect knowledge and information available
at the date of the Board of Director’s Report and are subject to inherent uncertainties and qualifications and are based on numerous
assumptions, in each case whether or not identified in the Board of Director’s Report. Although Forward Looking statements contained in
the Board of Director’s Report are based upon what management of the Bank believes are reasonable assumptions, because these
assumptions are inherently subject to significant uncertainties and contingencies, including risks related to increased geopolitical tensions,
that are difficult or impossible to predict and are beyond the Bank’s control, no assurance can be provided that the Bank will achieve or
accomplish these expectations, beliefs or projections. COVID-19 developments, along with the current geopolitical situation and its
economic impact remains highly uncertain. Therefore, this outbreak constitutes another factor that could cause actual results to differ
materially from the ones included in the Forward-Looking Statements. Forward -Looking Statements are provided for illustrative purposes
only and are not intended to serve as, and must not be relied on as, a guarantee, an assurance, a prediction or a definitive statement of
fact or probability. The Bank’s actual results may differ materially from those discussed in the Forward-Looking Statements. Some
important factors that could cause actual results to differ materially from those in any Forward Looking Statements could include, inter
alia, changes in domestic and foreign business, market, financial, political and legal conditions including changing industry regulation,
adverse decisions by domestic or international regulatory and supervisory authorities, the impact of market size reduction, the ability to
maintain credit ratings, capital resources and capital expenditures, adverse litigation and dispute outcomes, impact of COVID-19 and the
effect of such outcomes on the Group’s financial condition. There can be no assurance that any particular Forward-Looking Statement will
be realized, and the Bank expressly disclaims any obligation or undertaking to release any updates or revisions to any Forward-Looking
Statement to reflect any change in the Bank’s expectations with regard thereto or any changes in events, conditions or circumstances on
which any Forward-Looking Statement is based. Accordingly, the reader is cautioned not to place undue reliance on Forward-Looking
Statements.
No Updates
Unless otherwise specified all information in the Board of Director’s Report is as of the date of the Board of Director’s Report. Neither the
delivery of the Board of Director’s Report nor any other communication with its recipients shall, under any circumstances, create any
implication that there has been no change in the Bank’s affairs since such date. Except as otherwise noted herein, the Bank does not intend
to, nor will it assume any obligation to, update the Board of Director’s Report or any of the information included herein. The Board of
Director’s Report is subject to Greek law, and any dispute arising in respect of the Board of Director’s Report is subject to the exclusive
jurisdiction of the Courts of Athens.
Board of Directors’ Report
for the year ended 31 December 2022
180
181
Supplementary Report
Supplementary Report
for the year ended 31 December 2022
182
Supplementary Report of
the Board of Directors
To
the Annual General Meeting of Shareholders of National
Bank of Greece pursuant to article 4 of Greek Law 3556/2007
Greek Law 4941/2022 on the reform of the
institutional framework of the HFSF
Other information
A)
Share capital structure
B)
Restrictions on transfers of the Bank’s shares
C)
Significant direct and indirect holdings as per
Greek Law 3556/2007
D) Shares with special control rights
Ε) Restrictions to voting rights
F) NBG Shareholders’ agreements
G) Rules regarding the appointment and
replacement of Board of Directors members and
amendments to Articles of Association
Η) Board of Directors’ authority for the issue of
new shares or the purchase of own shares
I) Significant agreements that come into effect,
are modified or terminated in the event of a
change in control following a public offering
J) Agreements with Board of Directors members
or officers of the Bank
Pursuant to article 4 of
Greek Law 3556/2007,
listed companies must
submit a Supplementary
Report to the Annual
General Meeting of
Shareholders providing
detailed information on
specific issues. This Board
of Directors’
supplementary report to
the Annual General
Meeting of Shareholders
contains all the required
additional information.
Supplementary Report
for the year ended 31 December 2022
183
Greek Law 4941/2022 on the reform of
the institutional framework of the HFSF
On 16 June 2022, Greek Law 4941/2022 on the reform of the
institutional framework of the HFSF was published, significantly
amending the provisions of Greek Law 3864/2010.
Among others, the following significant amendments were
introduced:
●
Extension of the duration of the HFSF
:
HFSF is prolonged to 2025 extended from 2022, in order for
the HFSF to serve its revised purpose as per the new
framework, while the possibility of extending the duration of
the HFSF is no longer foreseen.
●
Amendments to special rights of the HFSF, i.e
.:
i)
Certain HFSF powers relating to governance aspects of
credit institutions have been removed, including the
power to evaluate the corporate governance
arrangements, which also extends to the evaluation of
individual members of the Board of Directors and the
Board Committees, and the power to develop criteria for
the evaluation of the above elements, including the
power to make specific recommendations for changes in
the corporate governance of a credit institution. In that
context, most of the “eligibility criteria” foreseen for
Board members have been eliminated, while the Law
further specifies that the criteria set out by the HFSF shall
be complementary to the criteria for the Board of
Directors provided by Greek Laws 4548/2018, 4261/2014,
and, where applicable, Greek Law 4706/2020 (A' 136),
and shall not contradict them.
ii)
The following special rights of the HFSF are no longer
foreseen:
- to call the General Assembly;
- to approve the Chief Financial Officer; and
- to veto any decision of the Board where the decision in
question could seriously compromise the interests of
depositors, or impair the credit institution’s liquidity or
solvency or its overall sound and smooth operation
(e.g., business strategy, asset/liability management,
etc.).
iii)
Significant amendments to veto rights and
remuneration restrictions are foreseen:
- the veto right on the distribution of dividends and the
benefits and bonus policy concerning Board members
and Senior Management shall apply only to specific
credit institutions that fall within the scope of the
provision (i.e., to those whose ratio of NPLs to total
loans exceeds 10%);
- the remuneration cap for Board members and Senior
Management (i.e., to the remuneration of the Governor
of the Bank of Greece) shall apply for as long as the
ratio of NPLs to total
loans exceeds 10% or
for the
financial years referring up to 2022, while it is also
clarified that it concerns fixed remuneration, while
variable remuneration of such persons is abolished until
the completion of the institution’s restructuring plan
32
or for as long as the ratio of NPLs to total loans exceeds
10% or for the financial years referring up to 2022.
Similarly, for the period of participation of the credit
institution in the capital increase program, variable
remuneration may be granted only in the form of
shares or stock options or other instruments within the
meaning of Articles 52 or 63 of the Regulation (EU)
575/2013, according to Article 86 of Greek Law
4261/2014.
iv)
HFSF’s free access to credit institutions books and records
is restricted only to information needed for the purpose
of subsection (b) of para.1 of Article 2 of Greek Law
3864/2010, i.e., for the purpose of the divestment of the
HFSF’s holding in the credit institution.
It is also clarified that special rights of Greek Law
3864/2010 are in addition to the rights granted to the
HFSF under the provisions of general company law (Law
4548/2018, A' 104 and any other relevant provision).
●
Voting rights of shares held by the HFSF:
HFSF’s voting rights is extended so as to refer to the shares
held by the HFSF in any way (i.e., not only those subscribed to
in the context of a capital support). Consequently, the
limitations to the exercise of voting rights in particular cases
of shares are no longer applicable. Therefore, such shares
shall be taken into account for the purposes of calculating the
quorum and majority in the General Assembly and shall have
full voting rights on all items on the agenda (i.e., not just in
the case of the particular matters).
●
Divestment process:
participation in credit institutions is elevated to a second
main objective of the HFSF. A specific process is foreseen for
said disposal, which shall take place in accordance with a
reasoned divestiture strategy meeting at least the principles
set out in the Law, and which is closely monitored (e.g.,
through regular status reports).
Other information
A) Share capital structure
Following the resolution of the Bank’s Annual General Meeting of
26 July 2018, the Bank’s share capital amounted to
€2,744,145,459, divided into 914,715,153 common shares of a
nominal value of €3.00 each.
By resolution of the Bank’s Annual General Meeting of 30 July
2021, it was decided to reduce the Bank’s share capital by
€1,829,430,306 through reduction of the nominal value of each
common registered share from €3.00 to €1.00, for the purpose of
setting off equal cumulative accounting losses of previous years
in the context of launching a Stock Options Program in
accordance with Article 113(4) of Greek Law 4548/2018,
described in detail in Section H below
(“H. Board of Directors’
authority for the issue of new shares or the purchase of own
32
agreed between the Hellenic Republic and the Directorate General for the
Competition of the European Commission, because of the State Aid
received by the Bank during the recapitalizations which took place in
2013 and 2015.
Supplementary Report
for the year ended 31 December 2022
184
shares” – “Stock options
”). As a result, the Bank’s share capital
stand at €914,715,153.00 divided into 914,715,153 common
shares of a nominal value of €1.00 each.
Following the above resolution and the receipt of the required
approvals by competent authorities, on 18 November 2021, the
Bank announced the aforementioned share capital decrease by
reduction of the nominal value of its share, determining 22
November 2021, as the date of change of the nominal value of
the Bank’s share to €1.00.
Further to the above, the Bank’s share capital on 31 December
2022 amounted to €914,715,153.00 and is divided into
914,715,153 common shares of a nominal value of €1.00 each.
The Bank’s shares are listed for trading on the Athens Exchange
(“ATHEX”).
The rights of the shareholders of the Bank, arising from each
share, are proportional to the percentage of the share capital to
which they correspond. Each share carries the rights stipulated by
law and the Articles of Association. In particular, the following
rights arise out of the 914,715,153 ordinary shares
(corresponding to an amount of €914,715,153 or 100% of the
Bank’s total share capital) of which 369,468,775 owned by HFSF
(corresponding to an amount of €369,468,775 or 40.39% of the
Bank’s total share capital):
●
The right to participate in and vote at the General Meeting of
Shareholders.
●
The right to a statutory minimum dividend from the Bank’s
profit for the year ended, which amounts to 35% of the
distributable profits, following deduction of the amounts
specified in the applicable legal framework. The distribution
of a supplementary dividend is subject to General Meeting
resolution. Shareholders entitled to a dividend are those
whose names appear in the Register of the Bank’s
Shareholders on the date the dividend beneficiaries are
determined, and a dividend on each share owned by them is
paid within two (2) months of the date of the General
Meeting of Shareholders that approved the Annual Financial
Statements of the Group and the Bank, as incorporated in the
Annual Financial Report. The dividend payment method and
place are announced as prescribed by the applicable
framework. After the lapse of five years from the end of the
year in which the General Meeting approved the dividend,
the right to collect the dividend expires and the
corresponding amount is forfeited in favour of the Greek
state. It is noted that, in accordance with Article 149A par. 1
of Greek Law 4261/2014, as well as in accordance with Article
35 of the Bank’s Articles of Association, by way of derogation
from case c of par. 2 of Article 160, as well as from par. 2 of
Article 161 of Greek Law 4548/2018, the Bank is not subject
to obligation for minimum dividend distribution. Further, in
accordance with par. 2 of Article 149A of Greek Law
4261/2014, and Article 35 of the Bank’s Articles of
Association, in case of dividend distribution in kind, in
implementation of par. 4 and 5 of Article 161 of Greek Law
4548/2018 and/or for distribution in kind for additional Tier 1
capital instruments and Tier 2 capital instruments, prior
approval by the Bank of Greece is required.
●
The pre-emptive right to each share capital increase in cash
and issue of new shares.
●
The right to access the Bank’s Annual Financial Report which
incorporates: a) the Certifications of the Board of Directors,
b) Board of Directors’ Report, c) Supplementary Report, d)
Annual Report of the Audit Committee, e) Independent
Auditor’s Report, f) the Annual Financial Statements,
including the separate and consolidated financial statements,
and the notes thereto, g) the Annual Report for the
distribution of capital of the financial year it concerns, via the
Bank’s website ten (10) days before the Annual General
Meeting.
●
The General Meeting of Shareholders maintains all of its
rights during liquidation proceedings (pursuant to Article 37
of the Bank’s Articles of Association).
It is noted that, the 13,481,859 common shares held by HFSF
(corresponding to an amount of €13,481,859 or 1.47% of the
Bank’s total share capital) according to the Article 7a par. 2 of the
Greek Law 3864/2010,
as in force prior to its amendment in
2022, used to give the right to HFSF to exercise its voting rights in
the General Meeting of Shareholders with restrictions. However,
as described in detail in Section E below (
“Restrictions to voting
rights”
), following the amendment of Greek Law 3864/2010 by
means of Greek Law 4941/2022, said restrictions no longer apply.
Furthermore, in addition to the rights granted to the HFSF under
the provisions of general company law (Law 4548/2018, A' 104
and any other relevant provision), all common shares held by the
HFSF provide the HFSF representative to the Bank’s Board of
Directors, the following rights under the Greek Law 3864/2010,
as in force:
●
Veto power over any decision taken by the Board of
Directors:
i.
Regarding the distribution of dividends and the benefits
and bonus policy concerning the Chair, the CEO as well as
other members of the Board of Directors, the General
Managers and their deputies, for any credit institutions
whose ratio of non-performing loans to total loans, as
calculated in accordance with subsection f(ii), of paragraph
2 of Article 11 of Commission Implementing Regulation
(EU) 2021/451, exceeds 10%; or
ii.
Related to decision to amend the Articles of Association,
including capital increase or reduction or providing
authorisation to the Board of Directors to that effect,
merger, division, conversion, revival, extension of duration
or dissolution of the company, asset transfers, including
sale of subsidiaries, or any other matter that requires an
increased majority as provided in Greek Law 4548/2018
and which decision might substantially influence the
Fund’s participation at the share capital of the credit
institution.
●
The right to request an adjournment of any meeting of the
Bank’s Board of Directors for three (3) business days, in order
to receive instructions from the HFSF’s Chief Executive
Officer. This right may be exercised until the end of the Board
of Directors’ meeting.
●
The right to request convocation of the Board of Directors.
While exercising the aforementioned rights to the Bank’s Board
of Directors, the HFSF Representative shall respect the Bank’s
Supplementary Report
for the year ended 31 December 2022
185
business autonomy. Furthermore, for the purpose of subsection
(b) of para.1 of Article 2 of Greek Law 3864/2010, as in force, the
HFSF has free access to the Bank’s books and records with
employees or with consultants of its choice.
B) Restrictions on transfers of the Bank’s
shares
The Bank’s Articles of Association do not impose restrictions on
the transfer of the common shares of the Bank. The disposal of
shares of the Bank held by the HFSF is made pursuant to the
provisions of the Greek Law 3864/2010 (“HFSF Law”), article 8, as
amended and in force, i.e., based on a divestment strategy with a
specific time horizon of definite and full implementation, which is
determined in accordance with Article 8, and in principle does
not extend beyond the HFSF’s termination, i.e., 31 December
2025.
C) Significant direct and indirect holdings
as per Greek Law 3556/2007
As at 31 December 2022, there were no significant direct or
indirect holdings as per Greek Law 3556/2007, i.e. of a direct or
indirect participation percentage equal to or higher than 5% of
the aggregate number of the Bank’s ordinary shares, except for
the 369,468,775 ordinary dematerialised registered shares with
voting rights held by HFSF following the Bank’s recapitalization in
2013 and 2015.
D) Shares with special control rights
There are no shares with special control rights with
the following exceptions.
According to the stipulations of article 10 par. 2 of Greek Law
3864/2010, as amended and in force, HFSF has since 11 June
2012 a representative to the Bank’s Board of Directors, with the
abovementioned rights of Greek Law 3864/2010,
as in force.
In particular, the objective of the HFSF according to Greek Law
3864/2010, as amended and in force, is (a) to contribute to the
maintenance of the stability of the Greek banking system, for the
sake of public interest and (b) the effective disposal of shares or
other financial instruments held by the HFSF in credit institutions,
which is based on a divestment strategy with a specific time
horizon of definite and full implementation, which is determined
in accordance with Article 8 of the HFSF Law, and in principle
does not extend beyond the HFSF’s termination, i.e., 31
December 2025.
In pursuing its objective, the HFSF should, among others, (i)
exercise its shareholding rights in compliance with the rules of
prudent management of its assets and in compliance with the
relevant framework, (ii) ensure that the Bank operates on marke t
terms, and (iii) that in due time the Bank returns to private
ownership in an open and transparent manner.
For the purpose of accomplishing its objectives set out in Greek
Law 3864/2010 as in force at the time, the Bank and HFSF
entered into a Relationship Framework Agreement dated 10 July
2013 (the initial Relationship Framework Agreement).
Furthermore, in view of the capital injected to the Bank, as a
result of the recapitalization, which was completed in December
2015, and in order for the HFSF to fulfill its objectives under
Greek Law 3864/2010, as in force at the time, exercise its rights
and obligations and comply with the commitments undertaken
through the Financial Assistance Facility Agreement
33
the Memorandum of Understanding
34
Bank entered into the revised Relationship Framework
Agreement dated 3 December 2015, which amended the initial
Relationship Framework Agreement (“the RFA”) .
The RFA, as each time in force, determines the relationship
between the Bank and the HFSF, while subject to its provisions ,
the applicable Law and the Charter Documents, the Bank’s
decision-making bodies will determine independently, the Bank’s
commercial strategy and policy and the decisions on their day to-
day operation will continue to rest with the Bank’s competent
bodies and officers, as the case may be, in accordance with their
statutory, legal and fiduciary responsibilities.
In the context of efficient implementation of the RFA, as each
time in force, the Bank and the HFSF shall cooperate effectively.
In addition to the above, the HFSF Representative to the Bank’s
Board of Directors participates as a member in all Board
Committees, while an HFSF Observer participates (with no voting
rights) at the Board of Directors and all Board Committees.
According to the provisions of the RFA, in conjunction with the
provisions of Greek Law 3864/2010 as amended and in force,
the HFSF Representative in the Board of Directors has the
following rights (additionally to rights referred to in Section
“A)
Share capital structure”
●
To
request that the Board of Directors is convened within the
next seven (7) calendar days from the HFSF’s Representative
written request to the Chair of the Board of Directors. The
relevant request shall be addressed to the Chair of the Board
of Directors in writing and include the proposed items on the
agenda. If the Chair of the Board of Directors does not
proceed to the convocation of the Board of Directors within
the above deadline or does not include all the proposed items
in the invitation, then the HFSF Representative shall be
entitled to convoke the Board of Directors within five (5) days
as of the expiry of the above seven (7) days period. Such
invitation shall be notified to all the members of the Board of
Directors.
●
To
request that the Board Committee is convened within the
next seven (7) calendar days from the HFSF Representative’
written request to the Chairman of the Committee. The
relevant request shall include the proposed items of the
agenda. If the Chairman of the Committee does not proceed
to the convocation of the Committee within the above
deadline or does not include all the proposed items in the
33
European Stability Mechanism (“ESM”), the Hellenic Republic, the Bank of
Greece and the HFSF.
34
on behalf of the European Commission, the Hellenic Republic and the
Bank of Greece.
Supplementary Report
for the year ended 31 December 2022
186
invitation, then the HFSF Representative shall be entitled to
convoke the Committee within five (5) days as of the expiry
of the above seven (7) days period. Such invitation shall be
notified to all the members of the Committee and to the HFSF
Observer.
Ε) Restrictions to voting rights
There are no restrictions to voting rights attached to the Bank’s
ordinary shares.
Prior to the amendment of Greek Law 3864/2010 by means of
Greek Law 4941/2022, restrictions used to apply on ordinary
shares held by HFSF which were subject to the provisions of
Article 7a par. 2 of Greek Law 3864/2010, as abovementioned.
More specifically, said shares used to give the right to HFSF to
exercise its voting rights in the General Meeting of Shareholders
only for decisions regarding amendments to the Articles of
Association, including increase or reduction of capital or provision
of authorisation to the Board of Directors to that effect, merger,
division, conversion, revival, extension of duration or dissolution
of the company, transfer of assets, including the sale of
subsidiaries or any other issue requiring an increased majority as
provided by Greek Law 4548/2018. Specifically, in order to
calculate quorum and majority at the General Meeting, these
shares of HFSF were not taken into account regarding decisions
on matters other than those mentioned above. According to
Article 7a of Greek Law 3864/2010, as in force prior to its
amendment by means of Greek Law 4941/2022, HFSF would
exercise its full voting rights without the aforementioned
limitations in case it was concluded, by decision of the HFSF
General Council, that there was a breach of material obligations
which were included in the restructuring plan or which promoted
its implementation or which were described in the RFA between
the Bank and the HFSF.
However, in accordance with Greek Law 4941/2022, which
amended Greek Law 3864/2010, Article 107 par. 2, as of 16 July
2022, the HFSF, pursuant to Article 7a of Greek Law 3864/2010,
as amended by Greek Law 4941/2022 and in force, fully exercises
voting rights corresponding to the total shares that it holds, i.e.,
to 369,468,775 shares.
F) NBG Shareholders’ agreements
The Bank is not aware of any agreements between its
shareholders resulting to restrictions in share transfers or in the
exercise of voting rights. The only restrictions in share transfers
concern shares held by the HFSF, as outlined in Section B above
(“
Restrictions on transfers of the Bank’s shares
”).
G) Rules regarding the appointment and
replacement of Board of Directors
members and amendments to Articles of
Association
The provisions of the Bank’s Articles of Association regarding the
appointment and replacement of members of the Board of
Directors, as well as for amendments to the Articles of
Association are in alignment with the corresponding provisions of
Greek Law 4548/2018, as in force. Relevant provisions regarding
the appointment and replacement of Board of Directors
members are included in the Corporate Governance Code and
the Charter of the Corporate Governance and Nominations
Committee, to which more detailed reference is made in Sections
“
A. Corporate Governance Code
” and “
B. Corporate Governance
Key Policies and Practices
” of the Corporate Governance
Statement.
In the context of the recapitalization of the Greek banks and
specifically pursuant to the provisions of Greek Law 3864/2010,
as currently in force, and Cabinet Acts 15/2012 and 38/2012, and
following the contribution on 28 May 2012 to the Bank by HFSF
of EFSF bonds as an advance for the participation in the Bank’s
future share capital increase, HFSF, pursuant to the
Presubscription Agreement dated 28 May 2012 and executed by
the Bank, HFSF and EFSF, as amended and restated on 21
December 2012, has a Representative to the Bank’s Board of
Directors, who has the rights provided by Greek Law 3864/2010
as amended and in force, and the terms of the new RFA, as each
time in force.
Η) Board of Directors’ authority for the
issue of new shares or the purchase of
own shares
Issue of new shares
Pursuant to the provisions of Greek Law 4548/2018 Article 24
par. 1, by General Meeting resolution, subject to the publication
requirements provided for under Greek Law 4548/2018 Articles
12 and 13, the Board of Directors can increase the Bank’s share
capital through the issue of new shares by resolution adopted on
a two-third-majority basis. In that case, pursuant to Article 5 of
the Bank’s Articles of Association, the Bank’s share capital may
increase up to three times the level of the capital in existence as
at the date the said powers are delegated to the Board of
Directors (extraordinary increase). The said authorization may be
renewed from the General Meeting, each time for a period of up
to 5 years.
Stock options
In accordance with Greek Law 4548/2018 Article 113, pursuant to
a General Meeting resolution a Stock Options Program may be
launched for the Board members and staff of the Bank and its
affiliated companies in the form of options to acquire shares of
the Bank as per the terms of the resolution. The General Meeting
resolution determines the maximum number of shares to be
issued if the beneficiaries’ stock options are exercised, whose
total nominal value by law cannot exceed 1/10 of the Bank’s
existing share capital, as well as the purchase price and the terms
of allocation of the shares to the beneficiaries.
Τhe Annual General Meeting of the Bank’s shareholders held on
30 July 2021 approved the Bank’s share capital decrease by
reducing the nominal value of each common registered share of
Supplementary Report
for the year ended 31 December 2022
187
the Bank from €3.00 to €1.00 (without any change in the total
number of common registered shares) in order to set off equal
cumulative accounting losses of previous years, in the context of
launching a Stock Options Program in accordance with Article
113(4) of Greek Law 4548/2018 (See also Section A “
Share capital
structure
” above). Furthermore, it decided to amend accordingly
Article 4 of the Bank’s Articles of Association and to grant
relevant authorizations. Further, the Annual General Meeting
granted authorization to the Bank’s Board of Directors to launch
a five-year Stock Options Program in the form of options to
acquire shares of the Bank pursuant to Article 113(4) of Greek
Law 4548/2018, addressed to Board members, Senior
Management executives and staff of the Bank and its affiliated
companies, in the context of Article 32 of Greek Law 4308/2014,
subject to the restrictions imposed by Article 10(3) of Greek Law
3864/2010 (for as long as these restrictions remain in force) with
respect to the provision of any kind of additional benefit (bonus)
to Board members and Senior Management.
On 25 November 2021, the Bank’s Board of Directors approved
the Proposal on the Stock Options Scheme, to complement and
operationalize the existing provisions of the Group’s Variable
Remuneration Policy through the extension (issuance and award)
of stock options as long-term incentives, and the authorization of
the Group CEO to sign any and all respective documents required,
to amend the schemes’ operational terms.
However, the said Stock Options Scheme has not yet been
activated.
Purchase of own shares
Articles 49 and 50 of Greek Law 4548/2018 prescribe provisions
for the acquisition of own shares, pursuant to a General Meeting
resolution. However, pursuant to the restrictions imposed by
article 16C of Greek Law 3864/2010 as in force, during the period
of HFSF participation in the capital of the Bank, it is prohibited for
the Bank to purchase own shares without HFSF approval.
During 2022, National Securities S.A. (the Bank’s subsidiary which
conducts treasury shares transactions for its brokerage business)
acquired 4,402,533 and disposed 4,440,046 of the Bank’s shares
at the amount of €14 million and €14 million, respectively. On
31 December 2022, the Bank and NBG Securities S.A. did not hold
any own shares.
I) Significant agreements that come into
effect, are modified or terminated in the
event of a change in control following a
public offering
There are no significant agreements that shall come into effect,
be modified or terminated in the event of a change in control of
the Bank following a public offering.
J) Agreements with Board of Directors
members or officers of the Bank
In the case of the Chair and executive members of the Board of
Directors and Senior Managers (General Managers and Assistant
General Managers) the Bank reserves the right for groundless
termination of their employment contracts by paying specific
levels of compensation, as specified in the contract. Especially as
to Executive directors and Senior Managers, (General Managers
and Assistant General Managers), the compensation is
determined in accordance with the NBG Directors’ and Senior
Managers’ Remuneration Policy, as approved by the Annual
General Meeting of Shareholders in 2022.
Athens, 13 March 2023
THE CHAIRMAN OF THE BOARD OF DIRECTORS
THE CHIEF EXECUTIVE OFFICER
GIKAS A. HARDOUVELIS
PAVLOS K. MYLONAS
Audit Committee Report
for the year ended 31 December 2022
188
Audit Committee Report
to the Shareholders on its
activities
Chair of the Audit Committee
“Dear Shareholders,
In my capacity as the Audit Committee Chair of NBG, I am pleased
to submit to you the 2022 Audit Committee Report on behalf of
the Audit Committee (the “Committee”) in compliance with the
current legislation.
During 2022, the Audit Committee worked systematically to
achieve its purpose of assisting the Board of Directors in fulfilling
its oversight responsibility relating to safeguarding the Integrity
of the Financial Reporting Process, the Effectiveness of the
Internal Control System, the Performance of the Internal Audit
Function and the Independence, Objectivity and Effectiveness of
the External Audit Process in challenging times, by taking into
consideration the economic recovery from the crisis caused by the
COVID-19 pandemic, and in parallel the geopolitical and economic
consequences of the war in Ukraine.
A significant part of the Committee’s time was devoted in
receiving updates from the Group Chief Financial Officer, the
Group Chief Audit Executive, the Group Chief Control Officer, the
Group Chief Compliance Officer and the Independent Auditors on
the progress and results of the matters relating to their area of
responsibility. The Committee also assessed the effectiveness,
objectivity and independence of the Independent Auditors and
met with them to discuss any matters arising from their audit.
The collaboration of the Committee with the Board of Directors is
very efficient and constructive and the communication with the
Audit Committees of the subsidiaries is considered to be
satisfactory. During 2022, a new Audit Committee
Communication Framework was established, further formalizing
and enhancing the communication with subsidiaries Audit
Committees.
The Committee also performed its self-evaluation for 2022,
concluding that the Committee operates in an effective manner
and that it discharges its duties fully.
Finally, I would like to thank all the Committee members for their
valuable contribution and significant commitment to the
Committee in achieving its goals and in facing the emerging
challenges of the macroeconomic and regulatory environment.
I extend my thanks to the executives of the Bank and the
Independent Auditors who have provided the Committee very
high quality information allowing the Audit Committee to have a
clear view of the financial position of the Bank, its control
infrastructure and all matters under its supervision”.
Athens, 13 March 2023
Matthieu Kiss
Audit Committee Chair
The Committee is currently comprised of the following members:
Chair
Matthieu Kiss
Vice-Chair
Claude Piret
Members
Avraam Gounaris
JP Rangaswami
Periklis Drougkas (HFSF representative)
Note: During 2022, Mrs Anne Marion Bouchacourt was a member from 24 February
2022 until 28 July 2022.
The Committee was assisted in its work by its Secretary and its
external advisor.
The Committee met 16 times during 2022. In some instances,
joint meetings were held with other Board Committees. Most
meetings were held by videoconference . For the frequency of the
convention and the main responsibilities of the Audit Committee,
please refer to the “
Corporate Governance Statement - Board of
Directors’ Committees - Audit Committee
” of the Board of
Directors’ Report.
Committee Governance
The Committee reported its activities to the Board of Directors
through quarterly reports which included its comments and
suggestions for the settlement of outstanding matters, covering
activities included in the Annual Work Plan. At the end of the
year the Committee reported to the Board of Directors an in-
depth self-appraisal of its activities and its compliance with its
Annual Work Plan.
The meetings were also attended by the Chair of the Board of
Directors, the Group Chief Audit Executive and the Group Chief
Financial Officer, as well as the Independent Auditors. The CEO
and other members of Management, were also invited to attend
meetings according to the items on the agenda in order for the
Committee to be updated on matters under its jurisdiction, giving
priority to the areas of Finance, Internal Audit, Interna l Control,
Compliance and Risk Management.
The meetings of the Committee were conducted in a way which
ensured the regular and detailed updating of the Committee
members. The attendance and participation by its members in
Audit Committee Report
for the year ended 31 December 2022
189
the meetings is considered very satisfactory, as all members
attended all meetings. Their participation was active and
contributed to a free expression of speech in a spirit of
constructive dialogue, while the discussion included constructive
challenges. The Committee followed with the terms of its Charter
approved by the Board of Directors and satisfactorily completed
its Annual Work Plan for 2022.
The Chair had regular communication with Senior Management,
the Group Chief Audit Executive, the Group Chief Financial
Officer, the Group Chief Compliance Officer, the Group Chief
Control Officer and the Independent Auditors to discuss agenda
planning and specific issues as they arose during the year outside
the formal Committee process. This helped to ensure that
matters which needed to be discussed at the Committee were
highlighted in time.
Throughout the year, the Committee, through its Chair,
communicated with the Chairs of the Audit Committees of the
Bank’s subsidiaries so as to promote a common group approach
in the tackling of the various matters under discussion.
During
2022 a formal Audit Committee Communication Framework for
the Committee’s communication/exchange of information with
the Audit Committees of the subsidiaries was approved.
The collaboration of the Committee with the Board of Directors,
the Management, the senior officials of the Bank and the Group
and the Internal and Independent Auditors is considered very
satisfactory and did not present any hindrance to the operation
of the Committee. The Committee was provided with all the
details and information it requested, as well as the means
necessary to carry out its work.
The Committee Secretary as well as its external advisor met
regularly with the Chair to ensure that the Committee fulfilled its
governance responsibilities, and to consider input from
stakeholders when finalizing meeting agendas, tracking progress
on actions and Committee priorities.
Compliance with legal and regulatory requirements
The Board of Directors has confirmed that each member of the
Committee is independent, in accordance with the definition of
independence specified in the relevant framework, and the
Committee continues to have competence relevant to sector in
which the Group operates. The Board has determined that the
Chair of the Committee meets the requirements of a “financial
expert” for the purpose of Greek Law 4449/2017.
The Chair met with the regulators supervising the Bank, i.e.,
ECB/SSM.
The Committee also monitored the legal and regulatory
environment relevant to its responsibilities.
How the Committee discharged its responsibilities
Internal Control System
The Committee monitored the effectiveness of the Internal
Control System of the Group without impairing its independence.
In 2022, the Committee continued to devote significant time in
overseeing Management’s approach to enhancing the Internal
Control System with particular focus on the control environment
that supports financial disclosures, as well as regulatory
reporting, to meet evolving expectations of regulators and other
stakeholders.
The Committee received regular updates and confirmations that
Management had taken, or was taking, the necessary actions to
remediate timely and appropriately any control deficiencies
identified by the various Risk and Control Functions, Group
Internal Audit, as well as the Independent Auditors and both
Greek and European regulators. For further details on how the
Board of Directors reviewed the effecti veness of the key aspects
of the Internal Control System, please refer to “
Corporate
Governance Statement - E. Internal Control System and Risk
Management
” of the Board of Directors’ Report.
Following the Committee’s assessment and proposal to the Board
of Directors for the appointment of PwC for the three year
assessment of the adequacy of the Internal Control System in
accordance with the Bank of Greece Governor’s Act 2577/2006,
the report was discussed by the Committee and submitted to the
Bank of Greece in June 2022.
Financial Reporting
The Committee is responsible for reviewing the Group’s financial
reporting, during the year, including the annual and interim
Financial Statements and the quarterly press releases. As part of
discharging its responsibilities, the Committee:
●
reviewed and approved the 2022 Group and Bank Annual
Financial Statements, as well as the Group and Bank Interim
Financial Statements for the six-month period ended 30 June
2022 and the Group Interim Financial Statements for the
period ended 31 March 2022 and 30 September 2022, and
made positive recommendations to the Board of Directors for
their approval;
●
held meetings with the Group Finance Division regarding the
adequacy and the effectiveness of the procedures for the
preparation of the annual and interim financial statements of
the Bank and the Group;
●
received monthly reviews from the Group Financial Planning
and Performance Monitoring Division on the Group’s and the
Bank’s performance;
●
was updated regarding the implementation of new or
amended International Financial Reporting Standards
(“IFRSs”);
●
was updated on the implementation of the Bank’s new
Banking Accounting Engine (“BAE”);
●
was informed on the work performed by the Group Finance
Division;
●
assessed the adequacy of resources of the Group Finance
Division.
True & Fair, balanced and understandable
Following its review and challenge of the Annual and Interim
Financial Statements including the relevant disclosures, the
Audit Committee Report
for the year ended 31 December 2022
190
Committee reported to the Board of Directors that the Annual
and Interim Financial Reports, taken as a whole, were reasonably
true & fair, balanced and understandable. The Annual & Interim
Financial Reports provided the shareholders with the necessary
information to assess the Group’s and the Bank’s financial
position and performance, business model, strategy and risks
facing the business, including the necessary disclosures regarding
increasingly important ESG considerations.
Specifically, the Committee reviewed the 2022 Group and Bank
Annual Financial Report and Group and Bank Interim Financial
Report for the six-month period ended 30 June 2022. This
enabled the Committee to give reasonable positive assurance to
the Board of Directors to assist them in making the statement
required in compliance with Greek Law 3556/2007.
Financial Statements
The accounting policies which were followed in the preparation
of the Annual and the Interim Financial Statements for 2022 were
materially unchanged from those followed in the previous year.
In their entirety, the accounting policies are in conformity with
the IFRSs as these have been adopted by the European Union.
The preparation of financial statements in accordance with IFRSs
requires the use of estimates and assumptions by Management
which affect not only the account balances of the assets and
liabilities, but also the income and expenses recognized in the
financial statements of the Bank and the Group. The Group
Finance Division regularly updated the Committee on the critical
accounting judgments and estimates made by Management.
Management believes that the estimations made and the
assumptions adopted for the preparation of the Group and Bank
financial statements reflect adequately the events and conditions
which existed during 2022 and as at 31 December 2022.
During 2022, the Committee continued to pay particular
attention to certain critical matters such as the calculation and
accounting for deferred tax, the procedure for the measurement
of the ECL allowance, the collectability of receivables other than
loans to customers, staff related matters, the upgrade of the
Bank’s IT applications, etc. The Committee also reviewed the
significant and unusual transactions that had a material effect on
the annual and interim financial statements and the relevant
disclosures.
The Committee had a series of meetings with the Bank’s
Independent Auditors and the Committee was regularly updated
regarding the preparation and carrying out of their work program
for the audit of the 2022 Annual Financial Statements and the
review of the Interim Financial Statements for the six-month
period ended 30 June 2022, the progress of the audit and any
significant audit and accounting issues which they encountered.
The Bank’s Group Finance Division, the Independent Auditors and
the Group Internal Audit, based on the work that they have
carried out, have confirmed to the Committee that they have not
encountered any outstanding matters which, up to the date of
their approval by the Board of Directors, would have had a
material effect on the 2022 Annual Financial Statements of the
Group and the Bank.
Going Concern
The Committee considered the current position of the Group and
the Bank, along with the emerging risks and carried out a robust
assessment of the Group’s and the Bank’s prospects, before
making a recommendation to the Board of Directors on the
Group’s Going Concern Assessment, that the Group continues to
adopt the going concern basis in preparing the 2022 Annual
Financial Statements. See also, “
Economic and financial review -
Financial Results of 2022 - Going concern
” of the Board of
Directors’ Report.
Group Internal Audit
Group Internal Audit is an independent and objective, assurance
and consulting activity, designed to add value and improve the
Group’s operational effectiveness, and to protect its assets and
its reputation. Group Internal Audit assists the Group in
accomplishing its objectives, by contributing to the regular,
systematic evaluation and improvement of the effectiveness of
the Group’s corporate governance, risk management and internal
control environment.
Group Internal Audit is independent of the audited activities, and
it is not involved in the design, selection, implementation or
operation of specific internal control measures. It performs its
assignments on its own initiative, in an unbiased manner, in all
areas and activities of the Group.
Group Internal Audit adheres to the Institute of Internal Auditors'
mandatory guidance. The Group Chief Audit Executive reports to
the Board of Directors through the Committee and regular
meetings are held between them.
The annual assessment of the Internal Control System in
accordance with Bank of Greece Governor’s Act 2577/2006 was
reported to the Committee which also issued its own evaluation
of the report. Regular reports provided by Group Internal Audit to
the Committee include highlights of the internal audit activity and
the key deficiencies identified as well as the progress of the
related remediation action plans. The risk-based Group Internal
Audit Annual Work Plan for 2022 and its revisions, on the basis of
emerging risks, were approved by the Committee.
Pursuant to its responsibilities, during 2022, the Committee
supervised the operation of the Group Internal Audit, monitored
the completion of its approved Work Plan, including the follow up
performed for the open control deficiencies, and evaluated its
performance. It also received information on the implementation
of key new technologies by Group Internal Audit.
Additionally, the Committee approved the Group Internal Audit
Annual Work Plan for 2023 which included the Group Internal
Audit’s budget for the year and its staff capacity plan.
The Committee reviewed the revisions of the Internal Audit Units
Charter and the Group Internal Audit organizational structure.
Audit Committee Report
for the year ended 31 December 2022
191
The Committee also presented reports to the Board, summarizing
Group Internal Audit’s quarterly activity reports and followed up
the developments relating to reported deficiencies. The
Committee reports that the procedure for the mitigation and
remediation of deficiencies continues to improve.
During the year, the Committee met with the Group Chief Audit
Executive, without the presence of management, to discuss
matters relating to the operations of Group Internal Audit. The
Committee also carried out its annual evaluation of the
performance of the Group Chief Audit Executive.
During 2022, the five year external quality assessment of the
activity of Group Internal Audit was completed from an
Independent External Audit Firm and the results were presented
to the Committee. More specifically, the Group Internal Audit
function of NBG “Generally Conforms” to the Institute of Internal
Auditors (“IIA”) International Standards for the Professional
Practice of Internal Auditing. Overall, the results of the
assessment indicate that the Group Internal Audit has a well-
defined role within NBG and provides independent and objective
assurance that focuses on the key risks that affect the Bank.
Group Internal Control Function
The Committee is responsible for monitoring the work of the
Group Internal Control Function (“ICF”) through regular meetings
as provided by the ICF’s Charter. As part of discharging its
responsibility, the Committee:
◾
approved the ICF Annual Activity Plan for 2022 and ICF
Activity Plan 2023 - 2024;
◾
received regular reports on the Progress and Results of the
approved Group Internal Control Function Annual Activity
Plan for 2022 which included:
-
the progress of the Control Documentation for Very
High priority processes as included in the ICF Annual
Activity Plan 2022, in accordance with the NBG Group
Internal Control Methodology for Control Identification
and Assessment;
-
the progress of remediation of any control deficiencies
identified in design, as well as the progress and results
of the additional activities included in the Group ICF
Annual Activity Plan for 2022.
Independent Auditors
The Committee has the prime responsibility for overseeing the
relationship with PwC, the Group’s Independent Auditor.
The Committee, following its review and assessment,
recommended to the Board of Directors the appointment of the
Independent Auditors for 2022, in order for the Board to propose
them to the Annual General Meeting of Shareholders.
For the 2022 Annual Financial Statements of the Group and the
Bank, PwC comp leted their audit, providing a robust challenge to
management and sound independent advice to the Committee
on specific financial reporting judgements and the control
environment. The signing partner is Ms. Despina Marinou who is
in her first year in the role, following the compulsory rotation of
the signing partner. The Committee reviewed the Independent
Auditor’s approach and strategy for the annual audit and
received regular updates on the audit, including observations on
the control environment. The Key Audit Matters discussed with
PwC are set out in the Independent Auditor’s Report.
The Committee held meetings with the Independent Auditors
during the planning, execution and completion of the audit to
discuss accounting policies and practices, significant matters and
communication with the Bank management and also met the
Independent Auditors without the presence of the Management
in order to discuss all issues occurred during the audit.
External audit plan
The Committee reviewed the audit approach, including the
materiality, risk assessment and scope of the audit.
Effectiveness of the external audit process
The Committee assessed the effectiveness regarding the quality
and output of PwC as the Group’s Independent Auditor. PwC
highlighted the actions taken in response to this assessment,
including the development of audit quality indicators, which
would provide a balanced scorecard and transparent reporting to
the Audit Committee. The assessment focused on the following
areas:
•
Quality of services and responsiveness
: The quality of the
audit services provided by the audit firm throughout 2022
was in line with the agreed performance standards in terms
of efficiency and auditor’s responsiveness required for the
preparation of the Group’s financial statements within the
set strict deadlines. Furthermore, the audit work performed
and the hours spent was sufficient for the size, complexity,
and risks of the Group.
•
Audit team skills, expertise and resource
: The audit firm has
the relevant industry expertise, geographical reach,
sufficient network resources, and appropriate specialists
necessary to continue to serve the Group. PwC has
demonstrated the availability of the necessary mix of
expertise, skills and knowledge of the specific business risks,
processes, systems, and operations of the Bank and the
Group in order to address the risks of any material
misstatements. In this respect, any complex accounting and
auditing matters are addressed by experts of the audit firm
timely and efficiently.
•
Communication and interaction with Management
: The
lead audit partners as well as the audit engagement team
maintained a professional and open dialogue with
Management, explaining accounting and auditing issues or
concerns in an understandable manner, and providing any
additional feedback that was requested by the Group. There
were no significant differences in views between
Management and the Independent Auditor.
The Committee received regular updates from PwC and
Management on the progress of the external audit plan and PwC
performance across the audit quality indicators.
The Committee monitored the policy on hiring employees or
former employees of the Independent Auditor, and there were
no breaches of the relevant Bank’s Policy during the year.
Audit Committee Report
for the year ended 31 December 2022
192
The Committee communicated to the Board of Directors the
external audit results and elaborated on the role of the external
audit and the Committee in relation to the integrity of the
financial reporting.
The Independent Auditors provided the Committee with their
special report on their audit of the 2022 Financial Statements as
required by EU and Greek legislation.
Independence and objectivity
The Committee assessed any potential threats to independence
that were self-identified or reported by PwC. The Committee
considered PwC to be independent and PwC, in accordance with
professional ethical standards and applicable rules and
regulations, provided the Committee with written confirmation
of its independence for the duration of the audit of the financial
year 2022.
The appointment of PwC was approved by the 2017 Annual
General Meeting of the NBG Shareholders held on 30 June 2017
who elected PwC for the first time to undertake the audit of the
2017 Group and Bank Annual Financial Statements and the
review of the Group and Bank Interim Financial Statements for
the six-month period ended 30 June 2017. The Annual General
Meeting of the NBG Shareholders held on 28 July 2022 re-elected
PwC to undertake the audit of the 2022 Annual Financial
Statements and the review of the Interim Financial Statements
for the six-month period ended 30 June 2022 of the Bank and the
Group.
According to th
e Relationship Framework Agreement, as in force
in 2022, a requirement to replace the audit firm every five
consecutive years was applicable. However, in accordance with
article 28 of Greek Law 4701/2020 allowing extension of
statutory audit services beyond the five-year period for a period
of up to 10 years, according to article 17 of Regulation (EU)
537/2014, for credit institutions which have received capital
support by HFSF, following the positive assessment and proposal
of the Committee and subsequent relevant reasoned proposal of
the Board of Directors to the Annual General Meeting of the
Bank’s Shareholders of 28 July 2022, the Annual General Meeting
appointed PwC as the Group Independent Auditors for the
financial year 2022.
Non-audit services
The Committee is responsible for setting, reviewing and
monitoring the appropriateness of the provision of non-audit
services by the Independent Auditor. It also applies the Group’s
Policy regarding non-audit services being awarded to the
Independent Auditor. The non-audit services are carried out in
accordance with the Independent Auditor’s Independence Policy
to ensure that services do not create a conflict of interest. All
non-audit services are either approved by the Committee, or by
the Group Chief Financial Officer when acting within delegated
limits and criteria set by the Committee.
During the period, PwC did not provide any non-permissible non-
statutory audit services. The non-statutory audit services carried
out by PwC included engagements approved during the year.
Group Finance Division, as a delegate of the Committee,
considered that it was in the best interests of the Group to use
PwC for these services because they were:
•
audit-related engagements that were largely carried out by
members of the audit engagement team, with the work
closely related to the work performed in the audit;
•
engagements covered under other assurance services that
require obtaining appropriate audit evidence to express a
conclusion designed to enhance the degree of confidence of
the intended users other than the responsible party about
the subject matter information; or
•
other permitted services to advisory attestation reports on
internal controls of a service organization primarily prepared
for and used by third-party end users.
For fees paid to PwC, please refer to Note 45 of the Annual
Financial Statements.
Whistleblowing regarding financial reporting and auditing
matters
As set out in the “
Non-Financial Statement
” of the Board of
Directors’ Report,
the Compliance, Ethics and Culture Committee
of the Bank’s Board of Directors is responsible for the
establishment and the continuous monitoring of the
implementation of these procedures, which ensure
confidentiality and secrecy of the reports or comments received.
The Committee is informed by the Compliance, Ethics and Culture
Committee regarding any whistleblowing cases that relate to
financial reporting and auditing matters.
Compliance and other Committee Activities
In accordance with the Bank of Greece Governor’s Act
2577/2006, the Committee also evaluated the Reports which the
Compliance Division presented to the Board of Directors for
approval and forwarding to the Bank of Greece,
including the
Report for issues relating to money laundering and terrorist
financing.
It also approves any new or updated policies prepared by the
Group Compliance Division, the Group Finance Division and the
Group Legal Division on subjects under the Committee’s
jurisdiction.
It was also updated on outstanding legal cases with emphasis on
cases, the outcome of which, could impact the financial
statements.
The Committee was also updated on regulatory developments
and key interactions with the regulatory authorities, through the
receipt of respective regular reports by the Compliance and
Governance Function.
Committee evaluation and effectiveness
Regarding the evaluation and the effectiveness of the Committee,
see section “
D. Board of Directors and other management,
administrative and supervisory Bodies - Evaluation of the Chief
Executive Officer, the Board of Directors and the Board
Committees
” of the Board of Directors’ Report
. The overall result
was positive, indicating that there is an effective Committee in
place discharging its duties fully.
NBG Group Sustainability Policy
Audit Committee Report
for the year ended 31 December 2022
193
In 2021, the Committee approved the NBG’s Group Sustainability
Policy (see “
Non-Financial Statement - NBG Group Sustainability
Policy
” of the Board of Directors’ Report).
A key principle of the NBG Group's philosophy is to operate
effectively, in a timely and decisive manner, focusing on its long-
term sustainability and growth, ensuring sustainable
development through innovative ideas and breakthrough
solutions, while contributing to addressing the challenges of
climate change for the benefit of all Stakeholders who trust its
brand and reputation.
Management is committed to continuing NBG’s social
contribution, demonstrating its respect for all stakeholders, and
understanding their features, expectations and needs, through
communication and interaction with them, to address the
material issues that they are concerned about. To continuously
promote sustainable development and responsible
entrepreneurship, and aiming at effective management of ESG,
sustainability and sustainable financing issues, the Bank
established in 2021, the ESG Management Committee (see
“
Corporate Governance Statement - Management, administrative
and supervisory bodies of the Bank-Executive Committees - ESG
Management Committee
” of the Board of Directors’ Report).
Furthermore, in February 2022, the Board established the
Innovation and Sustainability Committee ensuring there is
continuous monitoring and tracking of important developments
and long-term trends related to Innovation, Sustainability,
Information Technology, ESG and Banking (see section
“
Corporate Governance Statement - Board of Directors’
Committees - Innovation and Sustainability Committee
” of the
Board of Directors’ Report).
NBG has further integrated the management of ESG topics across
the Three Lines of Defence, with the introduction of specific roles
and responsibilities within existing organizational units, as well as
the establishment of new ESG related teams (for the Three Lines
of Defence please refer to section “
Corporate Governance
Statement - E. Internal Control System and Risk Management
”) of
the Board of Directors’ Report. In this context, a new
independent sector, Climate & Environmental Strategy Sector,
has been set up to define, coordinate and monitor
implementation of Climate and Environmental Strategy across
the front-line.
Fully aware of the importance of its role in the transition to a
sustainable economy, NBG’s strategic decision is to constantly
upgrade its role and contribution to sustainable development in
the context of its activities and operations. In this respect, the
Group Sustainability Policy, which is in alignment with the
requirements of the applicable legislative and regulatory
framework and international practices, applies to actions aiming
at sustainable development, corporate social responsibility and
business ethics. The purpose of this Policy is to set the framework
for the development of actions that assist in the management of
economic, social, governance and environmental impacts of the
Bank and its Group of Companies.
The main lines of actions for Sustainable Development of the
Group and the Bank carried out with the aim of either reducing
the negative impacts or enhancing the positive ones, as well as
the commitments of the Bank, are described in section “
Non-
Financial Statement
” of the Board of Directors’ Report, by impact
category, and more specifically, in sub section “
Environmental
Issues
” for the environmental Impact of financing activities and of
internal operation and infrastructure. For the Socio-economic
Impact
see subsection “
Social and labour issues”.
For the sustainable development initiatives that the Bank
undertook and developed in 2022, see section “
Non-Financial
Statement - Our performance
”
of the Board of Directors’ Report.
Responsible Governance Impact
Recognizing its leading role as a responsible company, the Bank is
committed to adopting principles that ensure a high level of
corporate governance, structures that generate reliable
standards of professional conduct and business ethics, policies
that contribute to the smooth operation of the organization and
the market, and practices that contribute to strengthening of all
Stakeholders’ trust. In this light, the Bank focuses on the
following issues:
•
Board membership, roles and authorities.
•
Regulatory compliance and business ethics (including combating
corruption and bribery, prevention of money laundering & terrorist
financing, and unfair competition practices, responsible tax
behaviour, data protection, responsible procurement).
•
Transparency and Reliability (accurate, equal, timely, regular,
reliable and accessible information for all, regarding issues of
financial and non-financial reporting/disclosures).
•
Remuneration policies.
•
Equal treatment of shareholders.
•
Robust and effective Internal Control System (i.e., Risk
Management Framework, etc.).
The full text of the Group Sustainability Policy can be found on the
Bank’s website
(https://www.nbg.gr/en/group/esg/environment/sustainable-
development-policy).
Focus of future activities
At the beginning of each year, the Committee discusses its key
priorities for the year ahead. In 2023, the Committee will
continue to focus strongly on the successful execution of its
Annual Work Plan for 2023. Among the Committee’s key
priorities is the close monitoring of the critical accounting
judgments and estimates in the context of the financial
statements, as well as the oversight of disclosures, to meet
increasing expectations of stakeholders, in particular the
implementation of robust processes and controls to support
these disclosures as part of the financial statements’
publications/reports to stakeholders in line with the regulatory
requirements.
Audit Committee Report
for the year ended 31 December 2022
194
The Committee will also closely track the impact of expected
evolution of the economic context (inflation pressure, interest
rate rise, reduction of ECB quantitative easing and asset
purchases); as well as the implications from the ongoing war in
Ukraine and the changing geopolitical environment it has caused.
Audit Committee Report
for the year ended 31 December 2022
195
Audit Committee Report
for the year ended 31 December 2022
196
Translation from the original text in Greek
Independent Auditor’s Report
To the Shareholders of “National Bank of Greece S.A.”
Report on the audit of the Group and Bank annual financial statements
Our opinion
We have audited the accompanying financial statements of “National Bank of Greece S.A.” (Bank or/and Group) which
comprise the statement of financial position as of 31 December 2022, the statements of income, comprehensive income,
changes in equity and cash flow for the year then ended, and
notes
1
financial statements, including a summary of
significant accounting policies.
In our opinion, the financial statements present fairly, in all material respects the financial position of the Bank and the Group
as at 31 December 2022, their financial performance and their cash flows for the year then ended in accordance with
International Financial Reporting Standards, as adopted by the European Union and comply with the statutory requirements of
Law 4548/2018.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs), as they have been transposed into
Greek Law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
During our audit we remained independent of the Bank and the Group in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) that has been transposed into Greek Law, and
the ethical requirements of Law 4449/2017 and of Regulation (EU) No 537/2014, that are relevant to the audit of the financial
statements in Greece. We have fulfilled our other ethical responsibilities in accordance with Law 4449/2017, Regulation (EU)
No 537/2014 and the requirements of the IESBA Code.
We declare that the non-audit services that we have provided to the Bank and its subsidiaries are in accordance with the
aforementioned provisions of the applicable law and regulation and that we have not provided non-audit services that are
prohibited under Article 5(1) of Regulation (EU) No 537/2014.
The non-audit services that we have provided to the Bank and its subsidiaries, for the year ended 31 December 2022, are
disclosed in note 45 to the financial statements.
1
Certain required disclosures have been presented elsewhere in the Board of Directors Report, rather than in the notes to the
financial statements. These disclosures are cross -referenced from the financial statements and are identified as audited.
Audit Committee Report
for the year ended 31 December 2022
197
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the year under audit. These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Expected credit loss allowances for loans and advances to customers under IFRS 9
The pre-provision balance of the loans and advances to
customers at amortized cost, excluding those held for sale,
amounted to €34.7bn for the Bank and €36.6bn for the
Group, with expected credit loss allowances of €1.4bn and
€1.5bn respectively.
The measurement of ECL requires Management to apply
significant judgement and make estimates and assumptions
that involve significant uncertainty, considering also the
current macroeconomic and geopolitical outlook, the high
levels of inflation and the rising global interest rate
environment.
Due to the magnitude of ECL allowance and the extent of
management judgement that is required for the impairment
calculations, the aforementioned calculation has been
identified as an area of most significance in the current year
audit of the Bank and Group financial statements.
The critical judgements and estimates on how the Bank and
Group manage and measure credit risk, and for the
allowance for impairment on loans and advances to
customers, are included in note 3.6 of the annual financial
statements.
These included:
o
The development by the Group’s Economic Analysis
Division of a number of future macroeconomic
scenarios and their relative probabilities of occurrence,
which are incorporated into the Stage allocation
process and the calculation of expected credit loss
allowances.
o
For lending exposures with signs of credit impairment,
that are assessed on an individual basis, the significant
judgements made for determining whether these loans
are impaired and the estimation of their ECL, based on
the expected future cash flows and collateral
liquidations and the timing of their recovery.
o
For the collectively assessed lending exposures, for
which ECL allowances are estimated on a portfolio
basis, the modelling methodologies used for the
determination of the probability of default (PD), the
exposure at default (EAD) and loss given default (LGD)
and the validation of their performance.
o
Management’s applied overlays where they believe that
the estimated loss amounts are not appropriate, either
due to model limitations, or when the emerging risks or
Our work included understanding of management’s
process and assessment of the design of governance and
controls over the determination of the allowance for
impairment on loans and advances to customers.
We understood the impairment estimation process due to
credit risk and assessed the design, implementation and
operation of key internal controls around: (i) the
determination of the macroeconomic scenarios used and
the probability weightings applied to them, (ii) the model
monitoring and validation, and (iii) the flow of critical data
from source systems to ECL models.
With the support of our internal specialists, when needed,
we performed the following procedures:
o
For the generation, selection and weighting applied to
economic scenarios, we: (i) assessed the identification
and use of appropriate external economic data, (ii)
assessed the methodology for determining the
economic scenarios used and the probability
weightings applied to them, and (iii) assessed the risk
of bias in the forecasts, as well as the existence of
contrary evidence.
o
Where impairment provisions were calculated on a
collective basis, we: (i) tested the completeness and
accuracy of data used in the impairment models by
agreeing details to the source systems, (ii) assessed
the design and implementation of the models,
including significant assumptions and the quality of
the observable data used to derive model
parameters, and (iii) assessed the reasonableness of
the impairment model methodology applied by
management and key modelling judgements to
determine the credit risk parameters for the
expected credit loss calculation.
In addition, our procedures included, among others, the
following test of details:
o
For a sample of individually impaired loans, we re-
performed the impairment calculation and tested
key inputs including the expected cash flows to be
collected, expected timing of the collection, discount
rates used and the valuation of any collateral held
that was included in the expected cash flows.
o
For the aforementioned sample we inspected legal
agreements and supporting documentation to
confirm the existence and legal right to the
Audit Committee Report
for the year ended 31 December 2022
198
the current conditions are not captured.
o
Management’s estimates around the measurement of
loans classified as held for sale either due to direct
portfolio sales or loans securitizations.
collateral. We assessed the collateral valuation
techniques applied against Bank and Group policy
and valuation standards.
o
Assessed the appropriateness of management’s
overlays in light of recent economic events and
circumstances.
o
For the loans held for sale, both through outright
sales transactions and through securitisations, we
inspected the respective offers and/or agreements
and assessed management’s calculations for
determining their recoverable amount.
Based on the evidence obtained, we found that the
methodologies, impairment model assumptions,
management judgements, data used within the allowance
assessment and the respective financial statements’
disclosures were appropriate and in line with the
requirements of IFRS 9.
Recoverability of Deferred Tax Assets (‘DTA’)
The Bank and Group, as disclosed in note 27 of the annual
financial statements, recognised DTA of €4.7bn in relation to
tax deductible temporary differences.
The recognition and measurement of DTA has been
identified as an area of significance as it requires significant
assumptions, estimates and high degree of judgement by
the management regarding the ability of generating future
taxable profits. For more information regarding critical
judgements and estimates please refer to note 3.2 of the
annual financial statements.
The Bank and the Group have recognised DTA for deductible
temporary differences to the extent it considers this to be
recoverable. These differences relate to:
o
The losses resulted from Group's participation in the
Greek debt voluntary restructuring (“PSI+”) and
subsequent debt buyback program of 2012, which are
subject to a 30 year tax amortization, starting from
year 2012; and
o
the loan impairment losses that can offset future
taxable gains according to current tax legislation.
The recoverability of the recognised DTA is dependent on
the Bank’s and the Group’s ability to generate future taxable
profits sufficient to cover the deductible temporary
differences when such differences crystallise for tax
purposes.
Management’s assessment regarding the ability of the Bank
and the Group to generate future taxable profits requires
the use of significant judgement and estimates as indicated
below:
o
The assumptions that underpin the business plan of
the Bank and the Group that may be impacted by the
We have assessed the reasonableness of the assumptions
used in drafting the business plan, that was approved by
the Bank’s and Group’s Board of Directors taking into
account the execution risks and uncertainties stemming
from the macroeconomic environment in Greece.
Specifically, we:
o
Compared these to our own expectations derived
from our knowledge of the industry and our
understanding obtained during our audit, and
o
Performed a sensitivity analysis to determine the
effect of changes in the assumptions and how
estimation uncertainty may affect the Bank’s and
the Group’s projected profitability.
For the purpose of our recoverability assessment, we have
evaluated the appropriateness of the adjustments applied
to convert accounting profits into taxable ones and have
assessed management’s projections beyond the business
plan horizon. Furthermore, our procedures also included
assessing management’s interpretations of current tax
legislation with respect to the accounting write-offs and
the gradual amortisation of the crystallised tax loss arising
from nonperforming loans’ disposals, and debt
forgiveness arrangements.
Based on the evidence obtained, we found management’s
assessment with respect to the recoverability of the DTA
to be reasonable.
We evaluated the adequacy of the financial statements’
disclosures, including disclosures of key assumptions and
judgements.
Based on the evidence obtained, we found that the
management’s assumptions, judgements, data within the
Audit Committee Report
for the year ended 31 December 2022
199
risks and uncertainties stemming from the
macroeconomic environment in Greece;
o
the projections required to cover the time horizon up
to the legal expiration of the period within which the
DTA can be recovered; and
o
the adjustments required to derive the estimated tax
profits from the projected accounting profits to infer
the amount of DTA that will be recoverable in future
periods.
DTA recoverability assessment and the respective financial
statements’ disclosures were appropriate and in line with
the requirements of IAS 12.
IT systems
The Bank’s and Group’s financial statements are highly
reliant on information generated, processed and reported
by the Bank’s and Group's Information Technology (IT)
systems and automated processes and controls
implemented in these systems.
The Bank and the Group have implemented a framework of
governance and IT controls to address risks related to user
access management, program
development and changes as
well as IT operations that support the continued proper
operation of the IT environment, including the continued
effective functioning of information processing controls and
the integrity of information relevant to financial reporting.
We considered this a significant area of focus for our audit,
due to the complexity, the high volume of transactions and
pervasiveness of IT systems on the Bank’s and Group’s
operations and financial reporting processes as well as the
implementation of the new Accounting Engine during the
year.
We involved specialists to evaluate IT general controls
that support financially significant applications, underlying
infrastructure and IT dependencies relevant to financial
reporting. The IT General control areas evaluated included
access to programs and data, IT operations, program
development and changes as well as consideration of
cyber security risks.
With regards to the newly implemented Bank Accounting
Engine, we tested, on a sample basis, specific program
development controls. Additionally, we performed
substantive procedures over the validation of General
Ledger Accounting rules for all the transactions generated
from all transactional systems in scope, as well as
substantive testing over manual journal entries.
We also performed testing, on a sample basis, of
supporting IT dependencies that were key to our audit in
order to assess the accuracy of certain system
calculations, the completeness and accuracy of system
generated reports and where applicable, further
supplemented by other substantive audit procedures.
Other Information
The members of the Board of Directors are responsible for the Other Information. The Other Information, which is
included in the Annual Report in accordance with Law 3556/2007, is the Certification of the Board of Directors, the Board
of Directors’ Report, the Supplementary Report of the Board of Directors, the Audit Committee Report
,
4261/2014 Art.81, Disclosures of Law 4261/2014 Art. 82 and Disclosures of article 6 of Law 4374/2016 (but does not
include the financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s
report.
Our opinion on the financial statements does not cover the Other Information and except to the extent otherwise
explicitly stated in this section of our Report, we do not express an audit opinion or other form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the Other Information identified
above and, in doing so, consider whether the Other Information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We considered whether the Board of Directors Report includes the disclosures required by Law 4548/2018 and the
Corporate Governance Statement required by article 152 of Law 4548/2018 has been prepared.
