The impact of COVID-19 in the Greek Banking Sector and Credit Risk

The disruption and implications of COVID-19 are already imminent in the society and economy. Rapidly changing social norms, restrictions on transportation, slowdown in the level of economic activity, possible disruptions in the supply chain, high degrees of volatility in the markets and shock in the market sentiment constitute some of the preliminary challenges to deal with. Responses from governments and regulators are intense but as the outbreak prompts high social and financial stakes with unknown outcomes at this moment, substantial adjustments and policy actions should still be expected in order to mitigate the impact of the disease in the global and domestic economies.

Despite the global nature of the outbreak, Greek banks are facing the challenge to deal with a new type of crisis after only a profound “small break” from a prolonged period of turbulence. In this context, decision-makers and practitioners need to understand the implications of the outbreak caused as a result of COVID-19 and manage effectively the risks stemming from it in order to ensure resilience. At this moment no one can provide a reasonable estimate about how long the outbreak will last and as such timely responses are necessary.

With the aim to tread along these unfamiliar paths with confidence, holistic approaches are needed in order to mitigate the impact of this “black swan” event to the degree possible. If the common goal, is to preserve social and financial stability and resilience in this turbulent era, it is in our joint interest to help motivate all forces available to win this battle.