Piraeus Bank, under CEO Christos Megalou, has undergone a remarkable transformation, earning it the prestigious “World’s Best Bank Transformation” award from Euromoney. This award recognizes the bank’s significant improvements in restructuring and financial health, highlighting Greece’s economic recovery after the Eurozone sovereign debt crisis. The information in this article was originally published by Euromoney on July 19, 2024, as part of their series presenting the 2024 ‘Awards for Excellence’ to various banks.

Piraeus Bank’s return to full private ownership in March 2024 was a key milestone, signifying Greece’s economic resurgence. The bank successfully managed a €1.35 billion offering, allowing the Hellenic Financial Stabilization Fund (HFSF) to sell its entire 27% stake in Piraeus, demonstrating the bank’s recovery.

The bank, Greece’s largest by acquisitions before and after the crisis, faced a significant non-performing loan (NPL) problem. By 2015, it needed substantial capital to cover shortfalls identified by European Central Bank stress tests. A €2.7 billion state contribution helped, but leadership changes soon followed.

When Christos Megalou became CEO in 2017, Piraeus Bank’s market capitalization had dropped to €360 million. By 2024, it had grown to €5 billion. Under Megalou’s leadership, the bank reduced its non-performing exposure ratio from 52% in 2017 to 3.5% by the end of 2023. The workforce was streamlined from over 18,000 employees in 2016 to around 8,000, and more than two-thirds of its branch network was closed. The bank also divested from operations in Albania, Bulgaria, Romania, and Serbia.

A pivotal moment was the €1.4 billion recapitalization in 2021, described as a “re-IPO.” This marked the re-entry of international institutional investors and the state’s stake reduction. It enabled Piraeus to issue Greece’s first additional tier-1 bond and accelerated NPL portfolio sales under the Sunrise plan.

The bank’s credibility, rebuilt since 2017, played a crucial role in the successful HFSF sell-down. Megalou emphasizes that Piraeus has consistently delivered on its market promises. The 2023 results were the best in its history, with a 16.6% normalized return on average tangible book value and a cost-to-income ratio of 31%.

Looking forward, Piraeus Bank aims to maintain a cost-to-income ratio below 40% and achieve a normalized return on equity between 12% and 14%. The bank, holding a 65% share of Greece’s bankable population, expects reported net profit to increase from €800 million in 2023 to €1 billion in 2025 and 2026.

A key part of the bank’s growth strategy is its focus on wealth and asset management. Since 2018, Piraeus has achieved a compound annual growth rate of 27% in assets under management, aided by initiatives such as the 2022 acquisition of alternative asset manager Iolcus. This growth reflects the bank’s comprehensive transformation and increasing trustworthiness as a capital harbor in Greece.

Christos Megalou concludes that the significant appreciation in the bank’s share price and confidence in the banking system’s restructuring are pivotal to the group’s success. Piraeus Bank’s transformation is a story of recovery, strategic growth, and resilience, earning it deserved recognition on the global stage.

This article is based on information originally published by Euromoney on July 19, 2024.