Based on the work undertaken in the course of our audit, in our opinion:
Audit Committee Report
for the year ended 31 December 2022
200
●
The information given in the Board of Directors’ Report for the year ended at 31 December 2022 is consistent with
the financial statements,
●
The Board of Directors’ Report has been prepared in accordance with the legal requirements of articles 150, 151, 153
and 154 of Law 4548/2018,
●
The Corporate Governance Statement provides the information referred to items (c) and (d) of paragraph 1 of article
152 of Law 4548/2018.
In addition, in light of the knowledge and understanding of the Bank and Group and their environment obtained in the
course of the audit, we are required to report if we have identified material misstatements in the Board of Directors
Report and Other Information that we obtained prior to the date of this auditor’s report. We have nothing to report in
this respect.
Responsibilities of Board of Directors and those charged with governance for the financial statements
The Board of Directors is responsible for the preparation and fair presentation of the financial statements in accordance
with International Financial Reporting Standards, as adopted by the European Union and comply with the requirements of
Law 4548/2018, and for such internal control as the Board of Directors determines is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Bank’s and Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the Board of Directors either intends to liquidate the Bank and Group or to cease operations, or has
no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Bank’s and Group’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs,
as they have been transposed into Greek Law, will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs that have been transposed into Greek Law, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
●
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
●
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s
and Group’s internal control.
●
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Board of Directors.
●
Conclude on the appropriateness of Board of Directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Bank’s and Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Bank
and Group to cease to continue as a going concern.
Audit Committee Report
for the year ended 31 December 2022
201
●
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
●
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the Bank and Group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the year under audit and are therefore the key audit matters. We
describe these matters in our auditor’s report.
Report on other legal and regulatory requirements
1.
Additional Report to the Audit Committee
Our opinion on the accompanying financial statements is consistent with our, as per article 11 of Regulation (EU)
537/2014 required, Additional Report to the Audit Committee of the Bank.
2.
Appointment
We were first appointed as auditors of the Bank by the decision of the annual general meeting of shareholders on 30 June
2017. Our appointment has been renewed annually by the decision of the annual general meeting of shareholders for a
total uninterrupted period of appointment of 6 years.
3.
Operating Regulation
The Bank has an Operating Regulation in accordance with the content provided by the provisions of article 14 of Law
4706/2020.
4.
Assurance Report on the European Single Electronic Format
We have examined the digital files of the Bank and the Group, which were compiled in accordance with the European
Single Electronic Format (ESEF) defined by the Commission Delegated Regulation (EU) 2019/815, as amended by
Regulation (EU) 2020/1989 (hereinafter “ESEF Regulation”), and which include the financial statements of the Bank and
the Group for the year ended December 31, 2022, in XHTML format 5UMCZOEYKCVFAW8ZLO05 -2022-12-31-el.html, as
well as the provided XBRL file 5UMCZOEYKCVFAW8ZLO05 -2022-12-31-el.zip with the appropriate marking up, on the
aforementioned consolidated financial statements, including the other explanatory information (Notes to the financial
statements).
Regulatory framework
The digital files of the European Single Electronic Format are compiled in accordance with ESEF Regulation and 2020 / C
379/01 Interpretative Communication of the European Commission of 10 November 2020, as provided by Law 3556/2007
and the relevant announcements of the Hellenic Capital Market Commission and the Athens Stock Exchange (hereinafter
“ESEF Regulatory Framework” ).
In summary, this Framework includes the following requirements:
●
All annual financial reports should be prepared in XHTML format.
●
For consolidated financial statements in accordance with International Financial Reporting Standards, the financial
information stated in the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of
Audit Committee Report
for the year ended 31 December 2022
202
Changes in Equity and the Statement of Cash Flows, as well as the financial information included in the other
explanatory information, should be marked-up with XBRL 'tags' and ‘block tag’, according to the ESEF Taxonomy, as
in force. The technical specifications for ESEF, including the relevant classification, are set out in the ESEF Regulatory
Technical Standards.
The requirements set out in the current ESEF Regulatory Framework are suitable criteria for formulating a reasonable
assurance conclusion.
Responsibilities of the management and those charged with governance
The management is responsible for the preparation and submission of the financial statements of the Bank and the
Group, for the year ended December 31, 2022, in accordance with the requirements set by the ESEF Regulatory
Framework, as well as for those internal controls that management determines as necessary, to enable the compilation of
digital files free of material error due to either fraud or error.
Auditor’s responsibilities
Our responsibility is to plan and carry out this assurance work, in accordance with no. 214/4 / 11.02.2022 Decision of the
Board of Directors of the Hellenic Accounting and Auditing Standards Oversight Board (HAASOB) and the "Guidelines in
relation to the work and the assurance report of the Certified Public Accountants on the European Single Electronic
Format (ESEF) of issuers with securities listed on a regulated market in Greece" as issued by the Board of Certified
Auditors on 14/02/2022 (hereinafter "ESEF Guidelines"), providing reasonable assurance that the financial statements of
the Bank and the Group prepared by the management in accordance with ESEF comply in all material respects with the
current ESEF Regulatory Framework.
Our work was carried out in accordance with the Code of Ethics for Professional Accountants of the International Ethics
Standard Board for Accountants (IESBA Code), which has been transposed into Greek Law and in addition we have
fulfilled the ethical responsibilities of independence, according to Law 4449/2017 and the Regulation (EU) 537/2014.
The assurance work we conducted is limited to the procedures provided by the ESEF Guidelines and was carried out in
accordance with International Standard on Assurance Engagements 3000, “Assurance Engagements other than Audits or
Reviews of Historical Financial Information''. Reasonable assurance is a high level of assurance, but it is not a guarantee
that this work will always detect a material misstatement regarding non-compliance with the requirements of the ESEF
Regulation.
Conclusion
Based on the procedures performed and the evidence obtained, we conclude that the financial statements of the Bank
and the Group for the year ended December 31, 2022, in XHTML file format 5UMCZOEYKCVFAW8ZLO05 -2022-12-31-
el.html, as well as the provided XBRL file 5UMCZOEYKCVFAW8ZLO05 -2022-12-31-el.zip with the appropriate marking up,
on the aforementioned consolidated financial statements have been prepared, in all material respects, in accordance with
the requirements of the ESEF Regulatory Framework.
PricewaterhouseCoopers S.A.
260 Kifissias Avenue, Halandri 152 32
SOEL Reg. No. 113
Athens, 19 March 2023
The Certified Auditor
Despina Marinou
SOEL Reg. No. 17681
Audit Committee Report
for the year ended 31 December 2022
203
Group and Bank
Financial Statements
2022
Statement of Financial Position
as at 31 December 2022
The notes on pages 209 to 337 form an integral part of these Annual Financial Statements
204
Group
Bank
€ million
Note
31.12.2022
31.12.2021
31.12.2022
31.12.2021
ASSETS
Cash and balances with central banks
17
13,957
15,539
Due from banks
18
2,854
3,539
Financial assets at fair value through profit or loss
19
375
295
Derivative financial instruments
20
1,962
4,331
Loans and advances to customers
21
33,782
28,886
Investment securities
22
12,905
14,552
Investment property
23
2
2
Investments in subsidiaries
43
759
1,133
Equity method investments
24
172
17
Software
25
424
345
Property and equipment
26
1,164
1,240
Deferred tax assets
27
4,692
4,906
Current income tax advance
15
205
285
Other assets
28
2,122
2,584
Non-current assets held for sale
29
441
866
Total assets
75,816
78,520
LIABILITIES
Due to banks
30
10,027
14,900
Derivative financial instruments
20
1,923
3,014
Due to customers
31
53,704
52,228
Debt securities in issue
32
1,731
912
Other borrowed funds
33
-
-
Deferred tax liabilities
27
-
-
Retirement benefit obligations
11
246
269
Current income tax liabilities
-
-
Other liabilities
34
2,302
1,956
Liabilities associated with non-current assets held for sale
29
-
-
Total liabilities
69,933
73,279
SHAREHOLDERS' EQUITY
Share capital
36
915
915
Share premium
36
3,539
13,863
Reserves and retained earnings
38
(9,264 )
1,429
(9,537)
Amounts recognised directly in equity relating to non-current assets held for sale
-
-
Equity attributable to NBG shareholders
5,883
5,241
Non-controlling interests
39
-
-
Total equity
5,883
5,241
Total equity and liabilities
75,816
78,520
Statement of Financial Position
Athens, 13 March 2023
THE CHAIRMAN OF THE BOARD OF
DIRECTORS
THE CHIEF EXECUTIVE OFFICER
THE CHIEF FINANCIAL OFFICER
GIKAS A. HARDOUVELIS
PAVLOS K. MYLONAS
CHRISTOS D. CHRISTODOULOU
Income Statement
for the year ended 31 December 2022
The notes on pages 209 to 337 form an integral part of these Annual Financial Statements
205
Group
Bank
12-month period ended
12-month period ended
€ million
Note
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Continuing Operations
Interest and similar income
1,412
1,260
Interest expense and similar charges
(152 )
(149 )
(162)
(158)
Net interest income
6
1,250
1,102
Fee and commission income
414
370
Fee and commission expense
(117 )
(134 )
(103)
(121)
Net fee and commission income
7
311
249
Net trading income / (loss) and results from investment securities
8
339
172
Gains / (losses) arising from the derecognition of financial assets measured at
amortised cost
8
60
283
Net other income / (expense)
9
(59 )
220
(81)
Total income
2,180
1,725
Personnel expenses
10
(475 )
(545 )
(439)
(503)
General, administrative and other operating expenses
12
(208 )
(207 )
(178)
(179)
Depreciation and amortisation on investment property, property & equipment
and software & other intangible assets
23, 25,
26
(172 )
(163 )
(155)
(142)
Credit provisions and other impairment charges
13
(280 )
(78 )
(252)
(60)
Restructuring costs
14
(67 )
(111 )
(67)
(109)
Share of profit / (loss) of equity method investments
-
Profit before tax
1,089
732
Tax benefit / (expense)
15
(263 )
(15 )
(263)
-
Profit for the period from continuing operations
826
732
Discontinued Operations
Profit / (loss) for the period from discontinued operations
29
(13)
(3)
Profit for the period
813
729
Attributable to:
Non-controlling interests
-
-
NBG equity shareholders
813
729
Earnings per share (Euro) - Basic and diluted from continuing operations
16
€0.97
€0.86
€0.90
€0.80
Earnings per share (Euro) - Basic and diluted from continuing and
discontinued operations
16
€1.22
€0.95
€0.89
€0.80
Income Statement
Athens, 13 March 2023
THE CHAIRMAN OF THE BOARD OF
DIRECTORS
THE CHIEF EXECUTIVE OFFICER
THE CHIEF FINANCIAL OFFICER
GIKAS A. HARDOUVELIS
PAVLOS K. MYLONAS
CHRISTOS D. CHRISTODOULOU
Statement of Comprehensive Income
for the year ended 31 December 2022
The notes on pages 209 to 337 form an integral part of these Annual Financial Statements
206
Group
Bank
12-month period ended
12-month period ended
€ million
Note
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Profit for the period
813
729
Other comprehensive income / (expense):
Items that will be reclassified to the Income Statement:
Available-for-sale securities, net of tax
(246 )
(88 )
-
-
Investments in debt instruments measured at fair value through other
comprehensive income ("FVTOCI"), net of tax
(212 )
(145 )
(211)
(145)
Currency translation differences, net of tax
(125 )
(13)
1
Cash flow hedge, net of tax
18
22
Net investment hedge, net of tax
-
-
Total of items that will be reclassified to the Income Statement
(455 )
(201 )
(206)
(122)
Items that will not be reclassified to the Income Statement:
Investments in equity instruments measured at FVTOCI, net of tax
(10 )
(11)
10
Remeasurement of the net defined benefit liability / asset, net of tax
35
10
Total of items that will not be reclassified to the Income Statement
24
20
Other comprehensive income / (expense) for the period, net of tax
37
(421 )
(181 )
(182)
(102)
Total comprehensive income / (expense) for the period
631
627
Attributable to:
Non-controlling interests
-
-
NBG equity shareholders
631
627
Athens, 13 March 2023
THE CHAIRMAN OF THE BOARD OF
DIRECTORS
THE CHIEF EXECUTIVE OFFICER
THE CHIEF FINANCIAL OFFICER
GIKAS A. HARDOUVELIS
PAVLOS K. MYLONAS
CHRISTOS D. CHRISTODOULOU
Statement of Changes in Equity - Group
for the year ended 31 December 2022
The notes on pages 209 to 337 form an integral part of these Annual Financial Statements
207
Attributable to equity holders of the parent company
€ million
Share capital
Share premium
Treasury shares
Securities at
FVTOCI reserve
Currency
translation
reserve
Net investment
hedge reserve
Cash flow hedge
reserve
Defined benefit
plans
Other reserves
&
Retained
earnings
Total
Non-controlling
Interests
Total
Ordinary shares
Ordinary shares
Balance at 31 December 2020 and at 1
January 2021
(1 )
(111 )
(40 )
(208 )
(11,661 )
Other Comprehensive Income/ (expense) for
the period
(223 )
(182 )
(182 )
Gains/(losses) from equity instruments at
FVTOCI reclassified to retained earnings
(1 )
Profit for the period
Total Comprehensive Income / (expense) for
the period (see Note 37)
(222 )
Reduction of par value per share
(see Note 36)
(1,829 )
Acquisitions, disposals & share capital
increases of subsidiaries/associates
(1 )
(1 )
(1 )
(Purchases)/ disposals of treasury shares
Balance at 31 December 2021 and at 1
January 2022
(111 )
(18 )
(199 )
(8,967 )
Other Comprehensive Income/ (expense) for
the period
(457 )
(125 )
(9 )
(419 )
(419 )
Gains/(losses) from equity instruments at
FVTOCI reclassified to retained earnings
(11 )
Profit for the period
Total Comprehensive Income / (expense) for
the period (see Note 37)
(468 )
(125 )
Offsetting of losses with share premium and
reserves (see Note 36)
(10,324 )
Acquisitions, disposals & share capital
increases of subsidiaries/equity method
investments
(1 )
Balance at 31 December 2022
(273 )
(56 )
(1 )
(155 )
Statement of Changes in Equity - Bank
for the year ended 31 December 2022
The notes on pages 209 to 337 form an integral part of these Annual Financial Statements
208
€ million
Share capital
Share premium
Securities at
FVTOCI reserve
Currency
translation
reserve
Cash flow hedge
reserve
Defined benefit
plans
Other reserves &
retained
earnings
Total
Ordinary shares
Ordinary shares
Balance at 31 December 2020 and 1 January 2021
2,744
13,863
76
(52)
(40)
(199)
(11,777)
4,615
Other Comprehensive Income/ (expense) for the period
-
-
(136)
1
22
10
-
(103)
Gains/(losses) from equity instruments at FVTOCI reclassified to retained earnings
-
-
1
-
-
-
(1)
-
Profit for the period
-
-
-
-
-
-
729
729
Total Comprehensive Income / (expense) for the period (see Note 37 )
-
-
(135)
1
22
10
728
626
Reduction of par value per share (see Note 36)
(1,829)
-
-
-
-
-
1,829
-
Balance at 31 December 2021 and 1 January 2022
915
13,863
(59)
(51)
(18)
(189)
(9,220)
5,241
Other Comprehensive Income/ (expense) for the period
-
-
(211)
(13)
18
35
-
(171)
Gains/(losses) from equity instruments at FVTOCI reclassified to retained earnings
-
-
(11)
-
-
-
11
-
Profit for the period
-
-
-
-
-
-
813
813
Total Comprehensive Income / (expense) for the period (see Note 37 )
-
-
(222)
(13)
18
35
824
642
Offsetting of losses with share premium and reserves (see Note 36)
-
(10,324)
-
-
-
-
10,324
-
Balance at 31 December 2022
915
3,539
(281)
(64)
-
(154)
1,928
5,883
Cash Flow Statement
for the year ended 31 December 2022
The notes on pages 209 to 337 form an integral part of these Annual Financial Statements
209
Group
Bank
12-month period ended
12-month period ended
€ million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Cash flows from operating activities
Profit before tax
1,074
729
Adjustments for:
Non-cash items included in income statement and other adjustments:
494
14
Depreciation and amortisation on investment property, property & equipment and software & other
intangible assets (see Note 23, 25 & 26)
155
142
Amortisation of premiums /discounts of investment securities, debt securities in issue and other
borrowed funds
72
96
Credit provisions and other impairment charges
188
88
Provision for employee benefits
8
8
Share of (profit) / loss of equity method investments
(2 )
-
-
Result from fair value and cash flow hedges
(1 )
(1)
34
Dividend income from investment securities
(3 )
(4 )
(3)
(3)
Net (gain) / loss on disposal of property & equipment and investment property
(21 )
(8 )
-
(4)
Net (gain) / loss on disposal of subsidiaries
(30 )
-
-
Net (gain) / loss on disposal of investment securities
(182 )
24
(172)
Gain on exchange of Greek Government Bonds (see Note 22)
(209 )
-
(209)
Accrued interest from financing activities and results from repurchase of debt securities in issue
(2)
2
Accrued interest of investment securities
(6 )
(7)
16
Valuation adjustment on instruments designated at fair value through profit or loss
4
2
Other non-cash operating items
(1 )
56
14
Net (increase) / decrease in operating assets:
4,132
223
Mandatory reserve deposits with Central Bank
3
4
Due from banks
3,179
298
Financial assets at fair value through profit or loss
(72 )
(68)
207
Derivative financial instruments
2,492
1,235
Loans and advances to customers
(2,180 )
(1,078 )
(2,043)
(1,125)
Other assets
(422 )
569
(396)
Net increase / (decrease) in operating liabilities:
(3,148 )
(3,649)
5,607
Due to banks
(4,950 )
(4,873)
1,879
Due to customers
1,472
4,701
Derivative financial instruments
(661 )
(567 )
(661)
(567)
Retirement benefit obligations
(10 )
(21 )
3
(25)
Insurance related reserves and liabilities
-
-
Income taxes (paid) / received
54
52
Other liabilities
(415 )
356
(433)
Net cash from / (for) operating activities
2,051
6,573
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired
(2)
-
Participation in share capital (increase)/decrease of subsidiaries
(53)
(19)
Disposals of subsidiaries, net of cash disposed
623
-
(Acquisition) / disposal of equity method investments
(155 )
(155)
-
Dividends received from investment securities & equity method investments
4
3
Purchase of investment property, property & equipment, software & other and intangible assets
(193 )
(179 )
(176)
(167)
Proceeds from disposal of property & equipment and investment property
10
5
Purchase of investment securities
(7,942 )
(13,122 )
(7,321)
(11,571)
Proceeds from redemption and sale of investment securities
5,908
11,582
Net cash (used in) / provided by investing activities
(1,082 )
(272 )
(1,162)
(167)
Cash flows from financing activities
Proceeds from debt securities in issue and other borrowed funds
883
-
Repayments of debt securities in issue, other borrowed funds and preferred securities
(62 )
(22)
-
Principal elements of lease payments
(61 )
(57 )
(50)
(45)
Proceeds from disposal of treasury shares
-
-
Repurchase of treasury shares
(14 )
(15 )
-
-
Net cash from/ (for) financing activities
(37 )
811
(45)
Effect of foreign exchange rate changes on cash and cash equivalents
(8 )
-
(1)
Net increase / (decrease) in cash and cash equivalents
1,700
6,360
Cash and cash equivalents at beginning of period
15,810
9,450
Cash and cash equivalents at end of period (see Note 41)
17,510
15,810
NOTE 1 General information
Exchange since 1880
Notes to the Financial Statements
Group and Bank
210
237901000), tel. (+30) 210 334 1000, www.nbg.gr. By resolution of the Board of Directors, the Bank can establish branches, agencies
and correspondence offices in
business by entering into related business areas.
Netherlands and U.K. Following the respective Bank’s decision in 2021, the Group ceased its operation in Egypt, Malta and NBG
London Branch; and therefore the NBG Egypt Branch, the NBG London Branch and the subsidiaries NBG Malta Ltd (formerly known
as NBG Bank Malta Ltd) and NBaG Malta Holdings Ltd are currently under liquidation.
The Board of Directors (“BoD”) consists of the following members:
The Non-Executive Chairman of the Board of Directors
Gikas A. Hardouvelis
Executive members
Pavlos K. Mylonas
Christina T. Theofilidi
Independent Non-Executive Members
Avraam C. Gounaris - Senior Independent Director
Anne Clementine L. Marion-Bouchacourt
Claude Edgar L.G. Piret
Wietze J.P. Reehoorn
Matthieu A. Kiss
Elena Ana E.V. Cernat
Aikaterini K. Beritsi
Jayaprakasa (JP) C.S. Rangaswami
Athanasios S. Zarkalis
Non-Executive Representative of the Hellenic Financial Stability Fund (Greek Law 3864/2010)
Periklis F. Drougkas
The Board of Directors Μembers are elected by the Bank’s General Meeting of Shareholders for a maximum term of three years and may
be re-elected. The term of the above Members expires at the Annual General Meeting of the Bank’s Shareholders in 2024.
Moreover, the Annual General Meeting of Shareholders held on 28 July 2022, resolved upon the increase of the number of Board
members from twelve (12) to thirteen (13) and the election of Mr. Athanasios Zarkalis as new Independent Non-Executive member
of the Board of Directors, in fulfilment of the new position in the Board, with a term equal to the remaining Board members, i.e. up
to the Annual General Meeting of Shareholders of 2024.
The Annual Financial Statements are subject to approval by the Bank’s Annual Shareholder’s Meeting.
These Annual Financial Statements have been approved for issue by the Bank’s Board of Directors on 13 March 2023.
Notes to the Financial Statements
Group and Bank
211
NOTE 2 Summary of significant accounting policies
2.1 Basis of preparation
The consolidated Financial Statements of the Group and the separate Financial Statements of the Bank as at and for the year ended 31
December 2022 (the “Annual Financial Statements”) have been prepared in accordance with International Financial Reporting
Standards (“IFRSs”) as endorsed by the European Union (the “EU”).
The Annual Financial Statements have been prepared under the historical cost basis except for the financial assets measured at fair value
through other comprehensive income, financial assets and financial liabilities (including derivative instruments) measured at fair-
value-through-profit-or-loss. The carrying values of recognised assets and liabilities that are hedged items in fair value hedges, and
otherwise carried at amortised cost, are adjusted to record changes in fair value attributable to the risks that are being hedged .
The accounting policies for the preparation of the Annual Financial Statements have been consistently applied to the years 2022 and
2021, after considering the amendments in IFRSs as described in Section 2.3 “New and Amended Standards and Interpretations
”.
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.
The preparation of the Annual Financial Statements in conformity with IFRSs requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the reporting date and the
reported amounts of revenues and expenses during the reporting period. Use of available information and application of judgment
are inherent in the formation of estimates in the following areas: impairment of loans-and-receivables, valuation of financial
instruments not quoted in active markets, including OTC derivatives and certain debt securities, impairment of investment securities,
impairment assessment of intangible assets, assessment of the recoverability of deferred tax assets (“DTA”), estimation of
retirement benefits obligation, liabilities from unaudited tax years and contingencies from litigation. Although these estimates are
based on management's best knowledge of current events and actions, actual results ultimately may differ from those estimates.
The Annual Financial Statements have been prepared on the basis that the Group will continue to operate as a going concern (see Note
2.2 “Going Concern”).
The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the Annual
Financial Statements are disclosed in Note 3 “Critical judgments and estimates”.
The Group’s presentation currency is the Euro (€) being the functional currency of the parent company. Except as indicated, financial
information presented in Euro has been rounded to the nearest million.
2.2 Going concern
Going concern conclusion
After considering (a) the significant recurring profitability of the Group and the Bank (b) the significant collateral buffer and Liquidity
Coverage Ratio (“LCR”) and Net Stable Funding Ratio (“NSFR”) which is well above 100% (c) the current level of European Central
Bank (“ECB”) funding solely from Targeted Long-term Refinancing Operations (“TLTROs”) (d) the Group’s Common Equity Tier 1
(“CET1”) ratio at 31 December 2022 which exceeded the Overall Capital Requirements (“OCR”), (e) the extensive and continuous
fiscal and monetary support of the European and Greek authorities in response to the unprecedented COVID -19 crisis in 2020 and
2021, (f) the activation of new fiscal measures in response to pressures from increased inflation and (g) the Group’s insignificant
exposure to Russia and the Ukraine and Management’s actions with respect to the crises (see Note 47 “Ukraine crisis”), the Board of
Directors concluded that the Group and the Bank is a going concern and thus the application of the going concern principle for the
preparation of these Annual Financial Statements is appropriate.
Profitability
For the year ended 31 December 2022, the profit from continuing operations amounted to €892 million and €826 million for the Group
and the Bank, respectively, whereas earnings per share from continuing operations amounted to €0.97 and €0.90 for the Group and
the Bank, respectively.
Liquidity
Notes to the Financial Statements
Group and Bank
212
As at 31 December 2022, funding from the ECB through TLTROs amounted to €8.1 billion (31 December 2021: €11.6 billion), solely
TLTROs. Additionally, as at 31 December 2022, the Group’s liquidity buffer at cash values amounted to €25.9 billion, with the LCR and
NSFR ratios well above 100%.
Capital adequacy
The Group’s Common Equity Tier 1 (“CET1”) and Total Capital ratios as at 31 December 2022 were 16.6% and 17.7% respectively,
exceeding the OCR ratios of 11.75% for 2022, post capital relief measures (see Note 4.6 “Capital Adequacy”).
Macroeconomic developments
Economic activity in Greece remained on an upward trend in y-o-y terms in 2022, according to 9M.2022 national accounts data and high
frequency indicators of economic activity available for 4Q.2022, showing resilience to the persistent headwinds from high inflation
and elevated geopolitical uncertainty and outpacing the euro area average. Greece’s Gross Domestic Product (“GDP”) growth
reached 5.9% y-o-y in 9M.2022, compared with 4.0% y-o-y for the euro area average. The revival of tourism and other service
activities, additional energy-related fiscal support, and self-sustained improvements in the labor market and business environment
cushioned the inflation drag on disposable income.
Private consumption increased by 9.5% y-ο-y and gross fixed capital formation by 10.2% y-o-y in 9M.2022, with the latter climbing to an
11-year high of 13.6% of GDP. Labor market conditions remained highly supportive, offsetting part of the inflation hit on disposable
income. Tourism provided a decisive impulse to economic growth, with latest trends presaging a new all-time high for revenue (up
by €6.8 billion y-o-y in 11M.2022, to 97.6% compared to 11M.2019 levels).
Positive wealth effects and increasing non-wage income supported household spending. Residential real estate prices, which account for
more than 80% of household wealth, rose by 10.4% y-o-y in 9M.2022 (+11.2% y-o-y in 3Q.2022), recording a cumulative appreciation
of nearly 40% between 3Q.2017 and 3Q.2022.
Profits from entrepreneurial activity, as measured by the economy -wide gross operating surplus (excluding mixed income) increased at a
10-year high of €44.6 billion in 9M.2022, exhibiting the highest growth rate in 20 years. The buoyancy of business profits reflects the
adaptability and resilience of the competitive corporate sector to sharply rising production costs, combined with strengthened
pricing power and supported by favourable demand conditions.
Strong cyclical tailwinds bolstered the fiscal performance vis-à-vis the upwardly revised fiscal targets for 2022, despite the additional
energy support measures in 4Q.22 and early-2023. Fiscal support to households and firms in FY.2022 is estimated at c. €11.5 billion,
in gross value terms, mostly comprising of subsidies to electricity bills and other energy-related measures. The Government Budget
for 2023 targets to a primary surplus of 0.7% of GDP, from an estimated primary deficit of 1.6% of GDP in 2022. Greece’s public debt
as % of GDP recorded an outstanding decline of 24.7 pps, on an annual basis, in 3Q.2022 – the largest improvement among euro area
countries – to 178.2% of GDP and is expected to drop further in 2023 (to c. 160.0% according to the 2023 Budget).
Greece’s responsiveness to mounting energy challenges was remarkable, reflected in a double-digit drop in electricity consumption in
2022, as well as by a 19% y-ο-y decline in natural gas import volume for domestic consumption in 2022, combined with a swift
substitution of Russian gas for Liquefied Natural Gas (“LNG”) in the national energy mix. An easing of energy price pressures in
4Q.2022, following a spike in 3Q.2022, has been translated into a significant slowing of the Consumer Price Index (“CPI”) inflation to
7.2% in December 2022 from 12.0% in September 2022, while market expectations of energy prices (future contracts on crude oil
and natural gas) are also pointing to some easing of energy-related risks (estimated average year-over -year drop in crude oil prices of
-18.9% and natural gas based on Title Transfer Facility (“TTF”) contract of -46.7%, although the market remains sensitive to
geopolitical uncertainty and other extraordinary factors which could affect fuel demand and supply conditions).
However, underlying inflation pressures remain high and appear more persistent worldwide, leading major central banks (including the
ECB) to rapidly tighten their monetary policy, with markets expecting additional interest rate hikes until mid-2023. This tightening
could affect macroeconomic and financial conditions over the course of 2023, due to the timing lags in monetary policy’s
transmission mechanism. Adverse lagged effects, along with the persistent impact of the energy crisis, underlie the weakened
economic outlook for the global and European economy for 2023. The ECB, in its latest publication on macroeconomic forecasts,
expects a slowing of GDP growth in the euro area to 0.5% in 2023 from an estimated 3.4% in 2022. At the same time, the lift of
Covid-19 restrictions in China – which is expected to bolster demand for commodities – and the continuation of the Ukrainian crisis,
in conjunction with other sources of geopolitical uncertainty that remain relevant in 2023, could pose additional challenges as
regards the control of inflation and/or the resolution of energy challenges, which could translate into weaker economic outcomes in
2023 and beyond. An escalation of the crisis in Ukraine could have far-reaching economic and social implications for Europe, which
are impossible to credibly quantify, in a period of limited capacity for additional fiscal or monetary policy interventions.
On a positive note, the Greek economy is expected to outperform the euro area in the baseline scenario for 2023, on the back of: i)
stronger carryover effects from its solid economic growth momentum in 2022; ii) a more defensive position in the credit cycle, with
the business sector hardened by multiyear restructurings and exhibiting lower leverage levels and sizeable liquidity buffers, fueled
further by significant 2022 activity; and iii) increasing support from the Recovery and Resilience Facility (“RRF”), with inflows (i.e.
grants and loans, excluding leverage), according to the European Commission, estimated at €11.1 billion in 2021 – Feb 2023,
providing a significant boost to fixed capital investment in 2023.
Notes to the Financial Statements
Group and Bank
213
Notes to the Financial Statements
Group and Bank
214
2.3 New and Amended Standards and Interpretations
Amendments to existing standards and the Conceptual Framework effective from 1 January 2022
-IFRS 16 (Amendment): COVID-19-Related Rent Concessions
(effective for annual periods beginning on or after 1 April 2021 and effective for
the consolidated and separate Financial Statements from 1 January 2022). The amendment extends the application period of the practical
expedient in relation to rent concessions by one year to cover rental concessions that reduce leases due only on or before 30 June 2022. The
adoption of this amendment did not have a material impact on the consolidated and separate Annual Financial Statements.
-IFRS 3 (Amendments): Reference to the Conceptual Framework
(effective for annual periods beginning on 1 January 2022). The
amendments update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting
requirements for business combinations. The adoption of these amendments did not have any effect on the consolidated and separate
Annual Financial Statements.
-IAS 16 (Amendments): Property, Plant and Equipment: Proceeds before Intended Use
2022). The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling
items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and
related cost in the Income Statement. The adoption of these amendments did not have any effect on the consolidated and separate Annual
Financial Statements.
-IAS 37 (Amendments): Onerous Contracts: Cost of Fulfilling a Contract
(effective for annual periods beginning on 1 January 2022). The
amendments specify which costs a company includes when assessing whether a contract will be loss-making. The adoption of these
amendments did not have a material impact on the consolidated and separate Annual Financial Statements.
-Annual Improvements to IFRS Standards 2018–2020 Cycle
the IASB). The amendments applicable to the Group and the Bank are:
IFRS 9 Financial Instruments: Fees in the ‘10 per cent’ test for derecognition of financial liabilities.
an entity includes when it applies the ‘10 per cent’ test in assessing whether to derecognize a financial liability. Only fees paid or received
between the entity (the borrower) and the lender are included, including fees paid or received by either the entity or the lender on the
other’s behalf. The adoption of this amendment did not have a material impact on the consolidated and separate Annual Financial
Statements.
IFRS 16: Lease Incentives.
the reimbursement of leasehold improvements by the lessor, in order to resolve any potential confusion regarding the treatment of lease
incentives that might arise because of how lease incentives are illustrated in that example. The adoption of this amendment did not have
a material impact on the consolidated and separate Annual Financial Statements.
The amendments to existing standards effective from 1 January 2022 have been endorsed by the EU.
New standards and amendments to existing standards effective after 2022
New standard
-IFRS 17
Insurance Contracts
amendments issued in June 2020 and supersedes IFRS 4. IFRS 17 establishes principles for the recognition, measurement, presentation and
disclosure of insurance contracts within the scope of this standard and its objective is to ensure that an entity provides relevant information
that faithfully represents those contracts. The new standard solves the comparison problems created by IFRS 4 by requiri ng all insurance
contracts to be accounted for in a consistent manner. Insurance obligations will be accounted for using current values instead of historical
cost. The standard has been endorsed by the EU.
Due to the sale of the Bank’s insurance subsidiary NIC on 31 March 2022, there was no impact from the adoption of IFRS 17.
Amendments
-IAS 1 and IFRS Practice Statement 2 (Amendments): Disclosure of Accounting Policies
or after 1 January 2023). The amendments require that an entity discloses its material accounting policies, instead of its significant accounting
policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely
to be material are added.
To
support the amendment, the Board has also developed guidance and examples to explain and demonstrate the
application of the ‘Four-Step Materiality Process’. The Group and the Bank are currently assessing the impact of this amendment, but taking
into account the fact that the significant accounting policies disclosed in Note 2 “Summary of significant accounting policies” in this Annual
Notes to the Financial Statements
Group and Bank
215
Report include all material accounting policies, the Group and the Bank expect to disclose fewer accounting policies for the annual reporting
period beginning 1 January 2023.
-IAS 8 (Amendment): Definition of Accounting Estimates
(effective for annual reporting periods beginning on or after 1 January 2023). The
amendment replaces the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition,
accounting estimates are “monetary amounts in Financial Statements that are subject to measurement uncertainty”. Entities develop
accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement
uncertainty. The amendments clarify that a change in accounting estimate that results from new information or new developments is not the
correction of an error. There was no impact on the consolidated and separate Financial Statements from the adoption of this amendment.
-IAS 12 (Amendments): Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(effective for annual reporting
periods beginning on or after 1 January 2023). These amendments clarify and narrow the scope of the exemption provided by the IAS 12
“Income Taxes” standard allowing institutions to not recognise any deferred tax during the initial recognition of an asset and a liability. All
leases and decommissioning obligations are excluded from the exemption scope for which companies recognise both an asset and a liability
and will now have to recognise deferred taxes. From the date of first application of IFRS 16 “Leases”, the Group has considered the right of
use assets and the lease-related liabilities as a single transaction. Consequently, on the initial recognition date, the amount of deferred tax
asset offsets the amount of deferred tax liability. The net temporary differences resulting from later variations in the right of use assets and
lease liabilities subsequently result in a deferred tax asset as of 1 January 2023 which is subject to the recoverability criteria of IAS 12 “Income
Taxes”. There was no impact on the consolidated and separate Financial Statements from the adoption of these amendments.
-IFRS 17 (Amendment): Initial Application of IFRS 17 and IFRS 9 – Comparative Information
after 1 January 2023). The amendment is a transition option relating to comparative information about financial assets presented on initial
application of IFRS 17. The amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and
insurance contract liabilities, and therefore improve the usefulness of comparative information for the users of financial statements. Due to
the sale of the Bank’s insurance subsidiary NIC in March 2022 there was no impact on the consolidated and separate Financial Statements
from the adoption of this amendment.
-IFRS 16 (Amendment): Lease Liability in a Sale and Leaseback
(effective for annual periods beginning on or after 1 January 2024). The
amendment clarifies how an entity accounts for a sale and leaseback after the date of the transaction. Sale and leaseback transactions where
some or all the lease payments are variable lease payments that do not depend on an index or rate are most likely to be impacted. The
requirements are applied retrospectively back to sale and leaseback transactions that were entered into after the date of initial application of
IFRS 16.
-IAS 1 (Amendments): Classification of liabilities as current or non-current
2024). The amendments clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at
the end of the reporting period. The amendments also clarify that the classification is unaffected by expectations about whether an entity will
exercise its right to defer settlement of a liability and make clear that settlement refers to the transfer to the counterparty of cash, equity
instruments, other assets or services.
The amendments are expected to be effective for annual periods beginning on or after January 1, 2024
with early adoption permitted. The Group and the Bank present their Statement of Financial Position on a liquidity basis and this amendment
may affect the presentation of such liabilities if any .
-IAS 1 (Amendment): Non-current Liabilities with Covenants
(effective for annual periods beginning on or after 1 January 2024).
The new
amendments clarify that if the right to defer settlement is subject to the entity complying with specified conditions (covenants), this
amendment will only apply to conditions that exist when compliance is measured on or before the reporting date. Additionally, the
amendments aim to improve the information an entity provides when its right to defer settlement of a liability is subject to compl iance with
covenants within twelve months after the reporting period.
-Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendment to IFRS 4)
. The amendment, which has been endorsed
by the EU, introduces two approaches. The amended standard will: a) give all companies that issue insurance contracts the option to
recognise in the Statement of Other Comprehensive Income, rather than in the Income Statement, the volatility that could arise when IFRS 9
is applied before the new insurance contracts standard is issued (i.e. the difference between the amounts that would be recognized in profit
or loss in accordance with IFRS 9 and the amounts recognized in profit or loss in accordance with IAS 39) – “overlay approach” and b) give
companies whose activities are predominantly connected with insurance an optional temporary exemption from applying IFRS 9 until 2021 –
“deferral approach”. The entities that defer the application of IFRS 9 will continue to apply IAS 39.
The Amendment ‘Extension of the Temporary Exemption from Applying IFRS 9 (effective for annual periods beginning on or after 1 January
2021) extended the expiry date of the extension described above from 1 January 2021 to 1 January 2023.
On 31 March 2022, the Bank sold its insurance subsidiary NIC, however NIC applied this amendment using the deferral approach up to the
date of sale.
Notes to the Financial Statements
Group and Bank
216
The amendments to existing standards effective after 2022 have been endorsed by the EU, except for the amendments to IAS 1:
“Classification of liabilities as current or non-current” and “Non-current Liabilities with Covenants” and the amendment to IFRS 16:
“Lease Liability in a Sale and Leaseback”, which have not been endorsed by the EU.
2.4
Consolidation
2.4.1
Basis of consolidation
The Annual Financial Statements incorporate the consolidated and separate Financial Statements of the Bank and its subsidiaries
(including structured entities), which are entities controlled by the Bank. Control is achieved, if and only if, the Bank has: a) power
over the subsidiaries, b) exposure, or rights to variable returns from its involvement with the subsidiaries and c) the ability to use its
power over the subsidiaries to affect the amount of the Bank’s returns.
Income and expenses and other comprehensive income of subsidiaries acquired or disposed of during the year are included in the
consolidated Income Statement and in the consolidated Statement of Comprehensive Income, respectively, from the effective date
of acquisition and up to the effective date of disposal, as appropriate .
When necessary, adjustments are made to the Financial Statements of subsidiaries to bring their accounting policies in line with those of
the Group.
All intra-group transactions, balances, income and expenses are eliminated upon consolidation.
2.4.2
Non-controlling interests
Non-controlling interests may be initially measured either at fair value or at the non-controlling interests' proportionate share of the
recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-
transaction basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at
initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income/(expense)
is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
2.4.3
Changes in the Group's ownership interests in subsidiaries that do not result in loss of control
Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to
owners of the Bank.
2.4.4
Loss of control
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of
the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the
assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. For assets of the subsidiary carried at
fair value with the related cumulative gain or loss recognised in other comprehensive income, the amounts previously recognised in
other comprehensive income are accounted for as if the Bank had directly disposed of the relevant assets (i.e. reclassified to the
Income Statement or transferred directly to retained earnings as specified by applicable IFRSs). The fair value of any investment
retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent
accounting under IFRS 9 Financial Instruments or, when applicable, the cost on initial recognition of an investment in an associate or
a jointly controlled entity. Upon loss of significant influence over the associate or joint control, the Group measures and recognises
any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of
significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit
or loss.
2.4.5
Associates
Associates are entities over which the Group has significant influence, but which it does not control. If the Group holds, directly or
indirectly, 20% or more of the voting power of the investee, it is presumed that the Group has significant influence, unless it can be
clearly demonstrated that this is not the case. Investments in associates are accounted for by applying the equity method of
accounting. Under the equity method of accounting, the investment is initially recorded at cost. Goodwill arising on the acquisition of
an associate is included in the carrying amount of the investment (net of any accumulated impairment loss). The carrying amount of
the investment is increased or decreased by the proportionate share of the associate’s post-acquisition profits or losses (recognised
in the Group income statement) and movements in reserves (recognised in reserves). Dividends received from the associate during
the year reduce the carrying value of the investment. Investments in associates for which significant influence is intended to be
Notes to the Financial Statements
Group and Bank
217
temporary because such investments are acquired and held exclusively with a view to their subsequent disposal within twelve
months from their acquisition, are recorded as assets held for sale. Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are also eliminated but considered
as an impairment indicator of the asset transferred. Where necessary, the associate’s financial statements used in applying the
equity method are adjusted to ensure consistency with the accounting policies adopted by the Group.
2.4.6
Joint arrangements
A joint arrangement is an arrangement of which two or more parties have joint control. A joint arrangement has the following
characteristics:
(a)
The parties are bound by a contractual arrangement and
(b)
The contractual arrangement gives two or more of those parties joint control of the arrangement.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require the unanimous consent of the parties sharing control.
A joint arrangement is either a joint operation or a joint venture.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and
obligations for the liabilities, relating to the arrangement. Those parties are called joint operators. A joint venture is a joint
arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Those
parties are called joint venturers.
The Group determines the type of joint arrangement in which it is involved and classifies the joint arrangement as a joint operation or a
joint venture depending upon the rights and obligations of the parties to the arrangement.
In case of a joint operator the Group recognises:
(a)
its assets, including its share of any assets held jointly,
(b)
its liabilities, including its share of any liabilities incurred jointly,
(c)
its revenue from the sale of its share of the output arising from the joint operation,
(d)
its share of the revenue from the sale of the output by the joint operation and
(e)
its expenses, including its share of any expenses incurred jointly.
When the Group acquires an interest in a joint operation in which the activity of the joint operation constitutes a business, as defined in
IFRS 3 Business combinations, it applies, to the extent of its share in accordance with previous paragraph, all of the principles on
business combinations accounting in IFRS 3, and other IFRSs, that do not conflict with the guidance in IFRS 11 Joint arrangements.
This applies to the acquisition of both the initial interest and additional interests in a joint operation in which the activity of the joint
operation constitutes a business.
In case of a joint venture the Group recognises its interest in a joint venture as an investment and accounts for that investment using the
equity method. (see Note 2.4.5 “Associates” above).
2.4.7
Investments in subsidiaries, associates and joint ventures in individual financial statements
In the Bank’s separate financial statements subsidiaries, associates and joint ventures are measured at cost less impairment.
2.4.8
Impairment assessment of investments in subsidiaries, associates and joint ventures in individual financial statements
At each reporting date, the Group and the Bank assesses whether there is any indication that an investment in a subsidiary, associate or
joint venture may be impaired. If any such indication exists, the Group estimates the recoverable amount of the investment. Where
the carrying amount of an investment is greater than its estimated recoverable amount, it is written down immediately to its
recoverable amount.
2.5
Business combinations
2.5.1
Acquisition method
Acquisitions of businesses within the scope of IFRS 3 are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets
transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by
the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in the Income Statement as
incurred.
Notes to the Financial Statements
Group and Bank
218
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition
date, except for:
●
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in
accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;
●
liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance
with IFRS 2 Share-based Payment at the acquisition date (see Note 2.28.2 “Share based payment transactions” below); and
●
assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5
Non-current Assets Held for Sale
and
Discontinued Operations
2.5.2
Goodwill
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-
date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date
amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of
any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the
excess is recognised immediately in the Income Statement. As at 31 December 2022 and 2021 the Group had no separately
recognisable goodwill.
2.5.3
Contingent consideration
When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent
consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the
consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as
measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not
remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent
consideration that is either a financial instrument within the scope of IFRS 9 or a non-financial asset or liability, is remeasured, at fair
value at each subsequent reporting date and the changes in fair value are recognised in the Income Statement.
2.5.4
Business combination achieved in stages
When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair
value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in the
Income Statement. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised
in Other comprehensive income are reclassified to the Income Statement where such treatment would be appropriate if that interest
were disposed of.
2.5.5
Provisional accounting
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted
during the measurement period (see Note 2.5.3 “Contingent consideration ” above), or additional assets or liabilities are recognised,
to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have
affected the amounts recognised at that date. Measurement period adjustments are adjustments that arise from additional
information obtained during the “measurement period” (which cannot exceed one year from the acquisition date) about facts and
circumstances that existed at the acquisition date.
2.6
Foreign currency translations
Items included in the Financial Statements of each entity of the Group are measured using the currency that best reflects the economic
substance of the underlying events and circumstances relevant to that entity (“the functional currency”). The consolidated and
separate Financial Statements of the Group are presented in millions of Euro (€), which is the functional currency of the Bank.
Foreign currency transactions are translated into the functional currency at the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement, except when deferred in
Other comprehensive income as gains or losses from qualifying cash flow or net investment hedging instruments. Translation
differences on debt securities and other monetary financial assets re-measured at fair value are included in “Net trading income and
results from investment securities”. Translation differences on non-monetary financial assets are a component of the change in their
fair value and are recognised in the Income Statement for equity securities held for trading, or in Other comprehensive income for
equity securities measured at fair value through Other comprehensive income. Non-monetary items that are measured in terms of
historical cost in a foreign currency shall be translated using the exchange rate at the date of the transaction.
Notes to the Financial Statements
Group and Bank
219
When preparing these Financial Statements, assets and liabilities of foreign entities are translated at the exchange rates prevailing at the
reporting date, while income and expense items are translated at average rates for the period. Differences resulting from the use of
closing and average exchange rates and from revaluing a foreign entity’s opening net asset balance at closing rate are recognised
directly in foreign currency translation reserve within Other Comprehensive Income.
When a monetary item forms part of a reporting entity’s net investment in a foreign operation and is denominated in a currency other
than the functional currency of either the reporting entity or the foreign operation, the exchange differences that arise in the
individual financial statements of both companies are reclassified to Other comprehensive income upon consolidation. When a
foreign entity is sold, such translation differences are recognised in the Income Statement as part of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate.
2.7
Classification and Measurement of financial instruments
2.7.1
Classification of financial assets
The Group uses the following measurement categories for financial assets:
•
Debt instruments at amortised cost.
•
Debt instruments at Fair Value through Other Comprehensive Income (“FVTOCI”) with cumulative gains and losses reclassified to
profit or loss on derecognition.
•
Equity instruments measured at FVTOCI with gains and losses remaining in Other Comprehensive Income (“OCI”) without recycling
to profit or loss on derecognition.
•
Debt instruments, derivatives, equity instruments and mutual funds at Fair Value through Profit or Loss (“FVTPL”).
Except for debt instruments that are designated at initial recognition or mandatorily recognised at FVTPL, such assets are classified at
amortised cost or FVTOCI on the basis of:
a)
The Group’s business model for managing the financial asset and
b)
the contractual cash flow characteristics of the financial asset.
IFRS 9 precludes the separation of any embedded derivatives from a hybrid contract when the host contract is a financial asset within its
scope. Instead, the entire hybrid financial asset is classified into one of the categories listed above. The Group continues to recognise financial
assets on a trade basis.
2.7.2
Business model assessment
The business models reflect how the Group manages its debt financial assets in order to generate cash flows. This assessment is performed on
the basis of scenarios that the Group reasonably expects to occur. The assessment is based on all relevant and objective information that is
available at the time of the business model assessment. The Group has identified the following business models for debt financial assets:
●
Hold to collect contractual cash flows:
the assets in this business model give rise on specified dates to cash flows that are solely payments of principal and interest (“SPPI”)
on the principal amount outstanding. Debt instruments classified in this business model are measured at amortised cost. Loans and
advances to customers within this category may be sold to manage the concentration of the Group’s credit risk to a particular
obligor, country or industrial sector, without an increase in the asset’s credit risk. Such sales are consistent with the business model’s
objective if they are infrequent (even if significant in value) or insignificant in value both individually and in the aggregate (even if
frequent). In such cases, i.e. if more than an infrequent number of sales are made or those sales are more than insignificant in value
(either individually or in aggregate), the Group assess whether and how such sales are consistent with the objective of collecting
contractual cash flows.
●
Hold to collect contractual cash flows and sell:
objective is achieved by both collecting contractual cash flows and selling debt instruments. Assets within this business model are
not sold with the intention of short-term profit taking, however frequent sales may occur and such sales may be significant in value.
All the assets in this business model give rise to cash flows that are SPPI. Debt instruments held within this business model are
accounted for at FVTOCI.
●
Held for trading:
from changes in credit spreads and yield curves. The assets in this business model are accounted for at FVTPL.
●
Held and managed on a fair value basis:
to sell them in the near future. The assets in this business model are accounted for at FVTPL.
Notes to the Financial Statements
Group and Bank
220
2.7.3
Contractual cash flow characteristics
The Group assesses the characteristics of its financial assets’ contractual cash flows at initial recognition in order to determine whether
they are SPPI. This is referred to as the “SPPI test”. Interest amount within a basic lending arrangement, is typically the consideration
for the time value of money and the credit risk. Interest may also include consideration for other basic lending risks such as liquidity
and costs (e.g. administration associated with holding the financial asset for a particular period of time), as well as a profit margin.
Interest may also be negative, which is not consistent with this definition if the Group decides to effectively pay a fee for the
safekeeping of its money for a particular period of time.
2.7.4
Non-recourse loans and contractually linked financial assets
When a financial instrument’s contractual cash flows are specifically derived from specified assets of the borrower, the Group assesses
whether the cash flows arising from the debt instrument are SPPI. In order to conclude whether the loan represents a basic lending
agreement and its return does not vary based on the performance of the underlying asset or project, the Group assesses whether
there is an adequate buffer to absorb credit losses. The Group also performs a specific analysis of contractual cash flow when
financial assets are instruments issued by a securitisation vehicle or a similar entity that prioritises payments to holders using
multiple contractually -linked instruments that create concentrations of credit risk (tranches). When assessing whether contractual
cash flows are SPPI or not, the Group analysis the contractual terms, as well as the credit risk of each tranche and the exposure to
credit risk in the underlying pool of financial instruments. Judgment is applied in both cases when determining whether certain
contractual features significantly affect the future cash flows of the financial asset.
2.7.5
Equity instruments classified as FVTOCI
The Group may acquire an investment in an equity instrument that is not held for trading nor contingent consideration recognised by an
acquirer in a business combination to which IFRS 3 applies. At initial recognition, the Group may make an irrevocable election to present in
OCI subsequent changes to the fair value of this equity investment, except for equity securities that give an investor significant influence over
an investee, which are accounted for in accordance with IAS 28 Investments in Associates and Joint Ventures.
The election to designate an investment in an equity instrument at FVTOCI is made on an instrument-by-instrument basis. Investments in
mutual funds cannot be designated at FVTOCI, as they do not meet the definition of an equity instrument under IAS 32, hence these are
mandatorily measured at FVTPL. These equity instruments are not subject to an impairment assessment.
2.7.6
Measurement of financial assets
Financial assets measured at amortised cost
A debt financial asset is measured at amortised cost if it is held in a business model that has an objective to hold financial assets to collect
contractual cash flows and the contractual terms of the financial asset result in cash flows that pass the SPPI test.
The financial assets classified within this category, mainly include the following asset classes:
●
Cash and balances with central banks
●
Sight and time deposits with banks
●
Securities purchased under agreements to resell
●
Deposits in margin accounts
●
Other receivables due from banks
●
Loans and advances to customers at amortised cost
●
Debt securities (Investment securities measured at amortised cost)
●
Other receivables included in line item “Other assets”
Subsequent to initial recognition, the debt financial asset is measured at amortised cost using the effective interest rate (“EIR”) method for
the allocation and recognition of interest revenue in line item “Interest and similar income” of the Income Statement over the relevant
period. The amortised cost is the amount at which the financial asset is measured at initial recognition minus any principal repayments, plus
or minus the cumulative amortisation using the EIR method of any difference between that initial amount and the maturity amount, adjusted
for any loss allowance. The gross carrying amount is the amortised cost of a financial asset before adjusting for any loss allowance. Interest
income on debt financial assets is calculated on the gross carrying amount if the asset is classified in Stage 1 or Stage 2. When a debt financial
asset becomes credit-impaired (classified in Stage 3), interest income is calculated on the amortised cost (i.e. the gross carrying amount
adjusted for the impairment allowance).
The EIR is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to its gross
carrying amount. When calculating the EIR, the Group estimates the expected cash flows by considering all the contractual terms of the
financial instrument (e.g. prepayment, extension, call and similar options). The calculation includes all fees and points paid or received
between parties to the contract that are an integral part of the EIR, transaction costs, and all other premiums or discounts. Fees that are an
integral part of the EIR of a financial instrument are treated as an adjustment to the EIR.
Notes to the Financial Statements
Group and Bank
221
Except for purchased or originated financial assets that are credit-impaired (“POCI”) on initial recognition, expected credit losses (“ECL”) are
not considered in the calculation of the EIR. For a POCI financial asset, the credit-adjusted EIR is applied when calculating the interest revenue
and it is the rate that exactly discounts the estimated future cash flows through the expected life of the financial asset to the asset’s
amortised cost. The Group includes the initial ECL in the estimated cash flows when calculating the credit-adjusted EIR for such assets.
Debt instruments measured at FVTOCI
A debt financial asset is measured at FVTOCI if it is held in a business model that has an objective to hold financial assets to collect contractual
cash flows and sell the assets and the contractual terms of the financial asset result in cash flows that pass the SPPI test.
After initial recognition, investments in debt financial assets are measured at fair value in the statement of financial position (with no
deduction for sale or disposal costs) with unrealised gains and losses reported in OCI, net of applicable income taxes, until such investments
are derecognised (i.e. when sold or collected). Upon derecognition, the cumulative gains or losses previously recognised in OCI are reclassified
from equity to “Net trading income/(loss) and results from investment securities” of the Income Statement, as a reclassification adjustment.
For debt financial assets measured at amortised cost or FVTOCI, the following items are recognised in the Income Statement:
●
ECL allowance recognised in “Credit provisions and other impairment charges”.
●
Foreign exchange gains and losses, calculated based on the amortised cost of the instrument, are recognised in “Net trading
income/(loss) and results from investment securities”.
●
Interest income calculated with the EIR method is recognised in “Interest and similar income”.
●
Modification gains or losses, recognised in “Credit provisions and other impairment charges”.
Equity instruments at FVTOCI
After initial recognition, investments in equity instruments at FVTOCI are measured at fair value, with no deduction for sale or disposal costs.
With the exception of dividends received, the associated gains and losses (including any related foreign exchange component) is recognised in
OCI. Amounts presented in OCI are not subsequently recycled to the Income Statement, instead the cumulative gain or loss is transferred
within equity from accumulated OCI to retained earnings.
Dividends are recognised in “Net other income/(expense)” line item of the Income Statement when all of the following criteria are met:
●
the Group's right to receive payment of the dividend is established;
●
it is probable that the economic benefits associated with the dividend will flow to the Group;
●
the amount of the dividend can be measured reliably;
●
the dividend clearly does not represent a recovery of part of the cost of the investment.
Financial assets and financial liabilities measured at FVTPL
After initial recognition, financial assets and financial liabilities that are classified as at FVTPL are measured at fair value, with no deduction for
sale or disposal costs. Gains and losses arising from fair value remeasurement are recognised in their entirety in “Net trading income/(loss)
and results from investment securities”. All changes to the fair value of a FVTPL liability due to market risk are recorded in profit and loss
while changes due to the Group’s own credit risk are recorded in OCI. The amount presented in OCI is not subsequently transferred to profit
or loss even when the liability is derecognised and the amounts are realised. The cumulative gain or loss is transferred within equity from
accumulated OCI to retained earnings.
Reclassification of financial assets
The Group reclassifies all affected financial assets only when the Group changes its business model for managing financial assets. The
reclassification is applied prospectively from the reclassification date, which is the first day of the first quarterly reporting period following the
change in the business model.
Changes in the Group’s business models are usually the result of external or internal changes, affecting significantly the Group’s operations.
Investments in equity instruments that are designated as at FVTOCI, or any financial assets or liabilities that are designated at FVTPL, cannot
be reclassified because the election to designate them as at FVTOCI or FVTPL respectively, at initial recognition, is irrevocable.
2.7.7
Impairment - Expected Credit Losses
ECL are recognised for all financial assets measured at amortised cost, debt financial assets measured at FVTOCI, lease receivables, financial
guarantees and certain loan commitments. ECL represent the difference between contractual cash flows and those that the Group expects to
receive, discounted at the financial asset’s EIR. For loan commitments and other credit facilities in scope of ECL, the expected cash shortfalls
are determined by considering expected future drawdowns.
Notes to the Financial Statements
Group and Bank
222
Recognition of expected credit losses
At initial recognition, an impairment allowance is required for ECL resulting from default events that are possible within the next 12 months
(12-month ECL), weighted by the risk of a default occurring. Instruments in this category are referred to as instruments in Stage 1. For
instruments with a remaining maturity of less than 12 months, ECL are determined for this shorter period.
In the event of a significant increase in credit risk (“SICR”), an ECL allowance is required, reflecting lifetime cash shortfalls that would result
from all possible default events over the expected life of the financial instrument (“lifetime ECL”), weighted by the risk of a default occurring.
Instruments in this category are referred to as instruments in Stage 2.
Lifetime ECL are always recognised on financial assets for which there is objective evidence of impairment, that is they are considered to be in
default or otherwise credit-impaired. Such instruments are referred to as instruments in Stage 3.
POCIs are classified as credit impaired at initial recognition. An instrument is POCI if it has been purchased with a material discount to its par
value that reflects the incurred credit losses.
For POCI financial assets, the Group recognises adverse changes in lifetime ECL since initial recognition as a loss allowance with any changes
recognised in the Income Statement. POCI are initially recognised at fair value with interest income subsequently being recognised based on a
credit-adjusted EIR. POCI may also include financial instruments that are newly recognised following a substantial modification and remain a
separate category until maturity. Any favourable changes for POCI assets are ECL impairment gains even if the resulting expected cash flows
exceed the estimated cash flows on initial recognition.
The Group does not apply the practical expedient that allows a lifetime ECL for lease receivables to be recognised irrespective of whether a
SICR has occurred. Instead, all such receivables are incorporated into the standard ECL calculation.
Impairment charge for ECL is recognised in the Income Statement with a corresponding ECL allowance reported as a decrease in the carrying
value of financial assets measured at amortised cost on the statement of financial position. For financial assets measured at FVTOCI, the
carrying value is not reduced, but the ECL allowance is recognised in OCI. For off-balance sheet financial instruments, the ECL allowance is
reported as a provision in “Other liabilities”. Impairment charge for ECL is recognised in the Income Statement in “Credit provisions and other
impairment charges”.
Write-off
A write-off is made when the Group does not have a reasonable expectation to recover all or part of a financial asset. Write-offs reduce the
principal amount of a claim and are charged against previously established allowances for credit losses. Recoveries, in part or in full, of
amounts previously written off are generally credited to “Credit provisions and other impairment charges”. Write-offs and partial write-offs
represent derecognition or partial derecognition events.
Definition of default
The Group has aligned the definition of default for financial reporting purposes, with the non performing exposures (NPE) definition used for
regulatory purposes, as per EBA Implementing Technical Standards on Supervisory reporting on forbearance and non-performing exposures,
as adopted by the Commission Implementing Regulation (EU) 2015/227 of 9 January 2015 amending Implementing Regulation (EU) No
680/2014 laying down implementing technical standards with regard to supervisory reporting of institutions according to Regulation (EU) No
575/2013 of the European Parliament and of the Council (“EBA ITS”). Following the financial crisis, the EBA established tighter standards
around the definition of default (CRR Article 178) to achieve greater alignment across banks and jurisdictions being applied from 1 January
2021. The definition of default for financial reporting purposes is consistent with the one used for internal credit risk management purposes.
For more information on the definition of default please refer to Note 4.2.6 “Impairment of amortised cost and FVTOCI financial assets”.
Measurement of Expected Credit Losses
The Group assesses on a forward-looking basis the ECL associated with all financial assets subject to impairment under IFRS 9. The Group
recognises an ECL allowance for such losses at each reporting date. The measurement of ECL reflects:
●
An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes. The Group uses three
macroeconomic scenarios and estimates the ECL that would arise under each scenario. A weighting is allocated to each scenario,
such that the weighted probabilities of all three scenarios are equal to one. The distribution of possible ECL may be non-linear, hence
three distinct calculations are performed, where the associated ECLs are multiplied by the weighting allocated to the respective
scenario. The sum of the three weighted ECL calculations represents the probability-weighted ECL.
●
The time value of money.
●
Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events,
current conditions and forecasts of future economic conditions.
Notes to the Financial Statements
Group and Bank
223
For the purposes of measuring ECL, the estimate of expected cash shortfalls reflects the cash proceeds expected from collateral liquidation (if
any) and other credit enhancements that are part of the contractual terms and are not recognised separately by the Group. The estimate of
expected cash shortfalls on a collateralized loan exposure reflects the assumptions used regarding the amount and timing of cash flows that
are expected from foreclosure on the collateral less the costs of obtaining and selling the collateral, irrespective of whether the foreclosure is
probable or not.
The ECL calculations are based on the following factors:
●
Exposure at Default ("EAD"):
This is an estimate of the exposure at a future default date, taking into account expected changes in
the exposure after the reporting date, including repayments of principal and interest, and expected drawdowns on committed
facilities.
●
Probability of Default ("PD"):
Represents the likelihood of a borrower/issuer defaulting on its financial obligation, assessed on the
prevailing economic conditions at the reporting date, adjusted to take into account estimates of future economic conditions that are
likely to impact the risk of default either over the next 12 months for Stage 1 financial assets, or over the remaining lifetime, for
Stage 2 financial assets
.
●
Loss given default ("LGD"):
Represents the Group's expectation of the extent of loss on a defaulted exposure. The LGD varies by type
of counterparty, type and seniority of claim and availability of collateral or other credit support. The determination of LGD takes into
account expected future cash flows from collateral and other credit enhancements or expected payouts from bankruptcy
proceedings for unsecured claims and, where applicable, time to realization of collateral and the seniority of claims. LGD is expressed
as a percentage loss per unit of EAD
.
●
Discount Rate:
The implied discount factor based on the original EIR of the financial asset or an approximation thereof.
The PD and LGD are determined for three different scenarios whereas EAD projections are treated as scenario independent.
The ECL is determined by projecting the PD, LGD and EAD for each time step between future cash flow dates and for each individual exposure
or collective segment. These three components are multiplied together and adjusted for the likelihood of survival, if appropriate. This
effectively calculates an ECL for each future period, which is then discounted back to the reporting date and summed.
The Group recognises an ECL allowance on irrevocable commitments to extend credit, financial guarantee contracts (LGs) and letters of
credit (LCs), on the date that the Group becomes a party to the irrevocable commitment. No ECL allowance is recognised on
revocable loan commitments, as such commitments do not meet the definition of a financial instrument. For revolving lending
exposures (i.e. facilities that include both a loan and a revocable undrawn commitment component), the EAD represents the
expected balance at default, taking into account any expected drawdowns, based on the Group’s historical experience. The ECL
allowance on financial guarantees and letters of credit written by the Group, is based on the Credit Conversion Factor (“CCF”)
applicable to the relevant financial instrument type, which converts the off-balance sheet amount to an EAD amount.
The Bank has initiated the process of enhancing its credit risk assessment process, incorporating climate and environmental factors for
the purposes of evaluating borrower’s risk of default and ultimately the ECL calculation. Acknowledging the importance and potential
impact of Environmental, Social and Governance (ESG) risks, the Bank has proceeded with the identification and materiality
assessment of such risks and their incorporation in the overall risk management framework, and is committed to monitoring,
assessing and managing the particular risks going forward. To that end, in alignment with relevant supervisory expectations and good
market practices, the Bank, through a set of initiatives, is planning to further enhance the incorporation of ESG factors in its Risk
Management Framework (including link with borrower’s default risk and ECL) as methodological approaches mature, quantification
and analytical capabilities develop and additional climate and environmental data become available.
Management adjustments to expected credit losses
Management adjustments may be performed to factor in certain conditions and circumstances prevailing at the reporting date which are
not fully captured into the ECL models, based on management judgment. These relate to post-model adjustments (“PMAs”) to the
ECL model output which are calculated and allocated at a granular level following relevant risk assessment and analysis, resulting in
either an increase or a decrease in the total ECL allowance, and to in-model adjustments to model inputs. Further information on
adjustments applied is disclosed in Note 4.2.6 “Impairment of amortised cost and FVTOCI financial assets”.
Forward looking economic inputs
Forward looking information (FLI) is incorporated in the ECL measurement of collectively assessed loans and debt securities through the PD
and LGD models. The expected recoveries (cash flow recoveries or liquidation of collateral) used in the ECL measurement of wholesale lending
exposures individually assessed, takes into account FLI based on the Bank’s forecasts of the relevant macroeconomic factors.
The Group applies three scenarios, i.e. baseline, optimistic, adverse, developed by the Bank’s Economic Analysis Division (“EADN”). The
macroeconomic scenarios used for measuring ECL are the same with the ones used for evaluating SICR.
The main macroeconomic variables utilized by the Group, affecting the level of ECL are the following:
●
GDP growth rate
●
House price index (HPI)
Notes to the Financial Statements
Group and Bank
224
Significant Increase in Credit Risk
A financial asset is classified as Stage 2 when a SICR since its initial recognition has occurred and the financial asset does not meet the
definition for Stage 3. At each reporting date, the Group performs the SICR assessment on the individual financial instrument level by
comparing the risk of a default occurring over the remaining expected lifetime of the exposure with the expected risk of a default as
estimated at origination.
The Group's process to assess SICR is multi-factor and has three main components:
●
a quantitative element
, i.e. reflecting a quantitative comparison of PD or credit rating at the reporting date versus the respective
metric at initial recognition;
●
a qualitative element
, i.e. all Forborne Performing Exposures (FPE), in accordance with EBA ITS, internal watch list for corporate
obligors; and
●
"backstop" indicators
: The Group applies on all lending exposures the IFRS 9 presumption that a SICR has occurred when the
financial asset is more than 30 days past due. In addition, the EBA backstop indicator of the threefold increase in PD is applied as a
rule for Stage 2 allocation for lending exposures.
Further information on SICR is disclosed in Note 4.2.6 “Impairment of amortised cost and FVTOCI financial assets”.
2.8
Derivative financial instruments and hedging
2.8.1
Derivative financial instruments
Derivative financial instruments including foreign exchange contracts, forward rate agreements, currency and interest rate swaps,
interest rate futures, currency and interest rate options (both written and purchased) and other derivative financial instruments are
initially recognised in the Statement of Financial Position at fair value and subsequently are re-measured at their fair value.
Derivatives are presented in assets when favourable to the Group and in liabilities when unfavourable to the Group. Where the
Group enters into derivative instruments used for trading purposes, realised and unrealised gains and losses are recognised in the
Income Statement in “Net trading income / (loss) and results from investment securities”.
A derivative may be embedded in another financial instrument, known as a “host contract”. If the host is a contract other than a financial
asset, the embedded derivative is bifurcated from its host contract and treated as a separate derivative, provided that its risk and
economic characteristics are not closely related to those of the host contract, it meets the accounting definition of a derivative, and
the host contract is not carried at fair value with unrealized gains and losses reported in the Income Statement.
If the host contract is a financial asset, IFRS 9 precludes the separation of any embedded derivatives from a hybrid contract that is a
financial asset within its scope. Instead, the hybrid financial asset is measured at fair value in its entirety .
2.8.2
Continuation of IAS 39 hedge accounting requirements
IFRS 9 includes an accounting policy choice to continue IAS 39 hedge accounting, which the Group has exercised, and will comply with
the revised annual hedge accounting disclosures as required by the related amendments to IFRS 7
Financial Instruments: Disclosures
.
Refer to Note 20 "Derivative financial instruments".
2.8.3
Hedge accounting
Certain derivative instruments transacted as effective economic hedges under the Group’s risk management positions, do not qualify for
hedge accounting under the specific rules of IAS 39 and are therefore treated in the same way as derivative instruments held for
trading purposes.
The Group also uses derivative instruments as part of its asset and liability management activities to manage exposures to interest rate,
foreign currency and credit risks, including exposures arising from forecast transactions. The Group applies fair value, cash flow or
net investment hedge accounting when transactions meet the specified criteria to obtain hedge accounting treatment. The Group’s
criteria for a derivative instrument to be accounted for as a hedge include:
i.
at inception of the hedge, there is formal designation and documentation of the hedging instrument, hedged item, hedging objective,
strategy and relationship;
ii.
the hedge is documented showing that it is expected to be highly effective in offsetting the risk in the hedged item throughout the
hedging period. A hedge is considered to be highly effective when the Group achieves offsetting changes in fair value between 80 percent
and 125 percent for the risk being hedged; and
iii.
the hedge is highly effective on an ongoing basis.
2.8.4
Fair value hedges
For qualifying fair value hedges, the change in fair value of the hedging derivative is recognised in the Income Statement along with the
corresponding change in the fair value of the hedged item that is attributable to that specific hedged risk. If the hedge relationship
no longer meets the criteria for hedge accounting, for reasons other than the derecognition of the hedged item, or the hedging
Notes to the Financial Statements
Group and Bank
225
designation is revoked, the cumulative adjustment to the carrying amount of the hedged item, is, in the case of interest bearing
financial instruments, amortised to the Income Statement over the remaining term of the original hedge item, while for non-interest
bearing instruments that amount is immediately recognised in the Income Statement. If the hedged item has been derecognised, e.g.
sold or repaid, the unamortized fair value adjustment is recognised immediately in the Income Statement.
2.8.5
Cash flow hedges
Fair value gains or losses associated with the effective portion of a derivative designated as a cash flow hedge are recognised initially in
Οther comprehensive income. When the cash flows that the derivative is hedging (including cash flows from transactions that were
only forecast when the derivative hedge was effected) materialize, resulting in income or expense, then the associated gain or loss
on the hedging derivative is simultaneously transferred from Other comprehensive income to corresponding income or expense line
item.
If a cash flow hedge for a forecast transaction is deemed to be no longer effective, or the hedge relationship is terminated, the
cumulative gain or loss on the hedging derivative previously reported in Other comprehensive income is transferred to the Income
Statement when the committed or forecast transaction occurs even if it is no longer probable that it will occur. If the forecasted
transaction is no longer expected to occur, then the cumulative gain or loss is transferred immediately to the Income Stateme nt.
The foreign currency risk of a highly probable forecast intragroup transaction may qualify as a hedged item in the consolidated Financial
Statements, provided that: (a) the transaction is denominated in a currency other than the functional currency of the entity entering
into that transaction; and (b) the foreign currency risk will affect the consolidated Income Statement.
2.8.6
Net investment hedge
Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges. The gain or loss on the effective
portion of the hedging instrument is recognised in the Statement of Other comprehensive income; any gain or loss on the ineffective
portion is recognized immediately in the Income Statement. Gains and losses accumulated in other comprehensive income are
recycled in the Income Statement on the disposal of the foreign operation.
2.8.7
Hedge effectiveness testing
To qualify for hedge accounting, the Group requires that at the inception of the hedge and throughout its life, each hedge must be
expected to be highly effective (prospective test) and demonstrate actual effectiveness (retrospective test) on an ongoing basis.
The documentation of each hedging relationship sets out how effective the hedge is assessed. The method the Group adopts for
assessing hedge effectiveness will depend on its risk management strategy.
The Group implements a number of reliefs that apply to all hedging relationships directly affected by interest rate benchmark reform (i.e.
Interest Rate Benchmark Reform Phase 1). The reliefs apply during the period before the replacement of an existing interest rate
benchmark with an alternative risk-free rate (“RFR”). A hedging relationship is affected if interest rate benchmark reform gives rise to
uncertainties about the timing and or amount of benchmark-based cash flows of the hedged item or the hedging instrument. The
reliefs cease to apply once certain conditions are met. These include when the uncertainty arising from IBOR reform is no longer
present with respect to the timing and amount of the benchmark-based cash flows of the hedged item, if the hedging relationship is
discontinued or once amounts in the cash flow hedge reserve have been released.
Hedge ineffectiveness is recognized in the Income Statement in “Net trading income / (loss) and results from investment securities ”.
2.8.8
IBOR Reform-
Treatment of changes in the basis used for determining the contractual cash flows of the component of a hedge
Non-discontinuation of hedges
The documentation of the existing hedges shall be updated to reflect the changes brought about by the reform of the reference interest
rate (IBOR reform) on the basis for determining the contractual cash flows of the hedging components. These updates resulting from
the IBOR reform do not cause the discontinuation of the hedge nor the designation of a new accounting hedge if the aim of such
updates is only to:
●
designate the alternative reference interest rate (contractually or non-contractually specified) as a hedged risk;
●
update the description of the hedged item, including a description of the hedged portion of cash flows or of the fair value;
●
update the description of the hedging instrument;
●
update the description of the method used to assess the effectiveness of the hedge. These updates are performed as and when
changes are made to the hedged items or the hedging instruments; an accounting hedge may be updated several successive times.
Changes not directly resulting from the application of the IBOR reform and impacting the basis used for determining the contractual cash
flows of the hedging relationship components or the hedging documentation are analysed beforehand in order to confirm
compliance with the qualifying criteria for hedge accounting.
Specific accounting treatments
Notes to the Financial Statements
Group and Bank
226
Regarding fair value hedges and cash flow hedges, the applicable accounting requirements remain unchanged for the recognition of gains
and losses resulting from the reassessment of the hedged component and the hedging instrument taking account of the changes
described above.
For the purpose of the retrospective effectiveness assessment, the cumulative fair value changes may be reset to zero on a case by case
basis for each hedging relationship modified.
The amounts of gains or losses recognised in equity (as unrealised or deferred gains and losses), for the cash flow hedges that have been
discontinued prospectively after a change in the reference interest rate used as a basis for the future cash flows hedged are kept in
equity until the hedged cash flows are recorded on the Income Statement.
For the Bank’s derivative instruments that have been designated as hedging instruments the change over from EONIA to €STER took
place during 2021 and there was no effect on the consolidated and separate Income Statement.
2.9
Fair value of financial instruments
The Group measures the fair value of its financial instruments based on a framework for measuring fair value that categorises financial
instruments based on a three-level hierarchy of the inputs to the valuation technique, as discussed below.
Level 1
: Unadjusted quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity
securities and derivative contracts that are traded in an active market. An active market, is a market in which transactions for assets
or liabilities take place with sufficient frequency and volume to provide pricing information on an ongoing basis and are
characterized with low bid/ask spreads.
Level 2
: Observable inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities, quoted prices in
markets that are not active, or other inputs that are observable or can be corroborated by observable market data (for example
derived from prices) for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with
quoted prices that are traded less frequently than exchange-traded instruments, as well as debt securities without quoted prices and
certain derivative contracts whose values are determined using pricing models, discounted cash flow methodologies, or similar
techniques with inputs that are observable in the market or can be derived principally from or corroborated by observable market
data. This category generally includes government and corporate debt securities with prices in markets that are not active and
certain over-the-counter (“OTC”) derivative contracts.
Level 3:
liabilities. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that
measurement is a Level 3 measurement. Level 3 assets and liabilities include financial instruments whose value is determined using
pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair
value requires significant Management judgment or estimation.
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety, is determined on the basis of the
lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed
against the fair value measurement in its entirety.
2.10
Recognition of deferred Day 1 profit or loss
When the fair value is determined using valuation models for which not all inputs are market observable prices or rates, the Group
initially recognises a financial instrument at the transaction price, which is the best indicator of fair value, although the value
obtained from the relevant valuation model may differ. Such a difference between the transaction price and the model value is
commonly referred to as “Day 1 profit or loss”. The Group does not recognise that initial difference, immediately in the Income
Statement.
Deferred Day 1 profit or loss is amortised over the life of the instrument. Any unrecognised “Day 1 profit or loss” is immediately released
to the Income Statement if fair value of the financial instrument in question can be determined either by using market observable
model inputs or by reference to a quoted price for the same product in an active market or upon settlement.
After entering into a transaction, the Group measures the financial instrument at fair value, adjusted for the deferred “Day 1 profit or
loss”. Subsequent changes in fair value are recognised immediately in the Income Statement without reversal of deferred “Day 1
profits and losses”.
2.11
Derecognition
2.11.1
Financial assets
A financial asset (or, where applicable, a part of a financial asset or group of similar financial assets) is derecognised when:
i.
the rights to receive cash flows from the asset have expired;
ii.
the Group retains the right to receive cash flows from the asset but assumes a contractual obligation to pay the cash flows to one or more
recipients under a ‘pass through’ arrangement . Under a pass through arrangement the Group has no obligation to pay amounts to the
Notes to the Financial Statements
Group and Bank
227
eventual recipient unless it collects equivalent amounts from the original asset, the Group is prohibited by the terms of the transfer
contract from selling or pledging the original asset other than as security to the eventual recipient for the obligation to pay them cash
flows and the Group has an obligation to remit any cash flows it collects on behalf of the eventual recipient without material delay.
Furthermore, the Group is not entitled to reinvest such cash flows, except in cash and cash equivalents during a short settlement period
and interest earned on such investments is passed to the eventual recipients.; or
iii.
the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and
rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset. NBG has transferred control when the transferee has the practical ability to sell the asset in its entirety to an
unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the
risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement
in the asset. Continuing involvement in the form of a guarantee over the transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that the Group could be required to repay.
As part of its activities, the Group securitises certain financial assets, generally through the sale of these assets to special purpose
entities, which issue securities collateralised with these assets.
To the extent that the Group sells these securities to third party investors, the transferred assets may qualify for derecognition in full or
in part. Gains or losses on transfers that qualify for derecognition are based on the carrying amount of the financial assets
derecognised and the retained interest, based on their relative fair values at the date of the transfer.
Modification of financial assets
A financial asset may also be derecognised if, upon renegotiation of the contractual terms of the lending arrangement, the modification
of the terms is substantial enough to be considered as an expiry of the contractual rights to the cash flows of the original instrument,
in which case a new financial asset is recognised based on the revised contractual terms. The new financial asset is recognised at fair
value at the date of the modification and the difference between the fair value of the new financial asset and the net carrying
amount of the original one is recognised in the income statement as a derecognition gain or loss.
When the modification is not considered substantial in order to lead to derecognition, the gain or loss arising from the modification is
calculated as the difference between the present value of the new contractual cash flows (i.e. based on the modified terms)
discounted by the original effective interest rate of the loan and the carrying amount post write-off (if any). Further information on
modification that does not lead to derecognition is disclosed in Note 4.2.11 “Forbearance”.
IBOR Reform - Treatment of changes in the basis for determining the contractual cash flow of financial assets and liabilities
The basis for determining the contractual cash flows of a financial asset or liability may be modified:
•
either by amending the contractual terms and conditions set during the initial recognition of the financial instrument (e.g.: when the
agreement is renegotiated, the contractual terms and conditions are amended to replace the initial reference interest rate by an
alternative one),
•
or by applying the appropriate external dispositions without requiring a change in contractual terms (e.g.: the method for
determining the reference interest rate is modified without any change in the contractual terms and conditions, i.e., the EONIA has
been quoted by reference to the €STER + 8.5bp since October 2019),
•
or as a result of the activation of an existing contractual term or condition (example: application of the contractual rate replacement
provision, or “Fallback” provision).
If, in the context of the IBOR Reform, there is a change in the basis for determining the contractual cash flows of a financial asset or
liability at amortised cost or of a financial asset at FVTOCI, the reassessment of the contractual cash flows is regarded as a
modification of the EIR applied to determine the future interest income or expense and does not generate a gain or loss in the
Income Statement.
This treatment depends on compliance with the following conditions:
•
a change in the basis for determining the contractual cash flows is required and results directly from the IBOR Reform; and
•
The cases giving rise to a new basis for determining the contractual cash flows considered economically equivalent to the former basis
are, for example:
•
-
an alternative reference interest rate (or by changing the method used to determine the reference interest rate in
question), with
-
the addition of a fixed spread necessary to compensate for the difference in basis between the existing reference interest
rate and the alternative one;
•
changes in the determination of the amount of interest resulting from the use of a new reference interest rate; and
Notes to the Financial Statements
Group and Bank
228
•
the addition of a Fallback provision to the contractual terms and conditions of a financial asset or liability to allow for the
implementation of the changes described above (such as replacement of the rate).
2.11.2
Financial liabilities
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expired.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, the exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability, and the difference between the carrying amount of the extinguished or transferred liability and the
consideration paid including any non-cash assets transferred or liabilities assumed is recognised in the Income Statement.
For financial liabilities, the Group considers a modification to be substantial based on qualitative factors and if it results in a difference
between the adjusted discounted present value and the original carrying amount of the financial liability of, or greater than, ten
percent.
2.12
IBOR Reform
The interest rate benchmark reform, initiated by the Financial Stability Board in 2014, aims at replacing these benchmark rates with
alternative rates, in particular the Risk-Free Rates (“RFR”). This reform accelerated on 5 March 2021, when the Financial Conduct
Authority, the supervisor of LIBOR, announced the official dates for the cessation and loss of representativeness:
●
EUR and CHF LIBOR (all terms); GBP and JPY LIBOR (terms: overnight, 1 week, 2 months and 12 months); LIBOR USD (terms: 1 week
and 2 months): the publication of these benchmark settings contributed by a panel of banks has permanently ceased as of 1 January
2022.
Besides, regarding the major euro area interest rate benchmark indexes:
●
EURIBOR: European Money Markets Institute (“EMMI”), administrator of the index, does not plan to cease its publication. The
EURIBOR will thus be maintained in the coming years.
●
EONIA: its publication ceased definitively on 3 January 2022. The successor rate recommended by the ECB working group on the
euro area is the €STR on which the EONIA was based since end 2019.
In parallel,
other interest rate indexes based on LIBOR are also subject to reform (e.g. SOR, MIFOR, THBFIX, ICE swap rate). Local regulators or
administrators continue clarifying the roadmap and issuing recommendations to reduce the risks associated with these transitions.
Impact of the IBOR Reform to the Group
With the cessation deadlines announced for LIBOR and EONIA in mind, the public authorities and the working groups set up by the central
banks issued recommendations to the industry. These recommendations aim at stopping the production of new contracts referencing these
indexes as well as at migrating the existing contracts referencing said indexes to alternative benchmark rates. The Group took the following
steps with respect to the Reform:
●
strengthening of the new contracts through the inclusion of fallback clauses and risk warnings;
●
fair and homogenous treatment of customers through the involvement of the compliance teams in the renegotiations of contracts.
In 2022
the Group focused its action on transitioning its agreements referencing USD Libor. Depending on the products, the transition has,
overall, been carried out according to three major modalities:
●
loans and credit lines are subject to individual renegotiations, together with the related hedging instruments, in order to maintain
their effectiveness;
●
most of the derivative products have been transitioned at the instigation of the clearing houses or through the activation of their
fallback clauses (protocol set up by the ISDA). Some derivative products have, however, been renegotiated bilaterally;
●
lastly, for some products (typically: cash accounts and similar), the transition has been done through an update of the general
conditions.
Group's Exposures as at 31 December 2022 in € million
Financial assets and liabilities and derivatives impacted by the interest rate benchmarks reform:
Current benchmark interest rates
New risk-free rates
likely to/or has
replaced current
benchmark interest
rates
Financial assets
(excluding
derivatives) impacted
by the reform
Financial liabilities
(excluding
derivatives) impacted
by the reform
Derivatives impacted by
the reform
Carrying value
Notionals
Fair Value
Index whose listing ends on 30.06.2023
Notes to the Financial Statements
Group and Bank
229
LIBOR - London Interbank Offered
Rate - USD
Secured Overnight
Financing Rate (SOFR)
2,026
35
2,199
25
Total
2,026
35
2,199
25
Risks associated with the IBOR Reform
The
risks related to the IBOR reform are now mainly limited to USD LIBOR for the period running until June 2023. They have been identified as
follows:
●
programme governance and execution risk, liable to cause delays and loss of opportunities, is monitored as part of the work of
regular committees and arbitration bodies;
●
legal documentation risk, liable to lead to post-transition litigations, is managed through fallback clauses inserted in the contracts
depending on the availability of market standards;
●
market risk, with the creation of a basis risk between the rate curves associated with the different indexes, is the subject of close
monitoring and supervision;
●
operational risks in the execution of the transition of transactions, depending in particular on the willingness and preparedness of
our counterparties, the volume of transactions to be migrated and their spread over time;
●
regulatory risk managed according to the Group guidelines which are in line with the recommendations of the regulators and
working groups on the LIBOR transition; these guidelines concern the products which, by exception, continue referencing USD LIBOR;
●
misconduct risk, related to the end of LIBOR, notably managed through:
−
specific guidelines detailed by business line;
−
training of the teams;
−
communications to customers regarding the transition -related risks, the alternative solutions that may be implemented,
and on how they could be affected.
Based on the progress made to date, the Group is confident in its operational capacity to manage the transition to the new benchmark
rate.
2.13
Sale and repurchase agreements
Securities sold subject to a commitment to repurchase them at a predetermined price (‘Repos’) are retained on the Statement of
Financial Position and the counterparty liability is included in amounts Due to banks, Due to customers or Other deposits, which are
classified in Due to customers in the Statements of Financial Position, as appropriate. Securities purchased under agreement to resell
(‘Reverse Repos’) are recorded as Due from banks or Loans and advances to customers, as appropriate. The difference between sale
and repurchase price (or the purchase and resale price) is treated as interest expense (or income) and accrued over the life of the
Repos (or Reverse Repos) agreement using the effective interest rate method. The Group’s policy is to monitor the market value of
the principal amount loaned under resale agreements and obtain collateral from or return collateral pledged to counterparties when
appropriate, thus these financing agreements do not create material credit risk.
2.14
Securities borrowing and lending
Securities borrowing and lending transactions are usually collateralised by securities or cash. Cash advanced or received as collateral is
recorded as an asset or liability.
Securities borrowed are not recognised in the Statement of Financial Position, unless they are then sold to third parties, in which case,
the obligation to return the securities is recorded at fair value as a trading liability with any gains or losses included in the Income
Statement in “Net trading income”.
The Group monitors the market value of the securities borrowed and lent on a regular basis and provides or requests additional
collateral in accordance with the underlying agreements. Fees and interest received or paid are recorded as interest income or
interest expense, on an accrual basis.
2.15
Regular way purchases and sales of financial assets and liabilities
“Regular way” purchases and sales of financial assets and liabilities (that is, those that require delivery within the time frame established
by regulation or market convention) are recognised on the settlement date apart from trading and investment securities and
derivative financial instruments, which are recognised on the trade date, which is the date that the Group commits to purchase or
sell the asset. Other purchases and sales of trading securities are treated as derivatives until settlement occurs.
2.16
Offsetting
A financial asset and a financial liability are offset and the net amount presented on the Statement of Financial Position when the Group has a
legally enforceable right to set off the recognised amounts and intends either to settle the asset and liability on a net basis, or to realise the
asset and settle the liability simultaneously. The legal right to set off the recognised amounts must be enforceable in all circumstances, in both
the normal course of business and in the event of default of one of the counterparties. Please refer to Note 4.8 “Offsetting financial assets
and financial liabilities”.
2.17
Commodity broker-trader
Notes to the Financial Statements
Group and Bank
230
The Βank acts as a broker -dealer with respect to emission rights and measures those emission rights, that do not qualify as a derivative
financial instrument but as a commodity, at fair value less costs to sell. These emission rights are presented in in the Statement of
Financial Position in “Other assets” and the changes in fair value less costs to sell are recognised in the period of the change and are
presented in the Income Statement in “Net trading income and results from investment securities”.
2.18
Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured. Revenue associated with the rendering of services is recognized by reference to the stage of completion of the
transaction at the end of the reporting period.
2.18.1
Interest and similar income
Interest from interest-bearing assets and liabilities are recognized as net interest income using the EIR. EIR is the rate that discounts
expected future cash receipts through the expected life of the financial instrument to its gross carrying amount. The calculation takes
into account the contractual interest rate, along with any fees or incremental costs that are directly attributable to the instrument
and all other premiums or discounts.
2.18.2
Fee and commission income
Fee and commission income includes asset management fees, commission fees, investment banking fees and credit card fees. The Group
recognizes asset management fees based on time elapsed, which depicts the rendering of investment management services over
time.
Commission income includes sales, mutual fund management fees and brokerage commissions. Sales and brokerage commissions are
generally recognized at a point in time when the transaction is executed. Mutual fund management fees are recognized over time
and are generally calculated based on the average daily net asset value of the fund during the period.
Investment banking fees include advisory fees and underwriting fees and are generally recognized at a point in time as income upon
successful completion of the engagement.
2.19
Property and equipment, RoU assets and foreclosed assets
Property and equipment include land and buildings, leasehold improvements, transportation and other equipment, held by the Group for
use in the supply of services or for administrative purposes. Property and equipment are initially recorded at cost, which includes all
costs necessary to bring an asset into operating condition. Right-of-Use (“RoU”) assets are presented together with Property and
equipment in the Statement of Financial Position, and are analysed in Note 26 "Property and equipment". For more information on
the accounting for RoU Assets see Section 2.24 “Leases”.
Property and equipment are subsequently measured at cost less accumulated depreciation and accumulated impairment losses. Costs
incurred subsequent to the acquisition of an asset which is classified as property and equipment are capitalised only when it is
probable that they will result in future economic benefits to the Group beyond those originally anticipated for the asset, otherwise
they are expensed as incurred.
Depreciation begins when the asset is available for use and ceases only when the asset is derecognised. Depreciation of an asset that is
retired from active use does not cease unless it is fully depreciated, but its useful life is reassessed. Property and equipment are
depreciated on a straight-line basis over their estimated useful lives as follows:
Land
No depreciation
Buildings
Not exceeding 50 years
Leasehold improvements
Residual lease term, not exceeding 12 years
Furniture and related equipment
Not exceeding 12 years
Motor vehicles
Not exceeding 10 years
Hardware and other equipment
Not exceeding 5 years
Right-of-use assets
Straight-line basis over the lease term
At each reporting date the Group assesses whether there is any indication that an item of property or equipment and RoU may be
impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. Where the carrying amount of an
asset exceeds its estimated recoverable amount, it is written down to its recoverable amount. The impairment loss is recognised in
Income Statement in “Credit provisions and other impairment charges”. Gains and losses on disposal of property and equipment are
determined by reference to their carrying amount and are taken into account in determining profit/(loss) before tax.
Foreclosed assets
Assets that are classified as “Foreclosed assets” are included in the Statement of Financial Position in “Other assets” upon actual
foreclosure or when physical possession of the collateral is taken, through mutual agreement or court action. Foreclosed assets arise
when the Group initiates legal actions for debt collection upon the recognition that repayment or restructuring of the debt cannot be
achieved. In case the exposures are collateralized with assets, legal actions involve the initiation of an auction program that targets
Notes to the Financial Statements
Group and Bank
231
the repayment of the loans through the collateral liquidation value. Foreclosed assets are initially measured at the fair value of the
property less estimated costs to sell. Prior to foreclosure, any write-downs, if necessary, are charged to “Impairment charges for ECL”
in the Income Statement.
Subsequent to acquisition, gains or losses on the disposal of, and losses or gains up to the amount of previous write-downs arising from
the (periodic) revaluation of repossessed properties are recorded in the Income Statement in “Net other income/(expense)” and
“Other provisions and impairment charges”, respectively. Foreclosed assets that are held for capital appreciation or rental income,
are classified in the Statement of Financial Position as “Investment property”.
2.20
Investment property
Investment property includes land and buildings owned by the Group (or held through a finance lease agreement) with the intention of
earning rent or for capital appreciation or both, and is initially recorded at cost, which includes transaction costs.
Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and any accumulated
impairment losses.
Investment property is depreciated on a straight-line basis over its estimated useful life, which approximates the useful life of similar
assets included in property and equipment. Investment property is reviewed for impairment when there is an indication of
impairment or at least on an annual basis.
2.21
Goodwill, software, and other intangible assets
2.21.1
Goodwill
Subsequent to initial recognition, goodwill is stated at cost, as established at the date of acquisition (see Notes 2.5 “Business
combinations”-2.5.2 “Goodwill”, above) less accumulated impairment losses.
Goodwill is allocated to cash-generating units (“CGUs”) for the purpose of impairment testing. The allocation is made to those cash-
generating units that are expected to benefit from the business combination in which the goodwill arose.
The Group assesses goodwill for possible impairment annually or more frequently if there are indications for impairment. The
assessment involves estimating whether the carrying amount of the goodwill remains fully recoverable. When making this
assessment the Group compares the carrying value of the CGU to which the goodwill is allocated to its recoverable amount, which is
the higher of fair value less cost to sell and value in use. Fair value is estimated by reference to market value, if available, or is
determined by a qualified evaluator or pricing model. If the recoverable amount is less than the carrying amount, an irreversible
impairment loss is recognised, and the goodwill is written down by the excess of the carrying amount of the unit over its recoverable
amount.
2.21.2
Intangible assets acquired through business combinations
Intangible assets acquired through business combinations may include brand names, which have an indefinite life and customer
relationships, which have a finite life and are amortised on a straight line basis over their useful lives of 6-11 years.
2.21.3
Software
Software
includes costs that are directly associated with identifiable and unique software products controlled by the Group that are
anticipated to generate future economic benefits exceeding costs beyond one year. Expenditure, which enhances or extends the
performance of computer software programs beyond their original specifications is recognised as a capital improvement and added
to the original cost of the software.
Software is amortised using the straight-line method over the useful life, not exceeding a period of 20 years.
In particular for
internally generated software,
when the intangible asset first meets the recognition criteria. Where no internally generated intangible asset can be recognised,
development expenditure is charged in the period in which it is incurred to the Income Statement.
Research costs are expensed as incurred. An internally generated software arising from development expenditure incurred on an
individual project is recognized only when the Group can demonstrate:
i.
the technical feasibility of completing the internally generated software so that it will be available for use,
ii.
its intention to complete and use the asset,
iii.
the ability to use the asset,
iv.
how the asset will generate future economic benefits,
v.
the ability of adequate technical, financial and other resources to complete the development and use the asset and
vi.
the ability to measure reliably the expenditure during development.
Notes to the Financial Statements
Group and Bank
232
Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less
any accumulated amortization and impairment losses.
Expenditure on starting up an operation or branch, training personnel, advertising and promotion and relocating or reorganizing part or
the entire Group is recognised as an expense when it is incurred.
2.22
Impairment of intangible assets
The Group assesses intangible assets for possible impairment annually or more frequently if there are indications for impairment. If such
indications exist an analysis is performed to assess whether the carrying amount of intangible assets is fully recoverable. A write-
down is made if the carrying amount exceeds the recoverable amount. Any impairment loss is recognised in Income Statement in
“Credit provisions and other impairment charges”.
2.23
Insurance operations
The amendment to IFRS 4
Insurance Contracts
EU on 3 November 2017, provides the option for entities that predominantly undertake insurance activities to defer the effective
date of IFRS 9 until 1 January 2023. The effect of such a deferral is that those entities may continue to report their financial
statements under the existing standard IAS 39.
This temporary exemption from IFRS 9, which was limited to groups that predominantly undertook insurance activities according to the
IASB amendment, has been extended to the insurance sector of financial conglomerates as defined by the Directive 2002/87/EC as
adopted by the European Union.
Τhe Group applied this amendment to NIC, its insurance business which continued to apply IAS 39 “Financial instruments: Recognition
and Measurement” up to the date of sale, 31 of March 2022.
2.24
Leases
The Group at the inception of a contract assess whether the contract is or contains a lease based on whether the Group has the right to
control the use of an identified asset for a period of time obtaining substantially all the economic benefits from the use of the asset
in exchange for consideration.
2.24.1
A Group company is the lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value
assets for which lease payments are recognised as operating expenses on a straight-line basis over the lease term.
At the commencement date of the lease the Group:
a)
Recognises a right of use (“RoU”) asset representing the Group’s right to use the underlying asset in the statement of financial
position.
b)
Recognises a lease liability that represents the present value of the Group’s obligation to make lease payments over the lease terms
in the statement of financial position.
c)
Recognises depreciation on the RoU asset.
d)
Reviews the RoU assets for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable
over the remaining life. Any impairments are charged to the income statement.
e)
Recognises interest expense on the lease liabilities in the income statement.
f)
Separates the total amount of cash paid into the principal portion presented within financing activities and the accrued interest
expense portion presented within operating activities in the cash flow statement.
2.24.2
RoU assets
As stated above, the Group recognises RoU assets at the commencement date of the lease (i.e., the date the underlying asset is available
for use). RoU assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of RoU assets includes the amount of lease liabilities recognised, initial direct costs
incurred, restoration costs and lease payments made at or before the commencement date less any lease incentives received. RoU
assets are depreciated on a straight-line basis over the lease term.
The RoU assets are presented in “Property and equipment”.
Notes to the Financial Statements
Group and Bank
233
2.24.3
Lease liabilities
As stated above, at the commencement date of the lease, the Group recognises lease liabilities which are initially measured at the
present value of the future lease payments, discounted using the rate implicit in the lease or, if this rate cannot be readily
determined, the lessee’s incremental borrowing rate (IBR). The IBR is the rate of interest that the Group would have to pay to
borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the RoU asset in a
similar economic environment.
The lease payments include fixed payments (less any lease incentives receivable), variable lease payments that depend on an index or a
rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease
term reflects exercising the option to terminate.
Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or
condition that triggers the payment occurs. The lease liability is remeasured when there is a change in future lease payments arising
from a change in an index or a rate, if there is a change in the Group’s estimate of the amounts expected to be payable under a
residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination
option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the RoU
asset, or is recorded in the Income Statement if the carrying amount of the RoU asset has been reduced to zero.
2.24.4
Short-term leases and leases of low-value assets
The Group has elected not to recognize RoU assets and lease liabilities for short-term leases that have a lease term of 12 months or less
and leases of low-value assets (€5,000 or less). The Group recognizes the lease payments associated with these leases as an expense
on a straight-line basis over the lease term (Note 12 "General, administrative & other operating expenses").
2.24.5
A Group company is the lessor
Finance lease
: When assets are leased out under a finance lease, the present value of the minimum lease payments is recognized as a
receivable. Lease income is recognized over the term of the lease using the net investment method (before tax), which reflects a
constant periodic rate of return. Finance lease receivables are included in loans and advances to customers.
Operating lease
: Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset
are classified as operating leases. Property leased out under operating leases are included in the Statement of Financial Position
based on the nature of the asset. They are depreciated over their useful lives on a basis consistent with similar owned property.
Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term.
2.25
Cash and cash equivalents
For the purposes of the Cash Flow Statement, cash and cash equivalents include cash on hand, unrestricted balances held with central
banks, amounts due from other banks and highly liquid financial assets with original maturities of less than three months from the
date of acquisition such as treasury bills and other eligible bills, investment and trading securities which are subject to insignificant
risk of changes to fair value and are used by the Group in the management of its short-term commitments.
2.26
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an
outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of
the obligation can be made.
2.27
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt
instrument.
A financial guarantee contract, other than those assessed as insurance contracts, is recognised initially at their fair value and
subsequently measured at the higher of: (a) the unamortized balance of the related fees received and deferred, and (b) the amount
of the loss allowance determined in accordance with IFRS 9.
2.28
Employee benefits
Group companies operate various post-employment benefit plans in accordance with local conditions and practices in their respective
countries. Such plans are classified as defined benefit and defined contribution plans.
2.28.1
Pension plans
Notes to the Financial Statements
Group and Bank
234
a. Defined benefit plans
A defined benefit plan is a post-employment benefit plan that defines an amount of benefit to be provided, determined using a number
of financial and demographic assumptions. The most significant assumptions include age, years of service or compensation, life
expectancy, the discount rate, expected salary increases and pension rates. For defined benefit plans, the liability is the present value
of the defined benefit obligation as at the reporting date minus the fair value of the plan assets. The defined benefit obligation and
the related costs are calculated by independent actuaries on an annual basis at the end of each annual reporting period, using the
projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future
cash outflows using interest rates of high quality corporate bonds or government bonds that are denominated in the currency in
which the benefits will be paid and, which have terms to maturity approximating the terms of the related liability, or for currencies
for which there is no deep market in such high quality corporate bonds, the market yields (at the end of the reporting period) on
government bonds denominated in that currency shall be used. Net interest is calculated by applying the discount rate at the
beginning of the period to the net defined liability/(asset). Service cost (current service cost, past service cost (including the effect of
curtailments) and gains or losses on settlements) and net interest on the net defined benefit liability/(asset) are charged to the
income statement and are included in staff costs. The defined benefit obligation net of plan assets is recorded on the Statement of
Financial Position, with changes resulting from remeasurements (comprising actuarial gains and losses, the effect of the changes to
the asset ceiling (if applicable) and the return on plan asset (excluding interest)) recognized immediately in OCI, with no subsequent
recycling to profit or loss, in order to fully reflect the full value of the plan deficit or surplus.
b. Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and
has no legal or constructive obligations to pay further contributions, if the entity does not hold sufficient assets to pay all employees’
benefits relating to employee service in the current and prior periods. Group contributions to defined contribution plans are charged
to the income statement in the year to which they relate and are included in staff costs.
2.28.2
Share based payment transactions
The fair value of the employee services received in exchange for the grant of the options is measured by reference to the fair value of the
share options at the date on which they are granted and is recognised in the income statement over the period that the services are
received, which is the vesting period. The total amount to be expensed over the vesting period is determined by reference to the fair
value of the share options granted. Fair value of the options granted is determined using an option-pricing model that takes into
account the share price at the grant date, the exercise price of the option, the life of the option, the expected volatility of the share
price over the life of the option, the expected dividends on it, and the risk-free interest rate over the life of the option.
When the options are exercised and new shares are issued, the proceeds received net of any transaction costs are credited to share
capital (par value) and the surplus to share premium. There were no share based payment transactions in 2021 or 2022 for the
Group and the Bank.
2.28.3
Termination benefits
A liability for a termination benefit is recognised at the earlier of when the Group and the Bank can no longer withdraw the offer of the
termination benefit and when the entity recognises any related restructuring costs.
2.29
Income taxes
Current income tax liability is based on taxable profit for the year. Taxable profit differs from profit/(loss) for the period as reported in
the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group’s current income tax liability is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method.
The principal temporary differences arise from revaluation of certain financial instruments, including securities and derivatives, insurance
reserves, provisions for defined benefit obligations and other post retirement benefits, loss from the Private Sector Initiative (“PSI”)
and property and equipment. DTA relating to the unused tax losses carried forward are recognised to the extent that it is probable
that sufficient taxable profits will be available in the future against which these deductible temporary differences can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the
liability is settled, based on laws that have been enacted or substantially enacted at the reporting date.
Deferred tax assets and liabilities are not recognized if the temporary differences arise from the initial recognition of goodwill or from the
initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the
taxable profits nor the accounting profits.
Notes to the Financial Statements
Group and Bank
235
Recognition of deferred tax assets is based on Management’s best estimate that it is more probable than not that the tax benefits
associated with certain temporary differences, such as tax losses carried forward and tax credits, will be realized, based on all
available evidence. The carrying amount of deferred tax assets is reviewed semi-annually and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. In making such
determination, the Group and the Bank consider all available positive and negative evidence, including future reversals of existing
taxable temporary differences, projected future taxable income and recent financial results. In the event the Group and the Bank
were to determine that it would be able to realize their deferred income tax assets in the future in excess of their recorded amount,
it would make an adjustment to increase the carrying amount of deferred tax assets.
Current and deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current income tax advances
against current income tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Management intends to settle its current tax assets and liabilities on a net basis.
Deferred income tax is recognised for temporary differences arising from investments in subsidiaries, associates and joint ventures,
except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the
difference will not reverse in the foreseeable future.
Deferred income tax relating to fair value changes of investment securities measured at FVTOCI and cash flow hedges, which are charged
or credited to other comprehensive income, is also credited or charged to other comprehensive income where applicable and is
subsequently recognised in the Income Statement together with the deferred gain or loss.
2.30
Debt securities in issue and other borrowed funds
Debt securities issued and other borrowed funds are initially recognised at fair value net of transaction costs incurred. Subsequent
measurement is at amortised cost (unless they are designated as at fair value through profit or loss) and any difference between net
proceeds and the redemption value is recognised in the Income Statement over the period of the borrowings using the effective
interest rate method.
2.31
Share capital, treasury shares and other equity items
Share and other equity items issue costs
: Incremental external costs directly attributable to the issue of shares and other equity items,
other than on a business combination, are deducted from equity net of any related income tax benefit.
Dividends on ordinary shares, preference shares and preferred securities
: Dividends on ordinary shares are recognised as a liability in
the period in which they are approved by the Bank’s Shareholders at the Annual General Meeting. Dividends on preference shares
and preferred securities classified as equity are recognised as a liability in the period in which the Group becomes committed to pay
the dividend.
Treasury shares
: NBG shares held by the Group are classified as treasury shares and the consideration paid including any attributable
incremental external costs, net of income taxes, is deducted from total shareholders’ equity until they are cancelled, reissued or
resold. Treasury shares do not reduce the number of shares issued but affect the number of outstanding shares used in the
calculation of earnings per share. Treasury shares held by the Bank are not eligible to receive cash dividends. Any difference between
acquisition cost and ultimate proceeds from subsequent resale (or reissue) of treasury shares is included in shareholders’ equity and
is therefore not to be considered a gain or loss to be included in the Income Statement.
2.32
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The
chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating
segments of an entity. The Group has determined the Senior Executive Committee as its chief operating decision-maker.
All transactions between business segments are conducted on an arm’s length basis, with inter-segment revenue and costs being
eliminated. Income and expenses directly associated with each segment are included in determining business segment performance.
Geographical segments include income from assets that are either located or are managed in the respective geographical areas.
2.33
Assets and liabilities held for sale and discontinued operations
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset
(or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which
should be expected to qualify for recognition as a completed sale within one year from the date of classification except as permitted
by IFRS 5, and actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be
made or that the plan will be withdrawn.
Notes to the Financial Statements
Group and Bank
236
Non-current assets held for sale on initial classification are measured at their lower of their carrying amount and their fair value less costs
to sell. Assets and liabilities of disposal groups classified as held for sale and non-current assets classified as held for sale are shown
separately on the face of the Statement of Financial Position.
Impairment losses on initial classification as held for sale are included in the income statement, even when there is a revaluation. The
same applies to gains and losses on subsequent re-measurement.
If the Group has classified an asset (or disposal group) as held for sale, but the criteria for classification as such are no longer met, the
Group ceases to classify the asset (or disposal group) as held for sale. The Group measures a non-current asset (or disposal group)
that ceases to be classified as held for sale (or ceases to be included in a disposal group classified as held for sale) at the lower of:
(a)
its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation or amortisation that
would have been recognised had the asset (or disposal group) not been classified as held for sale, and
(b)
its recoverable amount at the date of the subsequent decision not to sell.
A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area
of operations that has been disposed of or is classified as held for sale or is a subsidiary acquired exclusively with a view to resale.
Classification as discontinued operations occurs upon disposal or when the operations meet the criteria to be classified as held for
sale.
The results of discontinued operations are shown as a single amount on the face of the income statement comprising the post-tax profit
or loss of discontinued operations and the post-tax gain or loss recognized either on measurement to fair value less costs to sell or on
the disposal of the discontinued operation.
2.34
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and
the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the income
statement over the period necessary to match them with the costs that they are intended to compensate.
The Group accounts for the potential reduction in the borrowing rate under the Targeted Longer-Term Refinancing Operations III
program (“TLTRO III”) as government grant under IAS 20. The income from the government grant is presented in the Income
Statement in Net interest income and is recognized when there is reasonable assurance that the Group will receive the grant and will
comply with the conditions attached to the grant.
2.35
Related party transactions
Related parties include entities, which the Bank has the ability to exercise significant influence in making financial and operating
decisions. Related parties include the members of the Board of Directors, the members of the (Extended) Senior Executive
Committees of the Bank, other General Manager with decision making power, the key management of the Group companies, their
close relatives, companies controlled or joint controlled by them and companies over which they can influence the financial and
operating policies.
2.36
Fiduciary and trust activities
The Group provides fiduciary and trust services to individuals and other institutions, whereby it holds and manages assets or invests
funds received in various financial instruments at the direction of the customer. The Group receives fee income for providing these
services. Trust assets are not assets of the Group and are not recognised in the financial statements. The Group is not exposed to
any credit risk relating to such placements, as it does not guarantee these investments.
2.37
Earnings /(losses) per share
A basic earnings per share (EPS) ratio is calculated by dividing the profit or loss for the period attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the period excluding the average number of ordinary shares
purchased by the Group and held as treasury shares.
A diluted earnings per share ratio is computed using the same method as for basic EPS, but the determinants are adjusted to reflect the
potential dilution that could occur if convertible debt securities, options, warrants or other contracts to issue ordinary shares were
converted or exercised into ordinary shares.
Notes to the Financial Statements
Group and Bank
237
NOTE 3 Critical judgments and estimates
The preparation of the Financial Statements in accordance with IFRSs requires Management to make judgments, estimates and
assumptions that affect the reported amount of assets, liabilities, income and expense in the consolidated and separate Financial
Statements and accompanying notes. The Group believes that the judgments, estimates and assumptions used in the preparation of
the consolidated and separate financial statements are appropriate.
The most significant areas, for which judgments, estimates and assumptions are required in applying the Group’s accounting policies, are
the following:
3.1
Fair value of financial instruments
The fair values of financial instruments that are not quoted in active markets are determined by using valuation techniques. These
include present value methods and other models based mainly on observable input parameters and to a smaller extent on non-
observable input parameters. Valuation models are used primarily to value derivatives transacted in the over-the-counter market
and bonds that are not traded on an active market.
These models take into consideration the impact of credit risk. For derivatives, this impact is estimated by calculating a separate credit
value adjustment (“CVA”) for each counterparty to which the Group has exposure. The calculation considers expected exposures
generated using simulation techniques, as well as netting agreements and collateral postings. Furthermore, the CVA is based on
expected loss rates derived from Credit Default Swaps (“CDS”) rates observed in the market, or, if these are not available, the
probability of default of the counterparty derived from internal rating models, or otherwise the regulatory risk weight is applied.
With respect to the impact of own credit risk on the valuation of derivatives, the Group applies a methodology symmetric to the one
applied for CVA.
All valuation models are validated before they are used as a basis for financial reporting. Valuation results of material models are
periodically reviewed by qualified personnel independent of the area that performed the development. Wherever possible, the
Group compares valuations derived from models with quoted prices of similar financial instruments and with actual values when
realised, in order to further validate and calibrate its models. A variety of factors are incorporated into the Group’s models, including
actual or estimated market prices and rates, such as time value and volatility, market depth and liquidity, and changes in own credit
risk for financial liabilities.
The Group applies its models consistently from one period to the next, ensuring comparability and continuity of valuations over time, but
estimating fair value inherently involves a significant degree of judgment. Management therefore periodically reviews the output of
the model to cover the risks associated with the estimation of unobservable input parameters and the assumptions within the
models themselves.
Although a significant degree of judgment is, in some cases, required in establishing fair values, Management believes the fair values
recorded in the Statement of Financial Position and the changes in fair values recorded in the Income Statement or the Statement of
Comprehensive Income are reasonable and reflect the underlying economics, based on the controls and procedural safeguards
employed.
Additional information related to fair value of financial instruments is disclosed in Note 4.7 "Fair value of financial assets and liabilities".
3.2
Income taxes
The Group is subject to income taxes in various jurisdictions. Significant judgment is required in determining the provision for income
taxes and the amount of deferred tax asset that is recoverable. The Group considers many factors including statutory, judicial and
regulatory guidance in estimating the appropriate accrued income taxes for each jurisdiction. There are many transactions and
calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes
liabilities for anticipated tax audit issues based on the technical merits of tax position taken and estimates of whether additional
taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such
differences will impact the current and deferred income tax assets and liabilities in the period in which the final outcome is
determined.
Deferred tax assets are recognized in respect of tax losses and deductible temporary differences to the extent that it is probable that
future taxable profit will be available against which the losses and deductible temporary differences can be utilized. Estimating the
expected future taxable income requires the application of judgment and making assumptions about the future trends of the key
drivers of profitability, such as loan and deposits volumes and spreads and operating expenses.
As of 31 December 2022 the Bank assessed the recoverability of its deferred tax asset, taking into account the actual performance for the
year ended 31 December 2022, the completed and agreed disposals of NBG’s subsidiaries, the funding from the Eurosystem and the
Notes to the Financial Statements
Group and Bank
238
extensive and continuous fiscal and monetary support from the European and Greek authorities in response to the unprecedented
COVID-19 crisis (see Note 2.2 "Going concern").
Taking into consideration the above, Management prepared analytical financial projections up to the end of 2025 and used its best
estimates regarding the growth assumptions thereafter. Based on the above, Management concluded that a deferred tax asset of
€4,705 million for the Group and €4,692 million for the Bank may be treated as realizable.
The amount of the deferred tax asset on tax losses and deductible temporary differences is currently treated as non-realizable, however,
could be recognised in future periods if estimates of future taxable income during the carry-forward period are increased. Taxable
income is calculated in accordance with the applicable tax laws and regulations; accordingly taxable income should not be
considered as equal to or an alternative to net income.
3.3
Pension benefits - Defined benefit obligation
The present value of the defined benefit obligations depends on a number of factors that are determined on an actuarial basis using a
number of assumptions such as mortality, disability and rates of employee turnover and financial assumptions such as the discount
rate, salary changes and benefit levels. Any changes in these assumptions will impact the carrying amount of defined benefit
obligations. The Group determines the appropriate discount rate at the end of each year by reference to market yields based on high
quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity
approximating the terms of the related defined benefit obligations. Where a deep market in these bonds does not exist, estimates of
rates which take into account the risk and maturity of the related liabilities are used.
Additional information related to other key assumptions for defined benefit obligations is disclosed in Note 11 "Retirement benefit
obligation".
3.4
Impairment assessment of investments in subsidiaries, associates and joint ventures in individual
financial statements
The Bank accounts for and assesses for impairment investments in subsidiaries, associates and joint ventures in its separate financial
statements as described in Note 2.4.8 “Impairment assessment of investments in subsidiaries, associates and joint ventures in
individual financial statements” , above. This assessment requires the use of certain assumptions and estimates, which Management
believes are reasonable and supportable in the existing market environment and commensurate with the risk profile of the assets
valued. However, different ones could be used which would lead to differe nt results.
3.5
Assessing whether the contractual cash flows are SPPI
The Group assesses whether the contractual cash flows of lending exposures including securitised notes issued by special purpose
entities and loans with non-recourse features, as well as debt securities are SPPI compliant. When performing this assessment
significant judgment may be applied. Specifically, the Group applies significant judgment when considering whether non-recourse
features significantly affect future cash flows. In order to conclude whether the loan represents a basic lending agreement and its
return does not vary based on the performance of the underlying asset or project, the Group assesses whether there is an adequate
buffer to absorb credit losses primarily by comparing the value of asset performance indicators, (e.g. loan-to-value and average debt
servicing coverage ratio) against predefined thresholds. Significant judgement is also applied when assessing if securitised notes
issued by special purpose vehicles are SPPI compliant, the cash flow characteristics of the notes, the underlying pool of financial
assets as well as the credit risk inherent in each securitization’s tranche is taken into account for this assessment.
3.6
Measurement uncertainty in determination of ECL estimates
The measurement of ECL requires Management to apply significant judgment and make estimates and assumptions that involve
significant uncertainty at the time they are determined. Changes to these estimates and assumptions can result in significant
changes to the amount and timing of ECL allowance to be recognised. The most significant sources of measurement uncertainty
relate to the following ECL factors:
Determination of a significant increase of credit risk
The Group assesses whether a SICR has occurred since initial recognition based on qualitative and quantitative criteria that include significant
management judgment. Further information on the criteria applied is disclosed in Note 4.2.6 “Impairment of amortised cost and FVTOCI
financial assets” . More stringent criteria could significantly increase the number of financial instruments classified into Stage 2. All staging
criteria and thresholds determined based on FLI are subject to validation by the Bank’s Model Validation Unit. Changes in the staging criteria
are approved by the Group’s Executive Committee and Board Risk Committee.
Model risk inherent in the IFRS 9 models
Notes to the Financial Statements
Group and Bank
239
Compliance with the IFRS 9 impairment model requires the use of a variety of models. The complexity of the models as well as dependency to
other model-based inputs is high, therefore any changes in inputs and data (e.g. internal credit ratings, behavioural scores etc.), as well as
new or revised models, may significantly affect the ECL allowance . The models are validated by the Bank’s Model Validation Unit, in
accordance with the Bank’s Model Risk Management Framework. Further information is disclosed in Note 4.2.6 “Impairment of amortised
cost and FVTOCI financial assets”.
Forward looking information
FLI is incorporated in the ECL measurement of collectively assessed loans and debt securities through the PD and LGD models. The
expected recoveries (cash flow recoveries or liquidation of collateral) used in the ECL measurement of corporate lending exposures
individually assessed, take into account FLI based on the Bank’s forecasts of the relevant macroeconomic factors. Management
selects forward-looking scenarios and assesses the suitability of respective weights to be applied. Each of the scenarios is based on
Management’s assumptions over future economic conditions in the form of macroeconomic, market and other factors. Changes in
the scenarios and weights, the relevant macroeconomic variables and the assumptions made for the forecast horizon may have a
significant effect on the ECL allowance. More information is disclosed in Note 4.2.6 “Impairment of amortised cost and FVTOCI
financial assets”.
3.7
Leases
The Group as a lessee determines the lease term as the non-cancellable period of a lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it
is reasonably certain not to be exercised. The Group applies judgement in evaluating whether it is reasonably certain or not to
exercise an option to extend or terminate a lease, by considering all relevant facts and circumstances that create an economic
incentive for the Group to exercise the option to extend the lease or not to exercise the option to terminate the lease.
After the commencement date the Group reassesses the lease term upon the occurrence of a significant event or a significant change in
circumstances that is within its control that affects whether it is reasonably certain to exercise an option not previously included in
the determination of the lease term, or not to exercise an option previously included in the determination of the lease term.
The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to
measure lease liabilities. The IBR is the rate of interest that the Bank or its subsidiaries would have to pay to borrow over a similar
term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar
economic environment.
The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain
entity-specific adjustments (such as an adjustment for credit risk) taking into account the terms and conditions of the lease.
3.8
Assessment of control over investees
Management exercises judgement to assess if the Group controls another entity including structured entities. The assessment of control
or loss of control is carried out according to the Group’s accounting policies and applicable accounting standards. Management’s
assessment of control takes into account the structure of the transaction, the contractual arrangements and whether the Group
directs the substantive decisions that affect returns.
NOTE 4 Financial risk management
The Group considers effective risk management to be a key factor in its ability to deliver sustained returns to the shareholders. The
Group allocates substantial resources to keep upgrading its policies, processes, methods and infrastructure to ensure compliance
with best international practices and the guidelines of the Basel Committee for Banking Supervision.
4.1 Group Risk Management Governance Framework
The Group aims to adopt practices regarding risk management governance, taking into account all relevant guidelines and regulatory
requirements. The risk management processes of the Group distinguish among the following kinds of risk: credit risk, concentration risk,
market risk, interest rate risk in the banking book, counterparty credit risk, liquidity risk, operational risk and model risk.
The Group Risk Management Governance Framework is described in detail in the Risk Management section of the Board of Directors Report.
Notes to the Financial Statements
Group and Bank
240
4.2 Credit risk
Credit risk is the risk of financial loss relating to the failure of a borrower to meet its contractual obligations. It arises in lending activities
as well as in various other activities where we are exposed to the risk of counterparty default, such as our trading, capital markets
and settlement activities. Credit risk is the largest single risk that the NBG Group faces. The credit risk processes are conducted
separately by the Bank and each of its subsidiaries. The credit risk procedures established by the subsidiaries are coordinated by the
Group Credit Risk Control Division (GCRCD). The sections below refer to the processes followed by the Bank.
4.2.1 Credit policy for corporate lending
The credit policies for corporate lending of the Bank and its Subsidiaries set out the fundamental principles for the identification,
measurement, approval, monitoring and reporting of the credit risk related to the corporate portfolio and ensure equal treatment
for all obligors.
The credit policy of the Bank (“Corporate Credit Policy”) and any exceptions to the Corporate Credit Policy are approved by the BoD upon
recommendation of the Board Risk Committee (BRC) following proposal by the Group CRO to the Senior Executive Committee and
the BRC. The Corporate Credit Policy is reviewed on an annual basis and revised whenever deemed necessary and in any case every
two years.
4.2.2 Credit policy for retail lending
The credit policy for retail lending (“Retail Credit Policy”) sets the minimum credit criteria, principles, procedures and guidelines for
managing and controlling credit risk undertaken in retail portfolios, both at Bank and Group level. Its main scope is to enhance, guide
and regulate the effective and adequate management of credit risk, thus achieving a viable balance between risk and return.
The Retail Credit Policy is approved by the BoD upon the recommendation of the BRC, following proposal by the Group CRO, to the
Senior Executive Committee and the BRC. Credit policy is reviewed on an annual basis and is revised whenever deemed necessary
and in any case at least every two years.
The Retail Credit Policy is communicated through the respective credit policy regulations serving three basic objectives:
●
to set the framework for basic credit criteria, rules and procedures,
●
to consolidate retail credit policies of the Group, and,
●
to establish a common approach for managing retail banking risks.
The credit policy regulations are approved by the Senior Executive Committee and are reviewed whenever deemed necessary.
The NBG Group Retail Credit Division reports directly to the Chief Credit Officer (“CCO”) and its main task is to evaluate, design and
approve the Credit Policy that governs the retail banking products, both locally and abroad. Furthermore, the NBG Group Retail
Credit Division closely monitors the consistent implementation of both the Retail Credit Policy provisions and credit granting
procedures.
Through the application of the Retail Credit Policy, the evaluation and estimation of credit risk, for new as well as for existing products,
are effectively facilitated. The Senior Executive Committee is regularly informed on all aspects covered by the Retail Credit Policy.
Remediation Action Plans are put together to resolve the issues, whenever necessary, within the risk appetite and strategic
orientation of the Bank.
4.2.3 Credit granting processes
The Group’s credit granting processes are described in the “Risk Management” section of the Board of Directors Report, under
“Management of Risks | Credit Risk”.
4.2.4 Credit risk assessment, monitoring and internal ratings
The Bank uses different credit risk rating models and methodologies, according to the specific characteristics of credit portfolios, which
are monitored systematically by GCRCD and validated according to the validation cycle defined in the Model Validation Policy by the
independent MVU. More specifically:
Corporate Portfolio
NBG has developed a corporate portfolio rating system (initially approved and certified by the Bank of Greece for Pillar I purposes) which
is used to quantify risk parameters, such as Probability of Default (“PD”), and supports mainly the credit approval process while it is
also utilized for pricing, ICAAP calculation, reporting and provisioning purposes. The rules for classifying obligors into rating grades
are set out in detail in the Corporate Credit Policy. In brief, NBG’s Obligor Risk Rating (ORR) scale contains 21 grades, 19 of which
correspond to obligors who are not in default status and 2 to obligors who are in default status. Different exposures against the same
obligor receive the same rating grade, regardless of the specificities of various characteristics of credit (e.g. type of facility, collateral
provided, etc.). The rating procedure is carried out at least annually or earlier in cases where new information or new financial data is
made available and may affect the risk undertaken. The Bank uses four types of models to assess the credit worthiness of corporate
obligors. All these models, are hosted on the Credit Lens (CL) platform, developed by Moody’s. Corporate obligors are assessed via
the following models:
Notes to the Financial Statements
Group and Bank
241
1.
Corporate Rating Model (CRM): A “Hybrid” rating model implemented via Moody’s Credit Lens (CL) platform , focusing on companies
with full financial data
2.
Specialised Lending – Slotting Criteria Scorecards: Project and Object Finance credits
3.
Limited Financials Scorecards: Applied to newly founded companies and smaller firms with limited financial data, which keep
simplified B-class accounting ledgers (i.e. single entry books)
4.
Expert judgement model: Used for specific type of obligors (such as Local Authorities and municipal enterprises, Non-Profit
Organizations, etc,) that cannot be rated by the remaining number of models for the Corporate portfolio, hosted on Credit Lens
platform
All these models produce ordinal rankings of obligors (or credits, in the case of project and object finance) in the ORR scale which are
then mapped into a unique PD. Models are calibrated, whenever necessary.
Apart from the above models, NBG has developed and implemented the Early Warning System (EWS) for its Corporate Clientele; a
comprehensive framework that identifies, monitors and manages obligors with credit deterioration at very early stages. EWS was
introduced in 2018, and comprises efficient and effective structures, processes and tools to support early arrears management.
With regard to the pricing of the Corporate Obligors, NBG has established a well-defined Risk-Based Pricing (RBP) Framework that is
based on fundamental pricing principles and is governed by relevant policies, robust pricing methodologies and tools. NBG’s RBP
Framework covers the new business production as well as the renewal of existing credit relationships for Corporate portfolio. It takes
into account the Bank’s Risk Appetite Framework (RAF), the current regulatory framework, the international accounting standar ds
and the relevant provisioning models, the macroeconomic trends, as well as the fair and proportional treatment of all clients. On a
regular basis (at least annually) it is reviewed and revised, if deemed necessary.
The universe of all models related to corporate portfolio is presented below.
Credit Risk Models by use, type and portfolio
Model Use
Model Type
Corporate
IFRS 9 Models
PD
1
EAD
1
LGD
1
ICAAP (Pillar II)
PD
5
EAD
LGD
-
Pricing Tools
1
Early Warning System (EWS)
1
Total
10
Retail Portfolio
The management of credit risk in the retail portfolio starts with the approval stage. The underwriting process is centralised which
ensures segregation of duties and uniform enforcement of underwriting standards. Every new application is assessed using product-
based application/origination scorecards. Furthermore, throughout the life of each credit, the payment behaviour is regularly
monitored, using statistically -developed behavioural scorecards. Monitoring reports about the quality of each retail loan book are
regularly (more frequently than annually) provided by GCRCD for management review and corrective measures are proposed to
mitigate and control credit risk, whenever necessary.
The
mortgage
portfolio in particular, is reviewed using more advanced methods since the Bank adopted the A- IRB approach in 2008 for
estimating capital requirements against credit risk for mortgage exposures. The Bank’s PD model was developed in 2009, and based
on more recent re-calibrations, was used for capital calculation purposes under the IRB Approach. Since the Bank’s reversion to the
Standardized Approach in June 2019, the model is used for Internal Capital (ICAAP) calculation purposes as well as for internal
reporting and portfolio monitoring purposes. Any non-defaulted exposure is rated using this PD model on a monthly basis and is
classified in one of 10 rating grades with common risk attributes (pools). Each rating grade is assigned a different PD. All defaulted
exposures receive a PD equal to 100%.
Furthermore, an internally developed LGD model for mortgage loans is used mainly for financial reporting purposes, but also for ICAAP,
Stress Test and Budget/Business/NPE/Recovery Planning purposes. The model consists of three components; the first component
Notes to the Financial Statements
Group and Bank
242
produces transition probabilities to any discrete state an account can be found from the previous state it has been classified taking
into account macro-economic factors, the second one estimates recovery rates and the third component incorporates the expected
recovered amount from collateral liquidation. Both the aforementioned PD and LGD models are validated according to the validation
cycle set as defined in the Model Validation Policy by the independent Model Validation Unit (MVU) and is monitored regularly by
GCRCD.
As far as loans and advances to
SBL
followed as in the corporate portfolio. All credit applications are evaluated first, at inception, and then at least once a year and
certainly, on credit limits renewal dates. The assessment uses the SBL Model that generates a rating score, which in turn
corresponds to a PD. This model incorporates an independent “behavioural score” variable. A standard behavioural scorecard
examines the customer’s behaviour in respect to all of his accounts, both credit and deposit ones, weighs a number of variables
accordingly (e.g. delinquencies, limit usage, etc.) and generates automatically a score every month. The addition of a behavioural
score led to a significant increase in the predictive power of the SBL PD Model.
In addition, an LGD model for SBL is in place and used mainly for financial reporting purposes, but also for ICAAP, Stress Test and
Budget/Business/NPE/Recovery Planning purposes. The methodology considers three model components (Curing, Recoveries, Loss
Given Liquidation) that lead to the implementation of a conceptually sound calculation technique which takes into account obligor
and portfolio specific characteristics and the long-run economic conditions of the Greek market.
As above, SBL’s PD and LGD models are validated according to the validation cycle set as defined in the Model Validation Policy by the
independent MVU and monitored regularly by GCRCD.
As in the Corporate Portfolio, NBG implements an EWS for its retail population and more specifically for Mortgage, Consumer & SBL
portfolios, aiming at identifying possible credit losses at a very early stage. The framework is supported by the appropriate procedure
documents, controls and tools for achieving effective early arrears management.
As far as the pricing is concerned, a well-established Risk-Based Pricing (RBP) Framework is also implemented for the retail clientele,
governed by relevant policies, robust pricing methodologies and tools.
The universe of all models related to retail portfolio is presented below.
Credit Risk Models by use, type and portfolio
Model Use
Model Type
Mortgage
loans
Consumer
Term Loans
Credit Cards
& Open Loans
SBL
Total
IFRS 9 Models
PD
1
1
1
1
4
EAD
-
1
1
2
LGD
1
1
1
1
4
ICAAP (Pillar II)
PD
1
-
3
4
LGD
1
-
1
2
Pricing Tools
1
1
1
1
4
Early Warning System (EWS)
1
1
2
1
5
Score cards
Application
1
2
2
5
Behavioral
3
2
6
-
11
Total
10
8
14
9
41
4.2.5 Concentration risk management
The Bank manages the extension of credit, controls its exposure to credit risk and ensures its regulatory compliance based on an internal
limits system. The process for managing concentration risk is described in the “Risk Management” section of the Board of Directors
Report, under “Management of Risks | Concentration Risk”.
Notes to the Financial Statements
Group and Bank
243
4.2.6 Impairment of amortised cost and FVTOCI financial assets
An ECL allowance is recognised for all financial assets measured at amortised cost, debt financial assets measured at FVTOCI, lease
receivables, financial guarantee contracts and certain loan commitments that meet the financial instrument definition. The Bank has
established a policy for impairment of financial instruments under IFRS 9 (the “Impairment Policy”), which also applies to all
subsidiaries and establishes guidelines on measurement of ECL. The Group’s accounting policies on recognition and measurement of
ECL are described in Note 2.7.7 “Impairment – Expected Credit Losses”. Based on the Impairment Policy, the Group’s Financial Assets
Impairment Provision and Write-off Committee is responsible for:
•
Approving the macroeconomic scenarios and the probability weights proposed to each scenario.
•
Ensuring that the ECL allowance on all financial assets and off-balance sheet commitments within the scope of IFRS 9 is estimated in
accordance with the impairment Policy.
•
Ensuring compliance with the approved procedures for calculating financial assets impairment provision.
•
Reviewing and approving the amount of the ECL allowance which has been measured either on an individual basis by the responsible
Divisions, or on a collective basis by the dedicated ECL calculation system.
•
Reporting to the BRC the amount of the ECL allowance for annual and interim, separate and consolidated financial statements.
•
Reporting to the BRC and the AC changes in the credit risk parameters used in the ECL allowance calculation.
Definition of default
The Group has aligned the definition of default for financial reporting purposes, with the NPE definition used for regulatory purposes, as
per the EBA ITS, thus a financial asset is considered as credit impaired, and is classified into Stage 3, when it is classified as NPE in
accordance with the Group’s NPE and Forbearance Classification Policy. Furthermore, EBA published the Final Guidelines
(EBA/GL/2016/07) on the application of the definition of default under Article 178 of Regulation (EU) No. 575/2013 and Regulation
(EU) 2018/1845 of the European Central Bank (ECB), in relation to the threshold for assessing the materiality of credit obligations
past due, with the intention of harmonizing its application among European Financial institutions and improving consistency in the
way these institutions estimate regulatory requirements to their capital positions, being applied from 1 January 2021.
The new definition of default results in classification of exposures (except for those held for trading or debt securities where the
borrower has no other exposures with the Group) into Stage 3 according to the following main criteria:
a)
Unpaid payments of over €100 for Retail €500 for Non-retail for more than 90 consecutive days, representing at least 1% of the total
exposure of the obligor. For the Corporate portfolio, the assessment takes place at obligor level across the Group, as opposed to a
facility level assessment for Retail exposures. In case of credit cards, the exposure is considered non-performing in case of more than
three (3) unpaid monthly instalments. Only missed payments related to business litigations, specific contractual features or IT
failures (i.e. ‘technical past due’ situations) may avoid automatic transfer into Stage 3 after 90 days.
b)
A 3-month probation period for non-forborne exposures, during which no default trigger applies.
c)
Identification of other criteria that evidence, even in the absence of missed payments, that it is unlikely that the counterparty could
meet all its financial obligations (UTPs), including indicatively the following:
•
the granting of concessions towards obligors facing or about to face difficulties in meeting their financial commitments that
result in a decrease in the present value of cash flows of more than 1% of its initial value (a distressed restructuring resulting in
a diminished financial obligation);
•
the partial or full sale of credit obligations at a material credit-related economic loss, i.e. >5%;
•
losses recognised in the Income Statement for instruments measured at fair value that represent credit risk impairment.
A commitment is regarded as NPE if, when withdrawn or otherwise used, it would lead to exposures that present a risk of not being paid back
in full without realisation of collateral. Financial guarantees written by the Bank are regarded as NPE for their nominal value when the
financial guarantee is at risk of being called by the holder of the guarantee, including, in particular, when the underlying guaranteed exposure
meets the criteria to be considered as NPE.
A debt security is considered as credit impaired under an objective approach, and classified into Stage 3, when at least one payment of
capital or interest is overdue by the issuer, based on the contractual terms of the instrument, irrespective of the days past due. In
addition, a debt security is assessed as credit impaired if there is at least one external credit rating on the security or the issuer (if no
external rating on the security is available) corresponding to Default or Selective Default.
Significant increase in credit risk (SICR)
A non-credit impaired asset is classified in Stage 2 if it has suffered a SICR, otherwise it is classified in Stage 1. An assessment as to
whether a significant increase in credit risk has occurred since initial recognition is performed at each reporting period on the
individual financial instrument level, by considering the change in the risk of default occurring over the remaining expected lifetime
of the financial instrument. The assessment compares the risk of default occurring at the reporting date compared with that at initial
recognition, taking into account reasonable and supportable information, including information about past events, current
Notes to the Financial Statements
Group and Bank
244
conditions and future economic conditions. The assessment is unbiased, probability-weighted, and to the extent relevant, uses
forward-looking information consistent with that used in the measurement of ECL.
The Bank assesses SICR, in accordance with the principles set in the Impairment Policy, which includes the following:
●
a quantitative element
, i.e. reflecting a quantitative comparison of PD or credit rating at the reporting date versus the respective
metric at initial recognition,
●
a qualitative element
, that is all Forborne Performing Exposures (FPE) and internal watch list for corporate obligors; and
●
“Backstop” indicators
: The Group applies the IFRS 9 presumption that a SICR has occurred when the financial asset is more than 30
days past due on all lending exposures. In addition, the EBA backstop indicator of the threefold increase in PD is applied as a rule for
Stage 2 allocation for lending exposures.
The abovementioned criteria regarding the quantitative element and backstop indicators are further analysed below per type of
exposure:
a. Retail lending exposures
Stage allocation is performed by the comparison of scenario weighted lifetime PDs from the risk assessment performed at origination
versus the weighted lifetime PDs at each reporting date, for the financial asset’s residual term. In order to identify SICR since initial
recognition and determine whether the financial asset shall be transferred from Stage 1 to Stage 2 on a quantitative basis the Bank
has developed a separate threshold model for each group of retail lending exposures (mortgage, consumer and SB exposures). SICR
threshold models are statistically estimated utilizing historical data in the IFRS 9 lifetime PD modelling framework. The resulting
thresholds derived from the models are not altered exogenously. Thresholds are relative and vary depending on the level of lifetime
PD at origination, also ensuring that higher origination PDs are associated with lower SICR thresholds. As at 31 December 2022, the
estimated average relative increase for SICR identification can range between 58% and 162%, depending on the group of retail loans
portfolio.
In addition, for exposures with lifetime PD equal to or greater than 0.3% at the reporting date, the EBA backstop indicator of the
threefold increase in lifetime PD is applied as a rule for Stage 2 allocation .
b. Corporate lending exposures
SICR is assessed based on changes in the obligor’s internal credit rating since origination. The SICR threshold for a financial asset to be
transferred to Stage 2 on a quantitative basis, ranges from one notch to eight notches downgrade in terms of the ORR scale, whereby
thresholds are wider for obligors whose credit risk at origination was lower and consequently narrower for obligors whose credit risk
at origination was higher.
In addition, for exposures with 12-month point-in-time (“PiT”) PD (based on the PD to which the credit ratings of obligors in the ORR
scale have been mapped, as described in Note 4.2.4 “Credit risk assessment, monitoring and internal ratings”) equal to or greater
than 0.3% at the reporting date, the EBA backstop indicator of the threefold increase in 12-month PiT PD is applied as a rule for Stage
2 allocation.
c. Debt securities and other financial assets
All debt securities and financial assets due from sovereigns and financial institutions are assessed on an individual basis in order to
determine if a SICR has occurred since initial recognition, based on external credit ratings. If an external credit rating is available for a
debt security, then SICR is assessed based on this rating, rather than the issuer’s rating, in order to incorporate in the analysis any
instrument-specific credit characteristics. All other financial assets due from sovereigns and financial institutions, such as money
market placements, reverse repurchase agreements and unrated debt securities, are assessed for SICR based on the counterparty’s
or issuer’s external credit rating. Any of the aforementioned financial assets rated as ‘investment grade’ at the reporting date, are
assumed as having low credit risk and are classified within Stage 1 without any further SICR analysis.
Movement of financial assets to Stage 1
Financial assets are transferred back to Stage 1 when the SICR criteria are no longer met.
ECL measurement period
Τhe period over which lifetime ECL is measured is based on the maximum contractual period over which the Bank is exposed to credit
risk, which is determined in accordance with the substantive terms of the contract. For revolving lending exposures, the period of
exposure is determined based on the expected credit risk management actions and historical experience.
Forward-looking information
ECL measurement incorporates forward -looking information (FLI). The Group selects three forward-looking scenarios of the future path
of economic activity in Greece and combines them with a set of weights that represent the probability of occurrence of each of these
scenarios. The Group assesses the suitability and plausibility of the respective weighted scenario, combining relevant information
from official sources, major rating agencies and credible sources of private forecasters’ polls, and uses an econometric model relating
GDP with the future path of other macroeconomic variables used in ECL calculations, in conjunction with and a minimum set of
exogenous forward-looking conditioning variables. The selected scenarios for GDP growth and the related weights are approved by
the Management. More specifically, the Bank applies three forward -looking macroeconomic scenarios, i.e. baseline, optimistic and
Notes to the Financial Statements
Group and Bank
245
adverse, with a probability weighting of 55%, 20% and 25%, respectively, developed by the Economic Analysis Division. The
macroeconomic scenarios and the respective weights are approved by the Group’s Financial Assets Impairment Provision and Write-
off Committee and their performance is assessed by the MVU as part of the validation process of the models used to estimate ECL in
accordance with the Model Validation Policy. The macroeconomic scenarios used for measuring ECL are the same with the ones used
for evaluating SICR.
The macroeconomic variables utilized by the Bank relate to Greek economic factors and the ECL allowance is mainly driven by the
changes in gross domestic product (GDP) and house price index (HPI). As regards HPI, the values corresponding to the optimistic
scenario are assumed to be equal to those of the baseline over the projection period, in view of the uncertainty and the idiosyncratic
non-modeled drivers of this market under the current juncture. The annual average forecasts in the mid-term horizon (2023-2027)
under the three macroeconomic scenarios for each of these 2 key variables are the following:
Baseline
Optimistic
Adverse
GDP growth
2.0
3.3
-0.5
HPI growth
3.4
3.4
1.0
The ECL allowance is sensitive to changes in forward-looking scenarios of the aforementioned macroeconomic variables. Given that the
Group’s ECL allowance is mainly driven by the Bank, Management assessed and considered the sensitivity of the Bank’s ECL
allowance on loans and advances to customers at amortised cost against reasonably possible changes in these specific variables,
compared to the FLI scenarios utilised in the ECL measurement as of 31 December 2022. The sensitivity analysis was performed
assuming a “favourable” and an “adverse” shift in the three FLI scenarios for GDP and HPI growth, while retaining the same
probability weights assigned to each scenario (i.e. 55%, 20% and 25% for the baseline, optimistic and adverse scenarios,
respectively). These two variations of the original set of GDP growth scenarios have been used to derive two model-based sets of
scenario paths for all macroeconomic variables (including the HPI) since GDP plays a pivotal role in the modelling of all other
variables. Moreover, an additional sensitivity analysis focusing exclusively on the HPI growth was performed keeping all other
macroeconomic variables constant to their original values.
The alternative scenarios were applied to the full trajectory of GDP growth and HPI (2023-2050), with the average deviation assumed for
each macroeconomic variable and scenario presented in the following table:
Change compared to FLI scenarios used in the ECL measurement as of 31
December 2022 and 2021, expressed in percentage points
Alternative scenario assumed
Baseline
Optimistic
Adverse
Higher GDP
+1.0
+1.0
+1.0
Lower GDP
-1.0
-1.0
-1.0
Higher HPI
+1.0
+1.0
+1.0
Lower HPI
-1.0
-1.0
-1.0
The impact on the ECL allowance for each of the alternative scenarios assumed for GDP and HPI by impairment stage is presented below,
expressed as a percentage of the Bank’s ECL allowance on loans and advances to customers at amortised cost as at 31 December
2022 and 2021. The impact on the ECL allowance should be read in the context of the sensitivity analysis as a whole, in conjunction
with the narrative disclosures provided above.
As at 31 December 2022
ECL Impact
Alternative scenario assumed
Stage 1
Stage 2
Stage 3
Total
Higher GDP
-0.03%
-1.3%
-0.5%
-1.9%
Lower GDP
+0.01%
+1.4%
+0.4%
+1.9%
Higher HPI
-0.03%
-0.2%
-0.2%
-0.4%
Lower HPI
+0.03%
+0.2%
+0.2%
+0.5%
Notes to the Financial Statements
Group and Bank
246
As at 31 December 2021
ECL Impact
Alternative scenario assumed
Stage 1
Stage 2
Stage 3
Total
Higher GDP
-0.2%
-1.6%
-1.2%
-3.0%
Lower GDP
+0.2%
+1.9%
+1.3%
+3.4%
Higher HPI
-0.02%
-0.2%
-0.4%
-0.7%
Lower HPI
+0.01%
+0.3%
+0.4%
+0.7%
As at 31 December 2022, the assignment of a 100% probability weight on the optimistic scenario would decrease the Bank’s ECL
allowance by 2.0% compared to the probability weighted ECL allowance (31 December 2021: -5.8%), while the assignment of a 100%
probability weight on the adverse scenario would increase the Bank’s ECL allowance by 3.1% compared to the probability weighted
ECL allowance (31 December 2021: +11.3%).
Model risk inherent in the IFRS 9 models
Compliance with the impairment requirements of IFRS 9 requires the use of a variety of models. The complexity of the models as well as
dependency to other model-based inputs is high, therefore any changes in inputs and data (e.g. ORRs, behavioral scores etc.), as well
as new or revised models, may significantly affect the ECL allowance. The models are validated by the Bank’s MVU, in accordance
with the Bank’s Model Risk Management Framework. The Bank’s Model Validation Policy describes all key metrics and statistical
tests used to quantitatively assess the following models and methodologies used to estimate the credit risk and measure ECL:
●
PD, LGD and EAD models
●
SICR methodology
●
FLI macroeconomic models
The model validation process comprises the assessment of the qualitative and the quantitative aspects of a model as they are presented
in detail in the Model Validation Policy and its Annexes. As part of the qualitative assessment, the qualitative aspects mainly
examined comprise the completeness, the correctness and the consistency of the input data, the model design, its compliance with
the existing internal and external requirements, the rigor of its implementation in the Bank’s source systems and the model use,
while the quantitative aspects cover the estimation of model’s discriminatory power, its accuracy and the stability of the produced
model outcomes.
Management adjustments in the ECL measurement of loans and advances to customers
The Group, in the context of its provisional framework, may occasionally make use of post-model adjustments (PMAs) based on expert
credit judgment, to capture additional risks and incorporate the impact from new economic conditions and related macroeconomic
uncertainties as a result of unexpected events, which may not be timely reflected in the ECL model outputs. PMAs may also relate to
accounting requirements not incorporated in the ECL model output due to model limitations.
Management critically assesses the prevailing economic conditions at each quarter and determines whether PMAs are warranted to
address emerging risks or whether prior period PMAs are no longer required, incorporating the related uncertainties in the
estimation of expected credit losses in a valid, consistent and efficient manner, in accordance with the Group’s internal respective
frameworks. The determination and estimation of PMAs is performed in accordance with established dedicated processes and is
subject to strict governance arrangements, ensuring the adequacy and soundness of the ECL measurement under IFRS 9.
As at 31 December 2022, PMAs include adjustments relating to the economic uncertainty resulting from the energy crisis, persistence of
inflationary pressures, increasing interest rates, elevated geopolitical risks and concerns regarding the response of economic activity
to the ongoing monetary policy tightening and the unwinding of exceptional fiscal support. Tighter financing conditions due to
increasing inflation and interest rates may have an adverse impact on the credit condition of corporates and households, depending
on their sensitivity to the macro-financial environment.
In this context, PMAs have been applied on exposures of obligors of both the retail and the corporate loan portfolios, that have been
either under post support measures during 2022 or relate to other risk sensitive segments considering their respective risk profiles,
which are considered most vulnerable to further deterioration of the economic conditions and related financial pressures caused by
increasing cost of living and higher operating costs. The adjustment is performed on performing exposures and involves the
application of increased coverage rates, following relevant risk assessment. Furthermore, management adjustments have also been
captured through other PMAs, mainly focusing on recovery strategies to be pursued for NPEs.
As at 31 December 2021, PMAs had been applied on performing exposures of obligors to which payment moratoria had been granted in
the context of the Covid-19 crisis and expired in end-2020. These adjustments were focused on Stage 1 and Stage 2 exposures of the
retail and corporate loan portfolios by applying increased coverage rates following risk assessment. Other PMAs performed related
to recovery strategies to be pursued for NPEs, as in 2022.
Notes to the Financial Statements
Group and Bank
247
4.2.7 Maximum exposure to credit risk before collateral held or other credit enhancements
The following table represents the maximum exposure to credit risk of the Group and the Bank at 31 December 2022 and 31 December
2021, without taking account of any collateral held or other credit enhancements attached.
.
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Due from banks (Note 18)
2,900
3,639
2,854
3,539
Trading debt securities (Note 19)
214
282
213
276
Derivative financial instruments (Note 20)
1,962
4,331
1,962
4,331
Loans and advances to customers (Note 21)
35,561
30,439
33,782
28,886
Investment debt securities (Note 22)
13,089
14,851
12,814
14,475
Other financial assets (Note 28)
1,775
2,212
1,699
2,136
Credit related commitments (Note 35)
5,706
3,979
5,955
4,241
Total
61,207
59,733
59,279
57,884
4.2.8 Collateral and other credit enhancements
Counterparty credit risk
The Group’s counterparty credit risk management processes are described in the Risk Management section of the Board of Directors
Report, under “Management of Risks | Counterparty Credit Risk”.
Loans and advances to customers
The most common practice used by the Group to mitigate credit risk with respect to loans and advances to customers is receiving
collateral. The Group implements guidelines on the eligibility of specific types of collateral, as described in the Corporate Credit
Policy and the Retail Credit Policy documents. In the same documents, eligible types of collateral for regulatory purposes (funded
and unfunded credit risk mitigation techniques), are also presented.
The main collateral types for loans and advances to customers are:
Real Estate Collaterals
●
Residential real estate,
●
Commercial real estate,
●
Industrial real estate
Financial Collaterals
●
Cash collaterals,
●
Assigned receivables,
●
Pledges over financial instruments, such as debt securities and equities
Other Collaterals
●
State guarantees, vessels, equipment, inventory, and other collateral
Guarantees received
●
Personal, corporate, public entities, local authorities and other guarantees
The Bank has internally developed a Collateral Management System in order to upgrade the control and monitoring of collaterals
received for both corporate and retail loans and advances to customers, as well as to fulfil the requirements arising from the
regulatory framework. The user of the Collateral Management System is able to retrieve information regarding collateral at different
aggregation levels, to monitor all useful aspects of collateral in order to preserve adequate coverage as well as automatically
calculate required haircuts on the collateral values.
Furthermore, the Collateral Management System is designed so as to provide information regarding exposure per guarantor in the case
of credit guarantees. The basic types of credit guarantees are:
Bank Guarantees
This guarantee is deemed an acceptable form of unfunded credit protection and takes the form of a Letter of Credit (L/C) or a Letter of
Guarantee (L/G) from Financial Institutions, domestically and abroad.
State Guarantee
Notes to the Financial Statements
Group and Bank
248
This guarantee is considered as equivalent to the pledge on a liquid asset only if it is direct, explicit, irrevocable and unconditional, hence
no external factors could affect the substance of coverage.
Guarantee by ETEAN Fund (formerly known as TEMPME)
This guarantee is considered as equivalent to the pledge on a liquid asset if the decision of the ETEAN Fund does not include conditions
and special clauses concerning factors beyond the Bank’s control.
Longer-term finance and lending to corporate entities are generally secured. Revolving credit facilities to individuals are generally
unsecured. In addition, in order to mitigate the potential credit loss, the Group will seek additional collateral from the counterparty
as soon as impairment indicators are noticed for the relevant individual loans and advances to customers. Debt securities, treasury
and other eligible bills are generally unsecured.
Valuation of collateral
The collateral associated with loans and advances to customers is initially evaluated during the credit approval process, based on its
market value
35
Market value assessment of real estate collaterals, which may secure loans and advances to individuals or legal entities, is performed by
the Immovable & Movable Assets Valuation & Advisory Services Division and employs internal or external certified valuers based on
predefined criteria (qualifications and expertise), in accordance with the NBG Group Property Valuation Policy.
The real estate valuations are categorized into individual valuations on a specific property and are carried out either through on-site,
desktop or by indexed valuations based on statistical methodology (Propindex, etc.). The real estate valuations performed to
determine the collateral value during the loan origination phase are always performed by on-site inspections.
In accordance with the NBG Group Property Valuation Policy, NBG Group accepts the following key valuation approaches provided by
International and European Valuation Standards (IVS/EVS):
a.
Market approach or Comparative Method
b.
Income approach
c.
Cost Approach or Depreciated Replacement Cost
d.
Residual Method
The frequency of property valuations used as collateral for loans and advances to customers is set out in the NBG Group Property
Valuation Policy and is in compliance with the Regulation (EU) 575/2013 and the ECB Guidance to Banks on Non-Performing Loans.
The Group updates the collateral valuations of all exposures at least annually based on the NBG Group Property Valuation Policy.
Furthermore, the revaluation of the real estate collateral is updated on an individual basis at the time the exposure is classified as
non-performing (NPE) and at least annually while it continues to be classified as such.
Management is constantly monitoring the market conditions in the Greek real estate market either internally though macroeconomic
reports issued by the Group’s Chief Economist, or externally through reports produced by the Immovable & Movable Assets
Valuation & Advisory Services Division or by international independent valuation firms. Changes in market conditions are considered
as an important factor in determining the market value of real estate collateral. A more volatile market may lead to the need for
more frequent collateral valuations. Valuations are prepared taking into consideration the effect of any sources of uncertainty.
When the value of the collateralised property exceeds the loan balance, the value of collateral is capped to the gross carrying amount of
the loan. A breakdown of collateral and guarantees received to mitigate credit risk exposure arising from loans and advances to
customers is summarised as follows:
Breakdown of collaterals and guarantees | Group
31.12.2022
31.12.2021
Value of collateral received
Guarantees
received
Value of collateral received
Guarantees
received
Real estate
collateral
Financial
collateral
Other
collateral
Total
collateral
value
Real estate
collateral
Financial
collateral
Other
collateral
Total
collateral
value
Retail Lending
7,829
483
553
8,865
4,679
8,073
389
655
9,117
5,016
Corporate Lending
(1)
3,121
1,832
6,928
11,881
8,688
3,162
1,690
6,934
11,786
6,231
Public Sector Lending
36
40
81
157
274
50
40
68
158
119
Total
10,986
2,355
7,562
20,903
13,641
11,285
2,119
7,657
21,061
11,366
35
different to the definition of fair value in IFRS 13 “Fair Value Measurement”.
Notes to the Financial Statements
Group and Bank
249
¹ Other collateral includes the guarantee provided by the Hellenic Republic under the Hellenic Asset Protection Scheme for the Frontier senior notes. The
amount of the guarantee is capped to the gross carrying amount of the Frontier senior notes of €2,795 million (31 December 2021: €3,145 million).
Breakdown of collaterals and guarantees for Credit impaired assets | Group
31.12.2022
31.12.2021
Value of collateral received
Guarantees
received
Value of collateral received
Guarantees
received
Real estate
collateral
Financial
collateral
Other
collateral
Total
collateral
value
Real estate
collateral
Financial
collateral
Other
collateral
Total
collateral
value
Retail Lending
460
11
85
556
346
556
24
104
684
563
Corporate Lending
381
62
169
612
547
506
69
169
744
711
Public Sector Lending
2
-
-
2
4
15
-
1
16
4
Total
843
73
254
1,170
897
1,077
93
274
1,444
1,278
Breakdown of collaterals and guarantees | Bank
31.12.2022
31.12.2021
Value of collateral received
Guarantees
received
Value of collateral received
Guarantees
received
Real estate
collateral
Financial
collateral
Other
collateral
Total
collateral
value
Real estate
collateral
Financial
collateral
Other
collateral
Total
collateral
value
Retail Lending
7,404
456
497
8,357
4,679
7,688
372
615
8,675
5,016
Corporate Lending
(1)
2,454
1,814
5,857
10,125
8,646
2,580
1,686
6,004
10,270
6,207
Public Sector Lending
36
40
54
130
274
51
40
40
131
119
Total
9,894
2,310
6,408
18,612
13,599
10,319
2,098
6,659
19,076
11,342
¹ Other collateral includes the guarantee provided by the Hellenic Republic under the Hellenic Asset Protection Scheme for the Frontier senior notes. The
amount of the guarantee is capped to the gross carrying amount of the Frontier senior notes of €2,795 million (31 December 2021: €3,145 million).
Breakdown of collaterals and guarantees for Credit impaired assets | Bank
31.12.2022
31.12.2021
Value of collateral received
Guarantees
received
Value of collateral received
Guarantees
received
Real estate
collateral
Financial
collateral
Other
collateral
Total
collateral
value
Real estate
collateral
Financial
collateral
Other
collateral
Total
collateral
value
Retail Lending
443
11
83
537
346
534
24
104
662
563
Corporate Lending
324
62
161
547
547
451
69
159
679
711
Public Sector Lending
2
-
-
2
4
15
-
1
16
4
Total
769
73
244
1,086
897
1,000
93
264
1,357
1,278
Loan to Value (LTV) Ratio of Mortgage portfolio
The Loan to Value Ratio represents the relationship between the loan and the appraised value of the property held as collateral. A
breakdown of mortgage loans by range of LTV is summarised as follows:
Group
Bank
31.12.2022
of which:
Credit Impaired
31.12.2021
of which:
Credit Impaired
31.12.2022
of which:
Credit Impaired
31.12.2021
of which:
Credit Impaired
Less than 50%
2,056
65
1,930
66
1,955
63
1,836
63
50%-70%
1,955
82
1,898
84
1,849
81
1,804
83
Notes to the Financial Statements
Group and Bank
250
71%-80%
1,083
50
1,048
63
1,034
50
1,002
58
81%-90%
860
47
795
58
830
47
773
54
91%-100%
680
42
836
47
677
41
834
46
101%-120%
580
53
791
70
578
51
788
69
121%-150%
388
44
588
62
386
42
586
61
Greater than 150%
304
46
456
88
299
44
452
86
Gross carrying amount
7,906
429
8,342
538
7,608
419
8,075
520
Average LTV
72.6%
89.0%
78.1%
98.2%
73.3%
89.0%
78.8%
98.8%
4.2.9 Credit quality of loans and advances to customers at amortised cost
Credit quality of loans and advances to customers at amortised cost by range of probability of default
A breakdown of the portfolio by range of probability of default for the Group is summarized as follows:
As at 31 December 2022
Mortgage loans
Consumer loans
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
4,388
1,628
-
6,016
890
142
-
1,032
2.01% - 10%
228
735
-
963
303
104
-
407
10.01% - 20%
394
70
-
464
9
21
-
30
Over 20.01%
-
34
429
463
1
14
149
164
Gross carrying amount
5,010
2,467
429
7,906
1,203
281
149
1,633
As at 31 December 2022
Credit Cards
Small Business Lending
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
306
6
-
312
57
3
-
60
2.01% - 10%
101
10
-
111
419
244
-
663
10.01% - 20%
2
1
-
3
165
136
-
301
Over 20.01%
-
-
33
33
38
246
200
484
Gross carrying amount
409
17
33
459
679
629
200
1,508
As at 31 December 2022
Corporate Lending
Public Sector
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
20,081
453
-
20,534
530
25
-
555
2.01% - 10%
1,953
446
-
2,399
48
7
-
55
10.01% - 20%
271
157
-
428
2
16
-
18
Over 20.01%
2
97
945
1,044
1
1
14
16
Gross carrying amount
22,307
1,153
945
24,405
581
49
14
644
As at 31 December 2022
Total Loans
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
26,252
2,257
-
28,509
2.01% - 10%
3,052
1,546
-
4,598
10.01% - 20%
843
401
-
1,244
Over 20.01%
42
392
1,770
2,204
Gross carrying amount
30,189
4,596
1,770
36,555
As at 31 December 2021
Mortgage loans
Consumer loans
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
4,295
1,701
-
5,996
965
154
-
1,119
2.01% - 10%
245
910
-
1,155
269
47
-
316
10.01% - 20%
491
121
-
612
19
19
-
38
Over 20.01%
-
41
538
579
1
13
161
175
Gross carrying amount
5,031
2,773
538
8,342
1,254
233
161
1,648
Notes to the Financial Statements
Group and Bank
251
As at 31 December 2021
Credit Cards
Small Business Lending
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
299
22
-
321
105
8
-
113
2.01% - 10%
67
3
-
70
410
220
-
630
10.01% - 20%
20
4
-
24
7
43
-
50
Over 20.01%
-
-
22
22
51
393
220
664
Gross carrying amount
386
29
22
437
573
664
220
1,457
As at 31 December 2021
Corporate Lending
Public Sector
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
15,924
469
-
16,393
471
3
-
474
2.01% - 10%
1,059
438
-
1,497
19
6
-
25
10.01% - 20%
33
60
-
93
-
1
-
1
Over 20.01%
36
69
1,241
1,346
1
2
31
34
Gross carrying amount
17,052
1,036
1,241
19,329
491
12
31
534
As at 31 December 2021
Total Loans
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
22,059
2,357
-
24,416
2.01% - 10%
2,069
1,624
-
3,693
10.01% - 20%
570
248
-
818
Over 20.01%
89
518
2,213
2,820
Gross carrying amount
24,787
4,747
2,213
31,747
A breakdown of the portfolio by range of probability of default for the Bank is summarized as follows:
As at 31 December 2022
Mortgage loans
Consumer loans
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
4,227
1,625
-
5,852
475
113
-
588
2.01% - 10%
227
615
-
842
284
13
-
297
10.01% - 20%
394
70
-
464
1
6
-
7
Over 20.01%
-
31
419
450
1
8
111
120
Gross carrying amount
4,848
2,341
419
7,608
761
140
111
1,012
As at 31 December 2022
Credit Cards
Small Business Lending
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
264
2
-
266
16
2
-
18
2.01% - 10%
101
8
-
109
389
240
-
629
10.01% - 20%
2
-
-
2
113
124
-
237
Over 20.01%
-
-
30
30
38
233
189
460
Gross carrying amount
367
10
30
407
556
599
189
1,344
As at 31 December 2022
Corporate Lending
Public Sector
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
20,419
397
-
20,816
529
-
-
529
2.01% - 10%
1,601
347
-
1,948
48
7
-
55
10.01% - 20%
8
60
-
68
2
16
-
18
Over 20.01%
1
25
829
855
1
1
14
16
Gross carrying amount
22,029
829
829
23,687
580
24
14
618
As at 31 December 2022
Total Loans
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Notes to the Financial Statements
Group and Bank
252
0.01% - 2%
25,930
2,139
-
28,069
2.01% - 10%
2,650
1,230
-
3,880
10.01% - 20%
520
276
-
796
Over 20.01%
41
298
1,592
1,931
Gross carrying amount
29,141
3,943
1,592
34,676
As at 31 December 2021
Mortgage loans
Consumer loans
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
4,142
1,698
-
5,840
486
152
-
638
2.01% - 10%
237
829
-
1,066
218
24
-
242
10.01% - 20%
490
121
-
611
18
6
-
24
Over 20.01%
-
38
520
558
1
5
125
131
Gross carrying amount
4,869
2,686
520
8,075
723
187
125
1,035
As at 31 December 2021
Credit Cards
Small Business Lending
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
262
11
-
273
79
5
-
84
2.01% - 10%
66
-
-
66
360
208
-
568
10.01% - 20%
20
4
-
24
7
39
-
46
Over 20.01%
-
-
21
21
51
376
217
644
Gross carrying amount
348
15
21
384
497
628
217
1,342
As at 31 December 2021
Corporate Lending
Public Sector
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
16,249
392
-
16,641
446
-
-
446
2.01% - 10%
619
298
-
917
19
6
-
25
10.01% - 20%
3
26
-
29
-
1
-
1
Over 20.01%
36
9
1,114
1,159
1
2
31
34
Gross carrying amount
16,907
725
1,114
18,746
466
9
31
506
As at 31 December 2021
Total Loans
12-month PD
Stage 1
Stage 2
Credit
impaired
Total
0.01% - 2%
21,664
2,258
-
23,922
2.01% - 10%
1,519
1,365
-
2,884
10.01% - 20%
538
197
-
735
Over 20.01%
89
430
2,028
2,547
Gross carrying amount
23,810
4,250
2,028
30,088
Ageing analysis of loans and advances to customers at amortised cost
Ageing analysis of loans and advances to customers at amortised cost | Group
Mortgage loans
Consumer loans
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
4,984
2,364
234
7,582
1,133
252
21
1,406
1-30 days
26
74
17
117
70
19
6
95
31-60 days
-
18
14
32
-
7
4
11
61-90 days
-
11
11
22
-
3
3
6
91-180 days
-
-
32
32
-
-
13
13
Past due over 180 days
-
-
121
121
-
-
102
102
Gross carrying amount
5,010
2,467
429
7,906
1,203
281
149
1,633
ECL allowance
(26)
(98)
(148)
(272)
(23)
(30)
(101)
(154)
Net carrying amount
4,984
2,369
281
7,634
1,180
251
48
1,479
Notes to the Financial Statements
Group and Bank
253
Credit Cards
Small Business Lending
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
404
13
-
417
634
552
35
1,221
1-30 days
5
1
-
6
45
61
6
112
31-60 days
-
2
-
2
-
10
2
12
61-90 days
-
1
-
1
-
6
2
8
91-180 days
-
-
2
2
-
-
15
15
Past due over 180 days
-
-
31
31
-
-
140
140
Gross carrying amount
409
17
33
459
679
629
200
1,508
ECL allowance
(8)
(2)
(31)
(41)
(14)
(70)
(118)
(202)
Net carrying amount
401
15
2
418
665
559
82
1,306
Large Corporate
SMEs
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
17,854
434
316
18,604
3,654
435
80
4,169
1-30 days
445
94
32
571
354
61
35
450
31-60 days
-
17
3
20
-
68
13
81
61-90 days
-
32
-
32
-
12
1
13
91-180 days
-
-
14
14
-
-
9
9
Past due over 180 days
-
-
250
250
-
-
192
192
Gross carrying amount
18,299
577
615
19,491
4,008
576
330
4,914
ECL allowance
(100)
(45)
(386)
(531)
(34)
(46)
(191)
(271)
Net carrying amount
18,199
532
229
18,960
3,974
530
139
4,643
Public Sector
Total Loans
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
556
38
2
596
29,219
4,088
688
33,995
1-30 days
25
7
-
32
970
317
96
1,383
31-60 days
-
3
-
3
-
125
36
161
61-90 days
-
1
-
1
-
66
17
83
91-180 days
-
-
-
-
-
-
85
85
Past due over 180 days
-
-
12
12
-
-
848
848
Gross carrying amount
581
49
14
644
30,189
4,596
1,770
36,555
ECL allowance
(7)
(3)
(12)
(22)
(212)
(294)
(987)
(1,493)
Net carrying amount
574
46
2
622
29,977
4,302
783
35,062
Mortgage loans
Consumer loans
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
4,998
2,679
318
7,995
1,153
200
45
1,398
1-30 days
33
72
8
113
101
21
6
128
31-60 days
-
14
4
18
-
9
3
12
61-90 days
-
8
2
10
-
3
3
6
91-180 days
-
-
9
9
-
-
7
7
Past due over 180 days
-
-
197
197
-
-
97
97
Gross carrying amount
5,031
2,773
538
8,342
1,254
233
161
1,648
ECL allowance
(30)
(81)
(184)
(295)
(21)
(32)
(111)
(164)
Net carrying amount
5,001
2,692
354
8,047
1,233
201
50
1,484
Credit Cards
Small Business Lending
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
378
15
-
393
552
581
53
1,186
1-30 days
8
3
1
12
21
70
10
101
31-60 days
-
5
-
5
-
9
1
10
61-90 days
-
6
-
6
-
4
1
5
91-180 days
-
-
3
3
-
-
6
6
Notes to the Financial Statements
Group and Bank
254
Past due over 180 days
-
-
18
18
-
-
149
149
Gross carrying amount
386
29
22
437
573
664
220
1,457
ECL allowance
(5)
(1)
(22)
(28)
(10)
(92)
(160)
(262)
Net carrying amount
381
28
-
409
563
572
60
1,195
Large Corporate
SMEs
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
12,991
429
246
13,666
3,068
481
112
3,661
1-30 days
598
39
205
842
395
68
35
498
31-60 days
-
2
3
5
-
12
4
16
61-90 days
-
-
22
22
-
5
1
6
91-180 days
-
-
29
29
-
-
11
11
Past due over 180 days
-
-
383
383
-
-
190
190
Gross carrying amount
13,589
470
888
14,947
3,463
566
353
4,382
ECL allowance
(102)
(35)
(512)
(649)
(30)
(30)
(175)
(235)
Net carrying amount
13,487
435
376
14,298
3,433
536
178
4,147
Public Sector
Total Loans
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
488
9
15
512
23,628
4,394
789
28,811
1-30 days
3
-
-
3
1,159
273
265
1,697
31-60 days
-
3
-
3
-
54
15
69
61-90 days
-
-
-
-
-
26
29
55
91-180 days
-
-
2
2
-
-
67
67
Past due over 180 days
-
-
14
14
-
-
1,048
1,048
Gross carrying amount
491
12
31
534
24,787
4,747
2,213
31,747
ECL allowance
(6)
(1)
(15)
(22)
(204)
(272)
(1,179)
(1,655)
Net carrying amount
485
11
16
512
24,583
4,475
1,034
30,092
Ageing analysis of loans and advances to customers at amortised cost | Bank
Mortgage loans
Consumer loans
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
4,824
2,242
232
7,298
711
124
18
853
1-30 days
24
73
16
113
50
10
6
66
31-60 days
-
16
13
29
-
4
4
8
61-90 days
-
10
11
21
-
2
3
5
91-180 days
-
-
31
31
-
-
9
9
Past due over 180 days
-
-
116
116
-
-
71
71
Gross carrying amount
4,848
2,341
419
7,608
761
140
111
1,012
ECL allowance
(26)
(98)
(143)
(267)
(20)
(22)
(82)
(124)
Net carrying amount
4,822
2,243
276
7,341
741
118
29
888
Credit Cards
Small Business Lending
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
363
8
-
371
525
530
35
1,090
1-30 days
4
-
-
4
31
58
6
95
31-60 days
-
1
-
1
-
8
2
10
61-90 days
-
1
-
1
-
3
2
5
91-180 days
-
-
2
2
-
-
14
14
Past due over 180 days
-
-
28
28
-
-
130
130
Gross carrying amount
367
10
30
407
556
599
189
1,344
ECL allowance
(8)
(1)
(30)
(39)
(14)
(69)
(114)
(197)
Net carrying amount
359
9
-
368
542
530
75
1,147
Notes to the Financial Statements
Group and Bank
255
Large Corporate
SMEs
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
18,532
356
292
19,180
2,910
302
72
3,284
1-30 days
297
91
30
418
290
43
30
363
31-60 days
-
6
1
7
-
30
13
43
61-90 days
-
1
-
1
-
-
1
1
91-180 days
-
-
9
9
-
-
6
6
Past due over 180 days
-
-
240
240
-
-
135
135
Gross carrying amount
18,829
454
572
19,855
3,200
375
257
3,832
ECL allowance
(109)
(43)
(368)
(520)
(31)
(40)
(153)
(224)
Net carrying amount
18,720
411
204
19,335
3,169
335
104
3,608
Public Sector
Total Loans
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
555
24
2
581
28,420
3,586
651
32,657
1-30 days
25
-
-
25
721
275
88
1,084
31-60 days
-
-
-
-
-
65
33
98
61-90 days
-
-
-
-
-
17
17
34
91-180 days
-
-
-
-
-
-
71
71
Past due over 180 days
-
-
12
12
-
-
732
732
Gross carrying amount
580
24
14
618
29,141
3,943
1,592
34,676
ECL allowance
(7)
(3)
(12)
(22)
(215)
(276)
(902)
(1,393)
Net carrying amount
573
21
2
596
28,926
3,667
690
33,283
Mortgage loans
Consumer loans
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
4,846
2,602
316
7,764
666
173
44
883
1-30 days
23
65
8
96
57
10
5
72
31-60 days
-
12
3
15
-
3
2
5
61-90 days
-
7
2
9
-
1
2
3
91-180 days
-
-
8
8
-
-
4
4
Past due over 180 days
-
-
183
183
-
-
68
68
Gross carrying amount
4,869
2,686
520
8,075
723
187
125
1,035
ECL allowance
(30)
(80)
(177)
(287)
(16)
(29)
(92)
(137)
Net carrying amount
4,839
2,606
343
7,788
707
158
33
898
Credit Cards
Small Business Lending
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
341
5
-
346
489
552
53
1,094
1-30 days
7
-
1
8
8
66
9
83
31-60 days
-
5
-
5
-
7
1
8
61-90 days
-
5
-
5
-
3
-
3
91-180 days
-
-
3
3
-
-
6
6
Past due over 180 days
-
-
17
17
-
-
148
148
Gross carrying amount
348
15
21
384
497
628
217
1,342
ECL allowance
(5)
(1)
(21)
(27)
(9)
(92)
(158)
(259)
Net carrying amount
343
14
-
357
488
536
59
1,083
Large Corporate
SMEs
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
13,639
310
244
14,193
2,524
329
100
2,953
1-30 days
413
23
204
640
331
48
23
402
31-60 days
-
2
3
5
-
8
2
10
61-90 days
-
-
22
22
-
5
2
7
91-180 days
-
-
29
29
-
-
10
10
Notes to the Financial Statements
Group and Bank
256
Past due over 180 days
-
-
344
344
-
-
131
131
Gross carrying amount
14,052
335
846
15,233
2,855
390
268
3,513
ECL allowance
(113)
(34)
(483)
(630)
(26)
(24)
(131)
(181)
Net carrying amount
13,939
301
363
14,603
2,829
366
137
3,332
Public Sector
Total Loans
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Current
463
9
16
488
22,968
3,980
773
27,721
1-30 days
3
-
-
3
842
212
250
1,304
31-60 days
-
-
-
-
-
37
11
48
61-90 days
-
-
-
-
-
21
28
49
91-180 days
-
-
2
2
-
-
62
62
Past due over 180 days
-
-
13
13
-
-
904
904
Gross carrying amount
466
9
31
506
23,810
4,250
2,028
30,088
ECL allowance
(6)
(1)
(15)
(22)
(205)
(261)
(1,077)
(1,543)
Net carrying amount
460
8
16
484
23,605
3,989
951
28,545
4.2.10 Interest income on loans and advances to customers
Interest income from loans and advances to customers at amortised cost | Group
31.12.2022
Not Credit
Impaired Loans
Credit Impaired
Loans
Total Interest
Income
Retail Lending
407
54
461
Corporate Lending
648
56
704
Public sector Lending
1
-
1
Total interest income
1,056
110
1,166
31.12.2021
Not Credit
Impaired Loans
Credit Impaired
Loans
Total Interest
Income
Retail Lending
375
132
507
Corporate Lending
483
67
550
Total interest income
858
199
1,057
Interest income from loans and advances to customers at amortised cost | Bank
31.12.2022
Not Credit
Impaired Loans
Credit Impaired
Loans
Total Interest
Income
Retail Lending
350
53
403
Corporate Lending
605
54
659
Total interest income
955
107
1,062
31.12.2021
Not Credit
Impaired Loans
Credit Impaired
Loans
Total Interest
Income
Retail Lending
319
131
450
Corporate Lending
448
63
511
Total interest income
767
194
961
4.2.11 Forbearance
Forbearance Measures
The Group may, in the normal course of business, renegotiate contractual terms of a lending arrangement and proceed to modifications,
either as a result of financial difficulties of the borrower or due to other reasons. Forbearance measures comprise concessions of the
Group towards a borrower facing or about to face financial difficulties in meeting its financial commitments, in which case the loan
terms and conditions are modified to provide the borrower the ability to service the debt or refinance the contract, either totally or
Notes to the Financial Statements
Group and Bank
257
partially. Cases of lending arrangement modifications without financial difficulty of the borrower are not classified as forbearance
measures.
There are several types of forbearance measures offered by the Group, including reduced payment schedules, loan term extensions,
interest-only payment schedules, partial debt forgiveness programs and hybrid modifications, comprising a combination of the
aforementioned forbearance measures.
The main restructuring program, namely “Split & Settle”, has been applied to the mortgage and secured consumer loan portfolio since
2019, and comprises a split-balance type of product whose main characteristic is the separation of the outstanding debt in two parts:
the amount to be repaid (Split), which is amortized in monthly instalments (principal plus interest) and the amount to be potentially
forgiven (Settle), which remains interest-free. The settle amount is forgiven one month after the end of the repayment period,
provided that the contractually agreed conditions are met. Borrowers who have applied for protection under bankruptcy Law
3869/2010 are also entitled to participate in this program, as long as they resign from their application.
Furthermore, similar programs with the aforementioned characteristic of debt splitting have also been introduced since 2018 for the
restructuring of SBL loans (sole entrepreneurs/ professionals) as well as debt deriving from credit cards and consumer credit
products (without collateral). A “Split & Settle” product with similar characteristics with those of the program relating the mortgage
portfolio has become available to the SBL legal entities during 2022.
Finally, the “Restart” program for SBL loans to individuals, introduced in 2021, relates to loans secured by real estate collateral and offers
instalment reduction through loan term extension with the option of a reduced fractional payment of up to 24 months. This program
has become available to the SBL legal entities as well during 2022. The ‘’Restart’’ program for the Household Retail portfolio
(mortgage, consumer loans, credit cards) relating to loans secured by real estate collateral was also launched during 2022 and offers
instalment reduction through loan term extension combined with a fractional-payment scheme of 24 months, whereby the customer
pays a proportion of the full instalment due, based on affordability .
For Corporate loans, the types of forbearance measures usually include a mix of tailor-made solutions to cover current conditions and
the borrower’s projected cash flows.
The Bank’s Credit Policy for both Retail and Corporate portfolios provides clear instructions and guidelines regarding the full range of
forbearance products offered to customers, the requirements to be met in terms of eligibility for the available programs to be
offered, as well as the management and monitoring of restructured loans after approval and until termination of the loan contract.
The approval rights of the Credit Committees are also described in the Bank’s Credit Policy.
The forbearance processes and evolution of forborne loans along with re-default and curing trends and their respective drivers are
closely monitored and assessed by Management on an on-going basis in order to timely identify and assess relevant risks and deploy
appropriate management strategies to provide borrowers with viable solutions and improve cash flow recoverability .
Classification of forborne loans
Forbearance constitutes a qualitative SICR trigger, as disclosed in Note 4.2.6 “Impairment of amortised cost and FVTOCI financial assets”.
The monitoring, classification and reporting of forborne loans is performed by the Group in accordance with EBA Guidelines. All
forborne performing exposures (FPEs) are classified in Stage 2 for a probation period of at least 2 years until regulatory requirements
to exit forbearance status are met, while all forborne non-performing exposures (FNPEs) are classified in Stage 3 for at least one year
(cure period) until regulatory curing requirements are met.
Modification of loans and advances to customers at amortised cost
Forbearance measures do not lead to derecognition unless changes to the original contractual terms result in a substantially different
loan, i.e. the loan is altered in a manner that the terms under the modified contract are substantially different from those under the
original contract (Note 2.11 “Derecognition”).
When the modification is not considered substantial in order to lead to derecognition, the gain or loss arising from the modification is
calculated as the difference between the present value of the new contractual cash flows (i.e. based on the modified terms)
discounted by the original effective interest rate of the loan and the carrying amount post write-off (if any), and is recognised in the
income statement in “Credit provisions and other impairment charges”.
As at 31 December 2022, the amortised cost (before modification) of loans and advances to customers with lifetime ECL whose cash
flows were modified during the year amounted to €389 million for the Group and the Bank (31 December 2021: €1,001million),
resulting in a modification loss of €1 million for the Group and the Bank (2021: €34 million), as disclosed in the Movement of the
Gross carrying amount of loans and advances to customers at amortised cost in Note 21 “Loans and advances to customers”.
The impact of modification on the ECL allowance associated with these assets for the Group and the Bank was a release of €2 million
(2021: €16 million), as disclosed in the Movement of the ECL allowance on loans and advances to customers at amortised cost in
Note 21 “Loans and advances to customers”.
Therefore, the net impact recognised in the Income Statement related to modification gain of €1 million for the Group and the Bank for
the period (2021: loss of €18 million), which is separately disclosed in Note 13 “Credit provisions and other impairment charges”.
An analysis of the Group’s and the Bank’s forborne loans measured at amortised cost is presented in the following tables.
Notes to the Financial Statements
Group and Bank
258
Forborne loans and advances to customers at amortised cost by type of forbearance measure
Group
Bank
Forbearance measure
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Reduced payment schedule
911
1,080
910
1,080
Hybrid modifications
618
843
618
843
Term extension
610
750
556
690
Interest only schedule
91
72
89
71
Other types of forbearance measures
126
204
100
165
Net carrying amount
2,356
2,949
2,273
2,849
Credit quality of forborne loans and advances to customers at amortised cost
Group
Bank
As at 31 December 2022
Loans and
advances to
customers
Forborne
loans
% of forborne
loans
Loans and
advances to
customers
Forborne
loans
% of forborne
loans
Stage 1
30,189
-
0%
29,141
-
0%
Stage 2
4,596
2,082
45%
3,943
2,030
51%
Credit impaired
1,770
830
47%
1,592
785
49%
Gross carrying amount
36,555
2,912
8%
34,676
2,815
8%
ECL allowance - Individual
(471)
(249)
53%
(424)
(238)
56%
ECL allowance - Collective
(1,022)
(307)
30%
(969)
(304)
31%
Net carrying amount
35,062
2,356
7%
33,283
2,273
7%
Value of collateral
20,903
2,347
11%
18,612
2,294
12%
As at 31 December 2022, credit -impaired loans and advances to customers at amortised cost subject to forbearance measures include
loans with delay less than 90 days:
Group
Bank
Mortgage loans
248
245
Consumer loans
22
21
Small Business Lending
36
35
Corporate Lending
378
370
Gross carrying amount
684
671
Group
Bank
As at 31 December 2021
Loans and
advances to
customers
Forborne
loans
% of forborne
loans
Loans and
advances to
customers
Forborne
loans
% of forborne
loans
Stage 1
24,787
-
0%
23,810
-
0%
Stage 2
4,747
2,446
52%
4,250
2,380
56%
Credit impaired
2,213
1,100
50%
2,028
1,030
51%
Gross carrying amount
31,747
3,546
11%
30,088
3,410
11%
ECL allowance - Individual
(630)
(322)
51%
(559)
(287)
51%
ECL allowance - Collective
(1,025)
(275)
27%
(984)
(274)
28%
Net carrying amount
30,092
2,949
10%
28,545
2,849
10%
Value of collateral
21,061
2,808
13%
19,076
2,753
14%
As at 31 December 2021, credit -impaired loans and advances to customers at amortised cost subject to forbearance measures include
loans with delay less than 90 days.
Group
Bank
Mortgage loans
305
303
Notes to the Financial Statements
Group and Bank
259
Consumer loans
23
22
Small Business Lending
52
51
Corporate Lending
504
485
Gross carrying amount
884
861
Movement of forborne loans and advances to customers at amortised cost net of ECL allowance
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Opening net carrying amount
2,949
3,612
2,849
3,461
New forborne assets
172
263
134
232
Interest income
90
125
89
123
Repayments
(346)
(384)
(325)
(354)
Exposures that exited forbearance status
(497)
(459)
(467)
(451)
Write-offs & sales
(57)
(76)
(54)
(68)
Impairment charge for expected credit losses
81
61
83
68
Reclassified as Held for Sale
(36)
(193)
(36)
(162)
Closing net carrying amount
2,356
2,949
2,273
2,849
Forborne loans and advances to customers at amortised cost net of ECL allowance by product line
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Retail Lending
1,843
2,379
1,827
2,362
Mortgage Loans
1,689
2,160
1,685
2,152
Consumer Loans
85
133
80
128
Small Business Lending
69
86
62
82
Corporate Lending
494
550
427
467
Large
348
364
331
324
SMEs
146
186
96
143
Public Sector Lending
19
20
19
20
Net carrying amount
2,356
2,949
2,273
2,849
Forborne loans and advances to customers at amortised cost net of ECL allowance by geographical region
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Greece
2,322
2,904
2,273
2,849
International
34
45
-
-
Net carrying amount
2,356
2,949
2,273
2,849
4.2.12 Repossessed collateral
As at 31 December 2022, repossessed collateral amounted to €467 million and €393 million for the Group and the Bank respectively
(2021: €490 million and €418 million respectively). During 2022, the Group obtained assets by taking possession of collateral held as
security of €26 million for the Group and €13 million for the Bank respectively (2021: €52 million and €50 million for the Group and
the Bank respectively).
Almost all repossessed assets relate to properties. Repossessed properties are sold as soon as practicable. Repossessed assets are
classified in the Statement of Financial Position within “Other assets”, except for those properties that are held for capital
appreciation or rental income, which are classified within “Investment property”.
4.2.13 Credit risk concentration of loans and advances to customers at amortised cost and credit related commitments
The credit risk concentration of loans and advances to customers at amortised cost and credit related commitments by geographical and
industry sector for the Group and the Bank is summarised in the following tables:
Notes to the Financial Statements
Group and Bank
260
Analysis by product line, industry and geographical region | Group
Greece
International
Total
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Retail lending
6,593
3,097
757
(630)
708
297
54
(39)
7,301
3,394
811
(669)
Mortgage
4,848
2,341
419
(267)
162
126
10
(5)
5,010
2,467
429
(272)
Consumer
770
140
111
(123)
433
141
38
(31)
1,203
281
149
(154)
Credit cards
367
10
30
(39)
42
7
3
(2)
409
17
33
(41)
Small business lending
608
606
197
(201)
71
23
3
(1)
679
629
200
(202)
Corporate lending
21,896
1,005
871
(750)
411
148
74
(52)
22,307
1,153
945
(802)
Industry & mining
2,661
368
331
(293)
117
41
20
(14)
2,778
409
351
(307)
Trade and services (excl.
tourism)
9,693
249
246
(181)
155
47
31
(22)
9,848
296
277
(203)
Construction and real
estate development
1,281
48
56
(57)
40
20
10
(5)
1,321
68
66
(62)
Energy
2,647
13
2
(26)
26
17
-
(2)
2,673
30
2
(28)
Tourism
1,195
180
136
(108)
6
5
5
(4)
1,201
185
141
(112)
Shipping
2,360
48
30
(11)
-
-
-
-
2,360
48
30
(11)
Transportation and
telecommunications
1,598
58
36
(45)
12
4
4
(2)
1,610
62
40
(47)
Other
461
41
34
(29)
55
14
4
(3)
516
55
38
(32)
Public sector
581
49
14
(22)
-
-
-
-
581
49
14
(22)
Total
29,070
4,151
1,642
(1,402)
1,119
445
128
(91)
30,189
4,596
1,770
(1,493)
Standby letters of credit
and financial guarantees
written
4,274
234
68
(49)
64
4
13
(1)
4,338
238
81
(50)
Commercial letters of
credit
606
-
3
(1)
406
33
1
-
1,012
33
4
(1)
Greece
International
Total
As at 31 December 2021
(Restated)
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Retail lending
6,473
3,524
883
(710)
771
175
58
(39)
7,244
3,699
941
(749)
Mortgage
4,870
2,685
520
(287)
161
88
18
(8)
5,031
2,773
538
(295)
Consumer
732
187
124
(136)
522
46
37
(28)
1,254
233
161
(164)
Credit cards
348
15
21
(27)
38
14
1
(1)
386
29
22
(28)
Small business lending
523
637
218
(260)
50
27
2
(2)
573
664
220
(262)
Corporate lending
16,662
900
1,144
(805)
390
136
97
(79)
17,052
1,036
1,241
(884)
Industry & mining
2,491
228
449
(333)
117
41
25
(31)
2,608
269
474
(364)
Trade and services (excl.
tourism)
5,739
314
260
(187)
142
83
55
(33)
5,881
397
315
(220)
Construction and real
estate development
1,751
44
116
(67)
40
14
5
(4)
1,791
58
121
(71)
Energy
2,281
3
3
(21)
23
7
-
(1)
2,304
10
3
(22)
Tourism
861
163
188
(109)
3
7
5
(3)
864
170
193
(112)
Shipping
2,062
93
36
(23)
-
-
-
-
2,062
93
36
(23)
Transportation and
telecommunications
982
14
48
(40)
3
5
2
(1)
985
19
50
(41)
Other
495
41
44
(25)
62
(21)
5
(6)
557
20
49
(31)
Public sector
491
12
31
(22)
-
-
-
-
491
12
31
(22)
Total
23,626
4,436
2,058
(1,537)
1,161
311
155
(118)
24,787
4,747
2,213
(1,655)
Standby letters of credit
and financial guarantees
written
2,620
181
84
(53)
52
20
3
-
2,672
201
87
(53)
Commercial letters of
credit
695
1
2
(1)
315
2
4
-
1,010
3
6
(1)
Greece
SEE
Other countries
Total
As at 31 December 2021
(As published in 2021)
Gross
carrying
amount
Credit
impaired
ECL
allowance
Gross
carrying
amount
Credit
impaired
ECL
allowance
Gross
carrying
amount
Credit
impaired
ECL
allowance
Gross
carrying
amount
Credit
impaired
ECL
allowance
Retail lending
10,880
883
(710)
948
42
(31)
56
16
(8)
11,884
941
(749)
Mortgage
8,075
520
(287)
224
4
(2)
43
14
(6)
8,342
538
(295)
Consumer
1,043
124
(136)
593
35
(26)
12
2
(2)
1,648
161
(164)
Credit cards
384
21
(27)
52
1
(1)
1
-
-
437
22
(28)
Small business lending
1,378
218
(260)
79
2
(2)
-
-
-
1,457
220
(262)
Notes to the Financial Statements
Group and Bank
261
Corporate lending
18,705
1,144
(805)
435
53
(41)
189
44
(38)
19,329
1,241
(884)
Industry & mining
3,168
449
(333)
166
23
(16)
17
2
(15)
3,351
474
(364)
Trade and services (excl.
tourism)
6,312
260
(187)
109
13
(10)
172
42
(23)
6,593
315
(220)
Construction and real
estate development
1,911
116
(67)
59
5
(4)
-
-
-
1,970
121
(71)
Energy
2,287
3
(21)
30
-
(1)
-
-
-
2,317
3
(22)
Tourism
1,212
188
(109)
15
5
(3)
-
-
-
1,227
193
(112)
Shipping
2,191
36
(23)
-
-
-
-
-
-
2,191
36
(23)
Transportation and
telecommunications
1,044
48
(40)
10
2
(1)
-
-
-
1,054
50
(41)
Other
580
44
(25)
46
5
(6)
-
-
-
626
49
(31)
Public sector
534
31
(22)
-
-
-
-
-
-
534
31
(22)
Total
30,119
2,058
(1,537)
1,383
95
(72)
245
60
(46)
31,747
2,213
(1,655)
Analysis by product line, industry and geographical region | Bank
Greece
International
Total
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Retail lending
6,532
3,090
748
(626)
-
-
1
(1)
6,532
3,090
749
(627)
Mortgage
4,848
2,341
419
(267)
-
-
-
-
4,848
2,341
419
(267)
Consumer
761
140
110
(123)
-
-
1
(1)
761
140
111
(124)
Credit cards
367
10
30
(39)
-
-
-
-
367
10
30
(39)
Small business lending
556
599
189
(197)
-
-
-
-
556
599
189
(197)
Corporate lending
22,021
829
826
(740)
8
-
3
(4)
22,029
829
829
(744)
Industry & mining
2,366
303
328
(291)
4
-
-
(1)
2,370
303
328
(292)
Trade and services (excl.
tourism)
10,268
151
205
(173)
4
-
3
(3)
10,272
151
208
(176)
Construction and real
estate development
1,224
40
56
(57)
-
-
-
-
1,224
40
56
(57)
Energy
2,640
13
2
(26)
-
-
-
-
2,640
13
2
(26)
Tourism
1,195
180
136
(108)
-
-
-
-
1,195
180
136
(108)
Shipping
2,360
48
30
(11)
-
-
-
-
2,360
48
30
(11)
Transportation and
telecommunications
1,595
58
36
(45)
-
-
-
-
1,595
58
36
(45)
Other
373
36
33
(29)
-
-
-
-
373
36
33
(29)
Public sector
580
24
14
(22)
-
-
-
-
580
24
14
(22)
Total
29,133
3,943
1,588
(1,388)
8
-
4
(5)
29,141
3,943
1,592
(1,393)
Standby letters of credit
and financial guarantees
written
4,605
234
67
(48)
-
-
1
(1)
4,605
234
68
(49)
Commercial letters of
credit
606
-
3
(1)
405
33
1
-
1,011
33
4
(1)
Greece
International
Total
As at 31 December 2021
(Restated)
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Stage 1
Stage 2
Credit
impaired
ECL
allowance
Retail lending
6,434
3,516
882
(709)
3
-
1
(1)
6,437
3,516
883
(710)
Mortgage
4,869
2,686
520
(287)
-
-
-
-
4,869
2,686
520
(287)
Consumer
720
187
124
(136)
3
-
1
(1)
723
187
125
(137)
Credit cards
348
15
21
(27)
-
-
-
-
348
15
21
(27)
Small business lending
497
628
217
(259)
-
-
-
-
497
628
217
(259)
Corporate lending
16,888
725
1,109
(793)
19
-
5
(18)
16,907
725
1,114
(811)
Industry & mining
2,163
188
448
(333)
15
-
2
(15)
2,178
188
450
(348)
Trade and services (excl.
tourism)
6,446
210
226
(175)
4
-
3
(3)
6,450
210
229
(178)
Construction and real
estate development
1,683
35
116
(67)
-
-
-
-
1,683
35
116
(67)
Energy
2,265
3
3
(21)
-
-
-
-
2,265
3
3
(21)
Tourism
850
163
188
(109)
-
-
-
-
850
163
188
(109)
Shipping
2,062
93
36
(23)
-
-
-
-
2,062
93
36
(23)
Transportation and
telecommunications
981
13
48
(40)
-
-
-
-
981
13
48
(40)
Other
438
20
44
(25)
-
-
-
-
438
20
44
(25)
Public sector
466
9
31
(22)
-
-
-
-
466
9
31
(22)
Total
23,788
4,250
2,022
(1,524)
22
-
6
(19)
23,810
4,250
2,028
(1,543)
Standby letters of credit
and financial guarantees
written
2,956
181
84
(76)
-
-
3
-
2,956
181
87
(76)
Notes to the Financial Statements
Group and Bank
262
Commercial letters of
credit
695
1
2
(1)
313
2
4
-
1,008
3
6
(1)
Greece
SEE
Other countries
Total
As at 31 December 2021
(As published in 2021)
Gross
carrying
amount
Credit
impaired
ECL
allowance
Gross
carrying
amount
Credit
impaired
ECL
allowance
Gross
carrying
amount
Credit
impaired
ECL
allowance
Gross
carrying
amount
Credit
impaired
ECL
allowance
Retail lending
10,832
882
(709)
-
-
-
4
1
(1)
10,836
883
(710)
Mortgage
8,075
520
(287)
-
-
-
-
-
-
8,075
520
(287)
Consumer
1,031
124
(136)
-
-
-
4
1
(1)
1,035
125
(137)
Credit cards
384
21
(27)
-
-
-
-
-
-
384
21
(27)
Small business lending
1,342
217
(259)
-
-
-
-
-
-
1,342
217
(259)
Corporate lending
18,722
1,109
(793)
-
-
-
24
5
(18)
18,746
1,114
(811)
Industry & mining
2,799
448
(333)
-
-
-
17
2
(15)
2,816
450
(348)
Trade and services (excl.
tourism)
6,882
226
(175)
-
-
-
7
3
(3)
6,889
229
(178)
Construction and real
estate development
1,834
116
(67)
-
-
-
-
-
-
1,834
116
(67)
Energy
2,271
3
(21)
-
-
-
-
-
-
2,271
3
(21)
Tourism
1,201
188
(109)
-
-
-
-
-
-
1,201
188
(109)
Shipping
2,191
36
(23)
-
-
-
-
-
-
2,191
36
(23)
Transportation and
telecommunications
1,042
48
(40)
-
-
-
-
-
-
1,042
48
(40)
Other
502
44
(25)
-
-
-
-
-
-
502
44
(25)
Public sector
506
31
(22)
-
-
-
-
-
-
506
31
(22)
Total
30,060
2,022
(1,524)
-
-
-
28
6
(19)
30,088
2,028
(1,543)
4.2.14 Debt securities
The tables below present the movement of expected credit losses for debt securities during 2022 and 2021, for the Group and the Bank
(see also Note 22 “Investment Securities”):
ECL Movement for Debt Securities - Group & Bank 2022
Securities measured at
amortised cost
Securities measured at
FVTOCI
Stage 1
Stage 2
Stage 1
Stage 2
Balance at 1 January
18
57
4
1
Net remeasurement of ECL allowance
5
(4)
1
-
Impairment losses on new assets
3
-
2
-
Derecognition of debt Securities
(1)
-
-
(1)
Balance at 31 December
25
53
7
-
ECL Movement for Debt Securities - Group & Bank 2021
Securities measured at
amortised cost
Securities measured at
FVTOCI
Stage 1
Stage 2
Stage 1
Stage 2
Balance at 1 January
24
68
9
-
Net remeasurement of ECL allowance
(7)
(11)
(3)
1
Impairment losses on new assets
7
-
3
-
Derecognition of debt Securities
(6)
-
(5)
-
Balance at 31 December
18
57
4
1
The tables below present an analysis of debt securities, treasury bills and other eligible bills by rating agency designation at 31 December
2022 and 2021, based on the lower rating between Moody’s and S&P ratings expressed in Moody’s equivalent:
Notes to the Financial Statements
Group and Bank
263
Ratings – Group
As at 31 December 2022
Securities
measured at
FVTPL
Securities
measured at
FVTOCI
Securities
measured at
amortised cost
Total
Aaa
44
140
302
486
Aa1 to A3
114
82
-
196
Baa1 to Ba3
46
2,394
9,764
12,204
Lower than Ba3
6
115
292
413
Total
210
2,731
10,358
13,299
As at 31 December 2021
Securities
measured at
FVTPL
Securities
measured at
FVTOCI
Securities
measured at
amortised cost
Total
Aaa
-
525
-
525
Aa1 to A3
163
83
-
246
Baa1 to Ba3
74
1,931
11,936
13,941
Lower than Ba3
31
210
166
407
Total
268
2,749
12,102
15,119
Ratings – Bank
As at 31 December 2022
Securities
measured at
FVTPL
Securities
measured at
FVTOCI
Securities
measured at
amortised cost
Total
Aaa
44
140
302
486
Aa1 to A3
114
82
-
196
Baa1 to Ba3
46
2,357
9,527
11,930
Lower than Ba3
5
115
291
411
Total
209
2,694
10,120
13,023
As at 31 December 2021
Securities
measured at
FVTPL
Securities
measured at
FVTOCI
Securities
measured at
amortised cost
Total
Aaa
-
525
-
525
Aa1 to A3
163
83
-
246
Baa1 to Ba3
74
1,867
11,624
13,565
Lower than Ba3
31
211
165
407
Total
268
2,686
11,789
14,743
4.3 Market risk
Market risk is the current or prospective risk to earnings and capital arising from adverse movements in interest rates, equity and commodity
prices and exchange rates, and their levels of volatility. The main contributor to market risk in the Group is the Bank. The most significant
types of market risk for the Bank are interest rate risk, equity risk, foreign exchange risk and commodity risk. For more information over the
significant types of market risk for the Group, please refer to the “Board of Directors Report” section “Risk management – Management of
Risks – Market Risk”.
Notes to the Financial Statements
Group and Bank
264
4.3.1 Market risk on trading and HTCS portfolios - Value -at-Risk (“VaR”)
The Bank uses internally developed and implemented market risk models and systems to assess and quantify the portfolio market risk, based
on best practice and industry-wide accepted risk metrics. More specifically, the Bank estimates the market risk of its trading and the held to
collect and sell (HTCS) portfolios using the VaR methodology. This has been implemented in NBG’s risk platform which is RiskWatch by
Algorithmics (currently SS&C Technologies). In particular, the Bank has adopted the variance-covariance (VCV) methodology, with a 99%
confidence interval and a 1-day holding period. The VaR is calculated on a daily basis for the Bank’s trading and HTCS portfolios, along with
the VaR per risk type (interest rate, equity and foreign exchange risk). The VaR estimates are used internally as a risk management tool, as
well as for regulatory purposes. The GFLRMD calculates the VaR of the Bank’s trading and HTCS portfolios, for internal use, on a daily basis,
using the latest 75 exponentially weighted daily observations to construct the VCV matrices. For regulatory purposes, the calculations apply
only on the trading portfolio and the VCV matrices are based on 252, equally weighted, daily observations. The risk factors relevant to the
financial products in the Bank’s portfolio are interest rates, equity indices, foreign exchange rates and commodity prices. Additionally, the
GFLRMD calculates the stressed VaR (sVaR) of the Bank’s trading portfolio, which is defined as the VaR, where model inputs are calibrated to
historical data from a continuous 1-year period of significant financial stress, relevant to the Bank’s portfolio. The relevant VCV matrices are
identified over a period starting in January 2008. Similarly, to VaR, NBG calculates sVaR on a daily basis, using a 1-day holding period and 99%
confidence level.
The following tables reflect the VaR of the Bank (99%, 1 day) for the years ended 31 December 2022 and 2021, respectively.
2022 (in € 000)
Total VaR
Interest Rate Risk
VaR
Equity Risk VaR
Foreign Exchange
Risk VaR
31 December
17,973
17,676
518
320
Average (daily value)
18,169
17,715
1,504
342
Max (daily value)
33,176
31,929
4,656
1,201
Min (daily value)
9,688
10,065
518
81
2021 (in € 000)
Total VaR
Interest Rate Risk
VaR
Equity Risk VaR
Foreign Exchange
Risk VaR
31 December
11,034
11,103
1,394
271
Average (daily value)
13,305
12,916
1,064
234
Max (daily value)
28,166
27,721
1,925
571
Min (daily value)
7,947
7,335
523
52
The VaR of the Bank’s Trading and HTCS portfolios is mostly hedged for interest rate risk, but it is exposed to credit-spread risk, through the
positions in Greek and other EU periphery sovereign bonds, held in the HTCS portfolio.
In the first six months of 2022, ECB’s response to inflationary pressures and the macroeconomic impact of the Ukrainian crisis, led interest
rates to soar, both the benchmark and the EU periphery sovereign curves, and the respective credit-spreads to widen. This in turn caused the
yield volatilities to spike and the VaR of the Bank’s Trading and HTCS portfolios to increase sharply and breach the VaR limit of €30 million,
reaching its peak near the end of Q2.2022.
During the third quarter of the year, fragmentation fears subsided after the announcement of the Transmission Protection Instrument (‘TPI’)
by ECB and the VaR gradually receded, in line with the path of the respective volatilities. However, in the beginning of the last quarter of the
year, the EU periphery sovereign yields exhibited significant gyrations, leading to the increase of the respective volatilities and to higher VaR
estimates, albeit below the approved VaR limits. By the end of 2022, the VaR of the Bank’s trading and HTCS portfolio stood at €18 million,
above the respective level at the end of the previous year.
Back-testing
The Bank performs back-testing on a daily basis, in order to verify the predictive power of the VaR model. In accordance with the guidelines
set out in the Capital Requirements Regulation 575/2013, the calculations only refer to the Bank’s trading portfolio and involve the
comparison of the hypothetical as well as the actual daily gains/losses of the portfolio, with the respective estimates of the VaR model used
for regulatory purposes. The hypothetical gains/losses are the change in the value of the portfolio between days t and t+1, assuming that the
portfolio remains constant between the two days. In the same context, the actual gains/losses are the change in the value of the portfolio
Notes to the Financial Statements
Group and Bank
265
between days t and t+1, including all transactions and/or any realized gains/losses that took place in day t+1, excluding fees, commissions and
net interest income.
Any excess of the hypothetical/actual losses over the VaR estimate is reported to the regulatory authorities within no later than five business
days. Moreover, the Board is informed about the total number of excesses, on a monthly basis.
The Bank’s trading book is primarily exposed to interest rate risk in the Eurozone, with the key risk factors being the EUR swap rates and the
respective sovereign yields (mainly the German). During 2022, the widening of the swap-spread and the non-parallel movement of the EUR
IRS rates and the respective sovereign yields, combined with the unweighted scheme of the VaR model, caused successive over-shootings. As
of December 30th, 2022, the total number of back-testing over-shootings stood at 23, over a 1-year horizon.
Stress Testing
The VaR model is based on certain theoretical assumptions, which do not fully capture the potential “tail events” in the markets.
To enhance the predictability of our VaR model and minimize the effect of the aforementioned limitations, NBG performs stress testing on a
weekly basis. The aim of stress testing is to evaluate the gains or losses that may occur under extreme market conditions and applies on both,
trading and HTCS portfolios. These scenarios are presented in the following tables:
Interest rate-related scenarios:
Scenario
Description
0-
3 Mo
nths
3 Months-
5 Years
>5 Years
1
Parallel Curve Shift
+200 bps
+200 bps
+200 bps
2
Parallel Curve Shift
−200 bps
−200 bps
−200 bps
3
Steepening
0 bps
+100 bps
+200 bps
4
Flattening
+200 bps
+100 bps
0 bps
Equities/Commodities scenarios:
Scenario
Description
1
-30% for all indices
Foreign exchange rate-related scenarios:
Scenario
Description
1
appreciation by 30%
2
depreciation by 30%
Additionally, the following volatility stress scenarios are defined and the trading and HTCS portfolios are assessed, on a daily basis:
Volatility scenarios:
Scenario
Description
1
IR: normal +1bp, lognormal +1%, EQT & FX: +1%
2
IR: normal +5bp, lognormal +5%, EQT & FX: +5%
3
IR: normal +10bp, lognormal +10%, EQT & FX: +10%
4
IR: normal -1bp, lognormal -1%, EQT & FX: -1%
5
IR: normal -5bp, lognormal -5%, EQT & FX: -5%
6
IR: normal -10bp, lognormal -10%, EQT & FX: -10%
4.3.2 Limitations of the VAR model
The VaR model is based on certain theoretical assumptions, which under extreme market conditions might not capture the maximum
loss the Bank may suffer. The restrictions of this methodology are summarized as follows:
•
The use of volatilities and correlations as predictive measures for the behaviour of risk factors in the future might prove insufficient in
periods of intense volatility in financial markets. However, this limitation is mitigated with the calculation of the stressed VaR;
Notes to the Financial Statements
Group and Bank
266
•
The ten-day holding period for the VaR calculations (used for regulatory purposes and capital allocation), implies that the Bank will be
able to liquidate all its trading positions within this time period. This assumption might underestimate market risk in periods of
insufficient liquidity in the financial markets;
•
VaR refers to the plausible loss at a 99% confidence interval, without taking into account any losses beyond that level;
•
All VaR calculations are performed on a close-of-business (“COB”) basis and not on an intraday basis, thus not taking into account the
respective portfolio changes;
•
VaR estimates rely on small changes in the level of the relevant risk factors. For bigger movements (tail events), this metric might not
fully capture the impact on the value of the portfolio; and
•
Returns on individual risk factors are assumed to follow a normal distribution. If this assumption does not hold, the probability of
extreme market movements could be underestimated. This limitation is mitigated through the stress testing framework, analysed in
the previous section.
4.3.3 Interest rate risk in the banking book
Interest Rate Risk in the Banking Book (IRRBB) refers to the current or prospective risk to the Group’s and Bank’s capital and earnings arising
from adverse movements in interest rates that affect the Banking Book positions. The main sources of IRRBB are the following: re -pricing risk,
basis risk and optionality risk. For further analysis please refer to the “Board of Directors Report” section “Risk management – Management of
Risks – Interest Rate Risk in the Banking Book”).
4.3.4 Interest rate risk based on next re-pricing date
The interest rate risk for the Group and the Bank, relating to financial instruments based on next re-pricing date, is summarised as
follows:
Interest re-pricing dates - Group
As at 31 December 2022
Up to 1 month
1 to 3 months
3 to 12
months
1 to 5 yrs
Over 5 yrs
Non interest
bearing
Total
Assets
Cash and balances with central banks
12,856
-
-
-
-
1,370
14,226
Due from banks
2,523
2
86
167
-
122
2,900
Financial assets at fair value through
profit or loss
22
5
37
98
61
172
395
Loans and advances to customers
18,903
5,339
5,450
3,291
1,741
837
35,561
Investment securities at fair value
through OCI
44
719
540
226
1,202
101
2,832
Investment securities at amortised cost
98
169
1,973
416
7,700
2
10,358
Other assets
-
-
-
-
-
1,771
1,771
Total
34,446
6,234
8,086
4,198
10,704
4,375
68,043
Liabilities
Due to banks
1,237
30
6,285
2,149
108
2
9,811
Due to customers
46,506
2,057
2,823
2,723
3
1,080
55,192
Debt securities in issue & other borrowed
funds
2
30
5
1,331
400
26
1,794
Other liabilities
2
-
-
-
-
1,324
1,326
Lease liability
7
13
61
290
784
-
1,156
Total
47,754
2,130
9,174
6,493
1,295
2,432
69,279
Total interest sensitivity gap
(13,308)
4,104
(1,088)
(2,295)
9,409
1,943
(1,236)
Interest re-pricing dates - Group
Notes to the Financial Statements
Group and Bank
267
As at 31 December 2021
Up to 1 month
1 to 3 months
3 to 12
months
1 to 5 yrs
Over 5 yrs
Non interest
bearing
Total
Assets
Cash and balances with central banks
7
1
-
-
-
15,819
15,827
Due from banks
3,224
35
136
144
-
100
3,639
Financial assets at fair value through
profit or loss
31
7
19
100
122
35
314
Loans and advances to customers
15,680
4,695
5,117
2,659
1,650
638
30,439
Investment securities at fair value
through OCI
37
688
121
204
1,699
85
2,834
Investment securities at amortised cost
21
77
2,389
534
9,080
2
12,103
Other assets
-
3
-
-
-
2,208
2,211
Total
19,000
5,506
7,782
3,641
12,551
18,887
67,367
Liabilities
Due to banks
2,570
31
1,588
10,437
105
-
14,731
Due to customers
42,679
2,778
4,644
2,575
2
815
53,493
Debt securities in issue & other borrowed
funds
53
36
118
632
132
20
991
Other liabilities
1
-
-
-
-
878
879
Lease liability
7
13
59
344
816
-
1,239
Total
45,310
2,858
6,409
13,988
1,055
1,713
71,333
Total interest sensitivity gap
(26,310)
2,648
1,373
(10,347)
11,496
17,174
(3,966)
Interest re-pricing dates - Bank
As at 31 December 2022
Up to 1 month
1 to 3 months
3 to 12
months
1 to 5 yrs
Over 5 yrs
Non interest
bearing
Total
Assets
Cash and balances with central banks
12,736
-
-
-
-
1,221
13,957
Due from banks
2,460
25
86
167
-
116
2,854
Financial assets at fair value through
profit or loss
8
5
37
98
61
166
375
Loans and advances to customers
18,167
5,158
5,274
2,948
1,507
728
33,782
Investment securities at fair value
through OCI
14
719
531
226
1,203
91
2,784
Investment securities at amortised cost
78
169
1,937
328
7,609
-
10,121
Other assets
-
-
-
-
-
1,699
1,699
Total
33,463
6,076
7,865
3,767
10,380
4,021
65,572
Liabilities
Due to banks
1,455
30
6,285
2,149
108
-
10,027
Due to customers
45,783
1,991
2,546
2,565
-
819
53,704
Debt securities in issue & other borrowed
funds
-
-
-
1,315
391
25
1,731
Other liabilities
3
-
-
-
-
1,152
1,155
Lease liability
7
14
62
279
642
-
1,004
Total
47,248
2,035
8,893
6,308
1,141
1,996
67,621
Total interest sensitivity gap
(13,785)
4,041
(1,028)
(2,541)
9,239
2,025
(2,049)
Interest re-pricing dates - Bank
As at 31 December 2021
Up to 1 month
1 to 3 months
3 to 12
months
1 to 5 yrs
Over 5 yrs
Non interest
bearing
Total
Assets
Cash and balances with central banks
-
1
-
-
-
15,538
15,539
Due from banks
3,081
29
188
144
-
97
3,539
Financial assets at fair value through
profit or loss
20
7
19
100
122
27
295
Loans and advances to customers
15,093
4,697
4,936
2,159
1,499
502
28,886
Investment securities at fair value
through OCI
-
686
97
204
1,699
77
2,763
Notes to the Financial Statements
Group and Bank
268
Investment securities at amortised cost
-
77
2,384
341
8,987
-
11,789
Other assets
-
-
-
-
-
2,134
2,134
Total
18,194
5,497
7,624
2,948
12,307
18,375
64,945
Liabilities
Due to banks
2,739
31
1,588
10,437
105
-
14,900
Due to customers
42,223
2,671
4,008
2,470
-
856
52,228
Debt securities in issue & other borrowed
funds
13
26
116
617
122
18
912
Other liabilities
-
-
-
-
-
746
746
Lease liability
7
13
59
325
654
-
1,058
Total
44,982
2,741
5,771
13,849
881
1,620
69,844
Total interest sensitivity gap
(26,788)
2,756
1,853
(10,901)
11,426
16,755
(4,899)
4.3.5 Foreign exchange risk
Foreign Exchange Risk is the risk related to the potential loss due to adverse movements in foreign exchange rates. The Open Currency
Position (“OCP”) of the Bank primarily arises from foreign exchange spot and forward transactions, as well as from the mark-to-
market of NBG’s OTC derivatives’ trades denominated in foreign currency.
The foreign exchange risk concentration for the Group and the Bank as at 31 December 2022 and 31 December 2021 is presented in the
following tables:
Foreign exchange risk concentration - Group
As at 31 December 2022
EURO
USD
GBP
JPY
CHF
Other
Total
Assets
Cash and balances with central banks
14,049
21
3
-
1
152
14,226
Due from banks
2,704
88
10
15
40
43
2,900
Financial assets at fair value through profit or loss
382
9
4
-
-
-
395
Derivative financial instruments
1,892
63
6
-
-
1
1,962
Loans and advances to customers
31,850
2,457
33
-
231
990
35,561
Securities measured at fair value through other comprehensive
income
2,715
86
-
-
-
31
2,832
Securities measured at amortised cost
10,296
43
-
-
-
19
10,358
Investment property
63
-
-
-
-
8
71
Equity method investments
175
-
-
-
-
-
175
Goodwill, software and other intangible assets
429
-
-
-
-
2
431
Property and equipment
1,537
-
-
-
-
28
1,565
Other assets
6,740
306
14
-
26
56
7,142
Total assets excl. assets held-for-sale
72,832
3,073
70
15
298
1,330
77,618
Non-current assets held for sale
472
2
-
-
21
-
495
Total assets
73,304
3,075
70
15
319
1,330
78,113
As at 31 December 2022
EURO
USD
GBP
JPY
CHF
Other
Total
Liabilities
Due to banks
9,773
2
3
-
30
3
9,811
Derivative financial instruments
1,787
132
1
-
2
1
1,923
Due to customers
51,146
2,224
124
4
219
1,475
55,192
Debt securities in issue & Other borrowed funds
1,582
-
209
-
-
3
1,794
Other liabilities
2,399
206
5
-
-
35
2,645
Retirement benefit obligations
247
-
-
-
-
1
248
Total liabilities excl. liabilities associated with non current
assets held-for-sale
66,934
2,564
342
4
251
1,518
71,613
Liabilities associated with non-current assets held for sale
25
-
-
-
-
-
25
Total liabilities
66,959
2,564
342
4
251
1,518
71,638
Net on balance sheet position
6,345
511
(272)
11
68
(188)
6,475
Foreign exchange risk concentration - Group
As at 31 December 2021
EURO
USD
GBP
JPY
CHF
Other
Total
Notes to the Financial Statements
Group and Bank
269
Assets
Cash and balances with central banks
15,674
16
6
-
3
128
15,827
Due from banks
3,223
301
27
15
21
52
3,639
Financial assets at fair value through profit or loss
276
38
-
-
-
-
314
Derivative financial instruments
4,214
105
4
-
-
8
4,331
Loans and advances to customers
26,796
2,356
32
-
288
967
30,439
Securities measured at fair value though other comprehensive
income
2,780
7
-
-
-
46
2,833
Securities measured at amortised cost
12,039
46
-
-
-
19
12,104
Investment property
70
-
-
-
-
10
80
Equity method investments
18
-
-
-
-
-
18
Goodwill, software and other intangible assets
351
-
-
-
-
2
353
Property and equipment
1,637
-
-
-
-
18
1,655
Other assets
7,708
123
1
-
3
37
7,872
Total assets excl. assets held-for-sale
74,786
2,992
70
15
315
1,287
79,465
Non-current assets held for sale
4,451
6
-
-
18
18
4,493
Total assets
79,237
2,998
70
15
333
1,305
83,958
As at 31 December 2021
EURO
USD
GBP
JPY
CHF
Other
Total
Liabilities
Due to banks
14,450
16
11
1
253
-
14,731
Derivative financial instruments
2,843
159
10
-
-
2
3,014
Due to customers
49,321
2,499
138
1
44
1,490
53,493
Debt securities in issue & Other borrowed funds
975
-
-
-
-
16
991
Other liabilities
2,161
55
3
-
-
50
2,269
Retirement benefit obligations
270
-
-
-
-
1
271
Total liabilities excl. liabilities associated with non current
assets held-for-sale
70,020
2,729
162
2
297
1,559
74,769
Liabilities associated with non-current assets held for sale
3,403
2
-
-
-
12
3,417
Total liabilities
73,423
2,731
162
2
297
1,571
78,186
Net on balance sheet position
5,814
267
(92)
13
36
(266)
5,772
Foreign exchange risk concentration - Bank
As at 31 December 2022
EURO
USD
GBP
JPY
CHF
Other
Total
Assets
Cash and balances with central banks
13,929
20
3
-
-
5
13,957
Due from banks
2,714
61
6
15
34
24
2,854
Financial assets at fair value through profit or loss
366
9
-
-
-
-
375
Derivative financial instruments
1,892
63
6
-
-
1
1,962
Loans and advances to customers
31,090
2,431
28
-
231
2
33,782
Securities measured at fair value through other comprehensive
income
2,705
79
-
-
-
-
2,784
Securities measured at amortised cost
10,078
43
-
-
-
-
10,121
Investments in subsidiaries
759
-
-
-
-
-
759
Investment property
2
-
-
-
-
-
2
Equity method investments
172
-
-
-
-
-
172
Goodwill, software and other intangible assets
424
-
-
-
-
-
424
Property and equipment
1,164
-
-
-
-
-
1,164
Other assets
6,655
306
13
-
26
19
7,019
Total assets excl. non current assets held for sale
71,950
3,012
56
15
291
51
75,375
Non-current assets held for sale
423
2
-
-
16
-
441
Total assets
72,373
3,014
56
15
307
51
75,816
As at 31 December 2022
EURO
USD
GBP
JPY
CHF
Other
Total
Liabilities
Due to banks
9,969
22
3
-
30
3
10,027
Derivative financial instruments
1,787
132
1
-
2
1
1,923
Due to customers
50,584
2,182
137
5
213
583
53,704
Debt securities in issue & Other borrowed funds
1,522
-
209
-
-
-
1,731
Other liabilities
2,087
198
4
-
-
13
2,302
Notes to the Financial Statements
Group and Bank
270
Retirement benefit obligations
246
-
-
-
-
-
246
Total liabilities excl. liabilities associated with non current
assets held for Sale
66,195
2,534
354
5
245
600
69,933
Total liabilities
66,195
2,534
354
5
245
600
69,933
Net on balance sheet position
6,178
480
(298)
10
62
(549)
5,883
Foreign exchange risk concentration - Bank
As at 31 December 2021
EURO
USD
GBP
JPY
CHF
Other
Total
Assets
Cash and balances with central banks
15,510
14
6
-
2
7
15,539
Due from banks
3,206
261
16
14
14
28
3,539
Financial assets at fair value through profit or loss
257
38
-
-
-
-
295
Derivative financial instruments
4,214
105
4
-
-
8
4,331
Loans and advances to customers
26,232
2,334
32
-
287
1
28,886
Securities measured at fair value through other comprehensive
income
2,762
1
-
-
-
-
2,763
Securities measured at amortised cost
11,743
46
-
-
-
-
11,789
Investments in subsidiaries
1,133
-
-
-
-
-
1,133
Investment property
2
-
-
-
-
-
2
Equity method investments
17
-
-
-
-
-
17
Goodwill, software and other intangible assets
345
-
-
-
-
-
345
Property and equipment
1,236
-
-
-
-
4
1,240
Other assets
7,645
123
-
-
2
5
7,775
Total assets excl. non current assets held for sale
74,302
2,922
58
14
305
53
77,654
Non-current assets held for sale
852
-
-
-
14
-
866
Total assets
75,154
2,922
58
14
319
53
78,520
As at 31 December 2021
EURO
USD
GBP
JPY
CHF
Other
Total
Liabilities
Due to banks
14,557
74
11
1
253
4
14,900
Derivative financial instruments
2,843
159
10
-
-
2
3,014
Due to customers
48,913
2,424
218
3
37
633
52,228
Debt securities in issue & Other borrowed funds
912
-
-
-
-
-
912
Other liabilities
1,884
46
1
-
-
25
1,956
Retirement benefit obligations
269
-
-
-
-
-
269
Total liabilities excl. liabilities associated with non current
assets held for Sale
69,378
2,703
240
4
290
664
73,279
Total liabilities
69,378
2,703
240
4
290
664
73,279
Net on balance sheet position
5,776
219
(182)
10
29
(611)
5,241
4.4 Country risk
Country risk is the current or prospective risk to earnings and capital, caused by events in a particular country which are at least to some
extent under the control of the government but definitely not under the control of a private enterprise or individual. The main categories of
country risk consist of sovereign risk, convertibility risk and transfer risk. For more information, please refer to the “Board of Directors Report”
section “Risk management – Management of Risks – Country Risk”.
4.5 Liquidity risk
4.5.1 Liquidity risk management
Liquidity Risk is defined as the current or prospective risk to earnings and capital arising from the institution’s inability to meet its liabilities
when they come due without incurring unacceptable losses.
It reflects the potential mismatch between incoming and outgoing payments, taking into account unexpected delays in repayments (term
Liquidity Risk) or unexpectedly high outflows (withdrawal/call risk). Liquidity Risk involves both the risk of unexpected increases in the cost of
funding of the portfolio of assets at appropriate maturities and rates, and the risk of being unable to liquidate a position in a timely manner
Notes to the Financial Statements
Group and Bank
271
and on reasonable terms. For more information please refer to the “Board of Directors Report” section “Risk management – Management of
Risks – Liquidity Risk”.
4.5.2 Contractual undiscounted cash flows
The contractual undiscounted cash outflows of the Group’s and the Bank’s non-derivative financial liabilities are presented in the tables
below. Liquidity risk arising from derivatives is not considered significant.
Contractual undiscounted cash outflows - Group
As at 31 December 2022
Up to 1 month
1 to 3
3 to 12
months
1 to 5
Over 5
Total
yrs
Due to banks
1,239
30
6,348
2,233
109
9,959
Due to customers
49,384
2,139
2,941
775
11
55,250
Debt securities in issue & Other borrowed funds
13
20
111
1,993
10
2,147
Other liabilities
165
916
167
-
43
1,291
Lease liability
8
13
61
305
1,075
1,462
Total – on balance sheet
50,809
3,118
9,628
5,306
1,248
70,109
Credit commitments
1,186
380
839
1,017
2,284
5,706
Contractual undiscounted cash outflows - Group
As at 31 December 2021
Up to 1 month
1 to 3
3 to 12
months
1 to 5
Over 5
Total
yrs
Due to banks
2,107
104
1,670
9,937
741
14,559
Due to customers
46,454
2,647
3,653
350
3
53,107
Debt securities in issue & Other borrowed funds
11
2
98
202
1,042
1,355
Other liabilities
136
454
179
-
48
817
Lease liability
7
14
65
293
1,250
1,629
Total – on balance sheet
48,715
3,221
5,665
10,782
3,084
71,467
Credit commitments
976
300
648
441
1,612
3,977
Contractual undiscounted cash outflow - Bank
As at 31 December 2022
Up to 1 month
1 to 3
3 to 12
months
1 to 5
Over 5
Total
yrs
Due to banks
1,456
30
6,348
2,233
109
10,176
Due to customers
48,419
2,071
2,654
607
8
53,759
Debt securities in issue & Other borrowed funds
-
-
106
1,978
-
2,084
Other liabilities
3
916
166
-
46
1,131
Lease liability
8
14
62
308
1,075
1,467
Total – on balance sheet
49,886
3,031
9,336
5,126
1,238
68,617
Credit commitments
1,179
375
793
994
2,614
5,955
Contractual undiscounted cash outflow - Bank
As at 31 December 2021
Up to 1 month
1 to 3
3 to 12
months
1 to 5
Over 5
Total
yrs
Due to banks
2,281
104
1,670
9,937
741
14,733
Due to customers
46,105
2,566
3,349
218
-
52,238
Debt securities in issue & Other borrowed funds
-
-
47
188
1,031
1,266
Other liabilities
4
462
180
-
48
694
Lease liability
7
14
65
290
1,246
1,622
Total – on balance sheet
48,397
3,146
5,311
10,633
3,066
70,553
Credit commitments
974
295
617
411
1,944
4,241
Other liabilities mainly include accrued interest and commissions, payables to suppliers, amounts due to government agencies, taxes
payable (other than income taxes), and accrued expenses.
Notes to the Financial Statements
Group and Bank
272
4.6 Capital adequacy
In June 2013, the European Parliament and the Council of Europe issued Directive 2013/36/EU and Regulation (EU) No 575/2013 (known as
Capital Requirements Directive IV (“CRD IV”) and Capital Requirements Regulation (“CRR”) respectively), which incorporate the key
amendments that have been proposed by the Basel Committee for Banking Supervision (known as Basel III). Directive 2013/36/EU has been
transported into Greek Law by virtue of Greek Law 4261/2014 and Regulation (EU) No 575/2013 has been directly applicable to all EU
Member States since 1 January 2014 and certain changes under CRD IV were implemented gradually.
Regulation (EU) No 575/2013 as amended by Regulation (EU) No 876/2019 (CRR2) defines the minimum capital requirements (Pillar 1
requirements) and Directive 2013/36/EU as amended by Directive 2019/878/EU (CRD V) defines the combined buffer requirements for EU
institutions. In addition, Directive 2013/36/EU provides (Art. 97 et seq.) that Competent Authorities regularly carry out the Supervisory Review
and Evaluation process (“SREP”), to assess and measure risks not covered, or not fully covered, under Pillar 1 and determine additional capital
and liquidity requirements (Pillar 2 requirements). SREP is conducted under the lead of the ECB. The SREP decision is tailored to each bank’s
individual profile.
The table below summarises capital requirements for the NBG Group for 2023 and 2022:
CET1 Capital Requirements
Overall Capital Requirements
2023
2022 post
capital relief
measures
2022
2023
2022 post
capital relief
measures
2022
Pillar 1
4.50%
4.50%
4.50%
8.00%
8.00%
8.00%
Pillar 2
1.69%
1.69%
1.69%
3.00%
3.00%
3.00%
Capital Conservation
Buffer
2.50%
-
2.50%
2.50%
-
2.50%
O-SII Buffer
1.00%
0.75%
0.75%
1.00%
0.75%
0.75%
Total
9.69%
6.94%
9.44%
14.50%
11.75%
14.25%
The capital adequacy ratios for the Group and the Bank are presented in the table below:
Group
Bank
31.12.2022*
31.12.2021*
31.12.2022*
31.12.2021*
Common Equity Tier 1
16.6%
16.9%
16.3%
16.6%
Tier 1
16.6%
16.9%
16.3%
16.6%
Total
17.7%
17.5%
17.5%
17.3%
*including profit for the period.
DTC Law
Article 27A of Greek Law 4172/2013 (“DTC Law”), as currently in force, allows credit institutions, under certain conditions, and from 2017
onwards to convert deferred tax assets (“DTAs”) arising from (a) private sector initiative (“PSI”) losses, (b) accumulated provisions for credit
losses recognized as at 30 June 2015, (c) losses from final write off or the disposal of loans and (d) accounting write offs, which will ultimately
lead to final write offs and losses from disposals, to a receivable (“Tax Credit”) from the Greek State. Items (c) and (d) above were added with
Greek Law 4465/2017 enacted on 29 March 2017. The same Greek Law 4465/2017 provided that the total tax relating to cases (b) to (d)
above cannot exceed the tax corresponding to accumulated provisions recorded up to 30 June 2015 less (a) any definitive and cleared Tax
Credit, which arose in the case of accounting loss for a year according to the provisions of par.2 of article 27A of Greek Law 4172/2013, which
relate to the above accumulated provisions, (b) the amount of tax corresponding to any subsequent specific tax provisions, which relate to
Notes to the Financial Statements
Group and Bank
273
the above accumulated provisions and (c) the amount of the tax corresponding to the annual amortization of the debit difference that
corresponds to the above provisions and other losses in general arising due to credit risk.
The main condition for the conversion of DTAs to a Tax Credit is the existence of an accounting loss at Bank level of a respective year, starting
from accounting year 2016 and onwards. The Tax Credits will be calculated as a ratio of IFRS accounting losses to net equity (excluding the
year’s losses) on a solo basis and such ratio will be applied to the remaining Eligible DTAs in a given year to calculate the Tax Credit that will be
converted in that year, in respect of the prior tax year. The Tax Credit may be offset against income taxes payable. The non-offset part of the
Tax Credit is immediately recognized as a receivable from the Greek State. The Bank is obliged to issue conversion rights to the Greek State for
an amount of 100% of the Tax Credit in favour of the Greek State and will create a specific reserve for an equal amount. Common
shareholders have pre-emption rights on these conversion rights. The reserve will be capitalized with the issuance of common shares in
favour of the Greek State. This legislation allows credit institutions to treat such DTAs as not “relying on future profitability” according to CRD
IV, and as a result such DTAs are not deducted from CET1, hence improving a credit institution’s capital position.
Furthermore, Greek Law 4465/2017 amended article 27 “Carry forward losses” by introducing an amortization period of 20 years for losses
due to loan write offs as part of a settlement or restructuring and losses that crystallize as a result of a disposal of loans. In addition, in 2021
Greek Law 4831 further amended article 27 of Greek Law 4172/2013 (see Note 27 “Deferred tax assets and liabilities).
On 7 November 2014, the Bank convened an extraordinary General Shareholders Meeting which resolved to include the Bank in the DTC Law.
An exit by the Bank from the provisions of the DTC Law requires regulatory approval and a General Shareholders meeting resolution.
As of 31 December 2022, the amount of DTAs that were eligible for conversion to a receivable from the Greek State subject to the DTC Law
was €3.9 billion (31 December 2021: €4.1 billion). The conditions for conversion rights were not met in the year ended 31 December 2022 and
no conversion rights are deliverable in 2023.
2022 ECB Climate risk Stress Test
On 27 January 2022, ECB launched a supervisory climate risk stress test to assess how prepared banks are for dealing with financial and
economic shocks stemming from climate risk. The exercise was conducted in the first half of 2022 under common methodological rules and
scenario assumptions and ECB published its aggregate results in July 2022.
The Exercise was primarily prescribed by ECB as one of pivotal, but also mutually learning nature for all participating Banks and Supervisors,
forming part of the green transition roadmap and effective management of climate risks. In this context, the 2022 Climate risk Stress Test
does not constitute a solvency exercise; its outcome will inform the Supervisory Review and Evaluation Process (SREP) from a qualitative
perspective, without a direct impact on capital through the Pillar 2 guidance.
NBG’s overall performance was in line with the average of the EU-wide participating institutions. In terms of advancement in the internal
climate stress-testing capabilities (qualitative part of the Exercise), the Bank ranked above the average of Total EU sample at Medium-
Advance level, while in the domestic banking sector, NBG’s overall transition impact on Business Model viability was assessed as of relatively
lower risk (Advanced scoring).
2023 EBA EU-wide Stress Test
On 31 January 2023, The European Banking Authority (EBA) launched the 2023 EU-wide stress test and released the macroeconomic
scenarios. 2023 EU-wide stress test is designed to provide valuable input for assessing the resilience of the European banking sector in the
current uncertain and changing macroeconomic environment. The EU-wide stress test will be conducted on a sample of 70 EU banks – thereof
57 from countries which are members of the Single Supervisory Mechanism (SSM) – covering roughly 75% of total banking sector assets in the
EU and Norway. The EBA expects to publish the results of the exercise at the end of July 2023.
MREL Requirements
Under the Directive 2014/59 (Bank Recovery and Resolution Directive or (“BRRD”), as amended by Directive 2019/879 (BRRD II), banks in the
European Union are required to maintain a Minimum Requirement for own funds and Eligible Liabilities (“MREL”), which ensures sufficient
loss-absorbing capacity in resolution. MREL includes a risk- and a leverage-based dimension. MREL is therefore expressed as two ratios that
both have to be met: (i) as a percentage of Total Risk Exposure Amount (“TREA”), (the “MREL-TREA”); and (ii) as a percentage of the Leverage
Ratio Exposure (“LRE”), (the “MREL-LRE”).
Instruments qualifying for MREL are own funds (Common Equity Tier 1, Additional Tier 1 and Tier 2), as well as certain eligible liabilities
(mainly senior unsecured bonds). Regulation (EU) No 806/2014 of the European Parliament and of the Council, as amended by Regulation
Notes to the Financial Statements
Group and Bank
274
(EU) No 877/2019 of the European Parliament and of the Council allows the Single Resolution Board (“SRB”) to set in addition to the MREL
requirement, a “subordination” requirement, within MREL, against which only subordinated liabilities and own funds count.
On 14 December 2022, the Bank as being identified by the SRB as the Single Point of Entry (“SPE”) of the Group and the only entity required to
maintain an MREL capacity, received from the Bank of Greece the SRB’s decision that should meet by 31 December 2025 an MREL target of
23.53% of TREA and 5.88% of LRE on a consolidated basis. In addition, as per the MREL decision the Bank should always meet from 1 January
2022 onwards, the requirement of 14.79% of TREA and 5.85% of LRE on a consolidated basis, while through the linear build-up of the
requirements the Bank should meet from 1 January 2023 onwards, the requirement of 16.91% of TREA and 5.88% of LRE on a consolidated
basis. To the above requirements the capital buffer requirement (“CBR”) must be added, which from 1 January 2022 stands at 3.25%,
increases to 3.50% from 1 January 2023 and expected to stand at 3.50% until 31 December 2025. The Bank meets both the LRE requirements,
and the 1 January 2023 interim non-binding target of 20.41% of TREA (including CBR).
Finally, according to the abovementioned SRB’s decision, no subordination requirement is set for the Bank.
4.7 Fair values of financial assets and liabilities
a. Financial instruments not measured at fair value
The table below summarises the carrying amounts and the fair values of those financial assets and liabilities that are not presented on
the Group’s and the Bank’s Statement of Financial Position at fair value and the fair value is materially different from the carrying
amount.
Financial instruments not measured at fair value - Group
Carrying
amount
Fair value
31.12.2022
31.12.2022
Level 1
Level 2
Level 3
Financial Assets
Loans and advances to customers at amortised cost
35,062
35,817
-
3,224
32,593
Investment securities at amortised cost
10,357
9,128
3,418
4,929
781
Financial Liabilities
Due to customers
54,584
54,640
46,256
8,384
-
Debt securities in issue
1,731
1,728
-
1,728
-
Carrying
amount
Fair value
31.12.2021
31.12.2021
Level 1
Level 2
Level 3
Financial Assets
Loans and advances to customers at amortised cost
30,092
29,467
-
-
29,467
Investment securities at amortised cost
12,102
12,128
3,860
7,057
1,211
Financial Liabilities
Due to customers
53,026
53,090
44,434
8,656
-
Debt securities in issue
912
974
-
974
-
Financial instruments not measured at fair value - Bank
Carrying
amount
Fair value
31.12.2022
31.12.2022
Level 1
Level 2
Level 3
Financial Assets
Loans and advances to customers at amortised cost
33,283
34,038
-
3,224
30,814
Investment securities at amortised cost
10,121
8,891
3,418
4,692
781
Notes to the Financial Statements
Group and Bank
275
Financial Liabilities
Due to customers
53,096
53,151
45,321
7,830
-
Debt securities in issue
1,731
1,728
-
1,728
-
Carrying
amount
Fair value
31.12.2021
31.12.2021
Level 1
Level 2
Level 3
Financial Assets
Loans and advances to customers at amortised cost
28,545
27,919
-
-
27,919
Investment securities at amortised cost
11,790
11,812
3,794
6,807
1,211
Financial Liabilities
Due to customers
51,761
51,825
43,846
7,979
-
Debt securities in issue
912
974
-
974
-
The following methods and assumptions were used to estimate the fair values of the above financial instruments as at 31 December 2022 and
31 December 2021:
The carrying amount of cash and balances with central banks, due from and due to banks, other borrowed funds as well as accrued interest,
approximates their fair value.
Loans and advances to customers at amortised cost
:
discounted cash flow models. The discount rates are based on current market interest rates offered for instruments with similar terms to
borrowers of similar credit quality.
Investment securities at amortised cost
:
The fair value of investment securities at amortised cost is estimated using market prices or using
discounted cash flow models based on current market interest rates offered for instruments with similar credit quality.
Due to customers
:
The fair value for demand deposits and deposits with no defined maturity is determined to be the amount payable on
demand at the reporting date. The fair value for fixed-maturity deposits is estimated using discounted cash flow models based on rates
currently offered for the relevant product types with similar remaining maturities.
Debt securities in issue
:
Fair value is estimated using market prices, or if such are not available, using a discounted cash flow analysis, based
on current market rates of similar maturity and credit quality debt securities.
b. Financial instruments measured at fair value
The tables below present the fair values of those financial assets and liabilities presented on the Group’s and the Bank’s Statement of
Financial Position at fair value by fair value measurement level on 31 December 2022 and 31 December 2021. Other Assets for both
the Group and the Bank include an investment in spot position for emission rights which is carried at fair value through profit or loss.
Financial instruments measured at fair value - Group
As at 31 December 2022
Fair value measurement using
Level 1
Level 2
Level 3
Total at Fair
Value
Financial Assets
Financial assets at fair value through profit or loss
139
81
-
220
Financial assets mandatorily at fair value through profit or loss
152
10
512
674
Derivative financial instruments
2
1,947
13
1,962
Investment securities at fair value through other comprehensive income
833
1,949
51
2,833
Other assets
298
-
-
298
Total
1,424
3,987
576
5,987
Financial Liabilities
Notes to the Financial Statements
Group and Bank
276
Due to customers designated as at fair value through profit or loss
-
608
-
608
Derivative financial instruments
1
1,872
50
1,923
Other liabilities
1
-
-
1
Total
2
2,480
50
2,532
As at 31 December 2021
Fair value measurement using
Level 1
Level 2
Level 3
Total at Fair
Value
Financial Assets
Financial assets at fair value through profit or loss
167
114
-
281
Financial assets mandatorily at fair value through profit or loss
1
24
354
379
Derivative financial instruments
1
4,296
34
4,331
Investment securities at fair value through other comprehensive income
2,002
807
26
2,835
Other Assets
330
-
-
330
Total
2,501
5,241
414
8,156
Financial Liabilities
Due to customers designated as at fair value through profit or loss
-
467
-
467
Derivative financial instruments
-
3,008
6
3,014
Total
-
3,475
6
3,481
Financial instruments measured at fair value - Bank
As at 31 December 2022
Fair value measurement using
Level 1
Level 2
Level 3
Total at Fair
Value
Financial Assets
Financial assets at fair value through profit or loss
126
81
-
207
Financial assets mandatorily at fair value through profit or loss
149
10
508
667
Derivative financial instruments
2
1,947
13
1,962
Investment securities at fair value through other comprehensive income
826
1,909
49
2,784
Other assets
298
-
-
298
Total
1,401
3,947
570
5,918
Financial Liabilities
Due to customers designated as at fair value through profit or loss
-
608
-
608
Derivative financial instruments
1
1,872
50
1,923
Total
1
2,480
50
2,531
As at 31 December 2021
Fair value measurement using
Level 1
Level 2
Level 3
Total at Fair
Value
Financial Assets
Financial assets at fair value through profit or loss
156
115
-
271
Financial assets mandatorily at fair value through profit or loss
-
24
341
365
Derivative financial instruments
1
4,296
34
4,331
Investment securities at fair value through other comprehensive income
1,995
741
26
2,762
Other assets
330
-
-
330
Total
2,482
5,176
401
8,059
Financial Liabilities
Due to customers designated as at fair value through profit or loss
-
467
-
467
Derivative financial instruments
-
3,007
6
3,013
Total
-
3,474
6
3,480
There were no assets or liabilities classified as held-for-sale in the Group’s Statement of Financial Position measured at fair value as at 31
December 2022. The table below presents the fair values for the assets and liabilities classified as held-for -sale in the Group’s Statement
of Financial Position and measured at fair value for 31 December 2021:
Notes to the Financial Statements
Group and Bank
277
Held for Sale Operations - Financial instruments measured at fair value - Group
As at 31 December 2021
Fair value measurement using
Level 1
Level 2
Level 3
Total asset/
liability at Fair
Value
Financial Assets
Financial assets at fair value through profit or loss
7
20
-
27
Investment securities at fair value through other comprehensive income
1,467
1,722
15
3,204
Insurance related assets and receivables
173
112
-
285
Total
1,647
1,854
15
3,516
Transfers between Level 1 and Level 2
As at 31 December 2022, a fair value through other comprehensive income security issued by the Italian Republic, for which the Group
determined that sufficient liquidity and trading did not exist as of that date, has been transferred from Level 1 to Level 2 according to the
Group’s fair value hierarchy policy. The carrying amount of the fair value through other comprehensive income security transferred as at 31
December 2022 was €134 million. In addition, a fair value through profit or loss security issued by the European Stability Mechanism (“ESM”)
for which the Group determined that sufficient liquidity and trading did not exist as of that date, has been also transferred from Level 1 to
Level 2 according to the Group’s fair value hierarchy policy. The carrying amount of the fair value through profit or loss security transferred as
at 31 December 2022 was €8 million.
As at 31 December 2021, certain fair value through profit or loss securities issued by European Stability Mechanism (“ESM”) for which
the Group determined that sufficient liquidity and trading existed as of that date, have been transferred from Level 2 to Level 1
according to the Group’s fair value hierarchy policy. The carrying amount of the fair value through profit or loss securities transferred
was €4 million as at 31 December 2021.
All transfers between levels are assumed to take place at the end of the reporting period.
Level 3 financial instruments
Level 3 financial instruments as at 31 December 2022 and 31 December 2021 include:
(a)
Derivative products, which are valued using valuation techniques with significant unobservable inputs, including certain correlation
products, such as correlation between various interest indices. They also include derivatives for which the CVA is based on significant
unobservable inputs and the amount of the CVA is significant relative to the total fair value of the derivative.
(b)
Securities mandatorily at fair value through profit or loss, for which the models used to estimate their fair value is based on
unobservable credit spreads or which are price-based and the price is obtained from the issuers of the securities. They also include
loans and advances to customers mandatorily measured at fair value through profit or loss, valued using discounted cash flow valuation
techniques incorporating unobservable credit spreads. Additionally, they include receivables resulted from the disposal of loan
portfolios and other transactions. The main part of these receivables relates to an unconditional consideration to be received at a
predetermined future date while the remaining part relates to a contingent consideration to be received based on the achievement of
predetermined collection targets. The valuation of the contingent consideration incorporates a range of unobservable inputs, hence the
Group assesses the whole receivable to be classified in the lowest level of the fair value hierarchy.
(c)
Equity securities at fair value through other comprehensive income, which are not traded in active markets and their fair value is
estimated using an income or market approach, for which the main inputs used are not market observable.
The table below presents a reconciliation of all Level 3 fair value measurements for the year ended 31 December 2022 and 31 December
2021, including realized and unrealized gains/(losses) included in the “Income Statement” and “Statement of Other Comprehensive
Income”.
Transfers into or out of Level 3
The Group conducts a review of the fair value hierarchy classifications on a quarterly basis. For the year ended 31 December 2022 and the
year ended 31 December 2021, transfers from Level 2 into Level 3 include derivative financial instruments for which the bilateral CVA is
significant to the base fair value of the respective instruments. Transfers from Level 3 into Level 2 include derivative financial instruments for
which the bilateral CVA is no longer significant to the base fair value of the respective instruments.
Reconciliation of fair value measurements in Level 3 – Group
2022
Notes to the Financial Statements
Group and Bank
278
Group
Net derivative
financial instruments
Investment securities
at FVTOCI
Mandatorily at FVTPL
Balance at 1 January
28
26
354
Gain/(loss) included in Income Statement
(77)
-
16
Gain/(loss) included in OCI
-
1
-
Purchases
-
27
198
Sales
-
(3)
-
Settlements
-
-
(56)
Transfer into/(out of) level 3
12
-
-
Balance at 31 December
(37)
51
512
2021
Group
Net derivative
financial instruments
Investment securities
at FVTOCI
Mandatorily at FVTPL
Balance at 1 January
13
26
78
Gain/(loss) included in Income Statement
16
-
7
Purchases
-
-
296
Settlements
(1)
-
(27)
Balance at 31 December
28
26
354
Reconciliation of fair value measurements in Level 3 – Bank
2022
Bank
Net derivative
financial instruments
Investment securities
at FVTOCI
Mandatorily at FVTPL
Balance at 1 January
28
26
341
Gain/(loss) included in Income Statement
(77)
-
17
Gain/(loss) included in OCI
-
1
-
Purchases
-
25
204
Sales
-
(3)
-
Settlements
-
-
(54)
Transfer into/(out of) level 3
12
-
-
Balance at 31 December
(37)
49
508
2021
Bank
Net derivative
financial instruments
Investment securities
at FVTOCI
Mandatorily at FVTPL
Balance at 1 January
13
27
78
Gain/(loss) included in Income Statement
16
-
7
Purchases
-
-
281
Settlements
(1)
(1)
(25)
Balance at 31 December
28
26
341
Changes in unrealised gains/(losses) included in the income statement of financial instruments measured at fair value using significant
unobservable inputs (Level 3), relate to financial assets mandatorily at fair value through profit or loss and net derivative financial
instruments, and amount to €3 million and €(25) million for the Group as well as €4m and €(25) million for the Bank respectively for
the year ended 31 December 2022 and for the year ended 31 December 2021 amount to €(3) million and €18 million respectively, for
the Group and the Bank.
Valuation Process and Control Framework
The Group has various processes in place to ensure that the fair values of its assets and liabilities are reasonably estimated and has
established a control framework which is designed to ensure that fair values are validated by functions independent of the risk-taker. To that
end, the Group utilizes various sources for determining the fair values of its financial instruments and uses its own independent functions to
validate these results, where possible.
Fair values of debt securities are determined either by reference to prices for traded instruments in active markets, to external quotations or
widely accepted financial models, which are based on market observable or unobservable information where the former is not available, as
Notes to the Financial Statements
Group and Bank
279
well as relevant market based parameters such as interest rates, option volatilities, currency rates, etc.
The Group may, sometimes, also utilize third-party pricing information, and perform validating procedures on this information to the extent
possible or base its fair value on the latest transaction prices available, given the absence of an active market or similar transactions or other
market observable inputs. All such instruments are categorized within the lowest level of fair value hierarchy (i.e. Level 3).
Generally, fair values of debt securities, including significant inputs on the valuation models are independently checked and validated by the
Middle Office and Risk Management Function on a systematic basis.
Fair values of derivatives are determined by Management using valuation models which include discounted cash-flow models, option pricing
models or other appropriate models. Adequate control procedures are in place for the validation of these models, including the valuation
inputs, on a systematic basis. Middle Office and Risk Management functions provide the control valuation framework necessary to ensure
that the fair values are reasonably determined, reflecting current market circumstances and economic conditions. Furthermore, over-the-
counter derivatives are also compared on a daily basis with counterparties’ valuations, under the daily collateral management process.
Market Valuation Adjustments
Counterparty credit risk-adjustments are applied to all over-the-counter derivatives. Own credit-risk adjustments are applied to reflect
the Group’s own credit risk when valuing derivatives. Bilateral credit-risk adjustments consider the expected cash flows between the
Group and its counterparties under the relevant terms of the derivative instruments and the effect of the credit-risk profile of the
counterparties on the valuation of these cash flows. Where appropriate, the Group takes into consideration the credit-risk mitigating
arrangements, including collateral agreements and master netting arrangements, for the purpose of estimating own and
counterparty credit risk valuation adjustments.
Quantitative Information about Level 3 Fair Value Measurements | 31 December 2022
Financial Instrument
Fair Value
Valuation Technique
Significant Unobservable Input
Range of Inputs
Low
High
through profit or loss
13
Income and market approach
Price
n/a
1
n/a
1
Interest Rate Derivatives
(34)
Discounted Cash Flows, Internal
Model (for CVA/DVA)
Credit Spread
237 bps
624 bps
(3)
Discounted Cash Flows
Constant Maturity Swap
correlation between different
tenors
72.80%
100.00%
Investment Securities at fair value through
other comprehensive income
51
Income and market approach
n/a
1
n/a
1
n/a
1
Loans and advances to customers mandatorily
at fair value through profit or loss
21
Discounted Cash Flows
Credit Spread
300 bps
300 bps
478
Discounted Cash Flows
Credit Spread
n/a
2
n/a
2
1
markets. In the absence of an active market we estimate the fair value of these securities using a market or an income valuation approach. Given the
bespoke nature of the valuation method in respect of each holding, it is not practicable to quote a range of unobservable inputs.
2
The valuation of the contingent part of the receivables from the loan portfolio sales, has been performed using a discounted cash flow methodology under
the income approach and includes a wide range of unobservable inputs, for which is not practicable to quote a relevant range of unobservable inputs, for
disclosure purposes.
Quantitative Information about Level 3 Fair Value Measurements | 31 December 2021
Financial Instrument
Fair Value
Valuation Technique
Significant Unobservable Input
Range of Inputs
Low
High
Investment securities mandatorily at fair value
through profit or loss
1
Discounted Cash Flows
Credit Spread
766 bps
766 bps
6
Price Based
Price
28.19%
28.19%
Interest Rate Derivatives
29
Discounted Cash Flows, Internal
Model (for CVA/DVA)
Credit Spread
166 bps
488 bps
(2)
Discounted Cash Flows
Constant Maturity Swap
correlation between different
tenors
72.80%
100.00%
Other Derivatives
1
Discounted Cash Flows,
Internal Model (for CVA/DVA)
Credit Spread
352 bps
488 bps
Notes to the Financial Statements
Group and Bank
280
Investment Securities at fair value through
other comprehensive income
26
Income and market approach
n/a
1
n/a
1
n/a
1
Loans and advances to customers mandatorily
at fair value through profit or loss
61
Discounted Cash Flows
Credit Spread
200 bps
650 bps
286
Discounted Cash Flows
Credit Spread
n/a
2
n/a
2
1
active market we estimate the fair value of these securities using a market or an income valuation approach. Given the bespoke nature of the valuation
method in respect of each holding, it is not practicable to quote a range of unobservable inputs.
2
The valuation of the contingent part of the receivables from the loan portfolio sales, has been performed using a discounted cash flow methodology under
the income approach and includes a wide range of unobservable inputs, for which is not practicable to quote a relevant range of unobservable inputs, for
disclosure purposes.
Sensitivity of Fair Value Measurements to Changes in Unobservable Inputs
For structured interest rate derivatives, a significant change in the correlation inputs (e.g. the degree of correlation between two different
interest rates, or between interest rates and foreign exchange rates) would have a significant impact on the fair value of the individual
instrument; however, the magnitude and the direction of the impact depends on whether the Group is long or short the exposure, among
other factors. Due to the limited exposure that the Group has to these instruments, a reasonable change in the above unobservable inputs
would not be significant to the Group. Additionally, interest rate derivatives include interest rate swaps for which the bilateral credit valuation
adjustment is significant in comparison to their fair value. The counterparty credit-risk adjustment in these cases is mainly driven by the
internal ratings of the counterparty. A reasonable increase in the credit spread of these entities would result in an insignificant change in the
fair value of the Group’s and the Bank’s financial instruments.
Other derivatives include derivatives for which the bilateral credit valuation adjustment is significant in comparison to their fair value. In these
cases, the counterparty credit risk adjustment is mainly driven by the internal ratings of the counterparty. A reasonable increase in the credit
spread of these entities would result in an insignificant change in the fair value of the Group’s and the Bank’s financial instruments.
For loans and advances to customers mandatorily measured at FVPTL, the valuation includes a parameter which is not observable in the
market, i.e. the credit spread of the client. A reasonable increase in the respective credit spreads used would not have a significant effect on
their fair value for the Group and the Bank.
The valuation of the contingent part of the receivables from sales of loan portfolios, mandatorily measured at fair value through profit or loss,
includes a range of unobservable inputs. A reasonable change in the unobservable inputs used would not result in a significant change in the
fair value of these receivables.
4.8 Offsetting financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount is reported in the Statement of Financial Position where the Group and the Bank
currently have a legally enforceable right to set-off the recognised amounts and there is an intention to settle on a net basis or realize the
asset and settle the liability simultaneously. The Group and the Bank enter into various master netting arrangements or similar agreements
that do not meet the criteria set by the applicable accounting guidance for offsetting in the Statement of Financial Position but still allow for
the related amounts to be set off in the event of a default by the counterparty (such as bankruptcy or a failure to pay or perform). The table
below presents the recognised financial instruments that are either offset or subject to master netting arrangements or similar agreements
but not offset, as at 31 December 2022 and 2021, and shows under “Net amount” what the net impact would be on the Group’s and the
Bank’s Statement of Financial Position if all set-off rights were exercised.
a. Financial assets subject to offsetting, enforceable netting arrangements and similar agreements
Group
Bank
At 31 December 2022
Derivative
instruments
(1)
Reverse
repurchase
agreements
(2)
Deposits in
margin
accounts
(3)
Total
Derivative
instruments
(1)
Reverse
repurchase
agreements
(2)
Deposits in
margin
accounts
(3)
Total
Gross amounts of recognised financial assets
6,579
115
1,451
8,145
6,579
115
1,451
8,145
Positive market values from derivative financial
instruments that have been offset
(4,617)
-
2,803
(1,814)
(4,617)
-
2,803
(1,814)
Cash collateral received
-
-
(2,738)
(2,738)
-
-
(2,738)
(2,738)
Negative market values from derivative financial
instruments
-
-
-
-
-
-
-
-
Notes to the Financial Statements
Group and Bank
281
Net amounts of financial assets presented in the
Statement of Financial Position
1,962
115
1,516
3,593
1,962
115
1,516
3,593
Related amounts not set off
in the Statement of Financial
Position
Financial
instruments
(584)
(115)
-
(699)
(584)
(115)
-
(699)
Cash collateral
received
(873)
-
-
(873)
(873)
-
-
(873)
Net amount
505
-
1,516
2,021
505
-
1,516
2,021
(1) Included in Derivative assets in the Statement of Financial Position of the Group and the Bank as at 31 December 2022.
(2) Included in Loans and advances to customers in the Statement of Financial Position of the Group and the Bank respectively, as at 31 December 2022.
(3) Included in Due from Banks in the Statement of Financial Position of the Group and the Bank respectively, as at 31 December 2022.
Group
Bank
At 31 December 2021
Derivative
instruments
(1)
Reverse
repurchase
agreements
(2)
Deposits in
margin
accounts
(3)
Total
Derivative
instruments
(1)
Reverse
repurchase
agreements
(2)
Deposits in
margin
accounts
(3)
Total
Gross amounts of recognised financial assets
5,060
30
4,129
9,219
5,060
30
4,129
9,219
Positive market values from derivative financial
instruments that have been offset
(729)
-
-
(729)
(729)
-
-
(729)
Negative market values from derivative financial
instruments
-
-
(959)
(959)
-
-
(959)
(959)
Net amounts of financial assets presented in the
Statement of Financial Position
4,331
30
3,170
7,531
4,331
30
3,170
7,531
Related amounts not set off
in the Statement of Financial
Position
Financial
instruments
(496)
(30)
-
(526)
(496)
(30)
-
(526)
Cash collateral
received
(715)
-
-
(715)
(715)
-
-
(715)
Net amount
3,120
-
3,170
6,290
3,120
-
3,170
6,290
(1) Included in Derivative assets in the Statement of Financial Position of the Group and the Bank as at 31 December 2021.
(2) Included in Loans and advances to customers in the Statement of Financial Position of the Group and the Bank respectively, as at 31 December 2021.
(3) Included in Due from Banks in the Statement of Financial Position of the Group and the Bank respectively, as at 31 December 2021.
b. Financial liabilities subject to offsetting, enforceable netting arrangements and similar agreements
Group
Bank
At 31 December 2022
Derivative
instruments
(1)
Repurchase
agreements
(2)
Total
Derivative
instruments
(1)
Repurchase
agreements
(2)
Total
Gross amounts of recognised financial liabilities
3,737
122
3,859
3,737
122
3,859
Negative market values from derivative financial instruments that have been
offset
(4,617)
-
(4,617)
(4,617)
-
(4,617)
Deposits in margin accounts
2,803
-
2,803
2,803
-
2,803
Net amounts of financial liabilities presented in the Statement of Financial
Position
1,923
122
2,045
1,923
122
2,045
Related amounts not set off in the
Statement of Financial Position
Financial instruments
(433)
(122)
(555)
(433)
(122)
(555)
Cash collateral pledged
(575)
-
(575)
(575)
-
(575)
Net amount
915
-
915
915
-
915
(1) Included in Derivative liabilities in the Statement of Financial Position of the Group and the Bank as at 31 December 2022.
(2) Included in Due to Banks in the Statement of Financial Position of the Group and the Bank as at 31 December 2022.
Group
Bank
At 31 December 2021
Derivative
instruments
(1)
Repurchase
agreements
(2)
Total
Derivative
instruments
(1)
Repurchase
agreements
(2)
Total
Gross amounts of recognised financial liabilities
4,702
1,239
5,941
4,701
1,239
5,940
Negative market values from derivative financial instruments that have been
offset
(729)
-
(729)
(729)
-
(729)
Deposits in margin accounts
(959)
-
(959)
(959)
-
(959)
Net amounts of financial liabilities presented in the Statement of Financial
Position
3,014
1,239
4,253
3,013
1,239
4,252
Related amounts not set off in the
Financial instruments
(1,253)
(1,239)
(2,492)
(1,253)
(1,239)
(2,492)
Notes to the Financial Statements
Group and Bank
282
Statement of Financial Position
Cash collateral pledged
(1,204)
-
(1,204)
(1,204)
-
(1,204)
Net amount
557
-
557
556
-
556
(1) Included in Derivative liabilities in the Statement of Financial Position of the Group and the Bank as at 31 December 2021.
(2) Included in Due to Banks in the Statement of Financial Position of the Group and the Bank as at 31 December 2021.
NOTE 5 Segment reporting
The Group manages its business through the following business segments:
Retail banking
Retail banking includes all individual customers, professionals, small-medium and small-sized companies (companies with annual
turnover of up to €2.5 million). The Bank, through its extended network of branches and digital business, offers to its retail
customers various types of loans (mortgage, consumer and small business lending), cards (debit, credit and prepaid cards), deposit,
investment and bancassurance products, as well as a wide range of other traditional services and products.
Corporate & investm ent banking
Corporate & investment banking includes lending to all large and medium-sized companies and shipping finance except for exposures
transferred to the Special Assets Unit (“SAU”) and investment banking activities. The Group offers its corporate customers a wide
range of products and services, including financial and investment advisory services, deposit accounts, loans (denominated in both
euro and foreign currency), foreign exchange and trade service activities.
Trouble Assets Units (“TAU”) & Specialized Asset Solutions (“SAS”)
In order to (a) manage more effectively delinquent, non-performing and denounced loans and (b) ensure compliance with the provisions
of the Bank of Greece Executive Committee Act 42/30.5.2014 and Act 47/9.2.2015 and the Code of Conduct (referred to in Article
1(2) of Greek Law 4224/2013), the Bank established two dedicated and independent internal units, one responsible for the
management of the Bank’s retail loans (the Retail Collection Unit (“RCU”)) and the other for the Bank’s corporate delinquent
exposures the SAU, which has the overall responsibility for the management of such loans (end-to-end responsibility). In 2022, a new
business was setup SAS in order to capture emerging revenue generation opportunities in the emerging ecosystem of NPE’s portfolio
servicers and investors (e.g. acquisition financing, Real Estate Operating companies (“REOCo”) financing).
Global markets and asset management
Global markets and asset management includes all treasury activities, asset management (mutual funds and closed end funds), custody
services, private equity and brokerage.
Insurance
Until 31 March 2022, the Group offered a wide range of insurance products through its subsidiary company NIC and other subsidiaries in
SEE. NIC was classified as Held for Sale and Discontinued Operations. On 31 March 2022, the disposal to CVC Capital Partners was
completed, see Note 43 “
Acquisitions, disposals and other transactions
”.
International banking operations
The Group’s international banking activities include a wide range of traditional commercial banking services, such as commercial and
retail credit, trade financing, foreign exchange and taking of deposits. In addition, the Group offers shipping finance, investment
banking and brokerage services through certain of its foreign branches and subsidiaries. Non-current assets held for sale as at 31
December 2021 include CAC Coral Ltd. The profit or losses from discontinued operations for the period ended 31 December 2022
and 31 December 2021, include CAC Coral Ltd. NBG Cyprus Ltd was reclassified as continuing operations. The disposal of CAC Coral
Ltd completed on 15 July 2022 (see Note 43 “
Acquisitions, disposals and other transactions
”.
Other
Includes proprietary real estate management, warehousing business as well as unallocated income and expense of the Group.
Breakdown by business segment
Notes to the Financial Statements
Group and Bank
283
12-month period ended
31.12.2022
Retail
Banking
Corporate &
Investment
Banking
TAU & SAS
Global
markets &
Asset
Management
Insurance
International
Banking
Operations
Other
Group
Net interest income
430
544
147
180
-
76
(8)
1,369
Net fee and commission income
175
113
10
22
-
17
10
347
Other
(18)
11
(8)
360
-
35
259
639
Total income
587
668
149
562
-
128
261
2,355
Direct costs
(332)
(41)
(6)
(22)
-
(53)
(104)
(558)
Allocated costs and provisions
(1)
(150)
(142)
(204)
(22)
-
(8)
(118)
(644)
Share of profit of equity method
investments
-
-
-
-
-
-
2
2
Profit / (loss) before tax
105
485
(61)
518
-
67
41
1,155
Tax benefit / (expense)
(263)
Profit for the period from
continuing operations
892
Non-controlling interests
(2)
Profit/(loss) for the period from
discontinued operations
-
-
-
-
240
(10)
-
230
Profit attributable to NBG equity
shareholders
1,120
Depreciation and amortisation
(1)
42
3
2
1
-
5
119
172
Credit provisions and other
impairment charges
(40)
97
171
5
-
8
39
280
Non current asset additions
8
-
-
-
-
16
167
191
(1) Includes depreciation and amortisation on investment property, property & equipment, software & other intangible assets.
Breakdown by business segment
12-month period ended
31.12.2021
Retail Banking
Corporate &
Investment
Banking
ΤAU & SAS
Global markets &
Asset
Management
Insurance
International
Banking
Operations
Other
Group
As restated
Net interest income
216
465
255
230
-
67
(21)
1,212
Net fee and commission income
141
92
12
21
-
18
3
287
Other
(17)
(3)
(26)
464
-
6
(20)
404
Total income
340
554
241
715
-
91
(38)
1,903
Direct costs
(325)
(42)
(7)
(22)
-
(77)
(187)
(660)
Allocated costs and provisions
(2)
(193)
(51)
(21)
5
-
(16)
(168)
(444)
Profit / (loss) before tax
(178)
461
213
698
-
(2)
(393)
799
Tax benefit / (expense)
(15)
Profit for the period from continuing
operations
784
Non controlling interests
(2)
Profit / (loss) for the period from
discontinued operations
-
-
-
-
88
(3)
-
85
Profit attributable to NBG equity
shareholders
867
Depreciation, amortisation
(2)
35
2
2
1
-
9
114
163
Credit provision and other
impairment charges
17
15
(15)
(20)
-
16
65
78
Non current asset additions
13
3
-
-
-
3
152
171
(2) Includes depreciation and amortisation on investment property, property & equipment, software & other intangible assets.
Breakdown by business segment
Retail Banking
Corporate &
Investment
Banking
ΤAU & SAS
Global Μarkets &
Asset
Management
Insurance
International
Banking
Operations
Other
Group
Notes to the Financial Statements
Group and Bank
284
Segment assets as at 31 December
2022
Segment assets
7,352
23,693
3,054
31,694
-
2,608
4,304
72,705
Current income tax advance and
deferred tax assets
-
-
-
-
-
-
-
4,913
Non-current assets held for sale
-
-
438
-
-
-
57
495
Total assets
78,113
Segment liabilities as at 31
December 2022
Segment liabilities
45,411
6,364
180
14,552
-
1,794
3,294
71,595
Current income and deferred tax
liabilities
-
-
-
-
-
-
-
18
Liabilities associated with non-
current assets held for sale
-
-
-
-
-
-
25
25
Total liabilities
71,638
Retail
Banking
Corporate &
Investment
Banking
ΤAU & SAS
Global Μarkets &
Asset
Management
Insurance
International
Banking
Operations
Other
Group
Segment assets as at 31 December
2021
Segment assets
7,052
18,395
3,559
38,420
-
2,739
4,099
74,264
Current income tax advance and
deferred tax assets
-
-
-
-
-
-
-
5,201
Non-current assets held for sale
-
-
445
-
3,893
-
155
4,493
Total assets
83,958
Segment liabilities as at 31
December 2021
Segment liabilities
43,482
6,325
186
19,250
-
1,951
3,556
74,750
Current income and deferred tax
liabilities
-
-
-
-
-
-
-
19
Liabilities associated with non-
current assets held for sale
-
-
-
-
3,413
4
-
3,417
Total liabilities
78,186
Breakdown by location
12 month period ended
Greece
International
Group
31 December 2022
Net interest income
1,293
76
1,369
Net fee and commission income
330
17
347
Other
605
34
639
Total income
2,228
127
2,355
Direct costs
(505)
(53)
(558)
Allocated costs and provisions
(1)
(637)
(7)
(644)
Share of profit of equity method
investments
2
-
2
Profit / (loss) before tax
1,088
67
1,155
Tax benefit / (expense)
(263)
Profit for the period from continuing
operations
892
Non-controlling interests
(2)
Notes to the Financial Statements
Group and Bank
285
Profit / (loss) for the period from
discontinued operations
230
-
230
Profit attributable to NBG equity
shareholders
1,120
Depreciation and amortisation
(1)
167
5
172
Credit provisions and other impairment
charges
272
8
280
Non-current asset additions
175
16
191
Non-current assets
2,409
68
2,477
(1) Includes depreciation and amortisation on investment property, property & equipment including RoU assets, software
& other intangible assets.
Breakdown by location
12 month period ended
Greece
International
Other
Group
As restated
31 December 2021
Net interest income
1,145
67
1,212
Net fee and commission income
269
18
287
Other
398
6
404
Total income
1,812
91
1,903
Direct costs
(583)
(77)
(660)
Allocated costs and provisions
(1)
(428)
(16)
(444)
Profit / (loss) before tax
801
(2)
799
Tax benefit / (expense)
(15)
Loss for the period from continuing
operations
784
Non-controlling interests
(2)
Profit/(loss) for the period from
discontinued operations
88
(3)
85
Profit attributable to NBG equity
shareholders
867
Depreciation and amortisation
(1)
154
9
163
Credit provisions and other impairment
charges
62
16
78
Non-current asset additions
168
3
171
Non-current assets
2,460
53
2,513
Breakdown by location
12 month period ended
Greece
S.E. Europe
Other
Group
31 December 2021
Net interest income
1,145
58
9
1,212
Net fee and commission income
269
13
5
287
Other
398
2
4
404
Total income
1,812
73
18
1,903
Direct costs
(583)
(29)
(48)
(660)
Allocated costs and provisions
(1)
(428)
(16)
-
(444)
Profit / (loss) before tax
801
28
(30)
799
Tax benefit / (expense)
(15)
Loss for the period from continuing
operations
784
Notes to the Financial Statements
Group and Bank
286
Non-controlling interests
(2)
Profit/(loss) for the period from
discontinued operations
88
-
(3)
85
Profit attributable to NBG equity
shareholders
867
Depreciation and amortisation
(1)
154
3
6
163
Credit provisions and other impairment
charges
62
16
-
78
Non-current asset additions
168
2
1
171
Non-current assets
2,460
33
20
2,513
(1) Includes depreciation and amortisation on investment property, property & equipment, software & other intangible assets.
In order to report the breakdown by business segment in a manner consistent with the internal reporting provided to the chief operating
decision-maker, the comparative figures for 2021 segment reporting were restated by reclassifying certain NII, general, administrative and
other operating expenses and depreciation and amortization among all business segments of the Bank.
Restatement
Breakdown by business segment
12-month period ended
Retail
Banking
Corporate &
Investment
Banking
TAU
Global markets
& Asset
Management
Insurance
International
Banking
Operations
Other
Group
31.12.2021
Net interest income
19
1
1
-
-
-
(21)
-
Net fee and commission income
-
-
-
-
-
-
-
-
Other
-
-
-
-
-
-
-
-
Total income
19
1
1
-
-
-
(21)
-
Direct costs
(10)
(1)
(2)
-
-
-
39
26
Allocated costs and provisions
(15)
(5)
(3)
(2)
-
-
(1)
(26)
Profit / (loss) before tax
(6)
(5)
(4)
(2)
-
-
17
-
NOTE 6 Net interest income
Group
Bank
Continuing Operations
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Interest earned on:
Amounts due from banks
88
114
88
115
Financial assets at fair value through profit or loss
4
4
4
4
Investment securities
263
186
258
180
Loans and advances to customers (Note 4.2.10)
1,166
1,057
1,062
961
Interest and similar income
1,521
1,361
1,412
1,260
Interest payable on:
Amounts due to banks
(38)
(42)
(38)
(42)
Amounts due to customers
(37)
(33)
(33)
(29)
Debt securities in issue and other borrowed funds
(54)
(49)
(55)
(48)
Lease liability
(23)
(25)
(36)
(39)
Interest expense and similar charges
(152)
(149)
(162)
(158)
Notes to the Financial Statements
Group and Bank
287
Net interest income
1,369
1,212
1,250
1,102
NOTE 7 Net fee and commission income
Group
Bank
Continuing Operations
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Custody, brokerage & investment banking
10
11
4
4
Retail lending fees
80
54
78
50
Corporate lending fees
104
92
92
80
Banking fees & similar charges
141
118
137
115
Fund management fees
12
12
-
-
Net fee and commission income
347
287
311
249
NOTE 8 Net trading income / (loss) and results from investment securities and Gains /
(losses) arising from the derecognition of financial assets measured at amortised cost
Group
Bank
Continuing Operations
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Net trading result and other net unrealized gains / (losses) from financial instruments
430
82
423
75
Net gain / (loss) from disposal of investment debt securities
(84)
98
(84)
97
Total net trading income / (loss) and results from investment securities
346
180
339
172
Group
Bank
Continuing Operations
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Gains / (losses) arising from the derecognition of financial assets measured at
amortised cost
60
283
60
283
Total
60
283
60
283
Net Trading Income during the twelve-month period ended 31 December 2022, includes €150 million gains from ineffective hedge
accounting relationships while the remaining Net Trading Income result, is mainly due to derivative and BCVA gains following the
increase in interest rates. On 13 January 2021, the Greek Public Debt Management Agency (“PDMA”) and the Bank carried out a
Greek Government Bond (“GGB”) exchange. The Bank exchanged bonds of €1.0 billion nominal value, carrying amount of €1.3 billion
and settlement amount of €1.5 billion maturing on 20 March 2050, with a series of other Greek Government Bonds with shorter
maturities of a total nominal value of €2.8 billion and a settlement amount of €3.6 billion (as per relative Ministry Decree). The
exchange was executed at market terms and the difference between the settlement amounts for the bond exchanged and the bonds
received was settled in cash. The transaction was settled on 20 January 2021. The Group realized a gain of €209 million in “Gains /
(losses) arising from the derecognition of financial assets measured at amortised cost”.
NOTE 9 Net other income / (expenses)
Group
Bank
Notes to the Financial Statements
Group and Bank
288
Continuing Operations
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Income from non-banking activities
344
43
328
18
Dividends
3
3
3
3
Deposit Insurance Premium
(63)
(52)
(60)
(49)
Withholding taxes and duties on loans granted
(51)
(53)
(51)
(53)
Total
233
(59)
220
(81)
Income from non-banking activities includes the total gain of €294 million from the spin-off of NBG's Merchant Acquiring Business and the
sale of 51% of NBG PAY to EVO Payments Inc at Group and Bank level (see Note 43 “Acquisitions, disposals and other capital
transactions”).
Deposit Insurance Premium includes contributions to Deposit Insurance and Resolution Funds for the Bank of €34 million regarding the
regular contribution to the Hellenic Deposit and Investment Guarantee Fund (“HDIGF”) Resolution Leg (2021: €33 million) and €26 million
contribution towards the Single Resolution Fund (“SRF”) (2021: €15 million).
NOTE 10 Personnel expenses
Group
Bank
Continuing Operations
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Salaries and other staff related benefits
466
537
431
496
Pension costs: defined benefit plans (see Note 11)
9
8
8
7
Total
475
545
439
503
“Salaries and other staff related benefits” in 2022, include the defined contributions of €35 million related to social security for
employees insured with National Bank of Greece Auxiliary Pension Plan ("LEPETE") , to e-EFKA. In 2021, the respective social security
contribution was €35 million (see Note 11 “Retirement benefit obligation”).
The average number of employees from continuing operations for the Group during the period from 1 January 2022 up to 31 December
2022 was 8,537 (31 December 2021: 9,224) and for the Bank was 7,196 (31 December 2021: 7,810). The decrease on the number of
employees as of 31 December 202 2 is due to the Voluntary Exit Scheme (“VES”) of the Bank launched in 2022, which reduced its
headcount gradually by 469 employees for the Group and the Bank, (see Note 11 “Retirement benefit obligation”).
NOTE 11 Retirement benefit obligation
I. Defined Contribution Plans
National Bank of Greece Pension Plan
In accordance with Greek Law 3655/2008, applicable from April 2008, the Bank’s main pension plan, which was a defined-contribution
plan, has been incorporated into the main pension branch of the state sponsored social security fund IKA–ETAM as of 1 August 2008.
This legislation also prescribes that employer contributions made by the Bank will be reduced every three years in equal increments
from 26.50% in 2013 until they reach 13.33% of employees’ gross salary, for employees who joined any social security plan prior to 1
January 1993.
However, in accordance with Greek Law 4387/2016 and Ministry decision number F11321/OIK.45947/1757/2016 (Govt. Gazette
4458/B/30.12.2016, from 1 January 2017, the Bank’s employer contributions reduced equally every year and they reached 13.33% in
2020. Additionally, the aforementioned law introduced a maximum gross monthly income of 5,860.80 euros, upon which social
security contributions are calculated, (the amount was increased to 7,126.94 euros from 1 January 2023, from 6,500 euros which was
on 1 February 2019). Employer contributions for employees, who joined any social security fund post 1 January 1993, will remain at
13.33%.
National Bank of Greece Auxiliary Pension Plan ("LEPETE")
Regarding the National Bank of Greece Auxiliary Pension Plan ("LEPETE"), on 19 March 2020, a legislative amendment (Article 63, Greek Law
4680/2020) on Article 24 of Greek Law 4618/2019 was passed (“the amendment”), changing the previous status described above. According
to the amendment, the employees insured with LEPETE were transferred to the former ETEAEP and are now governed by the legislation of the
Auxiliary Insurance Plan of Single Social Security Entity (“e-EFKA”). As a result, the Bank is liable for normal employer’s contributions. The Bank
is also obligated to pay an additional social security contribution to the Auxiliary Insurance Plan of e-EFKA for the years 2018 to 2032,
amounting to 12.0% per annum of the gross salaries of employees with any employment relationship with the Bank on 31 December of each
Notes to the Financial Statements
Group and Bank
289
respective year. These additional annual contributions from the Bank for the years 2022 and 2021 amounted to €35 million and €35 million
respectively.
Other Defined Contribution Pension Plans
NBG Asset Management Mutual Funds, Pronomiouhos S.A. Genikon Apothikon Hellados and NBG Leasing S.A. also make contributions to
other defined contribution pension plans and funds for their employees.
Defined contribution health plans
Contributions by the Bank to the National Bank of Greece Health Plan (“T.Y.P.E.T.”) amount to 6.25% of employees’ salaries. Employees’
contributions amount to 2.5% of their salaries. Additional contributions are paid for insured members of the employees’ families
(such as spouse that does not work and children) and are increased further in the event that the insured spouse is employed or that
members of the paternal family are also insured. Contributions of retired employees amount to 4% of their pensions, while
additional contributions are paid for other insured members of their families. T.Y.P.E.T. offers health benefits to employees before
and after their retirement, and to insured members of their families.
Total contributions to social security funds, state run plans and defined contribution plans for the Group for 2022 and 2021 were €133
million and €206 million respectively. The respective figures for the Bank were €126 million and €198 million respectively. As
mentioned above, as of 1 August 2008, the Bank’s pension plan was incorporated into IKA-ETAM and therefore ceased to exist as
separate defined contribution plan.
National Bank of Greece Lump Sum Benefit Plan
Up to 2013, the Bank did not contribute to the aforementioned plan. Following the amendment of the aforementioned plan’s regulation, from
1 January 2014 the Bank pays voluntary contribution of 2.0% and up to €12,060.00 total remuneration (as amended on 1 October 2022, from
€11,820.00 as of 1 December 2021).
II. Defined Benefit Plans
Retirement indemnities
Most of the Group companies are required by local law to offer retirement indemnities to employees leaving service to retire. Such
retirement indemnities are in the form of a lump sum payment based usually on final salary and years of service, the calculation of
which depends on the jurisdiction in which the company operates and the employee’s profession (e.g. Greek Law provides for
different indemnities for salaried employees, wage earners and lawyers). In some cases, Group company regulations provide for
additional benefits to employees above the statutory minimum.
In accordance with Greek Law 4046/2012 and Board of Ministers’ Decision (6/28.2.2012), from 14 February 2012 onwards, the
employment contracts that lapse on attainment of the normal retirement age or based on the particular retirement conditions, are
considered as indefinite duration employment contracts and therefore, the provisions for employees statutory retirement indemnity
of Greek Law 2112/1920, are applied.
Prior to the enactment of the above Law, the Bank considered the employment contracts with its employees as finite duration contracts;
therefore, no provision for staff leaving indemnity was recognized.
On 12 November 2012, the new Greek Law 4093/2012 (GG A’ 222) decreased the Greek Law 2112/1920 statutory indemnity scale in case
of employee dismissal or normal retirement. The new law restricts the maximum indemnity payable to an employee upon dismissal
or retirement, to 12 monthly salaries instead of 24.
The transitional provisions of the law state that for employees who on 12 November 2012 had 17 or more full years of service to the
same employer there is an additional monthly salary as indemnity per year and up to 24 monthly salaries. In case of dismissal the
additional monthly salary is restricted to 2,000 euros.
Implementation of the IFRS Interpretations Committee Decision relating to the provisions for staff indemnity relating to the accounting for
the allocation of the cost of provision for staff indemnity due to retirement based on IAS 19 Employee Benefits
.
In May 2021, the IFRS Interpretations Committee (“IFRIC”) issued the final decision (“Decision”) on the agenda entitled "Distribution of
benefits in periods of service in accordance with International Accounting Standard (IAS) 19“. Based on the above Decision, the way in which
the basic principles of IAS 19 were applied in Greece in the past in this regard, and consequently, according to what is defined in the IASB Due
Process Handbook (par. 8.6) is differentiated. Therefore, entities that prepare their financial statements in accordance with IFRS are required
to amend their accounting policies in this regard.
This Decision defines accounting treatment for the formation of the employee benefits for statutory indemnity due to retirement, where
according to the provision of the Greek legislation (Greek Law 3198/1955) is capped at 16 years of service within the entity.
This amendment was retroactively implemented, by the Group and the Bank, in 2020.
Lump sum and annuity benefits
Notes to the Financial Statements
Group and Bank
290
Former Ethnokarta employees are entitled to benefits from Deposit Administration Fund (“DAF”) type policies, which offer lump sum
benefits and pension benefits additional to those offered by social security funds or main pension plans. Such benefits are usually
based on the employees’ salary and years of service and vary depending on the provisions of each policy.
Pension costs – defined benefit plans
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Service cost
6
7
5
7
Net interest expense on the net defined benefit liability/(asset)
3
1
3
1
Loss / (income) on curtailments /settlements and other expense/ (income)
76
64
76
63
Less amounts recognized as restructuring cost
(76)
(64)
(76)
(64)
Total
9
8
8
7
In 2022, “Loss / (income) on curtailments / settlements and other expense / (income)” include the 2022 VES cost implemented mainly by the
Bank, amounting to €76 million for the Group and the Bank.
In 2021, “Loss / (income) on curtailments / settlements and other expense / (income)” include the 2021 VES cost implemented mainly by the
Bank, amounting to €64 million for the Group and €63 million for the Bank.
Net liability in Statement of Financial Position
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Present value of funded obligations
104
130
104
130
Fair value of plan assets
(3)
(3)
(3)
(3)
101
127
101
127
Present value of unfunded obligations
147
144
145
142
Total
248
271
246
269
Movement in net liability
Group
Bank
2022
2021
2022
2021
Net liability at the beginning of the period
271
294
269
293
Actual employer contributions paid
(7)
(17)
(7)
(17)
Benefits paid directly
(66)
(69)
(65)
(68)
Total expenses recognized in the income statement - continuing operations
85
72
84
71
Amount recognized in the OCI
(35)
(9)
(35)
(10)
Net liability at the end of the period
248
271
246
269
Remeasurements on the net liability
Group
Bank
2022
2021
2022
2021
Liability (gain)/loss due to changes in assumptions
(37)
(11)
(37)
(12)
Liability experience (gain)/loss arising during the year
2
2
2
2
Total amount recognized in OCI
(35)
(9)
(35)
(10)
In 2023, the Group and the Bank are expected to make €9 million and €9 million respectively, in contributions to funded plans, and pay €56
million and €56 million respectively, in retirement indemnities.
Reconciliation of defined benefit obligation
Group
Bank
2022
2021
2022
2021
Notes to the Financial Statements
Group and Bank
291
Defined benefit obligation at the beginning of the period
274
296
272
295
Service cost-continuing operations
6
7
5
7
Interest cost -continuing operations
3
1
3
1
Employee contributions
2
2
2
2
Benefits paid from the Fund
(9)
(18)
(9)
(18)
Benefits paid directly
(66)
(69)
(65)
(68)
Losses/(gains) on curtailments / settlements- continuing operations
76
64
76
63
Remeasurements (gains)/losses:
(37)
(11)
(37)
(12)
2
2
2
2
Defined benefit obligation at the end of the period
251
274
249
272
Reconciliation of plan assets
Group
Bank
2022
2021
2022
2021
Fair value of plan assets at the beginning of the period
3
2
3
2
Employer contributions
7
17
7
17
Employee contributions
2
2
2
2
Benefits paid from the fund
(9)
(18)
(9)
(18)
Fair value of plan assets at the end of the period
3
3
3
3
The weighted average assumptions used to determine the pension costs for these defined benefit obligations, for the years ended 31
December 2022 and 2021 are:
Weighted average assumptions at the end of the reporting period
Group
Bank
2022
2021
2022
2021
Discount rate
3.8%
0.9%
3.8%
1.0%
Price inflation
2.5%
1.9%
2.5%
2.0%
Rate of compensation increase
2.3%
1.5%
2.5%
1.5%
Pension increase
0.0%
0.0%
0.0%
0.0%
Plan duration
10.8
11.9
12.1
11.8
The following table presents a sensitivity analysis for each significant actuarial assumption showing how the defined benefit obligation
would have been affected by changes in the relevant actuarial assumption that were reasonably possible at the balance sheet date.
Sensitivity analysis of significant actuarial assumptions - Group
31 December 2022
Actuarial assumption
Change in Assumptions
Increase / (decrease)
Discount rate
Increase by 50 basis points
(5.1) %
Decrease by 50 basis points
5.5%
Price inflation
Increase by 50 basis points
0.3%
Decrease by 50 basis points
(0.2)%
Rate of compensation increase
Increase by 50 basis points
5.1%
Decrease by 50 basis points
(4.7)%
Pension growth rate
Increase by 50 basis points
0.6%
Decrease by 50 basis points
(1.3)%
Life Expectancy
Plus 1 year
0.7%
Minus 1 year
(0.8)%
Sensitivity analysis of significant actuarial assumptions - Bank
31 December 2022
Actuarial assumption
Change in Assumptions
Increase / (decrease)
Discount rate
Increase by 50 basis points
(5.1) %
Notes to the Financial Statements
Group and Bank
292
Decrease by 50 basis points
5.5%
Price inflation
Increase by 50 basis points
0.3%
Decrease by 50 basis points
(0.2)%
Rate of compensation increase
Increase by 50 basis points
5.1%
Decrease by 50 basis points
(4.8)%
Pension growth rate
Increase by 50 basis points
0.6%
Decrease by 50 basis points
(1.3)%
Life Expectancy
Plus 1 year
0.8%
Minus 1 year
(0.8)%
Allocation of plan assets
The allocation of plan assets as at 31 December 2022 for the Group and the Bank of amount €3 million (31 December 2021: €3 million)
relates mainly to assets of DAF policies issued by the insurance company NIC.
NOTE 12 General, administrative & other operating expenses
Group
Bank
Continuing Operations
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Duties and taxes
15
15
10
11
Utilities
52
52
47
46
ATM and POS related expenses
2
2
2
2
Travelling and transportation expenses
10
8
7
6
Short-term or low value leases
2
1
1
1
Maintenance and other related expenses
16
14
13
11
Consulting, audit, legal and outsourcing expenses
51
46
44
38
Promotion and advertisement and donation expenses
25
38
23
36
Subscriptions, contributions, consumables and entertainment expenses
18
18
16
17
Other administrative expenses
17
13
15
11
Total
208
207
178
179
NOTE 13 Credit provisions and other impairment charges
Group
Bank
12-month period ended
12-month period ended
Continuing Operations
31.12.2022
31.12.2021
31.12.2022
31.12.2021
a. Impairment charge for ECL
Loans and advances to customers at amortised cost (Note 21)
218
54
186
29
Net modification (gain)/loss (Note 4.2.11)
(1)
18
(1)
18
217
72
185
47
b. Impairment charge for securities
Investment in debt instruments
5
(20)
5
(20)
5
(20)
5
(20)
c. Other provisions and impairment charges
Impairment of investment property, property and equipment, software &
other intangible assets and other assets
5
6
5
6
Impairment of investment in subsidiaries and equity method investments
23
(10)
27
9
Legal and other provisions
30
30
30
18
58
26
62
33
Notes to the Financial Statements
Group and Bank
293
Total
280
78
252
60
Impairment charge for ECL at 31 December 2021 for the Group and the Bank includes a release of €0.2 billion relating to Project Frontier.
NOTE 14 Restructuring costs
For the period ended 31 December 2022, restructuring costs include €59 million for the Group and the Bank for the
Exit Schemes (31 December 2021: €83 million) and €8 million direct expenditure relating to the Transformation
Program (31 December 2021: €28 million for the Group and €26 million for the Bank).
NOTE 15 Tax benefit /(expense)
Group
Bank
12-month period ended
12-month period ended
Continuing Operations
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Current tax
(53)
(13)
(46)
-
Deferred tax
(210)
(2)
(217)
-
Tax benefit / (expense)
(263)
(15)
(263)
-
Profit before tax
1,155
799
1,089
732
Tax calculated based on the current tax rate of 29% (2021: 29%)
(335)
(232)
(316)
(212)
Effect of different tax rates of subsidiaries
9
7
-
-
Income not subject to taxation and other permanent differences
10
9
2
4
Expenses not deductible for tax purposes
(67)
(44)
(69)
(41)
Effect of unused tax losses and deductible temporary differences not recognised as
deferred tax assets
(2)
14
-
17
Tax effect of utilization of tax losses not previously recognised
-
35
-
35
Tax effect of utilization of deductible temporary differences not previously recognised
166
198
166
198
Effect of previously unrecognised and unused temporary differences now recognised as
deferred tax assets
8
-
-
-
Non off-settable withholding taxes
(46)
-
(46)
-
Other
(6)
(2)
-
(1)
Income tax expense
(263)
(15)
(263)
-
Effective tax rate for the period
22.77%
1.84%
24.12%
-
The nominal corporation tax rate for the Bank for 2022 and 2021 is 29%. Following Greek Law 4646/2019, the withholding tax on
dividends distributed from 1 January 2020 onwards was decreased from 10% to 5%.
The unaudited tax years of the Group’s investments accounted for by applying the equity method of accounting and subsidiaries are
presented in Note 44 “Group companies”.
Based on Article 120 of Greek Law 4799/2021 (Government Gazette #Α78/18.5.2021), effective from 2021, the corporate income tax rate
for legal entities, other than credit institutions, was reduced to 22% from 24%.
.
NOTE 16 Earnings per share
Group
Bank
Notes to the Financial Statements
Group and Bank
294
12-month period ended
12-month period ended
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Profit for the period attributable to NBG equity shareholders from continuing
operations
890
782
826
732
Profit / (loss) for the period from discontinued operations
230
85
(13)
(3)
Profit for the period attributable to NBG ordinary shareholders from
continuing and discontinued operations
1,120
867
813
729
Weighted average number of ordinary shares outstanding for basic and
diluted EPS
914,697,097
914,586,334
914,715,153
914,715,153
Earnings per share (Euro) - Basic and diluted from continuing operations
0.97
0.86
0.90
0.80
Earnings per share (Euro) - Basic and diluted from continuing and
discontinued operations
1.22
0.95
0.89
0.80
NOTE 17 Cash and balances with central banks
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Cash in hand
742
685
707
647
Balances with central banks
13,484
15,142
13,250
14,892
Total
14,226
15,827
13,957
15,539
Of which
Obligatory balances with central banks
116
234
1
4
The Bank is required to maintain a current account with the Bank of Greece (“BoG”) to facilitate interbank transactions with the central
bank, its member banks, and other financial institutions through the Trans-European Automated Real-Time Gross Settlement Express
Transfer system (”TARGET ”). BoG requires all banks established in Greece to maintain deposits with the central bank equal to 1% of
total customer deposits as defined by the ECB. Similar requirements apply to the other banking subsidiaries of the Group. The Bank’s
deposits at BoG bear interest at the refinancing rate as set by the ECB of 2.50% at 31 December 2022 while the corresponding
deposits of certain subsidiaries are non-interest bearing.
NOTE 18 Due from banks
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Sight deposits with banks
227
286
186
187
Time deposits with banks
81
69
81
78
Securities purchased under agreements to resell
92
-
92
-
Deposits in margin accounts
2,182
2,962
2,182
2,962
Other
318
322
313
312
Total
2,900
3,639
2,854
3,539
NOTE 19 Financial assets at fair value through profit or loss
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Trading Securities:
Government bonds
160
221
160
221
Treasury bills
44
30
43
30
Equity securities
21
30
3
19
Financial assets mandatorily classified at fair value through profit and loss:
Notes to the Financial Statements
Group and Bank
295
Other debt securities
6
17
6
17
Mutual funds units
160
2
159
-
Other
4
14
4
8
Total
395
314
375
295
NOTE 20 Derivative financial instruments
Group
Bank
31.12.2022
31.12.2022
Notional
Fair values
Fair values
Notional
Fair values
Fair values
amounts
Assets
Liabilities
amounts
Assets
Liabilities
Derivatives held for trading
Interest rate derivatives – OTC
41,047
1,719
1,453
41,047
1,719
1,453
Foreign exchange derivatives – OTC
5,029
82
93
5,024
82
93
Other types of derivatives – OTC
635
30
53
635
30
53
Interest rate derivatives – Exchange traded
1,935
1
1
1,935
1
1
Other types of derivatives - Exchange traded
771
2
-
753
2
-
Total
49,417
1,834
1,600
49,394
1,834
1,600
Derivatives held for fair value hedging
Interest rate derivatives – OTC
1,115
128
323
1,115
128
323
Total
1,115
128
323
1,115
128
323
Total
50,532
1,962
1,923
50,509
1,962
1,923
Group
Bank
31.12.2021
31.12.2021
Notional
Fair values
Fair values
Notional
Fair values
Fair values
amounts
Assets
Liabilities
amounts
Assets
Liabilities
Derivatives held for trading
Interest rate derivatives – OTC
35,534
4,201
2,069
35,534
4,201
2,069
Foreign exchange derivatives – OTC
3,141
64
55
3,130
64
55
Other types of derivatives – OTC
425
60
137
425
60
137
Interest rate derivatives – Exchange traded
1,370
1
-
1,370
1
-
Other types of derivatives - Exchange traded
1,191
1
-
1,178
1
-
Total
41,661
4,327
2,261
41,637
4,327
2,261
Derivatives held for fair value hedging
Interest rate derivatives – OTC
1,260
4
753
1,260
4
753
Total
1,260
4
753
1,260
4
753
Total
42,921
4,331
3,014
42,897
4,331
3,014
Credit risk
The Group calculates a separate CVA for each counterparty to which the Group has exposure. The CVA is estimated considering expected
exposures generated using simulation techniques, as well as netting agreements and collateral postings. Furthermore, the CVA is
based on implied probabilities of default, derived from CDS rates
observed in the market, or, if these are not available, the
probability of default of the counterparty derived from internal rating models, or otherwise the regulatory risk weight is applied.
With respect to own credit risk, the Group estimates a Debit Value Adjustment (“DVA”) by applying a methodology symmetric to the one
applied for CVA. The bilateral CVA for the Group and the Bank at 31 December 2022 amounted to a cumulative gain of €38 million
(31 December 2021: cumulative loss €6 million).
Fair value hedges
The Group’s and the Bank’s fair value hedges consist of interest rate swaps that are used to protect against changes in the fair value of
fixed-rate, long-term financial instruments due to movements in market interest rates.
Notes to the Financial Statements
Group and Bank
296
31.12.2022
31.12.2022
Hedging Instruments
Hedged Items
Derivative
Instrument
Nominal
Amount
Fair Value
Statement of
Financial Position
Line
Change in
fair value
(2)
Carrying
Amount
Accumulated
hedge
adjustment on
the hedged item
Statement of
Financial Position
Line
Change in fair
value due to the
risk being
hedged
(2)
Interest Rate Swaps
400
128
Derivative Assets
135
7,978
(1,686)
Securities measured
at amortised cost
(1,763)
Interest Rate Swaps
5,437
1,681
Due from Banks
(1)
1,744
Interest Rate Swaps
400
264
Derivative
Liabilities
(93)
Interest Rate Swaps
100
52
Derivative
Liabilities
36
957
N/A
Securities measured
at FVTOCI
(258)
Interest Rate Swaps
781
221
Due from Banks
(1)
219
Interest Rate Swaps
215
7
Derivative
Liabilities
(3)
1,581
39
Debt Securities in
issue
21
Interest Rate Swaps
1,380
(32)
Due from Banks
(1)
(18)
Interest Rate Swaps
177
14
Due from Banks
(1)
14
162
(14)
Loans and advances
to customers
(14)
Total
8,890
1,689
2,034
7,516
(1,661)
(2,014)
31.12.2021
31.12.2021
Hedging Instruments
Hedged Items
Derivative
Instrument
Nominal
Amount
Fair Value
Statement of
Financial Position
Line
Change in
fair value
(2)
Carrying
Amount
Accumulated
hedge
adjustment on
the hedged item
Statement of
Financial Position
Line
Change in fair
value due to the
risk being
hedged
(2)
Interest Rate Swaps
425
4
Derivative Assets
13
10,802
706
Securities measured
at amortised cost
208
Interest Rate Swaps
7,204
1
Due from Banks
(1)
174
Interest Rate Swaps
675
641
Derivative
Liabilities
(420)
Interest Rate Swaps
160
112
Derivative
Liabilities
(30)
1,490
N/A
Securities measured
at FVTOCI
9
Interest Rate Swaps
780
15
Due from Banks
(1)
16
Total
9,244
(733)
(247)
12,292
706
217
(1)
Relates to derivatives traded with Central Clearing Counterparties (CCPs). Please refer to Note 4.8 "Offsetting financial assets and financial liabilities".
(2) Amounts reported under change in fair value for hedging instruments and hedged items refer to fair value hedging relationships that were active as at 31 December 2022
and 31 December 2021, respectively.
The accumulated amount of fair value hedge adjustments remaining in the Statement of Financial Position for discontinued hedges was
€77 million for securities measured at amortised cost as at 31 December 2022 and €498 million as at 31 December 2021 respectively,
for the Group and the Bank. The respective amount for debt securities in issue was €18 million as at 31 December 2022 and Nil as at
31 December 2021, for the Group and the Bank.
Notes to the Financial Statements
Group and Bank
297
The accumulated amount of fair value hedge adjustments remaining in Other Comprehensive Income for discontinued hedges was 20
million as at 31 December 2022 and Nil as at 31 December 2021, for the Group and the Bank.
Hedge ineffectiveness recognized in the Income Statement amounted to €23 million and €(30) million, for the year ended 31 December
2022 and 31 December 2021 respectively, for the Group and the Bank.
Cash flow hedges
As at 31 December 2021, the Group’s cash flow hedges consist of interest rate swaps, used to hedge the variability in cash flows of the
Group’s borrowings that are attributable to changes in the market interest rates. As at 31 December 2022, the Group’s cash flow
hedges were Nil.
31.12.2021
31.12.2021
Hedging Instruments
Hedged Items
Derivative
Instrument
Nominal
Amount
Fair Value
Statement of
Financial Position
Line
Change in fair
value
Carrying
Amount
Statement of Financial
Position Line
Change in fair
value due to the
risk being hedged
Interest Rate Swaps
500
(23)
Due from Banks
(1)
2
500
Due to Banks
(2)
Total
500
(23)
2
500
(2)
(1) Relates to derivatives traded with Central Clearing Counterparties (CCPs). Please refer to Note 4.8 "Offsetting financial assets and financial liabilities".
For the year ended 31 December 2021, hedging gains or losses that were recognized in Other Comprehensive Income amount to €(22)
and hedge ineffectiveness recognized in “Net trading income / (loss) and results from investment securities” amounts to Nil for the
Group and the Bank.
The net investment hedge reserve of €(110) million relates to the investments in subsidiaries NBG Finance (Dollar) Plc and NBG Finance
(Sterling) Plc which are both under liquidation. The currency translation reserve of €110 million also relates to the aforementioned
subsidiaries. During 2022, the two subsidiaries proceeded with interim capital distribution (return) to NBG. According to IFRS’s (IFRIC
16 and IAS 21) the return of capital is equated with a sale, therefore both the Net Investment Hedge Reserve and the Currency
translation reserve, which were equal and opposite were reclassified from equity (OCI) to profit or loss (see Note 37 “Tax effects
relating to other comprehensive income / (expense) for the period”).
NOTE 21 Loans and advances to customers
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Loans and advances to customers at amortised cost
Mortgage loans
7,906
8,342
7,608
8,075
Consumer loans
1,633
1,648
1,012
1,035
Credit cards
459
437
407
384
Small business lending
1,508
1,457
1,344
1,342
Retail lending
11,506
11,884
10,371
10,836
Corporate and public sector lending
25,049
19,863
24,305
19,252
Gross carrying amount of loans and advances to customers at amortised cost
36,555
31,747
34,676
30,088
ECL allowance on loans and advances to customers at amortised cost
(1,493)
(1,655)
(1,393)
(1,543)
Net carrying amount of loans and advances to customers at amortised cost
35,062
30,092
33,283
28,545
Loans and advances to customers mandatorily measured at FVTPL
499
347
499
341
Total Loans and advances to customers
35,561
30,439
33,782
28,886
As at 31 December 2022, the gross carrying amount of loans and advances to customers at amortised cost in corporate and public sector
lending includes the Frontier senior notes of €2,795 million (31 December 2021: €3,145 million) and a short-term reverse repo of €3,200
Notes to the Financial Statements
Group and Bank
298
million (31 December 2021: NIL) The increase of loans and advances to customers mandatorily measured at FVTPL is mainly attributed to
additions during 2022 and is included in the Reconciliation of fair value measurements in Level 3 in Note 4.7 “Fair values of financial assets
and liabilities”.
Loans and advances to customers at amortised cost and mandatorily measured at FVTPL | Group
As at 31 December 2022
Stage 1
12-month ECL
Stage 2
Lifetime ECL
Credit impaired
Lifetime ECL
Total
Individually
assessed
Collectively
assessed
Loans and advances to customers at amortised cost
Mortgage loans
Gross carrying amount
5,010
2,467
-
429
7,906
ECL allowance
(26)
(98)
-
(148)
(272)
Net carrying amount
4,984
2,369
-
281
7,634
Collateral held for financial assets
4,821
2,359
-
382
7,562
Consumer loans
Gross carrying amount
1,203
281
-
149
1,633
ECL allowance
(23)
(30)
-
(101)
(154)
Net carrying amount
1,180
251
-
48
1,479
Collateral held for financial assets
172
51
-
11
234
Credit Cards
Gross carrying amount
409
17
-
33
459
ECL allowance
(8)
(2)
-
(31)
(41)
Net carrying amount
401
15
-
2
418
Small business lending
Gross carrying amount
679
629
-
200
1,508
ECL allowance
(14)
(70)
-
(118)
(202)
Net carrying amount
665
559
-
82
1,306
Collateral held for financial assets
456
450
-
163
1,069
Corporate lending
(1)
Gross carrying amount
22,307
1,153
735
210
24,405
ECL allowance
(134)
(91)
(459)
(118)
(802)
Net carrying amount
22,173
1,062
276
92
23,603
Collateral held for financial assets
10,502
767
480
132
11,881
Public sector lending
Gross carrying amount
581
49
12
2
644
ECL allowance
(7)
(3)
(12)
-
(22)
Net carrying amount
574
46
-
2
622
Collateral held for financial assets
107
48
-
2
157
Total loans and advances to customers at amortised cost
Gross carrying amount
30,189
4,596
747
1,023
36,555
ECL allowance
(212)
(294)
(471)
(516)
(1,493)
Net carrying amount of loans and advances to customers at amortised cost
29,977
4,302
276
507
35,062
Collateral held for financial assets
16,058
3,675
480
690
20,903
Loans and advances to customers mandatorily measured at FVTPL
499
Total loans and advances to customers
35,561
Notes to the Financial Statements
Group and Bank
299
(1)
Stage 1 and Credit impaired mortgage exposures include mortgage loans of €393 million and €1 million, respectively, guaranteed by the Hellenic Republic.
For the purposes of assessing the NPE classification for the specific mortgage guaranteed exposures, the Bank equalizes the guarantor, i.e. the Greek State
with the obligor. In substance, for these specific exposures the Greek State guarantee is considered obligor substitution rather than credit enhancement
means. Thus, the specific exposures are classified as Stage 1 unless specific circumstances exist.
Credit impaired SBL exposures include SBL loans of €57 million, partially guaranteed by the Hellenic Republic.
Stage 1 corporate exposures include corporate loans of €11 million partially guaranteed by the Hellenic Republic, excluding state guaranteed loans with the
participation of Hellenic Development Bank following COVID-19 support measures. Stage 2 and Credit impaired corporate exposures include corporate
loans of €1 million and €137 million, respectively, partially guaranteed by the Hellenic Republic.
As at 31 December 2021
Stage 1
12-month ECL
Stage 2
Lifetime ECL
Credit impaired
Lifetime ECL
Total
Individually
assessed
Collectively
assessed
Loans and advances to customers at amortised cost
Mortgage loans
Gross carrying amount
5,031
2,773
-
538
8,342
ECL allowance
(30)
(81)
-
(184)
(295)
Net carrying amount
5,001
2,692
354
8,047
Collateral held for financial assets
4,779
2,594
-
456
7,829
Consumer loans
Gross carrying amount
1,254
233
-
161
1,648
ECL allowance
(21)
(32)
-
(111)
(164)
Net carrying amount
1,233
201
50
1,484
Collateral held for financial assets
191
68
-
42
301
Credit Cards
Gross carrying amount
386
29
-
22
437
ECL allowance
(5)
(1)
-
(22)
(28)
Net carrying amount
381
28
-
409
Small business lending
Gross carrying amount
573
664
-
220
1,457
ECL allowance
(10)
(92)
-
(160)
(262)
Net carrying amount
563
572
60
1,195
Collateral held for financial assets
345
456
-
186
987
Corporate lending
(1)
Gross carrying amount
17,052
1,036
1,013
228
19,329
ECL allowance
(132)
(65)
(615)
(72)
(884)
Net carrying amount
16,920
971
398
156
18,445
Collateral held for financial assets
10,311
731
583
161
11,786
Public sector lending
Gross carrying amount
491
12
30
1
534
ECL allowance
(6)
(1)
(15)
-
(22)
Net carrying amount
485
11
15
1
512
Collateral held for financial assets
132
10
16
-
158
Total loans and advances to customers at amortised cost
Gross carrying amount
24,787
4,747
1,043
1,170
31,747
ECL allowance
(204)
(272)
(630)
(549)
(1,655)
Net carrying amount of loans and advances to customers at amortised cost
24,583
4,475
413
621
30,092
Collateral held for financial assets
15,758
3,859
599
845
21,061
Loans and advances to customers mandatorily measured at FVTPL
347
Notes to the Financial Statements
Group and Bank
300
Total loans and advances to customers
30,439
(1)
Stage 1 and Credit impaired mortgage exposures include mortgage loans of €490 million and €6 million, respectively, guaranteed by the Hellenic Republic.
For the purposes of assessing the NPE classification for the specific mortgage guaranteed exposures, the Bank equalizes the guarantor, i.e. the Greek State
with the obligor. In substance, for these specific exposures the Greek State guarantee is considered obligor substitution rather than credit enhancement
means. Thus, the specific exposures are classified as Stage 1 unless specific circumstances exist.
Credit impaired SBL exposures include SBL loans of €71 million, partially guaranteed by the Hellenic Republic.
Stage 1 corporate exposures include corporate loans of €15 million partially guaranteed by the Hellenic Republic, excluding state guaranteed loans with the
participation of Hellenic Development Bank following COVID-19 support measures. Stage 2 and Credit impaired corporate exposures include corporate
loans of €1 million and €122 million, respectively, partially guaranteed by the Hellenic Republic.
Loans and advances to customers at amortised cost and mandatorily measured at FVTPL | Bank
Stage 1
12-month ECL
Stage 2
Lifetime ECL
Credit impaired
Lifetime ECL
Total
As at 31 December 2022
Individually
assessed
Collectively
assessed
Loans and advances to customers at amortised cost
Mortgage loans
Gross carrying amount
4,848
2,341
-
419
7,608
ECL allowance
(26)
(98)
-
(143)
(267)
Net carrying amount
4,822
2,243
-
276
7,341
Collateral held for financial assets
4,662
2,236
-
372
7,270
Consumer loans
Gross carrying amount
761
140
-
111
1,012
ECL allowance
(20)
(22)
-
(82)
(124)
Net carrying amount
741
118
-
29
888
Collateral held for financial assets
109
33
-
8
150
Credit Cards
Gross carrying amount
367
10
-
30
407
ECL allowance
(8)
(1)
-
(30)
(39)
Net carrying amount
359
9
-
-
368
Small business lending
Gross carrying amount
556
599
-
189
1,344
ECL allowance
(14)
(69)
-
(114)
(197)
Net carrying amount
542
530
-
75
1,147
Collateral held for financial assets
355
425
-
157
937
Corporate lending
(1)
Gross carrying amount
22,029
829
643
186
23,687
ECL allowance
(140)
(83)
(412)
(109)
(744)
Net carrying amount
21,889
746
231
77
22,943
Collateral held for financial assets
9,098
480
429
118
10,125
Public sector lending
Gross carrying amount
580
24
12
2
618
ECL allowance
(7)
(3)
(12)
-
(22)
Net carrying amount
573
21
-
2
596
Collateral held for financial assets
106
22
-
2
130
Total loans and advances to customers at amortised cost
Gross carrying amount
29,141
3,943
655
937
34,676
ECL allowance
(215)
(276)
(424)
(478)
(1,393)
Net carrying amount of loans and advances to customers at amortised cost
28,926
3,667
231
459
33,283
Notes to the Financial Statements
Group and Bank
301
Collateral held for financial assets
14,330
3,196
429
657
18,612
Loans and advances to customers mandatorily measured at FVTPL
499
Total loans and advances to customers
33,782
(1)
Stage 1 and Credit impaired mortgage exposures include mortgage loans of €393 million and €1 million, respectively, guaranteed by the Hellenic Republic.
For the purposes of assessing the NPE classification for the specific mortgage guaranteed exposures, the Bank equalizes the guarantor, i.e. the Greek State
with the obligor. In substance, for these specific exposures the Greek State guarantee is considered obligor substitution rather than credit enhancement
means. Thus, the specific exposures are classified as Stage 1 unless specific circumstances exist.
Credit impaired SBL exposures include SBL loans of €57 million, partially guaranteed by the Hellenic Republic.
Stage 1 corporate exposures include corporate loans of €11 million partially guaranteed by the Hellenic Republic, excluding state guaranteed loans with the
participation of Hellenic Development Bank following COVID-19 support measures. Stage 2 and Credit impaired corporate exposures include corporate
loans of €1 million and €137 million, respectively, partially guaranteed by the Hellenic Republic.
Stage 1
12-month ECL
Stage 2
Lifetime ECL
Credit impaired
Lifetime ECL
Total
As at 31 December 2021
Individually
assessed
Collectively
assessed
Loans and advances to customers at amortised cost
Mortgage loans
Gross carrying amount
4,869
2,686
-
520
8,075
ECL allowance
(30)
(80)
-
(177)
(287)
Net carrying amount
4,839
2,606
-
343
7,788
Collateral held for financial assets
4,642
2,513
-
452
7,607
Consumer loans
Gross carrying amount
723
187
-
125
1,035
ECL allowance
(16)
(29)
-
(92)
(137)
Net carrying amount
707
158
-
33
898
Collateral held for financial assets
107
42
-
26
175
Credit Cards
Gross carrying amount
348
15
-
21
384
ECL allowance
(5)
(1)
-
(21)
(27)
Net carrying amount
343
14
-
-
357
Small business lending
Gross carrying amount
497
628
-
217
1,342
ECL allowance
(9)
(92)
-
(158)
(259)
Net carrying amount
488
536
-
59
1,083
Collateral held for financial assets
282
427
-
184
893
Corporate lending
(1)
Gross carrying amount
16,907
725
900
214
18,746
ECL allowance
(139)
(58)
(544)
(70)
(811)
Net carrying amount
16,768
667
356
144
17,935
Collateral held for financial assets
9,100
491
547
132
10,270
Public sector lending
Gross carrying amount
466
9
30
1
506
ECL allowance
(6)
(1)
(15)
-
(22)
Net carrying amount
460
8
15
1
484
Collateral held for financial assets
108
7
16
-
131
Total loans and advances to customers at amortised cost
Gross carrying amount
23,810
4,250
930
1,098
30,088
ECL allowance
(205)
(261)
(559)
(518)
(1,543)
Notes to the Financial Statements
Group and Bank
302
Net carrying amount of loans and advances to customers at amortised cost
23,605
3,989
371
580
28,545
Collateral held for financial assets
14,239
3,480
563
794
19,076
Loans and advances to customers mandatorily measured at FVTPL
341
Total loans and advances to customers
28,886
(1)
Stage 1 and Credit impaired mortgage exposures include mortgage loans of €490 million and €6 million, respectively, guaranteed by the Hellenic Republic.
For the purposes of assessing the NPE classification for the specific mortgage guaranteed exposures, the Bank equalizes the guarantor, i.e. the Greek State
with the obligor. In substance, for these specific exposures the Greek State guarantee is considered obligor substitution rather than credit enhancement
means. Thus, the specific exposures are classified as Stage 1 unless specific circumstances exist.
Credit impaired SBL exposures include SBL loans of €71 million, partially guaranteed by the Hellenic Republic.
Stage 1 corporate exposures include corporate loans of €15 million partially guaranteed by the Hellenic Republic, excluding state guaranteed loans with the
participation of Hellenic Development Bank following COVID-19 support measures. Stage 2 and Credit impaired corporate exposures include corporate
loans of €1 million and €122 million, respectively, partially guaranteed by the Hellenic Republic.
Movement of the Gross carrying amount of loans and advances to customers at amortised cost | Group
Retail lending
Corporate and Public sector lending
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Gross carrying amount 1.1.2022
7,244
3,699
941
11,884
17,543
1,048
1,272
19,863
24,787
4,747
2,213
31,747
735
(720)
(15)
-
348
(325)
(23)
-
1,083
(1,045)
(38)
-
(689)
911
(222)
-
(531)
696
(165)
-
(1,220)
1,607
(387)
-
(77)
(259)
336
-
(28)
(33)
61
-
(105)
(292)
397
-
New financial assets originated or purchased
(1)
1,109
110
-
1,219
9,371
116
-
9,487
10,480
226
-
10,706
Repayments and other changes
(1,027)
(352)
(41)
(1,420)
(3,958)
(303)
(41)
(4,302)
(4,985)
(655)
(82)
(5,722)
Changes due to modifications that did not result in
derecognition
-
-
(1)
(1)
-
-
-
-
-
-
(1)
(1)
Write-offs
-
-
(94)
(94)
-
-
(124)
(124)
-
-
(218)
(218)
Foreign exchange differences
6
5
2
13
143
3
4
150
149
8
6
163
Reclassified as held for sale
-
-
(95)
(95)
-
-
(25)
(25)
-
-
(120)
(120)
Gross carrying amount 31.12.2022
7,301
3,394
811
11,506
22,888
1,202
959
25,049
30,189
4,596
1,770
36,555
ECL allowance
(71)
(200)
(398)
(669)
(141)
(94)
(589)
(824)
(212)
(294)
(987)
(1,493)
Net carrying amount 31.12.2022
7,230
3,194
413
10,837
22,747
1,108
370
24,225
29,977
4,302
783
35,062
(1)
Retail lending
Corporate and Public sector lending
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Gross carrying amount 1.1.2021
7,191
3,599
2,341
13,131
13,480
984
2,073
16,537
20,671
4,583
4,414
29,668
800
(719)
(81)
-
258
(250)
(8)
-
1,058
(969)
(89)
-
(528)
1,205
(677)
-
(515)
593
(78)
-
(1,043)
1,798
(755)
-
(99)
(230)
329
-
(61)
(119)
180
-
(160)
(349)
509
-
New financial assets originated or purchased
(2)
882
99
-
981
8,008
118
-
8,126
8,890
217
-
9,107
Derecognition of financial assets
-
-
-
-
-
-
(36)
(36)
-
-
(36)
(36)
Repayments and other changes
(1,005)
(254)
(7)
(1,266)
(3,768)
(275)
(118)
(4,161)
(4,773)
(529)
(125)
(5,427)
Changes due to modifications that did not result in
derecognition
-
-
(32)
(32)
-
-
(2)
(2)
-
-
(34)
(34)
Write-offs
-
(4)
(195)
(199)
-
-
(271)
(271)
-
(4)
(466)
(470)
Foreign exchange differences
5
4
2
11
152
7
9
168
157
11
11
179
Reclassified as held for sale
(2)
(1)
(739)
(742)
(11)
(10)
(477)
(498)
(13)
(11)
(1,216)
(1,240)
Gross carrying amount 31.12.2021
7,244
3,699
941
11,884
17,543
1,048
1,272
19,863
24,787
4,747
2,213
31,747
ECL allowance
(66)
(206)
(477)
(749)
(138)
(66)
(702)
(906)
(204)
(272)
(1,179)
(1,655)
Net carrying amount 31.12.2021
7,178
3,493
464
11,135
17,405
982
570
18,957
24,583
4,475
1,034
30,092
(2)
Notes to the Financial Statements
Group and Bank
303
Movement of the Gross carrying amount of loans and advances to customers at amortised cost | Bank
Retail lending
Corporate and Public sector lending
Total loans and advances to customers
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Gross Balance 1.1.2022
6,437
3,516
883
10,836
17,373
734
1,145
19,252
23,810
4,250
2,028
30,088
708
(693)
(15)
-
287
(265)
(22)
-
995
(958)
(37)
-
(516)
736
(220)
-
(406)
570
(164)
-
(922)
1,306
(384)
-
(67)
(251)
318
-
(23)
(21)
44
-
(90)
(272)
362
-
New financial assets originated or purchased
(1)
757
74
-
831
8,979
58
-
9,037
9,736
132
-
9,868
Repayments and other changes
(793)
(297)
(41)
(1,131)
(3,743)
(226)
(64)
(4,033)
(4,536)
(523)
(105)
(5,164)
Changes due to modifications that did not result in
derecognition
-
-
(1)
(1)
-
-
-
-
-
-
(1)
(1)
Write-offs
-
-
(82)
(82)
-
-
(83)
(83)
-
-
(165)
(165)
Foreign exchange differences
6
5
2
13
142
3
4
149
148
8
6
162
Reclassified as held for sale
-
-
(95)
(95)
-
-
(17)
(17)
-
-
(112)
(112)
Gross carrying amount 31.12.2022
6,532
3,090
749
10,371
22,609
853
843
24,305
29,141
3,943
1,592
34,676
ECL allowance
(68)
(190)
(369)
(627)
(147)
(86)
(533)
(766)
(215)
(276)
(902)
(1,393)
Net carrying amount 31.12.2022
6,464
2,900
380
9,744
22,462
767
310
23,539
28,926
3,667
690
33,283
(1)
Retail lending
Corporate and Public sector lending
Total loans and advances to customers
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Gross Balance 1.1.2021
6,440
3,405
2,246
12,091
13,295
691
1,858
15,844
19,735
4,096
4,104
27,935
753
(673)
(80)
-
247
(239)
(8)
-
1,000
(912)
(88)
-
(472)
1,147
(675)
-
(453)
528
(75)
-
(925)
1,675
(750)
-
(92)
(220)
312
-
(59)
(108)
167
-
(151)
(328)
479
-
New financial assets originated or purchased
(2)
544
73
-
617
7,636
87
-
7,723
8,180
160
-
8,340
Derecognition of financial assets
-
-
-
-
-
-
(36)
(36)
-
-
(36)
(36)
Repayments and other changes
(741)
(216)
(6)
(963)
(3,445)
(232)
(91)
(3,768)
(4,186)
(448)
(97)
(4,731)
Changes due to modifications that did not result in
derecognition
-
-
(32)
(32)
-
-
(2)
(2)
-
-
(34)
(34)
Write-offs
-
(4)
(175)
(179)
-
-
(269)
(269)
-
(4)
(444)
(448)
Foreign exchange differences
5
4
1
10
152
7
9
168
157
11
10
178
Reclassified as held for sale
-
-
(708)
(708)
-
-
(408)
(408)
-
-
(1,116)
(1,116)
Gross Balance 31.12.2021
6,437
3,516
883
10,836
17,373
734
1,145
19,252
23,810
4,250
2,028
30,088
ECL allowance
(60)
(202)
(448)
(710)
(145)
(59)
(629)
(833)
(205)
(261)
(1,077)
(1,543)
Net carrying amount 31.12.2021
6,377
3,314
435
10,126
17,228
675
516
18,419
23,605
3,989
951
28,545
(2)
The senior notes of €3,145 million relating to the Frontier securitization are included in Stage 1 of Corporate and Public sector lending
Movement of the ECL allowance on loans and advances to customers at amortised cost | Group
Retail lending
Corporate and public sector lending
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
ECL allowance 1.1.2022
66
206
477
749
138
66
702
906
204
272
1,179
1,655
Transfer to stage 1 (from 2 or 3)
46
(35)
(11)
-
19
(14)
(5)
-
65
(49)
(16)
-
Transfer to stage 2 (from 1 or 3)
(6)
69
(63)
-
(5)
73
(68)
-
(11)
142
(131)
-
Transfer to stage 3 (from 1 or 2)
(1)
(24)
25
-
-
(3)
3
-
(1)
(27)
28
-
Net remeasurement of loss allowance (a)
(42)
(26)
151
83
(62)
(30)
150
58
(104)
(56)
301
141
Impairment losses on new assets (b)
10
8
-
18
57
2
-
59
67
10
-
77
Impairment losses on loans (a+b) (Note 13)
(32)
(18)
151
101
(5)
(28)
150
117
(37)
(46)
301
218
Modification impact on ECL
-
-
(2)
(2)
-
-
-
-
-
-
(2)
(2)
Write-offs
-
-
(94)
(94)
-
-
(124)
(124)
-
-
(218)
(218)
Foreign exchange differences and other movements
(2)
2
(67)
(67)
(6)
-
(19)
(25)
(8)
2
(86)
(92)
Change in the present value of the ECL allowance
-
-
(10)
(10)
-
-
(2)
(2)
-
-
(12)
(12)
Reclassified as Held For Sale
-
-
(8)
(8)
-
-
(48)
(48)
-
-
(56)
(56)
ECL allowance 31.12.2022
71
200
398
669
141
94
589
824
212
294
987
1,493
Notes to the Financial Statements
Group and Bank
304
Retail lending
Corporate and public sector lending
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
ECL allowance 1.1.2021
64
171
1,051
1,286
110
69
1,255
1,434
174
240
2,306
2,720
Transfer to stage 1 (from 2 or 3)
53
(23)
(30)
-
20
(18)
(2)
-
73
(41)
(32)
-
Transfer to stage 2 (from 1 or 3)
(6)
176
(170)
-
(7)
32
(25)
-
(13)
208
(195)
-
Transfer to stage 3 (from 1 or 2)
(1)
(18)
19
-
(1)
(15)
16
-
(2)
(33)
35
-
Net remeasurement of loss allowance (a)
(53)
(105)
112
(46)
(31)
6
61
36
(84)
(99)
173
(10)
Impairment losses on new assets (b)
8
7
-
15
45
4
-
49
53
11
-
64
Impairment losses on loans (a+b) (Note 13)
(45)
(98)
112
(31)
14
10
61
85
(31)
(88)
173
54
Derecognition of loans
-
-
199
199
-
-
(15)
(15)
-
-
184
184
Modification impact on ECL
-
-
(14)
(14)
-
-
(2)
(2)
-
-
(16)
(16)
Write-offs
-
(4)
(195)
(199)
-
-
(271)
(271)
-
(4)
(466)
(470)
Foreign exchange differences and other movements
1
2
(17)
(14)
2
(8)
(4)
(10)
3
(6)
(21)
(24)
Change in the present value of the ECL allowance
-
-
(47)
(47)
-
-
(6)
(6)
-
-
(53)
(53)
Reclassified as Held For Sale
-
-
(431)
(431)
-
(4)
(305)
(309)
-
(4)
(736)
(740)
ECL allowance 31.12.2021
66
206
477
749
138
66
702
906
204
272
1,179
1,655
Movement of the ECL allowance on loans and advances to customers at amortised cost | Bank
Retail lending
Corporate and public sector lending
As at 31 December 2022
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
ECL allowance 1.1.2022
60
202
448
710
145
59
629
833
205
261
1,077
1,543
Transfer to stage 1 (from 2 or 3)
44
(34)
(10)
-
17
(12)
(5)
-
61
(46)
(15)
-
Transfer to stage 2 (from 1 or 3)
(4)
65
(61)
-
(4)
72
(68)
-
(8)
137
(129)
-
Transfer to stage 3 (from 1 or 2)
-
(22)
22
-
(2)
(2)
4
-
(2)
(24)
26
-
Net remeasurement of loss allowance (a)
(39)
(26)
144
79
(58)
(33)
128
37
(97)
(59)
272
116
Impairment losses on new assets (b)
7
6
-
13
55
2
-
57
62
8
-
70
Impairment losses on loans (a+b) (Note 13)
(32)
(20)
144
92
(3)
(31)
128
94
(35)
(51)
272
186
Modification impact on ECL
-
-
(2)
(2)
-
-
-
-
-
-
(2)
(2)
Write-offs
-
-
(82)
(82)
-
-
(83)
(83)
-
-
(165)
(165)
Foreign exchange differences and other movements
-
(1)
(69)
(70)
(6)
-
(25)
(31)
(6)
(1)
(94)
(101)
Change in the present value of the ECL allowance
-
-
(10)
(10)
-
-
(2)
(2)
-
-
(12)
(12)
Reclassified as Held For Sale
-
-
(11)
(11)
-
-
(45)
(45)
-
-
(56)
(56)
ECL allowance 31.12.2022
68
190
369
627
147
86
533
766
215
276
902
1,393
Retail lending
Corporate and public sector lending
As at 31 December 2021
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
Stage 1
Stage 2
Credit
impaired
Total
ECL allowance 1.1.2021
57
162
1,009
1,228
112
58
1,162
1,332
169
220
2,171
2,560
Transfer to stage 1 (from 2 or 3)
48
(18)
(30)
-
19
(17)
(2)
-
67
(35)
(32)
-
Transfer to stage 2 (from 1 or 3)
(4)
174
(170)
-
(5)
30
(25)
-
(9)
204
(195)
-
Transfer to stage 3 (from 1 or 2)
(1)
(13)
14
-
(1)
(13)
14
-
(2)
(26)
28
-
Net remeasurement of loss allowance (a)
(46)
(104)
92
(58)
(25)
(1)
56
30
(71)
(105)
148
(28)
Impairment losses on new assets (b)
6
5
-
11
43
3
-
46
49
8
-
57
Impairment losses on loans (a+b) (Note 13)
(40)
(99)
92
(47)
18
2
56
76
(22)
(97)
148
29
Derecognition of loans
-
-
199
199
-
-
(15)
(15)
-
-
184
184
Modification impact on ECL
-
-
(14)
(14)
-
-
(2)
(2)
-
-
(16)
(16)
Write-offs
-
(4)
(175)
(179)
-
-
(269)
(269)
-
(4)
(444)
(448)
Foreign exchange differences and other movements
-
-
(18)
(18)
2
(1)
(10)
(9)
2
(1)
(28)
(27)
Change in the present value of the ECL allowance
-
-
(47)
(47)
-
-
(6)
(6)
-
-
(53)
(53)
Reclassified as Held For Sale
-
-
(412)
(412)
-
-
(274)
(274)
-
-
(686)
(686)
ECL allowance 31.12.2021
60
202
448
710
145
59
629
833
205
261
1,077
1,543
Total impairment charge for ECL on loans and advances to customers measured at amortised cost for the Group and the Bank is disclosed in
Note 13 “Credit provisions and other impairment charges”, including the net modification impact and the impairment charge for ECL on credit
related commitments. The ECL allowance on credit related commitments is disclosed in Note 34 “Other liabilities”.
Notes to the Financial Statements
Group and Bank
305
Covered bonds
Loans and advances to customers at amortized cost include loans used as collateral in the covered bonds program, as follows:
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Mortgage loans
3,350
3,597
3,350
3,597
3,217
3,485
3,217
3,485
Under the covered bond Programs I and II, the Bank has the following covered bond series in issue as at 31 December 2022:
Program
Series number
Type of
collateral
Issue date
Maturity date
Nominal
amount in
million €
Interest rate
Program I
(1)
Series 6
Residential
mortgage loans
5 October 2016
5 April 2023
1,500
Paid quarterly at rate of
three month Euribor plus a
margin of 30 bps
Program II
(1)
Series 8
Residential
mortgage loans
30 July 2018
28 July 2023
200
Paid annually at a fixed rate
1.85%
(1)
On 25 February 2021, the Bank amended the Final Terms by extending the maturity of the Series 6; from 5 April 2021 to 5 April 2023 and the
interest margin reduced from 50 bps to 30 bps with effective date 5 April 2021, onwards.
The Series 6 and the Series 8 issue have not been sold to institutional investors, are held by the Bank and thus are not presented within “Debt
securities in issue” (see Note 32 "Debt securities in issue").
Information regarding covered bonds can be found at the Bank’s site (www.nbg.gr) under “Investor Relations\ Outstanding Debt Issuances”.
Loans and advances to customers at amortised cost include finance lease receivables:
Group
31.12.2022
31.12.2021
Maturity
Not later than 1 year
169
175
Later than 1 year but not later than 5 years
337
272
Later than 5 years
436
286
942
733
Unearned future finance income on finance leases
(183)
(117)
Net investment in finance leases
759
616
ECL allowance on finance lease receivables as at 31 December 2022 amounts to €9 million (31 December 2021: €27 million).
The net investment in finance leases may be analysed as follows:
Group
31.12.2022
31.12.2021
Maturity
Not later than 1 year
134
151
Later than 1 year but not later than 5 years
248
208
Later than 5 years
377
257
Net investment in finance leases
759
616
NOTE 22 Investment securities
Group
Bank
Notes to the Financial Statements
Group and Bank
306
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Investment securities measured at fair value though other comprehensive income:
Debt securities
Greek government bonds
758
299
758
299
Treasury bills and other eligible bills
768
712
731
649
Debt securities issued by other governments and public sector entities
942
1,460
942
1,460
Corporate bonds incorporated in Greece
186
198
186
198
Corporate bonds incorporated outside Greece
11
11
Debt securities issued by Greek financial institutions
77
69
77
69
Total debt securities
2,731
2,749
2,694
2,686
Equity securities
101
86
91
77
Total investment securities measured at fair value though other comprehensive
income
2,832
2,835
2,785
2,763
Investment securities measured at amortised cost:
Greek government bonds
5,407
7,366
5,407
7,366
Debt securities issued by other government and public sector entities
4,300
4,550
4,063
4,247
Corporate bonds incorporated in Greece
27
27
27
27
Corporate bonds incorporated outside Greece
28
28
Debt securities issued by Greek financial institutions
274
159
274
149
Debt securities issued by foreign financial institutions
322
321
Total investment securities measured at amortised cost
10,358
12,102
10,120
11,789
Total investment securities
13,190
14,937
12,905
14,552
On 13 January 2021, the Greek PDMA and the Bank carried out a Greek Government Bond exchange. The Bank exchanged €1.0 billion
nominal value, carrying amount of €1.3 billion and settlement amount of €1.5 billion of the New Greek Government Bond maturing
at 20 March 2050, with a series of other GGBs with shorter maturities of a total nominal value of €2.8 billion and a settlement
amount of €3.6 billion (as per relative Ministry Decree). The exchange was executed at market terms and the difference between the
settlement amounts for the bond exchanged and the bonds received was settled in cash. The transaction was settled on 20 January
2021. The Group and the Bank realized a gain of €209 million.
Furthermore, on 15 December 2021, the Greek PDMA and the Bank carried out another Greek Government Bond exchange. In particular
the Bank exchanged €128 million nominal value, €173 million carrying value and settlement amount of €171 million of the PSI bonds,
with a series of other GGBs of a total nominal value €125million, and a settlement amount €171 million. The transaction was
executed at market terms and was treated as a modification of the financial instruments exchanged, resulting in a modification loss
of €2 million.
The movement of investment securities may be summarised as follows:
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Investment securities measured at fair value though other comprehensive income:
Balance at 1 January
2,835
2,888
2,763
2,814
Additions within the period
5,610
9,397
5,413
9,008
Disposals (sales and redemptions) within the period
(5,021)
(9,389)
(4,800)
(8,997)
Gains / (losses) from changes in fair value
(572)
(32)
(573)
(33)
Amortisation of premiums / discounts
(20)
(29)
(18)
(29)
Balance at 31 December
2,832
2,835
2,785
2,763
Investment securities measured at amortised cost:
Balance at 1 January
12,102
12,339
11,789
11,907
Additions within the period
1,973
4,172
1,973
4,076
Disposals (sales and redemptions) within the period
(3,663)
(4,357)
(3,588)
(4,147)
Impairment charge
(2)
15
(3)
17
Notes to the Financial Statements
Group and Bank
307
Amortisation of premiums / discounts
(55)
(70)
(54)
(67)
Foreign exchange differences
3
3
3
3
Balance at 31 December
10,358
12,102
10,120
11,789
NOTE 23 Investment property
Group
Land
Buildings
Total
Cost
At 1 January 2021
52
110
162
Transfers
(2)
(3)
(5)
Transfers to Held for Sale
(12)
(34)
(46)
Disposals and write offs
(3)
(6)
(9)
At 31 December 2021
35
67
102
Accumulated depreciation & impairment
At 1 January 2021
(10)
(27)
(37)
Transfers
-
2
2
Transfers to Held for Sale
3
6
9
Disposals and write offs
3
8
11
Depreciation charge
-
(2)
(2)
Impairment charge
(2)
(3)
(5)
At 31 December 2021
(6)
(16)
(22)
Net book amount at 31 December 2021
29
51
80
Cost
At 1 January 2022
35
67
102
Transfers to Held for Sale
(1)
(8)
(9)
Disposals and write offs
(1)
(2)
(3)
At 31 December 2022
33
57
90
Accumulated depreciation & impairment
At 1 January 2022
(6)
(16)
(22)
Transfers to Held for Sale
-
1
1
Disposals and write offs
-
1
1
Depreciation charge
-
(1)
(1)
Impairment charge
1
1
2
At 31 December 2022
(5)
(14)
(19)
Net book amount at 31 December 2022
28
43
71
The fair value of investment property as at 31 December 2022 exceeded the carrying amount and amounted to €91 million (31 December
2021: €102 million). Rental income for the year ended 31 December 2022 amounts to €3 million (2021: €3 million).
NOTE 24 Equity method investments
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
At 1 January
18
22
17
20
Additions/ transfers
155
-
155
-
Share of profit/(loss) of equity method investments
2
-
-
-
Impairment charge
-
(4)
-
(3)
Notes to the Financial Statements
Group and Bank
308
At 31 December
175
18
172
17
Additions / transfers, includes the 49.00% of NBG Pay S.M.S.A., following the sale of 51.00% of the share capital of NBG PAY S.M.S.A. to
EVO Payments Inc (see NOTE 43 “Acquisitions, disposals and other capital transactions”).
The Group’s and Bank’s equity method investments are as follows:
Group
Bank
Country
Tax years unaudited
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Social Securities Funds Management S.A.
Greece
2017-2022
20.00%
20.00%
20.00%
20.00%
Larco S.A.
Greece
2012-2022
33.36%
33.36%
33.36%
33.36%
Eviop Tempo S.A.
Greece
2017-2022
21.21%
21.21%
21.21%
21.21%
Teiresias S.A.
Greece
2012-2022
39.93%
39.93%
39.93%
39.93%
Planet S.A.
Greece
2017-2022
36.99%
36.99%
36.99%
36.99%
Pyrrichos Real Estate S.A.
Greece
2012-2022
21.83%
21.83%
21.83%
21.83%
Sato S.A.
Greece
2017-2022
23.74%
23.74%
23.74%
23.74%
Olganos S.A.
Greece
2012-2022
33.60%
33.60%
33.60%
33.60%
Perigenis Business Properties S.A.
Greece
2020-2022
28.50%
28.50%
28.50%
28.50%
NBG Pay S.M.S.A.
Greece
2022
49.00%
-
49.00%
-
Summarised financial information in respect of the Group's equity method investments is set out below based on the most recent
financial information available:
31.12.2022
31.12.2021
Total assets
480
88
Total liabilities
94
22
Net assets
386
66
Group's share of net assets of equity method investments
175
18
Total revenue
35
50
Total profit for the year
5
1
Group's share of profit of equity method investments
2
-
NOTE 25 Software
Group
Bank
Software
Total
Software
Total
Cost
At 1 January 2021
997
997
940
940
Reclassified as held for sale
(3)
(3)
-
-
Additions
127
127
126
126
At 31 December 2021
1,121
1,121
1,066
1,066
Accumulated amortisation & impairment
At 1 January 2021
(715)
(715)
(662)
(662)
Reclassified as held for sale
3
3
-
-
Amortization charge
(58)
(58)
(55)
(55)
Impairment charge
2
2
(4)
(4)
At 31 December 2021
(768)
(768)
(721)
(721)
Net book amount at 31 December 2021
353
353
345
345
Notes to the Financial Statements
Group and Bank
309
Cost
At 1 January 2022
1,121
1,121
1,066
1,066
Transfers
1
1
-
Additions
147
147
146
146
Disposals and write offs
(6)
(6)
(5)
(5)
At 31 December 2022
1,263
1,263
1,207
1,207
Accumulated amortisation & impairment
At 1 January 2022
(768)
(768)
(721)
(721)
Transfers
1
1
1
1
Disposals and write offs
4
4
4
4
Amortisation charge
(68)
(68)
(66)
(66)
Impairment charge
(1)
(1)
(1)
(1)
At 31 December 2022
(832)
(832)
(783)
(783)
Net book amount at 31 December 2022
431
431
424
424
NOTE 26 Property and equipment
Group
Land
Buildings
Vehicles &
equipment
Assets under
construction
RoU Asset
Leasehold
improvements
Total
Cost
At 1 January 2021
391
190
785
1
1,307
219
2,893
Transfers
(10)
(14)
-
-
-
-
(24)
Additions
1
4
23
1
181
16
226
Modifications / Remeasurements /
Termination
-
-
-
-
(140)
-
(140)
Disposals and write offs
(1)
(3)
(4)
-
-
(3)
(11)
At 31 December 2021
381
177
804
2
1,348
232
2,944
Accumulated depreciation & impairment
At 1 January 2021
(160)
(94)
(696)
-
(130)
(149)
(1,229)
Transfers
2
4
-
-
-
-
6
Disposals and write offs
-
2
4
-
-
1
7
Modifications / Remeasurements /
Termination
-
-
-
-
13
-
13
Depreciation charge
-
(3)
(15)
-
(75)
(9)
(102)
Impairment charge
10
1
1
-
4
-
16
At 31 December 2021
(148)
(90)
(706)
-
(188)
(157)
(1,289)
Net book amount at 31 December 2021
233
87
98
2
1,160
75
1,655
Cost
At 1 January 2022
381
177
804
2
1,348
232
2,944
Foreign exchange differences
-
-
(1)
-
-
-
(1)
Transfers
-
1
-
(1)
-
-
-
Additions
1
1
16
11
5
16
50
Modifications / Remeasurements /
Termination
-
-
-
-
(41)
-
(41)
Disposals and write offs
-
-
(24)
-
(2)
(3)
(29)
At 31 December 2022
382
179
795
12
1,310
245
2,923
Accumulated depreciation & impairment
At 1 January 2022
(148)
(90)
(706)
-
(188)
(157)
(1,289)
Disposals and write offs
-
-
14
-
2
4
20
Modifications / Remeasurements /
Termination
-
-
-
-
15
-
15
Depreciation charge
-
(3)
(16)
-
(74)
(9)
(102)
Impairment charge
(2)
-
-
-
-
-
(2)
At 31 December 2022
(150)
(93)
(708)
-
(245)
(162)
(1,358)
Notes to the Financial Statements
Group and Bank
310
Net book amount at 31 December 2022
232
86
87
12
1,065
83
1,565
Bank
Land
Buildings
Vehicles &
equipment
Assets under
construction
Land &
buildings -
RoU Asset
Vehicles -
RoU Asset
Leasehold
improvements
Total
Cost
At 1 January 2021
84
96
711
1
1,045
6
218
2,161
Transfers
(9)
(14)
(23)
Additions
3
22
181
2
16
224
Modifications / Remeasurements /
Termination
-
-
-
-
(102)
(1)
-
(103)
Disposals and write offs
(1)
(3)
(3)
-
(2)
(9)
At 31 December 2021
74
82
730
1
1,124
7
232
2,250
Accumulated depreciation & impairment
At 1 January 2021
(6)
(45)
(627)
-
(118)
(2)
(149)
(947)
Transfers
2
4
-
-
-
-
6
Disposals and write offs
-
2
3
-
-
-
5
Depreciation charge
-
(1)
(13)
-
(62)
(1)
(9)
(86)
Modifications / Remeasurements /
Termination
-
-
-
-
12
-
12
At 31 December 2021
(4)
(40)
(637)
-
(168)
(3)
(158)
(1,010)
Net book amount at 31 December 2021
70
42
93
1
956
4
74
1,240
Cost
At 1 January 2022
74
82
730
1
1,124
7
232
2,250
Foreign exchange differences
-
-
(1)
-
-
-
(1)
Additions
1
1
13
4
2
16
37
Modifications / Remeasurements /
Termination
-
-
-
-
(28)
(1)
-
(29)
Disposals and write offs
(20)
-
(2)
(3)
(25)
At 31 December 2022
75
83
722
1
1,098
8
245
2,232
Accumulated depreciation & impairment
At 1 January 2022
(4)
(40)
(637)
-
(168)
(3)
(158)
(1,010)
Disposals and write offs
-
11
-
2
3
16
Depreciation charge
-
(1)
(15)
-
(63)
(1)
(9)
(89)
Modifications / Remeasurements /
Termination
-
-
-
-
15
-
15
At 31 December 2022
(4)
(41)
(641)
-
(214)
(4)
(164)
(1,068)
Net book amount at 31 December 2022
71
42
81
1
884
4
81
1,164
During 2021 Prodea Investments S.A., the Bank’s main lessor, disposed of certain buildings to a third party, and as a result the Bank, signed
new lease agreements related to these buildings with the new landlord. This transaction resulted in the derecognition of these leases with
Prodea Investments S.A. and the recognition of new leases. The impact of this transaction with respect to the RoU movement amounts to
€139 million and €105 million for the Group and the Bank respectively and is included in Modifications / Remeasurements / Terminations. An
amount of €172 million is included in “Additions” with respect to the new RoU assets for the Group and the Bank. For the effect upon the
lease liability please see Νote 34 “Other Liabilities”.
Notes to the Financial Statements
Group and Bank
311
NOTE 27 Deferred tax assets and liabilities
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Deferred tax assets:
Unamortised PSI losses eligible for DTC
1,743
1,834
1,743
1,834
Property and equipment and intangible assets
1
1
-
-
Loan losses eligible for DTC
361
393
361
393
Unamortized debit differences relating to crystalized loan losses eligible for DTC
1,806
1,889
1,806
1,889
Loan losses created after 30 June 2015 non eligible for DTC
724
790
724
790
Unutilised tax amortization of LLP c/f to 20 years (Greek Law 4172/2013 Art.27)
58
-
58
-
Other differences on loans and advances to customers at amortised cost
-
2
-
-
Tax losses
3
3
-
-
Other temporary differences
9
-
-
-
Deferred tax assets
4,705
4,912
4,692
4,906
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Deferred tax liabilities:
Property and equipment and intangible assets
5
5
-
-
Loans and advances to customers at amortised cost
8
8
-
-
Other temporary differences
3
2
-
-
Deferred tax liabilities
16
15
-
-
Deferred tax charge in the income statement
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
PSI losses eligible for DTC
(92)
(92)
(92)
(92)
Debit differences relating to crystalized loan losses eligible for DTC
(115)
(106)
(115)
(106)
Loan losses created after 30 June 2015 non eligible for DTC
(66)
198
(66)
198
Unutilised tax amortization of LLP c/f for 20 years (Greek Tax Law 4172/2013 Art.27)
58
-
58
-
Other differences on loans and advances to customers at amortised cost
(1)
(1)
-
-
Other temporary differences
6
(1)
(2)
-
Deferred tax charge in the income statement
(210)
(2)
(217)
-
Net deferred tax movement
(210)
(2)
(217)
-
On 23 September 2021, with article 125 of Greek Law 4831 / 2021, an amendment was introduced to article 27 of Greek Law 4172/2013.
According to this amendment the annual amortization / deduction of the debit difference arising from PSI losses is deducted at a
priority over the debit difference arising from realized NPL losses. The amount of annual deduction of the debit difference arising
from realized NPL losses is limited to the amount of the profits determined according to the provisions of the tax law as in force
before the deduction of such debit differences and after the deduction of the debit difference arising from PSI losses. The remaining
amount of annual deduction that has not been offset, is transferred to be utilized in the 20 subsequent tax years, in which there will
be sufficient profit after the deduction of the above debit differences (PSI & NPL losses) that correspond to those years. In the order
of deduction of the transferred (unutilized) amounts, older balances of debit difference have priority over newer balances. If at the
end of the 20-year amortization period, there are balances that have not been offset, these qualify as tax losses which is subject to
the 5-year statutes of limitation.
The Group and the Bank believe that the realization of the recognized DTA of €4,705 million and €4,692 million for the Group and the
Bank, respectively, at 31 December 2022 is probable based upon expectations of the Group’s and the Bank’s taxable income in the
future.
At 31 December 2022, cumulative Group tax losses amounted to €495 million (31 December 2021: €541 million) and were incurred in
2018 through to 2022. The amount of €391 million (2021: €406 million) relates to the Bank and was incurred in 2018 through to
Notes to the Financial Statements
Group and Bank
312
2022. Management has estimated that tax losses of €30 million for the Group and Nil for the Bank (2021: €29 million and Nil) can be
utilised thus a DTA of €4 million and Nil (2021: €3 million and Nil) for the Group and the Bank respectively has been recognised. The
unused tax losses amounted to €465 million for the Group and €391 million for the Bank (2021: €512 million and €406 million) and
the unrecognised DTA amounted to €125 million and €113 million (2021: €140 million and €118 million) for the Group and the Bank,
respectively.
The following table presents the year of expiration of the unused tax losses for the Group and the Bank.
Group
Bank
Year
31.12.2022
31.12.2022
2023
59
-
2024
196
191
2025
21
-
2026
14
2027
205
200
495
391
The Group and the Bank have offset the deferred tax assets and deferred tax liabilities on an entity by entity basis based on the legally
enforceable right to set off the recognized amounts i.e. offset current tax assets against current tax liabilities and when the deferred
income taxes relate to the same fiscal authority.
NOTE 28 Other assets
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Accrued interest and commissions
120
179
121
179
Receivables from Greek State
803
894
803
893
Tax prepayments and other recoverable taxes
3
1
1
-
Trade receivables
20
39
8
9
Assets acquired through foreclosure proceedings
408
425
393
418
Prepaid expenses
46
34
30
30
Hellenic Deposit and Investment Guarantee Fund
343
493
343
493
Cheques and credit card transactions under settlement
10
44
6
40
Other
476
562
417
522
Total
2,229
2,671
2,122
2,584
Receivables from Greek State of €803 million and €803 million as at 31 December 2022 (31 December 2021: €894 million and €893 million)
for the Group and the Bank respectively, mainly include amounts claimed or eligible to be claimed from the Hellenic Republic relating to
mortgage loans guaranteed from the Hellenic Republic.
In accordance with article 9 of Greek Law 4370/07.03.2016, the upper coverage level for the amount of deposits guaranteed by the Hellenic
Deposit and Investment Guarantee Fund (“HDIGF”) is €100 thousand per client. Accordingly, the contributions paid by credit institutions to
HDIGF increased from 2008 onwards.
Greek Law 4370/07.03.2016 article 25 par. 8, 9 and 10 provides that the Supplementary Deposit Cover Fund (“SDCF”), is considered as a
distinct group of assets which consists of the annual contributions of the credit institutions, pursuant to paragraph 2 of Article 6 of Greek Law
3714/2008 (A ‘231). The assets of the SDCF are considered to be assets of the SDCF members credit institutions, according to their
participation in it and is part of the funds of and subject to management by the HDIGF, for the achievement of its objectives. In accordance
with Greek Law 4972/2022, the assets of the SDCF should be refunded to the SDCF members credit institutions in 3 equal annual instalments.
In this respect in December 2022, the Bank received the 1st instalment of €143 million.
In accordance with article 13 of Greek Law 4370/2016, HDIGF guarantees up to an amount of €30 thousand per client for investing activities.
In 2010, the participating credit institutions paid the first contributions. The said contributions are included in a special reserve which is jointly
owned by the credit institutions in proportion to their participation. Each credit institution participating in the Investment Cover Scheme
(“ICS”) has an individual share in it. The individual share of each ICS member is proportional to its participation in the assets of the ICS, article
Notes to the Financial Statements
Group and Bank
313
30 of the Greek Law 4370/ 2016.
In accordance with article 36 of Greek Law 4370/2016, the Resolution Scheme (“RS”) assets, as Resolution Fund for credit institutions,
are from ordinary contributions paid in advance, extraordinary contributions and alternative means of funding, pursuant to the
internal articles 98, 99 and 100 of article 2 of Greek Law 4355/2015. The contributions are determined in accordance with the
provisions in force.
Furthermore, according to Regulation (EU) 806/2014, the Bank participates in the Single Resolution Fund (“SRB”), through
predetermined regular annual contributions, set by the SRB.
Included in “Other” is an investment in a spot position for emission rights which is carried at fair value through profit or loss for the
Group and the Bank of €298 million (31 December 2021: €330 million) as well as an investment in a sublease for the Group and the
Bank with a carrying amount of €44 million as at 31 December 2022 (31 December 2021: €45 million).
NOTE 29 Assets and liabilities held for sale and discontinued operations
Non-Current Assets and Disposal Groups classified as held for sale and discontinued operations
Non-current assets held for sale at 31 December 2022 comprise of Probank Leasing S.A. (part of Project “Pronto ”, see below) while at
31 December 2021 comprised of NIC, CAC Coral Ltd and Probank Leasing S.A. Non-current assets held for sale as of 31 December
2022 and 2021 also include loan portfolio contemplated disposals mainly relating to Projects “Frontier II”, Project “Solar” and Project
“Pronto”. Profit / (loss) from discontinued operations for the period ended 31 December 2022 and 2021, comprises of NIC and CAC
Coral Ltd.
Disposal of subsidiaries
Ethniki Hellenic General Insurance S.A.
On 24 March 2021, NBG’s Board of Directors approved the sale of the 90.01% out of 100% stake in NIC and authorized the Bank’s
Management to proceed with the signing of the Share Sale and Purchase Agreement (“SPA”) with CVC Capital Partners (“CVC”) on 26
March 2021. The transaction was approved by the Extraordinary General Meeting of NBG’s Shareholders held on 21 April 2021.
The closing of the transaction took place on 31 March 2022, following the reception of the required supervisory approvals by national
and EU authorities, see Note 43 "Acquisitions, disposals and other capital transactions".
CAC Coral Ltd
On 16 October 2020, a sale and purchase agreement was signed with Bain Capital for the sale of a 100% stake in CAC Coral Ltd.
The transaction was concluded on 15 July 2022, after the approval of the competent regulatory authorities, (see Note 43 "Acquisitions,
disposals and other capital transactions").
Disposal of NPE portfolios
Project “Frontier II”
In the context of deleveraging its NPEs through inorganic actions and according to its NPE Divestment Policy, the
Bank decided the disposal of a portfolio of Greek Non-Performing Exposures in the form of a rated securitization
that will utilize the provisions of Hellenic Asset Protection Scheme (“HAPS”), known as (“Hercules II”). The portfolio
includes secured Large Corporate, Small and Medium Enterprises, Small Business Lending, Residential Mortgage
loans and Consumer loans with a total gross book value of c. €1 billion (as of the cut-off date 31 December 2021).
On 29 July 2022, the Bank announced that it has entered into a definitive agreement with funds managed by
Bracebridge Capital LLC for the sale of 95% of the Mezzanine and Junior notes. NBG will retain the 100% of the
Senior notes and 5% of the Mezzanine and Junior notes.
The transaction is estimated to be completed within the 2Q.23, subject to required approvals.
Project “Pronto”
The Bank decided the disposal of the Non-Performing leasing exposures through: i) the sale of the shares of the Probank Leasing S.A. and
ii) the sale of the Bank’s leasing portfolio (ex-FBB) and NBG Leasing S.A. (“NBGL”) leasing portfolio, with a total gross book value of
€51 million as of the 31 December 2022.
Notes to the Financial Statements
Group and Bank
314
The transaction is estimated to be completed within the 2H.23, subject to required approvals .
Project “Solar”
In December 2021, the Bank decided to launch the divestment of the secured portfolio of SMEs (Project “Solar”) with a gross book value
c. €170 million (as of the cut-off date 30 September 2021), through a joint securitization process with the other Greek financial
institutions under HAPS. In August 2022, the Bank together with the other Greek financial institutions submitted to the Greek
Ministry of Finance a joint application for inclusion of the senior notes to be issued in the context of the Solar Securitization in the
HAPS scheme.
The transaction is expected to be completed within the 2Q.23, subject to required approvals.
Notes to the Financial Statements
Group and Bank
315
Condensed Income Statement of discontinued operations
(1)
Group
Bank
12-month period ended
12-month period ended
€ million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Net interest income
8
43
-
-
Net fee and commission income
(6)
(13)
-
-
Earned premia net of claims and commissions
52
113
-
-
Net trading income / (loss) and results from investments securities
(4)
18
-
-
Other income
1
6
-
-
Total income
51
167
-
-
Operating expenses
(18)
(89)
(2)
-
Credit Provisions and other impairment charges
(2)
174
24
(13)
(3)
Profit before tax
207
102
(15)
(3)
Tax benefit/(expense)
(7)
(17)
2
-
Profit for the period from discontinued operations
200
85
(13)
(3)
Profit on disposal (see Note 43)
30
-
-
-
Total profit for the period from discontinued operations (attributable to NBG equity
shareholders)
230
85
(13)
(3)
(1)
Includes NIC and CAC Coral Ltd.
(2)
Credit provisions and other impairment charges refer mainly to remeasurement impairments of NIC.
Cash Flows from discontinued operations
Group
Bank
12-month period ended
12-month period ended
€ million
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Net cash inflows/(outflows) from operating activities
-
131
-
-
Net cash inflows/(outflows) from investing activities
-
(226)
-
-
Net cash inflows/(outflows) from financing activities
-
98
-
-
Net Cash inflows /(outflows)
-
3
-
-
Analysis of non-current assets held for sale and liabilities associated with non-current assets held for sale
Group
Bank
ASSETS
31.12.2022
(1)
31.12.2021
(2)
31.12.2022
(1)
31.12.2021
Due from banks
-
64
-
-
Financial assets at fair value through profit or loss
-
27
-
-
Loans and advances to customers
494
606
438
497
Investment securities
-
3,245
-
-
Investments in subsidiaries
-
-
3
352
Deferred tax assets
-
17
-
-
Insurance related assets and receivables
-
469
-
-
Other assets
1
57
-
-
Non-current assets held for sale
-
8
-
17
Total assets
495
4,493
441
866
LIABILITIES
Insurance related reserves and liabilities
-
2,575
-
-
Deferred tax liabilities
-
(1)
-
-
Retirement benefit obligations
-
73
-
-
Current income tax liabilities
-
5
-
-
Other liabilities
25
765
-
-
Total liabilities
25
3,417
-
-
(1) Includes Probank Leasing S.A.
(2) Includes NIC, Probank Leasing S.A. and CAC Coral Ltd.
Notes to the Financial Statements
Group and Bank
316
NOTE 30 Due to banks
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Demand deposits due to credit institutions
73
225
272
258
Time deposits due to credit institutions
165
156
183
295
Interbank deposits
-
3
-
-
Amounts due to ECB and Central Banks
8,100
11,600
8,100
11,600
Securities sold under agreements to repurchase
122
1,239
122
1,239
Margin Accounts
908
989
908
989
Other
443
519
442
519
Total
9,811
14,731
10,027
14,900
Targeted Longer-Term Refinancing Operations
The European Central Bank (ECB) launched in 2019 a third series of Targeted Longer-Term Refinancing Operations (TLTRO) with the aim of
maintaining favourable credit conditions in the euro area. As in the two previous operations, the level of remuneration of the borrowings
depends on the performance of the borrowing banking institutions in terms of loans granted to their household customers (excluding real
estate loans) and business customers (excluding financial institutions). Depending on these performances, the borrowing institutions may
benefit from a reduced interest rate and an additional temporary bonus applicable over the period from 24 June 2020 to 23 June 2021
(reduction by 50 basis points of the average rate of the deposit facility with a floor rate set at -1%). These TLTRO III operations are conducted
on a quarterly basis between September 2019 and December 2021, for a possible total of 10 drawdowns. Each such operation has a three-
year maturity and includes an early repayment option. Some terms and conditions were modified in March 2020, in particular the loan
production objectives, rate conditions and drawdown limit, in order to further support the granting of loans in the face of the emergence of
the COVID-19 crisis.
In January 2021, the ECB decided to extend the temporary additional bonus rate over the period from 24 June 2021 to 23 June 2022 subject
to performance in terms of number of granted loans observed over a new reference period from 1 October 2020 to 31 December 2021. Once
the Group has reasonable assurance of being eligible for the bonus rate (i.e., -1%) provided for, that rate is used to determine the amount of
interest recognised in the Income Statement for the TLTRO loans.
In accordance with Decision
(EU) 2021/124 of the ECB of 29 January 2021 amending Decision (EU) 2019/1311 on
TLTROs-III
the applicable interest rate before and after the two special interest rate periods ranging from 24 June 2020 until 23 June 2022, is
linked to the deposit facility rate or the rate on the main refinancing operations over the entire life of the respective operation.
However, the rapid and unexpected rise in inflation to levels that are unprecedented since the introduction of the euro, mainly due to
unexpectedly high energy costs and supply deficiencies and the substantial upward revision in the outlook for medium-term inflation
since the end of 2021, called for a fundamental reassessment of the appropriate monetary policy stance.
On 27 October 2022, the Governing Council decided to adopt additional monetary policy measures aiming to ensure the timely return
of inflation to the ECB’s 2 % medium-term target. As part of this decision, the Governing Council decided that the interest rate to be
applied to each respective outstanding TLTRO-III should be calculated as follows: starting from 23 November 2022 and until the
maturity date or early repayment date of each respective outstanding TLTRO-III, the interest rate should be indexed to the average
applicable key ECB interest rates over this period, as opposed to the life of each respective TLTRO-III, in order to contribute to the
overall monetary policy normalisation process.
Therefore, in accordance with Decision (EU) 2022/2128 of the ECB of 27 October 2022 amending Decision (EU) 2019/1311 on TLTRO s-
III, (ECB/2019/21) (ECB/2022/37), the interest rates applicable to NBG under TLTROs are as follows:
-
Based on the granting of loans for the years 2020 and 2021, the Group has achieved the lending objectives and is eligible to
consequently benefit from the bonus rate (i.e., -1%). Therefore, during the two special interest rate periods i.e. from 24 June
2020 to 23 June 2022, the interest rate is -1%
-
During the period before 24 June 2020 and after 23 June 2022 and up to 22 November 2022, the interest rate is the average
deposit facility rate over that period
-
During the period after 23 November 2022 until maturity of the respective TLTRO, the interest rate is the average deposit facility
rate over that period.
Notes to the Financial Statements
Group and Bank
317
The Group participated in TLTRO III operations and in 2022 the bank partially repaid €2.0 billion out of the €8.3 billion tranche
maturing in June 2023 and repaid the €1.5 billion tranche due to its maturity in December 2022. Therefore, as at 31 December 2022
and 31 December 2021 the total TLTRO liability outstanding amounted to €8.1 billion and €11.6 billion, respectively and are presented
under “Due to Banks - Amounts due to ECB and Central Banks”.
Interest income recorded in 2022 and 2021 in respect of these transactions and accrued at the bonus rate is presented in Net Interest Income
under “Amounts due from banks” (see Note 6: “Net Interest Income”) and amounted to €19 million and €113 million respectively.
NOTE 31 Due to customers
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Deposits:
Individuals
42,122
39,835
40,692
38,333
Corporate
11,187
11,912
11,133
12,156
Government and agencies
1,883
1,746
1,879
1,739
Total
55,192
53,493
53,704
52,228
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Deposits:
Savings accounts
31,333
28,957
31,050
28,667
Current & Sight accounts
14,770
15,311
14,130
15,033
Time deposits
7,177
7,971
6,625
7,293
Other deposits
1,912
1,254
1,899
1,235
Total
55,192
53,493
53,704
52,228
Included in time deposits are deposits which contain one or more embedded derivatives. The Group has designated such deposits as
financial liabilities at fair value through profit or loss. As at 31 December 2022, these deposits amounted to €608 million (31
December 2021: €467 million).
In accordance with Greek Law 4151/2013, all dormant deposit accounts are subject to statute of limitations of 20 years in favour of the
Greek State. All banks operating in Greece are required by April of every year to remit the cash balances of such dormant accounts to
the Greek State. The Bank until 31 December 2022 had remitted to the Greek State NIL in respect of dormant account balances
(2021: NIL).
NOTE 32 Debt securities in issue
Group
Bank
Weighted
Interest
rate
31.12.2022
31.12.2021
Weighted
Interest
rate
31.12.2022
31.12.2021
Fixed rate notes
6.31%
1,731
912
6.31%
1,731
912
Total
1,731
912
1,731
912
The movement of debt securities in issue is summarised as follows:
Group
Bank
Notes to the Financial Statements
Group and Bank
318
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Balance at 1 January
912
910
912
910
Additions within the period
883
-
883
-
Sold / (Buy) Backs
(22)
-
(22)
-
Accruals
6
-
6
-
Amortisation of premiums / discounts
(9)
2
(9)
2
Foreign exchange differences
(7)
-
(7)
-
Other
(32)
-
(32)
-
Balance at 31 December
1,731
912
1,731
912
In 2022, additions include the Bank’s issuance of €500 million, €150 million and GBP 200 million (€233 million in Euro) Fixed Rate
Resettable Unsubordinated MREL Notes (see below for the main terms).
Sold / (Buy) Backs as at 31 December 2022, include the retained amounts by the Bank of total €22 million (€17 million Fixed Rate
Resettable Unsubordinated MREL Note (denominated in GBP) and €5 million Green Fixed Rate Resettable Unsubordinated MREL
Note).
The main financial terms of debt securities in issue as at 31 December 2022, are as follows:
I
s
s
u
e
r
Type
Issue
da
te
Maturit
y
da
te
Call
da
te
Cur
r
e
n
c
y
Outsta
n
di
n
g
N
o
m
in
al
a
m
o
u
nt
Own held by
the
Group
(nomin
al
amoun
t)
Interest
rate
Fixed rate notes
N
B
G
Tier II
Notes
-
Globa
l
Medi
um
Term
Note
Progr
am
18 July
20
19
18 July
20
29
18 July
20
24
EUR
400
-
Paid
annu
ally at
a
fixed
coup
on
rate
of
8.25
%
N
B
G
Green
Fixed
Rate
Reset
table
Unsu
bordi
nated
MREL
Note
8
Oc
to
be
r
20
20
8
Oc
to
be
r
20
26
8
Oc
to
be
r
20
25
EUR
500
5
Paid
annu
ally at
a
fixed
coup
on
rate
of
2.75
%
N
B
G
Fixed Rate
Reset
table
Unsu
bordi
nated
MREL
Note
22
N
ov
e
m
be
r
20
22
22
No
ve
m
be
r
20
27
22
No
ve
m
be
r
20
26
EUR
500
-
Paid
annu
ally at
a
fixed
coup
on
rate
of
7.25
%
N
B
G
Fixed Rate
Reset
table
25
N
ov
25 May
20
25
25 May
20
24
EUR
150
-
Paid
annu
ally at
Notes to the Financial Statements
Group and Bank
319
Unsu
bordi
nated
MREL
Note
e
m
be
r
20
22
a
fixed
coup
on
rate
of 6%
N
B
G
Fixed Rate
Reset
table
Unsu
bordi
nated
MREL
Note
2
De
ce
m
be
r
20
22
2 June
20
27
2 June
20
26
GBP
200
15
Paid
annu
ally at
a
fixed
coup
on
rate
of
8.75
%
For NBG’s Covered Bonds issued under Programs I and II see
Note 21 "Loans and advances to customers".
NOTE 33 Other borrowed funds
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Loans-fixed rate
31
27
-
-
Loans-floating rate
32
52
-
-
Total
63
79
-
-
The movement of other borrowed funds is summarised as follows:
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Balance at 1 January
79
60
-
-
Additions within the period
24
19
-
-
Disposals (sales and redemptions) within the period
(40)
-
-
-
Balance at 31 December
63
79
-
-
In 2022, the additions include mainly the issuance of €20 million new floating rate borrowings from Ethniki Factors S.A., while disposals
include the redemption of €40 million floating rate borrowings from Ethniki Factors S.A.
In 2021, the additions include the issuance of €19 million new fixed rate borrowings from Stopanska Banka A.D.
NOTE 34 Other liabilities
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Accrued interest and commissions
8
3
8
3
Creditors and suppliers
277
240
134
141
Amounts due to government agencies
31
30
31
30
Collections for third parties
638
154
638
154
Other provisions
176
198
162
202
Taxes payable - other than income taxes
28
26
35
31
Accrued expenses and deferred income
131
125
126
120
Payroll related accruals
31
34
29
33
Unsettled transactions on debt securities
7
3
7
3
Lease Liability
1,155
1,239
1,004
1,058
Notes to the Financial Statements
Group and Bank
320
Other
145
198
128
181
Total
2,627
2,250
2,302
1,956
The movement of lease liability for the Group and the Bank may be summarised as follows:
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
At 1 January
1,239
1,248
1,058
1,016
Additions
5
180
6
182
Modifications / Remeasurements / Termination
(28)
(131)
(10)
(94)
Interest Expense
23
25
36
39
Lease payments during the year
(84)
(83)
(86)
(85)
Balance at 31 December
1,155
1,239
1,004
1,058
Lease liability
The lease liability amounted to €1,155 million and €1,004 million as at 31 December 2022 (31 December 2021: €1,239 million and €1,058
million) for the Group and the Bank respectively and was discounted at a weighted average discount rate of 1.91% and 3.51% (2021:
1.94% and 3.63%) for the Group and the Bank respectively. During 2021 Prodea Investments S.A., the Bank’s main lessor, disposed
of certain buildings to a third party, and as a result the Bank signed new lease agreements related to these buildings with the new
landlord. This transaction resulted in the derecognition of lease liabilities with Prodea Investments S.A., in the amount of €142
million and €110 million for the Group and the Bank respectively which are included in Modifications / Remeasurements /
Termination in the above table in 2021. The Group and the Bank recognised new lease liabilities in the amount of €172 million which
are included in the line “Additions” in the above table in 2021.
Extension options
The Bank leases a number of buildings that have extension options that are exercisable solely at the option of the Bank. These are used
to maximize operational flexibility in terms of managing the assets used in the Bank’s operations. These leases have a weighted
average non-cancellable period of 16 years and an additional weighted average maximum extension period exercisable at the option
of the Bank of 10 years (excluding the flexibility and cancelation mechanism described below). The current estimated period of lease
contracts to be extended on a weighted average basis is approximately 4 years (31 December 2021: 4.6 years) since the Bank only
reasonably expects to exercise this option on strategic properties.
Flexibility and Cancelation mechanisms
The flexibility mechanism allows the Bank to terminate leases with Prodea Investments annually up to 0.83% of the Total Base Rent
“TBR”. The Bank has the right to roll over any unused percentages of the TBR to subsequent lease years for a maximum of three
years for each annual unused percentage. No lease can be terminated for some of the leased space and remain in effect for the
remainder.
The cancellation mechanism gives the Bank the right to terminate specific leases with Prodea Investments after 2028 and until their
maturity, as long as the leases terminated do not exceed 65% of the TBR including all leases that have already been terminated with
the procedure described in the preceding paragraph.
As of 31 December 2022 the percentage of the lease liability that is eligible for the flexibility and the cancelation mechanism amounted
to 73% and 69% (2021: 72% and 69%) for the Group and the Bank respectively.
Other Provisions
The movement of other provisions for the Group and the Bank may be summarised as follows:
Group
2022
2021
Litigation
LGs and LCs
Other
Total
Litigation
LGs and LCs
Other
Total
Balance at 1 January
65
54
79
198
54
56
69
179
Provisions utilized during the year
(44)
-
(80)
(124)
(1)
-
(64)
(65)
Notes to the Financial Statements
Group and Bank
321
Provisions charged/ (released) to income statement during
the year
10
(3)
98
105
12
(2)
74
84
Foreign exchange differences
(1)
-
(2)
(3)
-
-
-
-
Balance at 31 December
30
51
95
176
65
54
79
198
Bank
2022
2021
Litigation
LGs and LCs
Other
Total
Litigation
LGs and LCs
Other
Total
Balance at 1 January
50
77
75
202
41
105
56
202
Provisions utilized during the year
(39)
(23)
(6)
(68)
(1)
(26)
(65)
(92)
Provisions charged/ (released) to income statement during
the year
8
(4)
26
30
10
(2)
84
92
Foreign exchange differences
-
-
(2)
(2)
-
-
-
-
Balance at 31 December
19
50
93
162
50
77
75
202
Provisions for letters of guarantee (LGs) and letters of credit (LCs) relate to the credit related commitments disclosed in Note 35 “Contingent
liabilities, pledged, transfers of financial assets and commitments” and in Note 4.2.13 “Credit risk concentration of loans and advances to
customers at amortised cost and credit related commitments”. As at 31 December 2022, provisions of €5 million relate to LGs and LCs
classified in Stage 1 for the Group and the Bank (31 December 2021: €3 million for the Group and €26 million for the Bank), €7 million relate
to LGs and LCs classified in Stage 2 for the Group and the Bank (31 December 2021: €4 million for the Group and the Bank) and €39 million
relate to LGs and LCs classified in Stage 3 for the Group and €38 million for the Bank (31 December 2021: €47 million for the Group and the
Bank).
NOTE 35 Contingent liabilities, pledged assets and commitments
a. Legal proceedings
The Bank and certain of its subsidiaries are defendants in certain claims and legal actions and proceedings arising in the ordinary course
of business. These actions and proceedings are generally based on alleged violations of consumer protection, banking, employment
and other laws. None of these actions and proceedings is individually material. The Group establishes provisions for all litigations, for
which it believes it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated. These provisions
may change from time to time, as appropriate, in light of additional information. For the cases for which a provision has not been
recognized, management is not able to reasonably estimate possible losses, since the proceedings may last for many years, many of
the proceedings are in early stages, there is uncertainty as to the likelihood of the final result, there is uncertainty as to the outcome
of pending appeals and there are significant issues to be resolved. However, in the opinion of management, after consultation with
legal counsel, the final outcome of these matters is not expected to have a material adverse effect on the Group’s Statement of
Financial Position, Income Statement and Cash Flow Statement, taking into account that as at 31 December 2022 the Group and the
Bank have provided for cases under litigation the amount of €30 million and €19 million respectively (31 December 2021: €65 million
and €50 million respectively).
b. Pending tax audits
Tax authorities have not yet audited all subsidiaries for certain financial years and accordingly their tax obligations for those years may
not be considered final. Additional taxes and penalties may be imposed as a result of such tax audits; although the amount cannot be
determined, it is not expected to have a material effect on the Group’s and the Bank’s Statement of Financial Position.
The years 2011-2016 have been tax audited by Deloitte Certified Public Accountants S.A., in accordance with article 82 of Greek Law
2238/1994 and subsequently with article 65A of Greek Law 4174/2013 and the tax audit certificates which were unqualified, were
issued on 27 July 2012, 27 September 2013, 10 July 2014, 30 October 2015, 30 September 2016 and 23 October 2017 respectively.
The years 2017, 2018, 2019, 2020 and 2021 have been tax audited by PwC S.A. and the tax certificates, which were unqualified, were
issued on 26 October 2018, 31 October 2019, 27 October 2020, 27 October 2021 and 27 October 2022, respectively. The year 2022
will be tax audited by PwC S.A., however it is not expected to have a material effect on the Group and the Bank’s Statement of
Financial Position.
Notes to the Financial Statements
Group and Bank
322
On 31 December 2022, the right of the tax authorities to issue a deed for re-calculation of income tax for the years up to and including
year 2016 expired. For the years 2017 onwards, in accordance with the Ministerial Decision 1006/2016 there is no exception from
tax audit by the tax authorities for those entities that have been tax audited by an independent auditor who has issued an
unqualified tax audit certificate.
Therefore, the tax authorities may re-audit the tax books of the Bank for those years. However, the Bank does not expect any material
effect on the Group’s and the Bank’s Statement of Financial Position.
For the subsidiaries and associates regarding unaudited tax years refer to Note 44 “Group companies” and Note 24 “Equity method
investments”, respectively.
c. Credit commitments
In the normal course of business, the Group enters into contractual commitments on behalf of its customers and is a party to financial
instruments with off-balance sheet risk to meet the financing needs of its customers. These contractual commitments consist of
commitments to extend credit, commercial letters of credit and standby letters of credit and guarantees. Commitments to extend
credit are agreements to lend to a customer as long as there is no violation of the conditions established in the contract. Commercial
letters of credit ensure payment by the Bank to a third party for a customer’s foreign or domestic trade transactions, generally to
finance a commercial contract for the shipment of goods. Standby letters of credit and financial guarantees are conditional
commitments issued by the Group to guarantee the performance of a customer to a third party. All of these arrangements are
related to the normal lending activities of the Group. The Group’s exposure to credit loss in the event of non-performance by the
other party to the financial instrument for commitments to extend credit, commercial and standby letters of credit is represented by
the contractual nominal amount of those instruments. The Group uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet instruments.
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Standby letters of credit and financial guarantees written
4,657
2,960
4,907
3,224
Commercial letters of credit
1,049
1,019
1,048
1,017
Total credit related commitments (Note 4.2.13)
5,706
3,979
5,955
4,241
In addition to the above, credit commitments also include commitments to extend credit which at 31 December 2022 amounted to
€13,504 million for the Group (31 December 2021: €9,225 million) and to €12,414 million for the Bank (31 December 2021: €8,242
million). Commitments to extend credit at 31 December 2022 relate to revocable commitments, as they do not include any amounts
which cannot be cancelled without certain conditions being met at any time and without notice, or for which automatic cancellation
due to credit deterioration of the borrower is not allowed.
In relation to the credit quality of the credit related commitments, a breakdown by range of probability of default and by stage for the
Group and the Bank is summarized below:
As at 31 December 2022
Group
Bank
12-month PD
impaired
impaired
0.01% - 2%
4,344
145
-
4,489
4,613
141
-
4,754
2.01% - 10%
986
71
-
1,057
983
71
-
1,054
10.01% - 20%
20
26
-
46
20
26
-
46
Over 20.01%
-
29
85
114
-
29
72
101
Credit related commitments
5,350
271
85
5,706
5,616
267
72
5,955
As at 31 December 2021
Group
Bank
12-month PD
impaired
impaired
0.01% - 2%
3,071
148
-
3,219
3,356
129
-
3,485
Notes to the Financial Statements
Group and Bank
323
2.01% - 10%
607
24
-
631
604
23
-
627
10.01% - 20%
1
12
-
13
1
12
-
13
Over 20.01%
3
20
93
116
3
20
93
116
Credit related commitments
3,682
204
93
3,979
3,964
184
93
4,241
d. Assets pledged
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Assets pledged as collateral
10,956
16,256
10,956
16,203
As at 31 December 2022, the Grou p and the Bank have pledged mainly for funding purposes with the ECB and financial institutions, the
following instruments:
trading and investment debt instruments of €3,505 million (31 December 2021: €8,824 million);
loans and advances to customers at amortised cost amounting to €5,751 million (31 December 2021: €5,787 million); and
covered bonds of a nominal value of €1,700 million backed with mortgage loans of total value of €3,217 million (31 December 2021:
€1,645 million backed with mortgage loans of total value of €3,372 million).
In addition to the pledged items presented above, as at 31 December 2022, the Group and the Bank have pledged an amount of €312
million (31 December 2021: €313 million) included in due from banks with respect to a guarantee for the non-payment risk of the
Hellenic Republic, as well as Hellenic Republic Treasury bills of €443 million (31 December 2021: €664 million) for trade finance
transactions.
e. Transferred financial assets
As at 31 December 2022 and 2021 the carrying amount of transferred financial assets, which have been transferred but are subject to
continued recognition in full and the associated recognized liabilities are presented in the tables below.
Group
Bank
Carrying
amount of
transferred
assets
Carrying
amount of
associated
liabilities
Carrying
amount of
transferred
assets
Carrying
amount of
associated
liabilities
31.12.2022
Amounts due to Eurosystem
Trading and investment securities
2,982
2,662
2,982
2,662
Loans and advances to customers at amortised cost
5,751
3,940
5,751
3,940
Securities sold under agreements to repurchase
Trading and investment securities
136
122
136
122
Other
Trading and investment securities
831
-
831
-
Total
9,700
6,724
9,700
6,724
Group
Bank
Carrying
amount of
transferred
assets
Carrying
amount of
associated
liabilities
Carrying
amount of
transferred
assets
Carrying
amount of
associated
liabilities
31.12.2021
Amounts due to Eurosystem
Trading and investment securities
7,101
6,248
7,101
6,248
Loans and advances to customers at amortised cost
5,787
3,845
5,787
3,845
Securities sold under agreements to repurchase
Trading and investment securities
1,313
1,275
1,259
1,238
Other
Trading and investment securities
1,074
-
1,074
-
Total
15,275
11,368
15,221
11,331
Notes to the Financial Statements
Group and Bank
324
Transactions whereby financial assets are transferred, but continue to be recognized in their entirety on the Group’s Statement of
Financial Position relate to Eurosystem funding under the general terms applying to such agreements and securities sold under
agreements to repurchase (see Note 2.13 "Sale and repurchase agreements" and Note 30 "Due to banks"), which, in general, are
conducted under standard market agreements. With respect to Eurosystem funding, a haircut is generally applied to the collateral,
which results in the associated liabilities having a carrying value less than the carrying value of the transferred assets. As a result of
these transactions, the Group and the Bank are unable to use, sell or pledge the transferred assets for the duration of the
transaction. The Group and the Bank remain exposed to interest rate risk and credit risk on these pledged instruments. The
counterparty’s recourse is not limited to the transferred assets.
NOTE 36 Share capital, share premium and treasury shares
Share Capital – Ordinary Shares
The total number of ordinary shares as at 31 December 2022 and 31 December 2021 was 914,715,153, with a nominal value of 1.00 Euro
per share.
On 28 July 2022, the Annual General Meeting of the Bank’s shareholders decided, the offsetting of (a) the special reserve of article 31,
par. 2, L.4548/ 2018 (former special reserve of article 4, par. 4a, L.2190/1920) of €5,014 million and (b) part of the share premium
account of €10,324 million with accumulated accounting losses €15,338 million, according to articles 31 par. 2 and 35 par. 3 of
L.4548/2018, as in force. The offsetting of the special reserve and the share premium with the accumulated accounting losses serves
the purpose of rationalizing the accounting and regulatory equity of the Bank and the Group and facilitating potential future
dividends distribution. On 8 September 2022, the offsetting was approved by the regulatory authorities.
Following the decision of the Annual General Meeting of the Bank’s shareholders on 30 July 2021, to decrease the Bank’s share capital by
€1,829 million from €2,744 million, by reducing the nominal value of each common registered share from 3.00 Euros to 1.00 Euro
(without any change in the total number of common registered shares), to set off equal cumulative accounting losses of previous
years, on 26 October 2021, the Ministry of Development and Investments (Decision No 2420390/26.10.2021), approved the decision.
The Athens Exchange Corporate Actions Committee at its meeting held on 18 November 2021 was informed about the reduction of the
nominal value of the Bank’s shares. Following this, 22 November 2021, was determined as the date of change of the nominal value of
the Bank’s share to 1.00 Euro.
Treasury shares
Treasury shares transactions are conducted by the Group subsidiary, NBG Securities S.A. and are summarized as follows:
Group
No of shares
€ million
At 1 January 2021
335,818
1
Purchases
6,274,150
15
Sales
(6,572,455)
(16)
At 31 December 2021
37,513
-
Purchases
4,402,533
14
Sales
(4,440,046)
(14)
At 31 December 2022
-
-
NOTE 37 Tax effects relating to other comprehensive income / (expense) for
the period
Group
12-month period ended
12-month period ended
31.12.2022
31.12.2021
Gross
Tax
Net
Gross
Tax
Net
Items that may be reclassified subsequently to profit
or loss:
Notes to the Financial Statements
Group and Bank
325
Unrealised gains / (losses) on investments in available-
for-sale for the period
(218)
35
(183)
(92)
28
(64)
Reclassification adjustments on investments in
available-for-sale included in the income statement
(35)
8
(27)
(28)
3
(25)
Impairment loss recognized on investments in available-
for-sale
2
-
2
1
-
1
Unrealised gains / (losses) on investments in debt
instruments measured at FVTOCI
(298)
-
(298)
(43)
-
(43)
Losses / (Gains) on investments in debt instruments
measured at FVTOCI reclassified to profit or loss on
disposal
84
-
84
(98)
-
(98)
ECL impairment recognised to profit or loss
2
-
2
(4)
-
(4)
Gain reclassified to income statement on disposal of NIC
(38)
-
(38)
-
-
-
Investments in debt instruments
(501)
43
(458)
(264)
31
(233)
Currency translation differences
(129)
-
(129)
10
-
10
Loss reclassified to income statement on disposal of NIC
4
-
4
-
-
-
Currency translation differences
(125)
-
(125)
10
-
10
Cash flow hedge
18
-
18
22
-
22
Net investment hedge
110
-
110
-
-
-
Total of items that may be reclassified subsequently to
profit or loss
(498)
43
(455)
(232)
31
(201)
Items that will not be reclassified subsequently to
profit or loss:
Gains / (losses) on investments in equity instruments
measured at FVTOCI
1
-
1
10
-
10
(Gains)/losses on investments in equity instruments
designated as at FVTOCI transferred to retained
earnings upon disposal
(11)
-
(11)
1
-
1
Remeasurement of the net defined benefit liability /
asset
35
-
35
9
9
Remeasurement of the net defined benefit liability /
asset on disposal of NIC
9
-
9
-
-
Total of items that will not be reclassified
subsequently to profit or loss
34
-
34
20
-
20
Other comprehensive income / (expense) for the
period
(464)
43
(421)
(212)
31
(181)
Bank
12month period ended
12month period ended
31.12.2022
31.12.2021
Gross
Tax
Net
Gross
Tax
Net
Items that may be reclassified subsequently to profit
or loss:
Unrealised gains / (losses) on investments in debt
instruments measured at FVTOCI
(297)
-
(297)
(43)
-
(43)
(Gains) / losses on investments in debt instruments
measured at FVTOCI reclassified to profit or loss on
disposal
84
-
84
(97)
-
(97)
ECL impairment recognised to profit or loss
2
-
2
(5)
-
(5)
Investments in debt instruments
(211)
-
(211)
(145)
-
(145)
Currency translation differences
(13)
-
(13)
1
-
1
Cash flow hedge
18
-
18
22
-
22
Notes to the Financial Statements
Group and Bank
326
Total of items that may be reclassified subsequently to
profit or loss
(206)
-
(206)
(122)
-
(122)
Items that will not be reclassified subsequently to
profit or loss:
Gains / (losses) on investments in equity instruments
measured at FVTOCI
-
-
-
9
-
9
(Gains)/losses on investments in equity instruments
designated as at FVTOCI transferred to retained
earnings upon disposal
(11)
-
(11)
1
-
1
Remeasurement of the net defined benefit liability /
asset
35
-
35
10
-
10
Total of items that will not be reclassified
subsequently to profit or loss
24
-
24
20
-
20
Other comprehensive income / (expense) for the
period
(182)
-
(182)
(102)
-
(102)
NOTE 38 Reserves & retained earnings
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Statutory reserve
310
310
297
297
Investments in debt and equity instruments reserve
(273)
(52)
(281)
(59)
Defined benefit obligations
(155)
(190)
(154)
(189)
Currency translation differences reserve
(56)
73
(64)
(51)
Other reserves and retained losses
2,169
(9,405)
1,631
(9,535)
Total
1,995
(9,264)
1,429
(9,537)
The Group’s and the Bank’s other reserves and retained earnings / (losses) which as of 31 December 2022 amounted to €2,169 million and
€1,631 million from other reserves and retained (losses)
€(9,405) million and €(9,535) million, respectively for 31 December 2021 include the
offsetting of the special reserve and the share premium with the accumulated accounting losses (see NOTE 36 “Share capital, share premium
and treasury shares”) .
The movement on the investment in debt instruments reserve is as follows:
Group
Bank
2022
2021
2022
2021
At 1 January
(52)
82
(59)
76
Net gains / (losses) on investments in debt instruments measured at FVTOCI
(298)
(43)
(297)
(44)
Net (gains) / losses on investments in debt instruments measured at FVTOCI
reclassified to profit or loss on disposal
84
(97)
84
(97)
Impairment loss recognized on investments in debt instruments classified at
FVTOCI
2
(5)
2
(5)
Net gains / (losses) in equity instruments designated at FV measured at FVTOCI
2
10
-
10
Reclassification to retained earnings due to disposal of equity secs measured at
FVTOCI
(11)
1
(11)
1
At 31 December
(273)
(52)
(281)
(59)
NOTE 39 Non controlling interests
Group
2022
2021
At 1 January
22
20
Notes to the Financial Statements
Group and Bank
327
(Acquisitions) /disposals
(1)
-
Share of net profit of subsidiaries
2
2
At 31 December
23
22
NOTE 40 Dividends
Greek Law 4548/2018 active from 1 January 2019, on Greek companies imposes restrictions regarding the dividend distribution.
Specifically, the laws states that no distribution to the shareholders can take place, if, on the day on which the last financial year
ends, the total shareholders’ equity, is or, following this distribution, will be, lower than the amount of the share capital increased by
the reserves the distribution of which is forbidden by law or the Articles of Association, credit balances in equity (i.e. OCI) the
distribution of which is not allowed and any unrealised gains of the year. Such share capital amount is reduced by the amount for
which payment has not yet been called.
In addition, the law states that any distributable amount shall not exceed the profit of the last financial year on an unconsolidated basis
net of tax, plus retained earnings and reserves the distribution of which is allowed and has been approved by the General Meeting,
less any unrealised gains of the year, any losses carried forward and any amounts required by law or its Articles of Association to be
allocated towards the formation of reserves.
Due to the above restrictions there were no distributable funds available by the end of 2021, therefore the Annual General Meeting of
the Bank’s shareholders held on 28 July 2022 took no decision on dividend distribution.
With regards to the dividend distribution out of the 2022 profits, the Bank’s Board of Directors will assess its proposal to the Bank’s
Annual Shareholders General Meeting of 2023 on the basis of the ongoing discussions with the supervisory authorities.
Furthermore, pursuant to the Hellenic Financial Stability Fund (“HFSF”) Law, and in line with the provisions of the Relationship
Framework Agreement with the HFSF, the HFSF’s representative who sits on the Board of Directors has a veto right over decisions
regarding the distribution of dividends.
NOTE 41 Cash and cash equivalents
Group
Bank
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Cash and balances with central banks
14,110
15,674
13,956
15,536
Due from banks
3,545
351
3,514
223
Trading securities
7
1
7
1
Investment securities
63
79
33
50
Total
17,725
16,105
17,510
15,810
For the year ended 31 December 2021, “Due from banks” of the Group include €19 million, relating to subsidiaries classified as Held for
Sale.
NOTE 42 Related party transactions
The nature of the significant transactions entered into by the Group with related parties during the 12-month period ended 31 December
2022 and 31 December 2021 and the significant balances outstanding as at 31 December 2022 and 31 December 2021 are presented
below.
a. Transactions with members of the Board of Directors and management
The Group and the Bank entered into transactions with the members of the Board of Directors, the General Managers and the members
of the Executive Committees of the Bank, the key management of other Group companies, as well as with the close members of
family and entities controlled or jointly controlled by those persons.
All loans granted to related parties (i) were made in the ordinary course of business, (ii) were made on substantially the same terms,
including interest rates and collaterals, as those prevailing at the time for comparable transactions with other persons, and (iii) did
not involve more than the normal risk of collectability or present other unfavourable features.
Notes to the Financial Statements
Group and Bank
328
The members of the Board of Directors of the Bank are disclosed in Note 1 “General Information”.
As at 31 December 2022, loans and advances to customers, deposits/liabilities and letters of guarantee, at Group level, amounted to €4
million, €7 million and NIL respectively (31 December 2021: €4 million, €5 million and NIL respectively), whereas the corresponding
figures for the Bank amounted to €4 million, €6 million and NIL respectively (31 December 2021: €4 million, €4 million and NIL
respectively).
Total compensation to key management for the period ended 31 December 2022, amounted to €9 million for the Group (31 December
2021: €9 million) and to €8 million for the Bank (31 December 2021: €8 million), mainly relating to short-term benefits, in particular
salaries and social security contributions.
b. Transactions with subsidiaries, associates and joint ventures
Transactions and balances between the Bank, its subsidiaries, associates and joint ventures are presented at the table below. At a Group
level, only transactions and balances with associates and joint ventures are included, as transactions and balances with subsidiaries
are eliminated on consolidation.
Group
31.12.2022
31.12.2021
Assets
15
5
Liabilities
23
17
Letters of guarantee, contingent liabilities and other off balance sheet accounts
3
2
12 month period ended
31.12.2022
31.12.2021
Interest, commission and other income
-
-
Interest, commission and other expense
2
3
Bank
31.12.2022
31.12.2021
Subsidiaries
Associates & Joint
Ventures
Total
Subsidiaries
Associates &
Joint Ventures
Total
Assets
1,318
6
1,324
1,367
5
1,372
Liabilities
560
23
583
1,221
17
1,238
Letters of guarantee, contingent liabilities and other
off balance sheet accounts
569
3
572
516
2
518
12 month period ended 31.12.2022
12 month period ended 31.12.2021
Interest, commission and other income
46
-
46
55
-
55
Interest, commission and other expense
8
2
10
13
3
16
c. Transactions with other related parties
The total receivables of both, the Group and the Bank, from the employee benefits related funds as at 31 December 2022, amounted to
€746 million (31 December 2021: €747 million). For these receivables the Group and the Bank recognized a provision of €739 million
(31 December 2021: €739 million).
The total payables of both the Group and the Bank, to the employee benefits related funds as at 31 December 2022, amounted to €41
million (31 December 2021: €112 million and €32 million respectively). The decrease of total payables is due to the disposal of
Ethniki Hellenic General Insurance S.A, and its related employee benefits funds which was completed on 31 March 2022.
d. Transactions with Hellenic Financial Stability Fund
Taking into consideration the Hellenic Financial Stability Fund (“HFSF”) Law, the Relationship Framework Agreement (“RFA”) between the
Bank and the HFSF that was signed in December 2015, the fact that the HFSF holds 40.39% of the Bank’s ordinary shares and that the
HFSF has representation in the Bank’s Board of Directors and other Board Committees of the Bank, the HFSF is considered a related
Notes to the Financial Statements
Group and Bank
329
party of the Group. Other than the ordinary shares issued by the Bank and held by the HFSF, no material transactions or balances
exist with the HFSF.
NOTE 43 Acquisitions, disposals and other capital transactions
Sale of Ethniki Hellenic General Insurance S.A.
On 24 March 2021, the Bank’s Board of Directors approved the sale of the 90.01% out of 100.00% stake in NIC and authorized the Bank’s
Management to proceed with the signing of the SPA with CVC on 26 March 2021.
On 31 March 2022, the Bank lost control of NIC and proceeded with the derecognition of its assets and liabilities due to the fact that at
that date all the conditions agreed between NBG and CVC were fulfilled. The consideration , less costs to sell plus the fair value of
investment retained in NIC, amounted to €314 million.
As at
31 March
2022
Assets
Due from banks
93
Financial assets at FVTPL
25
Loans and advances to customers
16
Investment securities
3,031
Deferred tax assets
53
Insurance related assets and receivables
702
Other assets
114
Total assets
4,034
Liabilities
Debt securities in issue
175
Retirement benefit obligations
66
Insurance related liabilities
2,905
Other liabilities
573
Total liabilities
3,719
Net Assets derecognized
315
Gain on disposal of NIC
As at
31 March 2022
Consideration less costs to sell
288
Fair value of 9.99% investment retained in NIC
26
Net assets derecognized
(315)
Non-controlling interests
1
Cumulative exchange loss in respect of the net assets of NIC reclassified from equity to profit or loss
(4)
Cumulative gain on financial assets measured at FVTOCI in NIC reclassified from equity to profit or loss
38
Gain on disposal
34
The gain on disposal of €34 million at Group level is included in the profit/(loss) for the period from discontinued operations (see Note 29
“
Assets and liabilities held for sale and discontinued operations
”).
Net cash inflow on disposal of NIC amounted to €142 million.
Sale of CAC Coral Ltd
On 16 October 2020, a sale and purchase agreement was signed with Bain Capital for the sale of a 100% stake in CAC Coral Ltd, which
contains a portfolio of non-performing corporate, SME and consumer and mortgage loans.
Notes to the Financial Statements
Group and Bank
330
On 15 July 2022, the transaction was concluded, after approval of the competent regulatory authorities. The consideration less costs to
sell amounted to €73 million.
As at
15 July 2022
Assets
Due from banks
1
Loans and advances to customers
77
Total assets
78
Liabilities
Other borrowed funds
70
Other liabilities
1
Total liabilities
71
Net Assets derecognized
7
Loss on disposal of CAC Coral Ltd
As at
15 July 2022
Consideration less costs to sell
73
Net assets derecognized
(7)
Transfer of loan to Bain Capital
(70)
Loss on disposal
(4)
The loss on disposal of €4 million at Group level is included in the profit/(loss) for the period from discontinued operations (see Note 29
“
Assets and liabilities held for sale and discontinued operations
”).
Net cash inflow on disposal of CAC Coral Ltd amounted to €72 million.
Spin-off of NBG’s Merchant Acquiring Business and sale of 51% of NBG Pay SA’s share capital to EVO Payments, Inc
On 17 December 2021 NBG announced that it has entered into a long-term strategic marketing alliance with the EVO Payments, Inc. (“EVO”),
a leading global provider of payment technology integrations and acquiring solutions, to provide merchant acquiring and payment processing
services.
Under the terms of the agreement, NBG and EVO will form a merchant acquiring joint venture. NBG will spin off its merchant acquiring
business into a new entity called NBG Pay S.A., and EVO will acquire a 51% interest in this entity. This transaction includes a marketing alliance
whereby NBG will exclusively refer customers to the joint venture, and EVO will manage the joint venture and provide its market leading card
acceptance solutions through its proprietary products and processing platforms. EVO has agreed to pay €158 million for its ownership interest
in the joint venture. Under the joint venture agreement, the parties will have joint control and rights to the net assets of the joint venture.
On 23 May 2022, a wholly owned subsidiary of the Bank, under the name of NBG Pay S.A. was established. The initial paid-in share capital
amounted to €125 thousand. On 7 December 2022, according to the agreement, NBG spun off its card payments acceptance business line and
Notes to the Financial Statements
Group and Bank
331
transferred it to NBG Pay S.A., and on 8 December 2022, following the receipt of all required regulatory approvals, NBG completed the sale of
51% of NBG Pay SA’s share capital to EVO for a consideration of €158 million. The fair value of the sector spun off was estimated to €308
million. This was accounted for as a loss of control of NBG Pay S.A. where NBG;
i.
Derecognised the assets and liabilities of NBG Pay S.A. from the consolidated statement of financial position.
ii.
Recognised the retained investment in NBG Pay S.A., at fair value at the date that control was lost.
iii.
Recognised a gain associated with the loss of control attributable to the former controlling interest. (The calculation of the gain is
shown below).
At Group and Bank level the gain from the transaction amounted to €294 million and was determined as follows:
Group
Period ended
31 December 2022
Consideration received
158
Fair value of 49% investment retained in NBG Pay
155
Costs to sell
(8)
Net assets derecognised
(11)
Gain on disposal
294
Bank
Period ended
31 December 2022
Fair value of sector spun off
308
Initial cost of investment including establishment costs
8
Total cost of investment before the transfer of 51%
316
Gain from the spin off and the transfer of acquiring business sector to NBG Pay
Fair value of sector spun off
308
Less: Net assets spun off
(11)
Gain from the spin off (A)
297
Consideration received from the disposal of 51%
158
Carrying amount of the investment disposed of
(161)
Notes to the Financial Statements
Group and Bank
332
Loss from the sale of 51% of the investment to EVO (Β)
(3)
Total gain from the spin off and the Sale of 51% of the investment to EVO (Α+Β)
294
The total gain from the spin off and the Sale of 51% of the investment to EVO of €294 million at Group and Bank level is included in Net other
income / (expense) (see Note 9 “Net other income / (expense)”).
NBG accounts for its investment in the joint venture in the Consolidated and Separate Financial Statements using the equity method and the
cost method, respectively.
Under the equity method in future periods the carrying amount would be increased or decreased to recognize NBG’s share of the profit or
loss from NBG PAY S.A. after the date of acquisition. After application of the equity method NBG determines whether there is objective
evidence that the joint venture is impaired. As at 31 December 2022 there was no such evidence. Included in the Joint Venture investment is
goodwill of EUR 145 million.
Under the cost method the investment is kept at cost and tested for impairment.
Other transactions
Establishment of Stopanska Leasing DOOEL - Skopje
On 24 February 2022, a wholly owned subsidiary of Stopanska Banka A.D. – Skopje, under the name of Stopanska Leasing DOOEL - Skopje
was established. The total paid-in share capital amounted to MKD 15 million.
.
The movement of the Bank’s investments in subsidiaries is presented below:
Bank
2022
2021
Balance at the beginning of the period
1,133
1,166
Acquisition of additional interest/ share capital increase in existing subsidiaries
55
26
Share capital decrease in existing subsidiaries
-
(7)
Interim distribution
(397)
-
Impairment charge
(32)
(32)
Non-Current Assets held for sale
-
(20)
Balance at the end of the period
759
1,133
The impairment charge recognized in 2022 mainly relates to the cost of investment in ARC Management One SRL of €5 million, ARC
Management Two EAD of €5 million, NBG Finance Plc of €5 million and in NBG Leasing S.R.L. of €18 million.
The interim distribution is the context of the liquidation process of NBG Finance (Dollar) Plc, and NBG Finance (Sterling) Plc with the
amounts of €280 million and €117 million respectively.
In 2021, share capital decrease in existing subsidiaries of amount €7 million related to NBG Greek Fund Ltd.
The impairment charge recognized in 2021 mainly relates to the cost of investment in National Bank of Greece (Cyprus) Ltd of €6 million,
and in NBG Leasing S.R.L. of €26 million.
Transferred to non-current assets held for sale in 2021 include the acquisition cost of Probank Leasing S.A. (see Note 29 “Assets and
liabilities held for sale and discontinued operations”).
The acquisition of additional interest / share capital increase in existing subsidiaries includes the following:
Notes to the Financial Statements
Group and Bank
333
Bank
2022
2021
Share capital increase of NBG Leasing S.R.L.
21
26
Share capital increase in ARC Management One S.R.L.
9
-
Share capital increase in ARC Management Two EAD
11
-
Share capital increase in National Bank of Greece (Cyprus) Ltd
12
-
Share capital increase in Mortgage, Touristic PROTYPOS S.A.
1
-
Share Capital Increase in several entities
1
-
Total
55
26
NOTE 44 Group companies
Group
Bank
Subsidiaries
Country
Tax years
unaudited
31.12.2022
31.12.2021
31.12.2022
31.12.2021
National Securities Single Member S.A.
Greece
2017-2022
100.00%
100.00%
100.00%
100.00%
NBG Asset Management Mutual Funds S.A.
Greece
2017-2022
100.00%
100.00%
100.00%
100.00%
Ethniki Leasing S.A.
Greece
2012-2022
100.00%
100.00%
100.00%
100.00%
NBG Property Services Single Member S.A.
Greece
2017-2022
100.00%
100.00%
100.00%
100.00%
Pronomiouhos Single Member S.A. Genikon Apothikon Ellados
Greece
2012-2022
100.00%
100.00%
100.00%
100.00%
Ethniki Hellenic General Insurance S.A.
(3)
Greece
-
-
100.00%
-
100.00%
ΚΑDΜΟS S.A.
Greece
2012-2022
100.00%
100.00%
100.00%
100.00%
DIONYSOS S.A.
Greece
2012-2022
99.91%
99.91%
99.91%
99.91%
EKTENEPOL Construction Company Single Member S.A.
Greece
2012-2022
100.00%
100.00%
100.00%
100.00%
Mortgage, Touristic PROTYPOS Single Member S.A.
Greece
2012-2022
100.00%
100.00%
100.00%
100.00%
Hellenic Touristic Constructions S.A.
Greece
2012-2022
78.34%
78.24%
78.34%
78.24%
Ethniki Ktimatikis Ekmetalefsis Single Member S.A.
Greece
2012-2022
100.00%
100.00%
100.00%
100.00%
Ethniki Factors S.A.
Greece
2017-2022
100.00%
100.00%
100.00%
100.00%
I-Bank Direct S.A.
(1)
Greece
2017-2022
100.00%
100.00%
99.90%
99.90%
Probank Leasing S.A.
(2)
Greece
2012-2022
100.00%
100.00%
100.00%
100.00%
NBG Insurance Brokers S.A.
Greece
2017-2022
100.00%
100.00%
100.00%
99.90%
NBG Malta Holdings Ltd
(4)
Malta
2012-2022
100.00%
100.00%
-
-
NBG Malta Ltd
(4)
Malta
2012-2022
100.00%
100.00%
-
-
ARC Management Two EAD (Special Purpose Entity)
Bulgaria
2016-2022
100.00%
100.00%
99.55%
-
Bankteco E.O.O.D.
Bulgaria
2016-2022
100.00%
100.00%
100.00%
100.00%
NBG Leasing S.R.L.
Romania
2017-2022
100.00%
100.00%
100.00%
100.00%
S.C. Garanta Asigurari S.A.
(3)
Romania
-
-
94.96%
-
-
ARC Management One SRL (Special Purpose Entity)
Romania
2013-2022
100.00%
100.00%
99.51%
-
Stopanska Banka A.D.-Skopje
North Macedonia
2014-2022
94.64%
94.64%
94.64%
94.64%
Stopanska Leasing DOOEL Skopje
(5)
North Macedonia
2022
94.64%
-
-
-
NBG Greek Fund Ltd
Cyprus
2019-2022
100.00%
100.00%
100.00%
100.00%
National Bank of Greece (Cyprus) Ltd
Cyprus
2012-2022
100.00%
100.00%
100.00%
100.00%
National Securities Co (Cyprus) Ltd
(1)
Cyprus
-
100.00%
100.00%
-
-
NBG Management Services Ltd
Cyprus
2019-2022
100.00%
100.00%
100.00%
100.00%
Ethniki Insurance (Cyprus) Ltd
(3)
Cyprus
-
-
100.00%
-
-
Ethniki General Insurance (Cyprus) Ltd
(3)
Cyprus
-
-
100.00%
-
-
National Insurance Agents & Consultants Ltd
(3)
Cyprus
-
-
100.00%
-
-
CAC Coral Limited
(6)
Cyprus
-
-
100.00%
-
100.00%
Merbolium Limited (Special Purpose Entity)
(7)
Cyprus
2022
100.00%
-
-
-
Cortelians Limited (Special Purpose Entity)
(7)
Cyprus
2022
100.00%
-
-
-
Ovelicium Ltd (Special Purpose Entity)
(7)
Cyprus
2021-2022
100.00%
-
-
-
Pacolia Holdings Ltd (Special Purpose Entity)
(7)
Cyprus
2022
100.00%
-
-
-
NBG Asset Management Luxemburg S.A.
Luxembourg
2021-2022
100.00%
100.00%
94.67%
94.67%
NBG International Ltd
U.K.
2003-2022
100.00%
100.00%
100.00%
100.00%
NBGI Private Equity Ltd
(1)
U.K.
2003-2022
100.00%
100.00%
-
-
NBG Finance Plc
U.K.
2003-2022
100.00%
100.00%
100.00%
100.00%
NBG Finance (Dollar) Plc
(1)
U.K.
2008-2022
100.00%
100.00%
100.00%
100.00%
NBG Finance (Sterling) Plc
(1)
U.K.
2008-2022
100.00%
100.00%
100.00%
100.00%
NBG International Holdings B.V.
The Netherlands
2021-2022
100.00%
100.00%
100.00%
100.00%
Notes:
Notes to the Financial Statements
Group and Bank
334
(1) Companies under liquidation.
(2) Probank Leasing S.A., has been reclassified as Non-current assets held for sale (See Note 29 "Assets and liabilities held for sale and discontinued operations").
(3) The disposal of Ethniki Hellenic General Insurance S.A. and its subsidiaries, was completed on 31 of March 2022.
(4) In October 2021, the Bank decided to cease its operation in Malta through its subsidiary NBG Bank Malta Ltd and from 31 August 2022, the subsidiaries are
under liquidation. NBG Malta Limited, formerly known as NBG Bank Malta Limited surrendered its banking licence on 11 August 2022 and subsequently placed
into liquidation.
(5) Entity was established on 24 February 2022.
(6) The disposal of CAC Coral Ltd, was completed on 15 of July 2022.
(7) Entities are 100% subsidiaries of National Bank of Greece (Cyprus) Ltd from November 2022.
Furthermore, in December 2022, the Bank disposed the 51% of NBG PAY S.M.S.A. The wholly owned subsidiary of the Bank was established on 23 May 2022 (see
NOTE 43 “Acquisitions, disposals and other transactions”).
The table below provides details of the significant subsidiaries of the Group:
Name of subsidiary
Principal Activity
Voting power held by the Group
31.12.2022
31.12.2021
National Securities Single Member S.A.
Brokerage services
100.00%
100.00%
Ethniki Leasing S.A.
Leasing
100.00%
100.00%
Ethniki Factors S.A.
Factoring services
100.00%
100.00%
National Bank of Greece ( Cyprus) Ltd.
Credit Institution
100.00%
100.00%
Stopanska Banka A.D. - Skopje
Credit Institution
94.64%
94.64%
The table below provides details of non-wholly -owned subsidiaries of the Group that have material non-controlling interests:
Name of subsidiary
Place of
incorporation
and operation
Proportion of ownership
interest and voting rights held
by non-controlling interests
Total comprehensive income
allocated to non-controlling
interests
Accumulated non-controlling
interests
31.12.2022
31.12.2021
31.12.2022
31.12.2021
31.12.2022
31.12.2021
Individually subsidiaries immaterial
with non-controlling interests
-
-
-
2
2
23
22
Total
-
-
2
2
23
22
NOTE 45: Independent auditor’s fees
On 28 July 2022, the Annual General Meeting of the Shareholders appointed PricewaterhouseCoopers S.A. as the principal independent
auditor of the Group and the Bank for the year ended 31 December 2022. The following table presents the aggregate fees for professional
audit services and other services rendered for the years ended 31 December 2022 and 31 December 2021 by the Group’s principal
independent auditor PricewaterhouseCoopers S.A., which is a member firm of PwC Network, other member firms of the Network and their
respective affiliates (collectively, “PwC”).
Group
Bank
2022
2021
2022
2021
Audit fees
3
3
2
2
All other fees
1
1
1
1
Total
4
4
3
3
It is noted that a) audit fees include the fees for tax audit and b) all other fees include the fees of the statutory auditor
"PricewaterhouseCoopers Greece" for non-audit services that in 2022 and 2021 amounted to €0.4 million for the Group and €0.3 million
for the Bank.
NOTE 46 Restructuring Plan
The 2019 Revised Restructuring Plan
Notes to the Financial Statements
Group and Bank
335
The Group was subject to European Commission rules on EU State aid in light of the aid received from the HFSF and the Hellenic Republic.
These rules were administered by the DG Competition. Under these rules, the Bank’s operations were monitored and limited to the
operations included in the 2019 Revised Restructuring Plan, which aimed to ensure the Bank’s return to long term viability.
The 2019 Revised Restructuring Plan was approved on 10 May 2019 by the European Commission.
The 2019 Revised Restructuring Plan included a number of commitments to implement certain measures and actions (the “2019 Revised
Restructuring Plan Commitments”). The 2019 Revised Restructuring Plan Commitments related both to domestic and foreign operations of
the Group. Differentiations to the 2015 Restructuring Plan which expired on 31 December 2018 related to the deepening of the Bank’s
operational restructuring, some amendments on the commitments and deadlines, as well as a commitment to sell the remaining stake
(32.66%) in NBG Pangaea REIC (currently Prodea Investments S.A.) in substitution for the commitment to dispose of Stopanska Banka A.D.-
Skopje.
For domestic operations, the 2019 Revised Restructuring Plan Commitments relate to constraining operating expenses, including the number
of personnel and branches. In particular, the Commitments include the following:
●
A further reduction of the number of branches in Greece to 420 (by the end of 2019) and 390 (by the end of 2020). As at 31 December
2020, the Bank had reduced its branches to 365. The Commitment has been attained.
●
A further reduction of the number of employees in Greece to 8,600 as at 31 December 2019 and 8,000 as at 31 December 2020. As at
31 December 2020, the Bank had reduced the number of employees at domestic level to 7,621 (excluding NIC). The Commitment has
been attained.
●
A further reduction of total operating expenses in Greece to €845 million as at 31 December 2019 and €800 million as at 31 December
2020. As at 31 December 2020 such costs amounted to €768 million(excluding NIC). The Commitment has been attained.
●
Divestment of domestic non-banking activities: Ιn May 2019 the Bank had completed the sale of its remaining stake in NBG Pangaea
REIC (currently Prodea Investments S.A.) Regarding the NIC, the transaction was closed on 31 March 2022. The Commitment has
been attained.
●
Divestment from international operations: The Bank reduced its international activities, by disposing certain subsidiaries in the years
2016 - 2019. The only non-complete divestment from international operations, since the Bank complied with its commitments with the
run-off of NBG Cyprus assets, relates to the Bank’s branch network in Egypt. In May 2021, an official approval was received by the
Central Bank of Egypt for the downsize and ultimately cease of operations in Egypt.
As communicated by DG Competition in June 2022, the restructuring period and the mandate of the Monitoring Trustee for NBG has ended,
as NBG complied with its commitments with the exception of the run-off of NBG Egypt. It is noted, that the size of asset deleveraging
remaining in NBG Egypt is very limited compared to the overall assets NBG deleveraged, and that NBG exceeded the overall level of
deleveraging required by the commitments of its Restructuring Plan. The effort to complete the wind-down of NBG Egypt is in progress and
NBG Egypt Branch is currently under liquidation.
NOTE 47 Ukraine crisis
On 24 February 2022, Russia invaded Ukraine where in addition to the humanitarian crisis it has caused in the
region, it has had negative economic consequences for the global economy mainly through higher energy and
commodity prices that have fuelled higher inflation which has produced weaker confidence in households and
business. The extent of these effects will depend to a great extent on how the conflict evolves. The invasion also
escalated tensions between Russia and the U.S., NATO, the EU and the U.K. The US has imposed and is likely to
impose material additional, financial and economic sanctions and export controls against certain Russian
organizations and/or individuals, with similar actions implemented by the EU and the U.K. and other jurisdictions. In
2022 the U.S., the EU and the U.K., each imposed packages of financial and economic sanctions that, in various
ways, constrain transactions with numerous Russian entities and individuals; transactions in Russian sovereign debt;
investment, trade and financing to and from certain regions of Ukraine.
Notes to the Financial Statements
Group and Bank
336
The Group has taken all necessary measures to comply with sanctions imposed by the competent authorities.
Management is closely monitoring the developments and assessing periodically the impact that these may have on
the Group’s operations and financial position. The Group has an insignificant exposure in any positions in securities,
interbank transactions (secured or unsecured), derivatives, or commercial transactions, related to Russia or Ukraine,
or to the Ruble, or with any Bank or subsidiary that is domiciled in these countries.
The Group also examined indirect exposure through its corporate loan portfolio. Corporate clients that were
analysed had one of the following characteristics:
●
Business Activity: Companies that sell their products/services in the affected countries or have local presence
through subsidiaries/ branches
●
Suppliers: Companies with key suppliers in the affected countries
●
Shareholders: Key shareholders or final beneficiary or other key stakeholder is of Russian nationality/citizenship
As a result of the Ukrainian crisis, the expected impact from first order effects on the underlying obligors, that meet
the above criteria, was deemed immaterial.
The Group also continuously invests in infrastructure to prevent, detect, and mitigate cyber threats. NBG already
has in place a robust framework supported by experienced staff and appropriate IT infrastructure to minimize the
probability of a cyber intrusion. From the onset of the crisis, NBG has proactively augmented this framework with a
significant number of preparedness and security enhancement actions which will help reduce the impact of any
such attacks.
NOTE 48 Events after the reporting period
There are no events after the reporting period.
Notes to the Financial Statements
Group and Bank
337
Disclosures of Greek Law 4261/2014 Art. 81
Country-by-country reporting in accordance with article 81 of Greek Law 4261/2014 for the year ended 31 December 2022
Turnover
(1)
€ in million
Profit before tax
€ in million
Income tax
€ in million
Employees number
Subsidies
€ in million
Greece
(2)
2,193
1,213
(264)
7,430
1
Malta
4
3
-
15
-
Bulgaria
3
-
-
32
-
Romania
(2)
-
(2)
-
50
-
North Macedonia
82
42
(4)
956
-
Cyprus
(2)
14
(7)
-
141
-
Luxembourg
1
-
-
4
-
UK
113
110
-
8
-
The Netherlands
-
-
-
-
-
Egypt
28
33
(2)
127
-
Total
2,438
1,392
(270)
8,763
1
(1)
investment securities, e) net other income / (expense) and f) share of profit / (loss) of equity method investments
(2)
Notes to the Financial Statements
Group and Bank
338
Country-by-country reporting in accordance with article 81 of Greek Law 4261/2014 for the year ended 31 December 2022
Company
Country
Business activities
National Bank of Greece S.A. (Parent Company)
Greece
Banking institution
National Securities Single Member S.A.
Greece
Capital Markets & Investment Services
NBG Asset Management Mutual Funds S.A.
Greece
Mutual Fund Management
Ethniki Leasing S.A.
Greece
Leasing
NBG Property Services Single Member S.A.
Greece
Property Services
Pronomiouhos Single Member S.A. Genikon Apothikon Ellados
Greece
Warehousing services
Ethniki Hellenic General Insurance S.A.
(1)
Greece
Insurance Services
ΚΑDΜΟS S.A.
Greece
Real Estate Services
DIONYSOS S.A.
Greece
Real Estate Services
EKTENEPOL Construction Company Single Member S.A.
Greece
Construstion Company
Mortgage, Touristic PROTYPOS Single Member S.A.
Greece
Real Estate Services
Hellenic Touristic Constructions S.A.
Greece
Real Estate Services
Ethniki Ktimatikis Ekmetalefsis Single Member S.A.
Greece
Real Estate Services
Ethniki Factors S.A.
Greece
Factoring
i-Bank Direct S.A.
(2)
Greece
Financial Services
Probank Leasing S.A.
(3)
Greece
Leasing
NBG Insurance Brokers S.A.
Greece
Insurance Brokerage
NBG Malta Holdings Ltd
(4)
Malta
Holding Company
NBG Malta Ltd
(4)
Malta
Banking institution
ARC Management Two EAD (Special Purpose Entity)
Bulgaria
Special Purpose Entity
Bankteco E.O.O.D
Bulgaria
Information Technology Services
NBG Leasing S.R.L.
Romania
Leasing
S.C. Garanta Asigurari S.A.
(1)
Romania
Insurance - Reinsurance Services
ARC Management One SRL (Special Purpose Entity)
Romania
Special Purpose Entity
Stopanska Banka A.D.-Skopje
North Macedonia
Banking institution
Stopanska Leasing DOOEL Skopje
(5)
North Macedonia
Leasing
NBG Greek Fund Ltd
Cyprus
Fund Investment Company
National Bank of Greece (Cyprus) Ltd
Cyprus
Banking institution
National Securities Co (Cyprus) Ltd
(2)
Cyprus
Capital Markets Services
NBG Management Services Ltd
Cyprus
Management Services
Notes to the Financial Statements
Group and Bank
339
Company
Country
Business activities
Ethniki Insurance (Cyprus) Ltd
(1)
Cyprus
Insurance Services
Ethniki General Insurance (Cyprus) Ltd
(1)
Cyprus
Insurance Services
National Insurance Agents & Consultants Ltd
(1)
Cyprus
Insurance Brokerage
CAC Coral Limited
(6)
Cyprus
Credit Acquiring Company
Merbolium Limited (Special Purpose Entity)
(7)
Cyprus
Special Purpose Entity
Cortelians Limited (Special Purpose Entity)
(7)
Cyprus
Special Purpose Entity
Ovelicium Ltd (Special Purpose Entity)
(7)
Cyprus
Special Purpose Entity
Pacolia Holdings Ltd (Special Purpose Entity)
(7)
Cyprus
Special Purpose Entity
NBG Asset Management Luxemburg S.A.
Luxembourg
Asset Management Company
NBG International Ltd
U.K.
Financial Services
NBGI Private Equity Ltd
(2)
U.K.
Private Equity
NBG Finance Plc
U.K.
Financial Services
NBG Finance (Dollar) Plc
(2)
U.K.
Financial Services
NBG Finance (Sterling) Plc
(2)
U.K.
Financial Services
NBG International Holdings B.V.
The Netherlands
Holding Company
NBG London Branch
(8)
U.K.
Branch of Greek banking Institution
NBG Cyprus Branch
Cyprus
Branch of Greek banking Institution
NBG Cairo Branch
Egypt
Branch of Greek banking Institution
(2) Companies under liquidation.
(3) Probank Leasing S.A. has been reclassified as Non-current assets held for sale.
(4) In October 2021, the Bank decided to cease its operation in Malta through its subsidiary NBG Bank Malta Ltd and from 31 August 2022, the subsidiaries are
under liquidation. NBG Malta Limited, formerly known as NBG Bank Malta Limited surrendered its banking licence on 11 August 2022 and subsequently placed
into liquidation.
(5) The entity was established on 24 February 2022.
(6) The disposal of CAC Coral Ltd, was completed on 15 July 2022.
(7) The entities are 100% subsidiaries of National Bank of Greece (Cyprus) Ltd from November 2022.
(8) NBG London Branch closed on 31 July 2022.
Notes to the Financial Statements
Group and Bank
340
Disclosures of Greek Law 4261/2014 Art. 82
Greek Law 4261/5.5.2014 article 82, which incorporated into Greek legislation the article 90 of Directive 2013/36/EU of the European
Parliament and of the Council of 26 June 2013, established the requirement to disclose the total return on assets. This ratio for the
Group and the Bank for the year ended 31 December 2022 amounted to 1.4% and 1.1%, respectively (2021: 1.1% and 1.0%
respectively).
Disclosures on a group level of article 6 of Greek Law 4374/2016
341
Disclosures on a group level of article 6 of Greek Law 4374/2016
Disclosures on a group level of article 6 of Greek Law 4374/2016
342
TABLE 1: PAYMENTS FOR PROMOTION AND ADVERTISING EXPENSES TO MEDIA ENTITIES
(ACCORDING TO PAR. 1 ARTICLE 6 OF LAW 4374/2016)
Name of Media entity
Net amount
2022
(in €)
1984 INDEPENDENT JOURNALISM
8.700,00
24 MEDIA S.A.
41.088,00
A.S.M. PUBLICATIONS P.C.
3.500,00
ABΡ P.C.
10.500,00
ADWEB LTD
11.000,00
AGRO BROKERS LTD
6.500,00
AIRLINΚ S.A.
13.917,60
ALPHA SATELLITE TELEVISION S.A.
362.960,44
ALPHA RADIO S.A.
15.000,00
AMOS INTERNATIONAL P.C.
1.500,00
ART SAVY P.C.
1.500,00
BANKINGNEWS S.M. S.A.
75.100,00
BETTERMEDIA P.C.
3.500,00
BRAINBUZZ MEDIA CONSULTING P.C.
1.300,00
BRAINFOOD PUBLISHING S.P. LTD
1.000,00
CRISIS MONITOR
11.800,00
DARKPONY INTERNET SERVICES P.C.
750,00
DEMO POWER P.C.
1.500,00
DG NEWSAGENCY S.A.
6.700,00
DIGIKA P.C.
2.500,00
DPG DIGITAL MEDIA S.A.
23.750,00
ENERGYCOMM LTD
3.700,00
ENIGMA M.G. S.P. P.C.
3.500,00
ETHOS MEDIA S.A
8.750,00
EUROMEDIA ACTION S.A.
2.500,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
343
Name of Media entity
Net amount
2022
(in €)
FAQ PUBLISHING S.P. P.C.
7.100,00
FAROSNET S.A.
4.400,00
FAST RIVER CREATIVE CONCEPT PUBLISHING LTD
35.910,00
FINANCIAL MARKETS VOICE S.A.
14.800,56
FORWARD MEDIA P.C.
13.700,00
FREED S.A.
9.800,00
FRONTSTAGE ENTERTAINMENT S.A
49.775,20
FUTURE ASSET S.P. P.C.
2.500,00
GRATIA PUBLISHING LTD
1.500,00
GURU PUBLISHING
1.000,00
HAZLIS AND RIVAS COMMUNICATIONS LTD
35.000,00
HT PRESS ONLINE S.P. P.C.
12.000,00
CONGRESS LINE
4.838,71
ICAP GROUP S.A.
13.250,00
INFINITAS P.C.
700,00
INSOMNIA P.C.
1.400,00
INTELLIGENT MEDIA LTD
34.500,00
INTERNATIONAL RADIO NETWORKS S.A.
17.556,60
ISERVICES KAPSALIS GEORGIOS
1.000,00
JP COMMUNICATIONS L.P.
2.000,00
K.E.D. HEALTH G.P.
49.666,66
KDB P.C.
7.500,00
KEYWE BUSINESS SOLUTIONS
5.000,00
KISS MEDIA S.A.- KISS ENTERPRISES
10.918,16
KONTRA P.C.
4.000,00
KONTRA MEDIA S.A.
3.185,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
344
Name of Media entity
Net amount
2022
(in €)
KOOLWORKS S.A.
8.500,00
KYRTSOS GROUP L.P.
20.300,00
LIQUID MEDIA S.A.
53.500,00
MARKETING AND MEDIA SERVICES S.P. P.C.
2.000,00
MEDIA MATRIX S.M.P.C
4.500,16
MEDIA2DAY PUBLISHING S.A.
81.050,00
MINDSUPPORT P.C.
9.500,00
MONOCLE MEDIA LAB - MONONEWS P.C.
86.608,00
MORAX MEDIA PUBLISHING S.A.
3.504,00
MPAM MEDIA P.C.
4.000,00
MY RADIO S.P. LTD
9.864,78
NEW MC & Co L.P.
4.250,00
NEW MEDIA NETWORK SYNAPSIS S.A.
109.500,00
NEW TIMES PUBLISHING P.C.
2.000,00
NEWPOST PRIVATE COMPANY
8.650,00
NEWSIT LTD
65.000,00
NEWSROOM S.P. P.C.
3.400,00
NK MEDIA GROUP LTD
18.700,00
NOTICE CONTENT AND SERVICES S.M. P.C.
1.700,00
NOVA BROADCASTING S.P. S.A.
22.475,53
ON ACTIVE L.P.
2.700,00
ONE BRAND STUDIO P.C.
3.000,00
ONE DIGITAL SERVICES S.A.
39.000,00
PERFECT MEDIA ADVERTISING S.P. P.C.
63.000,00
POLITICAL PUBLISHING P.C.
1.000,00
POWERGAME MEDIA P.C.
10.250,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
345
Name of Media entity
Net amount
2022
(in €)
PREMIUM S.A.
25.300,00
PREMIUMMEDIA P.C.
2.500,00
PRESSROOM MEDIA S.P. P. C.
5.500,00
PRIME APPLICATIONS S.A.
54.600,00
PRIME ONE LTD
5.605,20
PRODUCT GREEK P.C.
500,00
R MEDIA PUBLISHING LTD
8.000,00
RADIO PLAN BEE P.C.
4.042,69
REAL MEDIA S.A.
116.400,00
REPORT PRIVATE COMPANY
5.000,00
SABD PUBLISHING S.A.
87.750,00
SATCO MEDIA TV
2.000,00
SFERA RADIO BROADCASTING S.A.
16.006,00
SOLAR MEDIA S.A.
3.695,00
SPORT TV- RADIOTELEVISION BROADCASTING S.A.
7.118,35
SPORTDOG P.C.
850,00
SPORTNEWS INTERNET SERVICES S.A.
7.900,00
TELIA COMMUNICATIONS S.A.
2.800,00
TELIA INTERNET P.C.
1.000,00
THE TOC DIGITAL MEDIA SERVICES S.A.
54.550,00
THESSALONIKI 89 RAINBOW S.P. LTD
7.747,60
TLIFE LTD
12.750,00
TYPOS MEDIA LTD
7.200,00
VITO PR & EVENTS
2.500,00
VOTE POSITIVE CRITERION COMMUNICATIONS LTD
7.000,00
W.S.F. WALL STREET FINANCE P.C.
12.300,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
346
Name of Media entity
Net amount
2022
(in €)
WAVE MEDIA OPERATIONS P.C.
800,00
ZOFRANK HOLDINGS CO. LIMITED
67.300,04
ZOUGLA.GR S.A.
37.803,86
ADESMEFTI ENIMEROSI P.C.
2.200,00
ATHANASIOS DOUNIAS & Co G.P.
3.000,00
ΑTHΕΝS VOICE PUBLISHING S.A.
45.250,00
ATHENS NEWS AGENCY - MACEDONIAN PRESS AGENCY S.A.
24.400,00
AKOH S.A.
2.354,00
REALFM S.A.
100.200,00
ALTER EGO MEDIA S.A.
947.801,99
INDEPENDENT MEDIA S.A.
51.000,00
ΑΝΤΕΝΝΑ TV S.A.
438.647,27
NEW TECHNOLOGIES & INTERNET APPLICATIONS R&D S.A.
66.855,00
ARGO PUBLISHING AND ADVERTISING CO LTD
1.700,00
ATTICA DEPARTMENT STORES S.A.
5.000,00
BARMAZH N. GLYKERIA
856,80
VASILEIOS LIATSOS & Co L.P.
500,00
VERGINA TELEVISION
2.500,00
VORIA INFORMATIVE SA
2.250,00
G. SIMANTONIS & CO G.P.
750,00
GENERAL RADIOTELEVISION ENTERPRISES S.A.
6.498,25
D. ROUCHOTAS & CO G.P.
3.326,62
DΕSΜI PUBLISHING ADVERTISING RADIO & INTERNET APPLICATIONS S.A.
5.800,00
DIMITRIADIS TH. & CO P.C.
2.800,00
JUDICIAL NEWS AGENCY P.C.
6.500,40
DIOGENIS NPO
3.000,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
347
Name of Media entity
Net amount
2022
(in €)
DIONISIOS MPOURAS & Co L.D.
4.000,00
DΟUSIS ΑΝΑSΤΑSΙΟS & CO L.P.
1.300,00
DYADIKH INFORMATION L.D.
24.700,00
DIΟ DΕΚΑ PUBLISHING COMPANY S.A.
51.400,00
Ε.SPΥRΟU-G.Κ.SPΥRΟU G.P.
4.838,71
THE NATIONAL HERALD OF NEW YORK HELLAS LTD
1.300,00
DOT COM NEWS S.A.
519.326,29
PUBLICATIONS INFONEWS P.C.
7.500,00
MOTORI PUBLICATIONS LTD
500,00
AGRIMANAKH PUBLICATIONS S.A.
6.000,00
KARAMANOGLOU PRINTING MATERIAL PUBLICATIONS L.T.D.
3.800,00
INVESTMENT PUBLISHING S.A.
13.700,00
ΝΕΟ CHRIMA PUBLISHING S.A.
62.333,30
PROΤΟ THΕΜΑ PUBLISHING S.A.
430.183,33
ELEFTHERIA TIPOU PUBLISHING S.A.
80.500,00
GREEK SHIPPING PUBLISHING LTD
1.000,00
AMERICAN HELLENIC CHAMBER OF COMMERCE
2.400,00
GERMAN HELLENIC CHAMBER OF COMMERCE AND INDUSTRY
1.000,00
ΕΝΙΚΟS S.A.
30.000,00
ΕΝΤΥPOEKDOTIKI INDUSTRIAL & COMMERCIAL S.A.
29.300,00
EXPLORER S.A.
20.000,00
EPILOGOS N.P.C.P.
6.000,00
ERINYA NEWS S.P P.C.
500,00
ERMIDI GEORGIA
1.125,00
ESTIA MEDIA INVESTMENTS SA
65.250,00
EVAGGELOS SPYROU LTD
605,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
348
Name of Media entity
Net amount
2022
(in €)
ESTIA NEWSPAPER S.A.
77.800,00
ZOUGRIS DIMITRIOS & CO L.P.
500,00
AVGI PUBLISHING S.A.
4.500,00
HLIAS KANELLIS & Co. L.D.
4.000,00
HERODOTUS RADIO P.C.
1.308,00
ICHOS & RITHMOS S.A.
17.452,85
THEMA RADIO S.P S.A.
11.220,80
IASO HEALTHCARE SERVICES S.A.
1.000,00
IATRONET INTENET APPLICATIONS LTD
1.500,00
IKAROS RADIOTELEVISION COMPANY S.A.
14.871,50
INSTITUTE OF RESEARCH & STUDIES OF CENTRAL UNION OF HELLENIC CHAMBERS OF COMMERCE
2.000,00
Ι. DIONATOS & CO L.P.
12.000,00
IOANNIS KIRIAKOPOULOS & CO L.P.
2.000,00
K.M. CHATZIILIADIS & CO L.P.
10.954,67
KATHIMERINES PUBLICATIONS S.P. S.A.
596.725,04
INNOVATIVE ALTERNATIVE & SOCIAL ACTIONS
1.500,00
KALOPOULOU G.MARIA
300,00
ΚΑΝΤΖΙΟS GR S.A.
2.000,00
CAPITAL.GR S.A.
121.400,00
KARAHALIOS ANTONIOS
3.500,00
KATSATOU PINELOPI & CO S.A.
15.000,00
SOCIAL COOPERATIVE ENTERPRISE
1.600,00
COSMORADIO L.P.
6.366,80
CRETAN NEWS PAPADAKIS MICHALIS
1.000,00
KYRIAKOPOULOS IOANNIS F.
2.500,00
LAMPSI RADIO & PUBLISHING COMPANIES S.A.
17.447,60
Disclosures on a group level of article 6 of Greek Law 4374/2016
349
Name of Media entity
Net amount
2022
(in €)
LEFKOFRIDOU ZOI P.C.
4.000,00
LEOTSAKOS -BOUSBOURELIS G.P.
6.900,00
LYKAVITOS PUBLICATIONS S.P. P.C.
10.000,00
MACEDONIA TV SA
10.155,75
MACEDONIA MEDIA S.A.
500,00
MALTEZOS DIMITRIOS
295,00
ΜΑΜΑ 365 INTERNET COMPANIES LTD
37.650,00
ΜΑΝΕSIOTIS ΝΙΚ-PSOΜΙΑDIS CON. G.P.
7.301,06
MARIA VASILAKI PUBLICATIONS S.P.C.
13.500,00
ME ODIGO TO DIABHTH NPO
800,00
MESSAROPOULOU CONSTANTINA
18.000,00
ΜΕΤRΟDEAL S.P.C.
22.435,20
MIHELAKIS IOANNIS & Co L.D.
3.000,00
BΟUSΙΑS COMMUNICATIONS LTD
7.800,00
ΝEA TELEORASI S.A.
279.876,33
NIKOLAOS KOSMOPOULOS
1.000,00
NOISIS P.C.
12.000,00
OKTAS MEDIA P.C.
28.500,00
OPINION POST DIGITAL PUBLICATIONS S.A.
8.000,00
MASS MEDIA ORGANISATION S.A.
3.556,80
ΟΤΕ S.A.
17.555,01
P.D. PUBLICATIONS L.TD.
13.000,00
PANCRETAN RADIOTELEVISION S.A.
3.319,93
PΑLΟ LTD – DIGITAL TECHNOLOGIES
4.500,00
PANAGIOTIS DOUKAS
700,00
PAPADOGIANNH MARIA
1.500,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
350
Name of Media entity
Net amount
2022
(in €)
PΑPΑLΙΟS CONSTANTINOS & CO L.P. "DIRECTION BUSSINESS NETWORK"
11.140,00
PAPATRIANTAFYLLOU GEORGIOS
4.500,00
PΑRΑ ΕΝΑ INTERNET SERVICES S. LTD
149.746,55
PΑRΑPΟLΙΤΙΚΑ PUBLISHING S.A.
15.500,00
PΑVLΟPΟULΟS S. - INTERNET & SOCIALMEDIA
5.000,00
PELOPONNESE PATRON EDITIONS S.A.
1.800,00
PRΟΤΑGΟΝ S.A.
21.300,00
RADIO ATHENS S.P. LTD
2.654,40
RADIO ΤΗΕSSΑLΟΝΙΚΙ S.A.
15.512,00
RADIOPLIROFORIKI MASS MEDIA S.A.
450,00
RADIOTELEVISION GREEK PUBLISHING MEDIA S.A.
6.000,80
BROADCASTING ENTERPRISES S.A.
10.498,85
RADIOTELEVISION S.A.
145.889,47
RADIO NORTH 98 FM P.C. LTD
24.300,00
RADIO PRODUCTIONS SA
11.299,80
RADIO COMMUNICATION S.P. S.A.
15.464,00
SΕLΑΝΑ S.A.
5.000,00
SIMOUSI L.P.
9.800,00
CINE NEWS S.A.
47.563,00
SICHRONI ΕPΟCHI PUBLISHING I.C.S.A.
2.800,00
ALLIANCE FOR GREECE
4.900,00
SIRGΑΝI LΑΜ. PΑRΑSΚΕVI
300,00
TO MANIFESTO P.C.
15.300,00
TRAPEZIKOS AGONAS TOMELITOU I. KASTORINI
900,00
FELNIKOS S.P LTD
4.650,00
PHILELEFTHEROS TYPOS S.A.
114.750,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
351
Name of Media entity
Net amount
2022
(in €)
FOTAGOGOS LTD
1.500,00
FOTINOS FOTIOS
2.000,00
CHRISTOS DIMOU & Co L.P. DMG
849,30
XRISI EFKERIA S.A.
4.500,00
TOTAL
7.363.900,61
Note:
Additional disbursements related to the above payments have been made, in compliance with the existing legislative, fiscal and
regulatory framework, for VAT, tax and levies on TV and radio advertisements and other charges, amounting to €1,898,989.51.
Disclosures on a group level of article 6 of Greek Law 4374/2016
352
TABLE 2: PAYMENTS FOR DONATIONS, GRANTS AND SPONSORSHIPS
(ACCORDING TO PAR. 2 ARTICLE 6 OF LAW 4374/2016)
Legal Entities
Beneficiary
Net amount
2022
(in €)
"MELISSA" FEMALE ORPHANAGE
2.173,68
3D PRIMARY SCHOOL OF MAGOULA
1.390,00
APOLYTO CREATIVE SPOT
535,50
ATHENS DEMOCRACY FORUM
10.000,00
AVADAR ΜΟΝΟΠΡΟΣΩΠΗ P.C.
20.000,00
B & P P.C., ENERGYPRESS
5.000,00
CAPITAL LINK
22.500,00
COEURS POUR TOUS HELLAS
10.000,00
CYBERMEDIA S.A.
10.000,00
DELPHI ECONOMIC FORUM NPO
20.000,00
EKI ENERGY SERVICES LTD
1.742,17
EXCELLENSEAS: «SEAS OF EXCELLENCE OF PASTRA CRETONAXIOSA NPO»
12.000,00
FINANCE CLUB UNIVERSITY OF MACEDONIA
1.000,00
FLOWER POWER JOINT VENTURE
2.950,00
GEO ROUTES CULTURAL INSTITUTE
17.000,00
GET INVOLVED
7.000,00
HAZLIS & RIVAS COMMUNICATIONS LTD
50.000,00
Institute of Finance and Financial Regulation (IFFR) & EBRD
3.000,00
MINDVIEW FINANCIAL AND RESEARCH CONSULTANTS
8.000,00
NB EVENTS
2.000,00
PALLADIAN COMMUNICATION SPECIALISTS
7.000,00
PROGAME S.A.
110.000,00
WAVE MEDIA OPERATIONS P.C. - RED BUSINESS FORUM
3.000,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
353
Beneficiary
Net amount
2022
(in €)
WORLD HUMAN FORUM
10.000,00
WWF
10.000,00
ZOFRANK HOLDINGS CO. LIMITED
12.000,00
ACADEMY OF ATHENS
5.000,00
AXANA
3.000,00
APOSTOLI NON-PROFIT ORGANIZATION
40.000,00
POLICE DEPARTMENT OF MANDRA
44,56
PATTAS VASILEIOS S.A.
11.952,00
GENERAL HOSPITAL OF PATRAS "AGIOS ANDREAS"
4.443,00
GENERAL HOSPITAL "IPPOKRATEIO"
10.000,00
GENERAL HOSPITAL OF NIKAIA-PIRAEUS " AGIOS PANTELEHMON"
7.600,00
GENERAL HOSPITAL OF LAKONIA
8.500,00
GENERAL HOSPITAL OF ATHENS EVAGGELISMOS
392.722,00
GYMNASIUM OF AETOS MUNICIPALITY OF AMYNTAIO FLORINAS
2.000,00
GYMNASTIC AND ATHLETIC ASSOCIATION OF CHOLARGOS
10.000,00
DESMOS NON-PROFIT FOUNDATION
90.000,00
MUNICIPALITY OF MINOA PEDIADOS
18.816,00
PRIMARY SCHOOL OF ASVESTOPETRA MUNICIPALITY OF AORDEA KOZANIS
2.000,00
PRIMARY SCHOOL OF NESTORIO KASTORIAS
2.000,00
THESSALONIKI INTERNATIONAL FAIR S.A.
150.000,00
PIRAEUS LAWYER ASSOCIATION
5.000,00
SPECIAL ACCOUNT FOR RESEARCH FUNDING TECHNICAL UNIVERSITY OF CRETE
6.000,00
GREEK NATIONAL OPERA
70.000,00
NATIONAL TECHNICAL UNIVERSITY OF ATHENS
4.747,20
SPECIAL ACCOUNT FOR RESEARCH FUNDING UNIVERSITY OF THESSALY iGem Thessaly
2.000,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
354
Beneficiary
Net amount
2022
(in €)
SPECIAL ACCOUNT FOR RESEARCH FUNDING UNIVERSITY OF IOANNINA
4.000,00
ELETEAN MAKE
1.500,00
HELLENIC POLICE
867,07
HELLENIC ASSOCIATION FOR ENERGY ECONOMICS (HAEE)
22.000,00
SOCIETY FOR THE ENVIRONMENT AND CULTURAL HERITAGE
5.000,00
ELEPAP-GREEK REHABILITATION FOR THE DISABLED
7.000,00
AMERICAN HELLENIC CHAMBER OF COMMERCE
9.000,00
General Philoptochos of the Holy Metropolis AGIOU GEORGIOU ELEFSINAS
3.000,00
TOGETHER FOR CHILDREN
10.000,00
HELLENIC CHAMBER OF ATHENS
12.000,00
EPOMEA GREECE
2.571,87
OPA PROPERTY UTILIZATION AND MANAGEMENT COMPANY
1.500,00
SPASTICS SOCIETY ATHENS
2.204,41
ETAM CONSULTING COMPANY
120.000,00
LYCEUM OF KARPEROU DESKATI GREVENON
1.500,00
"PAMMAKARISTOS" FOUNDATION
884,13
FULBRIGHT FOUNDATION
10.000,00
FOUNDATION OF GEORGIOS AND AIKATERINH XATZHKONSTA
3.622,81
SIMITIS FOUNDATION
3.000,00
FOUNDATION FOR ECONOMIC AND INDUSTRIAL RESEARCH
6.000,00
HOME SHELTER FOR FEMALES "AGIOS ALEXANDROS"
3.000,00
HOLY METROPOLIS OF PATRAS
5.000,00
ST. MAXIM THE GREEK INSTITUTE
5.000,00
INSTITUTE AGAINST FRAUD
1.500,00
UNIVERSITY OF PIRAEUS RESEARCH CENTER
6.000,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
355
Beneficiary
Net amount
2022
(in €)
RECEPTION & SOLIDARITY CENTER OF THE MUNICIPALITY OF ATHENS
1.425,00
ARK OF THE WORLD NPO
4.000,00
ATHENS COLLEGE
6.000,00
LYCEUM GYMNASIUM OF NESTORIO KASTORIAS
2.000,00
NATIONAL BANK OF GREECE CULTURAL FOUNDATION
2.208.000,00
BENAKI MUSEUM
75.000,00
MPOUSIAS COMMUNICATIONS LTD
10.000,00
GENERAL HOSPITAL "MHTERA"
2.000,00
VOLUNTEER SUPPORT GROUP "STIRIXI"
6.000,00
MEGARON OF ATHENS CONCERT HALL
943,39
PANARCADIAN GENERAL HOSPITAL
707,55
PANHELLENIC ASSOCIATION OF CHILDREN WITH AUTISM AND DOWN SYNDROM " POWER
OF LIFE"
1.000,00
PANHELLENIC EXPORTERS ASSOCIATION
5.000,00
PANHELLENIC ASSOCIATION OF INSURANCE ADVISORS (PSSAS)
1.000,00
CULTURAL COMPANY PROMHTHEAS
5.000,00
ASSOCIATION OF PARENTS "SYZOI"
150,04
FOREST FIREFIGHTERS’ VOLUNTEERS OF ATTICA
651,02
ASSOCIATION OF APPRECIATORS OF GREECE
3.000,00
KETHEA STROFI
3.000,00
ASSOCIATION OF FRIENDS OF PATRIARCHAL GREAT SCHOOL OF THE NATION
16.793,00
TSOMOKOS SYMEON S.A.
25.000,00
HELLENIC THERAPEUTIC EQUESTRIAN ASSOCIATION
2.000,00
SCOUTS OF GREECE
2.760,00
JUNIOR ACHIEVEMENT GREECE
3.000,00
Disclosures on a group level of article 6 of Greek Law 4374/2016
356
Beneficiary
Net amount
2022
(in €)
FUND OF ARCHAELOGICAL MEANS AND EXPROPRIATIONS (TAPA)
154.848,36
MUTUAL HEALTH FUND OF NATIONAL BANK OF GREECE PERSONNEL
106.731,00
TECHNICAL CHAMBER OF GREECE (TCG)
Vertical Solutions SA
12.000,00
UNITED NATIONS HIGH COMMISSIONER
10.000,00
FRAGKAKIS KIMON " NEW RUN"
5.000,00
TOTAL
4.123.275,76
Individuals
Number of individuals
Net amount
2022
(in €)
3
285.000,00
Note:
Additional disbursements related to the above payments have been made, in compliance with the existing legislative, fiscal and
regulatory framework, for VAT and other charges, amounting to €425.038,69.
Availability of the Annual Financial Report
357
Availability of the Annual Financial Report
The Annual Financial Report, which includes:
●
Certifications by the Members of the Board of Directors
●
The Board of Directors’ Report
●
The Audit Committee Report
●
The Supplementary Report
●
The Independent Auditor’s Report
●
The Annual Financial Statements of the Group and the Bank
●
Disclosures of Greek Law 4261/2014 Art. 81
●
Disclosures of Greek Law 4261/2014 Art. 82
●
Disclosures on a Group level of Greek Law 4374/2016 Art. 6
is available on the website address: http://www.nbg.gr
The website paths for the Annual Financial Statements, the Independent Auditors’ report and the Board of Directors’ Report of
consolidated companies are summarised below:
Availability of the Annual Financial Report
358
Availability of the Annual Financial Report
359
Subsidiaries
Country
URL
Availability of the Annual Financial Report
360
National Securities Single Member S.A.
Greece
http://www.nbgsecurities.com/about -us/financial-reports
Availability of the Annual Financial Report
361
NBG Asset Management Mutual Funds S.A.
Greece
www.nbgam.gr
Availability of the Annual Financial Report
362
Ethniki Leasing S.A.
Greece
http://www.ethnolease.gr/Financial.aspx
Availability of the Annual Financial Report
363
NBG Property Services Single Member S.A.
Greece
ΓΕΜΗ :: Υπηρεσίες Δημοσιότητας (businessportal.gr)
Availability of the Annual Financial Report
364
Pronomiouhos Single Member S.A. Genikon Apothikon Ellados
Greece
https://paegae.gr/oikonomika -stoixeia/
Availability of the Annual Financial Report
365
ΚΑDΜΟS S.A.
Greece
ΓΕΜΗ :: Υπηρεσίες Δημοσιότητας (businessportal.gr)
Availability of the Annual Financial Report
366
DIONYSOS S.A.
Greece
ΓΕΜΗ :: Υπηρεσίες Δημοσιότητας (businessportal.gr)
Availability of the Annual Financial Report
367
EKTENEPOL Construction Company Single Member S.A.
Greece
ΓΕΜΗ :: Υπηρεσίες Δημοσιότητας (businessportal.gr)
Availability of the Annual Financial Report
368
Mortgage, Touristic PROTYPOS Single Member S.A.
Greece
ΓΕΜΗ :: Υπηρεσίες Δημοσιότητας (businessportal.gr)
Availability of the Annual Financial Report
369
Hellenic Touristic Constructions S.A.
Greece
ΓΕΜΗ :: Υπηρεσίες Δημοσιότητας (businessportal.gr)
Availability of the Annual Financial Report
370
Ethniki Ktimatikis Ekmetalefsis Single Member S.A.
Greece
ΓΕΜΗ :: Υπηρεσίες Δημοσιότητας (businessportal.gr)
Availability of the Annual Financial Report
371
Ethniki Factors S.A.
Greece
ΟΙΚΟΝΟΜΙΚΕΣ ΚΑΤΑΣΤΑΣΕΙΣ (nbgfactors.gr)
Availability of the Annual Financial Report
372
Probank Leasing S.A.
Greece
https://www.nbg.gr/el/omilos/drasthriothtes/etairies/pbleasing
Availability of the Annual Financial Report
373
NBG Insurance Brokers S.A.
Greece
https://www.nbg.gr/el/omilos/drasthriothtes/etairies/nbginsurancebrokers
Availability of the Annual Financial Report
374
ARC Management Two EAD (Special Purpose Entity)
Bulgaria
https://portal.registryagency.bg/CR/en/Reports/ActiveConditionTabResult?uic=202565274
Availability of the Annual Financial Report
375
Bankteco E.O.O.D.
Bulgaria
https://portal.registryagency.bg/CR/en/Reports/ActiveConditionTabResult?uic=204125829
Availability of the Annual Financial Report
376
NBG Leasing S.R.L.
(1)
Romania
https://mfinante.gov.ro/domenii/informatii -contribuabili/persoane-juridice/info -pj-
selectie-dupa-cui
Availability of the Annual Financial Report
377
ARC Management One SRL (Special Purpose Entity)
Romania
https://mfinante.gov.ro/domenii/informatii -contribuabili/persoane-juridice/info -pj-
selectie-dupa-cui
Availability of the Annual Financial Report
378
Stopanska Banka A.D.-Skopje
North
Macedonia
https://www.stb.com.mk/en/the -bank/data-and-reports/#Financial_Reports
Availability of the Annual Financial Report
379
Stopanska Leasing DOOEL Skopje
North
Macedonia
https://www.stopanskaleasing.mk/
Availability of the Annual Financial Report
380
NBG Greek Fund Ltd
Cyprus
https://www.companies.gov.cy/en/company -lifecycle/search-for-company -information
Availability of the Annual Financial Report
381
National Bank of Greece (Cyprus) Ltd
Cyprus
https://www.nbg.com.cy/i -trapeza-mas/ikonomiki-pliroforisi/
Availability of the Annual Financial Report
382
NBG Management Services Ltd
Cyprus
https://www.companies.gov.cy/en/company -lifecycle/search-for-company -information
Availability of the Annual Financial Report
383
NBG International Ltd
U.K.
https://find-and-update.company-information.service.gov.uk/
Availability of the Annual Financial Report
384
NBG Finance Plc
U.K.
https://find-and-update.company-information.service.gov.uk/
Availability of the Annual Financial Report
385
NBG International Holdings B.V.
The Netherlands
www.kvk.nl
Availability of the Annual Financial Report
386
Notes:
Availability of the Annual Financial Report
387
(1) Entity has no obligation by the law to publish the Financial Statements. The obligation is to submit the Financial Statements to the Ministry of Finance and the Ministry of Finance makes public, on short, the financial
position of the company.
Availability of the Annual Financial Report
388