JEUVK5RWVJEN8W0C9M24 2023-01-01 2023-12-31 JEUVK5RWVJEN8W0C9M24 2023-12-31 JEUVK5RWVJEN8W0C9M24 2022-12-31 JEUVK5RWVJEN8W0C9M24 2022-01-01 2022-12-31 JEUVK5RWVJEN8W0C9M24 2021-12-31 JEUVK5RWVJEN8W0C9M24 2021-12-31 ifrs-full:IssuedCapitalMember JEUVK5RWVJEN8W0C9M24 2021-01-01 2021-12-31 ifrs-full:IssuedCapitalMember JEUVK5RWVJEN8W0C9M24 2021-12-31 ifrs-full:SharePremiumMember JEUVK5RWVJEN8W0C9M24 2021-01-01 2021-12-31 ifrs-full:SharePremiumMember JEUVK5RWVJEN8W0C9M24 2021-12-31 ERB:ReservesAndRetainedEarningsMember JEUVK5RWVJEN8W0C9M24 2021-01-01 2021-12-31 ERB:ReservesAndRetainedEarningsMember JEUVK5RWVJEN8W0C9M24 2021-12-31 ifrs-full:NoncontrollingInterestsMember JEUVK5RWVJEN8W0C9M24 2021-01-01 2021-12-31 ifrs-full:NoncontrollingInterestsMember JEUVK5RWVJEN8W0C9M24 2021-01-01 2021-12-31 JEUVK5RWVJEN8W0C9M24 2022-01-01 2022-12-31 ifrs-full:IssuedCapitalMember JEUVK5RWVJEN8W0C9M24 2022-12-31 ifrs-full:IssuedCapitalMember JEUVK5RWVJEN8W0C9M24 2022-01-01 2022-12-31 ifrs-full:SharePremiumMember JEUVK5RWVJEN8W0C9M24 2022-12-31 ifrs-full:SharePremiumMember JEUVK5RWVJEN8W0C9M24 2022-01-01 2022-12-31 ERB:ReservesAndRetainedEarningsMember JEUVK5RWVJEN8W0C9M24 2022-12-31 ERB:ReservesAndRetainedEarningsMember JEUVK5RWVJEN8W0C9M24 2022-01-01 2022-12-31 ifrs-full:NoncontrollingInterestsMember JEUVK5RWVJEN8W0C9M24 2022-12-31 ifrs-full:NoncontrollingInterestsMember JEUVK5RWVJEN8W0C9M24 2023-01-01 2023-12-31 ifrs-full:IssuedCapitalMember JEUVK5RWVJEN8W0C9M24 2023-12-31 ifrs-full:IssuedCapitalMember JEUVK5RWVJEN8W0C9M24 2023-01-01 2023-12-31 ifrs-full:SharePremiumMember JEUVK5RWVJEN8W0C9M24 2023-12-31 ifrs-full:SharePremiumMember JEUVK5RWVJEN8W0C9M24 2023-01-01 2023-12-31 ERB:ReservesAndRetainedEarningsMember JEUVK5RWVJEN8W0C9M24 2023-12-31 ERB:ReservesAndRetainedEarningsMember JEUVK5RWVJEN8W0C9M24 2023-01-01 2023-12-31 ifrs-full:NoncontrollingInterestsMember JEUVK5RWVJEN8W0C9M24 2023-12-31 ifrs-full:NoncontrollingInterestsMember iso4217:EUR iso4217:EUR xbrli:shares
ANNUAL
FINANCIAL
REPORT
FOR THE YEAR ENDED
31 DECEMBER 2023
According to
Article 4 of the Law 3556/2007
Table
of Contents
A.
Corporate Governance
I.
Statements of the members of
the Board of Directors
II.
Report of the Directors and Corporate
Governance Statement
Appendix: Audit Committee Activity Report
B.
Auditor’s Report and Financial Statements
I.
Ιndependent Auditor’s Report
II.
Consolidated Financial Statements of the Company
for the year
ended 31 December 2023
III.
Financial Statements οf the Company
for the year
ended 31 December 2023
Statements
of Members of the Board of Directors
(according to the article 4 par. 2 of the Law 3556/2007)
We declare that to the best of our knowledge:
●
the annual
financial
statements
for the
year
ended 31
December 2023,
which
have been
prepared in accordance with the applicable accounting standards,
present fairly the assets,
liabilities, equity
and annual
results of Eurobank
Ergasias Services
and Holdings
S.A. and
the companies included in the consolidation,
and
●
the annual report
of the Board
of Directors presents fairly
the development, the performance
and the position of the
Eurobank Ergasias Services and Holdings S.A
and of the companies
included in
the consolidation,
including the
description
of the
main risks
and uncertainties
they face.
Athens, 28 March 2024
Georgios P.
Zanias
I.D. No AI – 414343
CHAIRMAN
OF THE BOARD OF
DIRECTORS
Fokion C. Karavias
I.D. No ΑΙ - 677962
CHIEF EXECUTIVE
OFFICER
Stavros E. Ioannou
I.D. No AH - 105785
DEPUTY
CHIEF EXECUTIVE
OFFICER
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
1
|
Page
€ = Euro
m = million
bn = billion
The directors
present their report
together with
the financial statements
for the
year ended 31 December 2023.
General information
Eurobank Ergasias Services and Holdings S.A. (the Company or Eurobank Holdings) is a holding company listed
on the Athens Exchange, owning 100% of the share
capital of Eurobank S.A. (the Bank). Eurobank
Holdings and
its
subsidiaries
form
a
group
(Group),
consisting
mainly
of
Eurobank
Group,
that
being
the
Bank
and
its
subsidiaries. The Company’s operations principally relate to the
strategic planning of the non-performing loans
management and the provision
of services to the
Group entities and third
parties.
Financial Results Review and Outlook
1
In 2023,
on the
back of
a positive
macroeconomic
backdrop
in Greece
and the
other
countries of
substantial
presence,
the
Group
enhanced
its core
profitability,
strengthened
its capital
adequacy and
liquidity position,
and improved
further
its asset
quality.
In addition,
it executed
several
strategic
actions, which
will allow
it to
expand its business and extend further
its regional footprint.
As
at
31
December
2023
total
assets,
including
the
impact
from
the
sale
of
Eurobank
Direktna
(Serbia),
decreased
by
€1.7bn
to €79.8bn
(Dec.
2022
2
: €81.5bn)
with
gross
customer
loans
amounting
to €42.8bn
(Dec.
2022: €43.5bn) and
investment
securities reaching
€14.7bn (Dec. 2022:
€13.3bn). Out of the
total loan portfolio,
€28.1bn has been originated from Greek operations
(Dec. 2022: €28.2bn), €10.3bn from international operations
(Dec. 2022: €10.4bn or
€8.7bn excluding Eurobank Direktna operations) and €4.5bn refer to senior and
mezzanine
notes of the Pillar, Cairo and Mexico securitizations (Dec. 2022: €4.9bn).
Business (wholesale and small business)
loans stood at €25bn (Dec.
2022: €25bn) and accounted for 58% of
total Group loans, while loans to households
reached €13.4bn
(Dec. 2022: €13.6bn),
of which 74%
is the
mortgage portfolio
and the
rest are
consumer loans.
Group
deposits reached
€57.4bn
(Dec. 2022:
€57.2bn)
with those
from Greek
operations
amounting to
€40bn
(Dec.
2022:
€39.6bn),
while
international
operations
contributed
with
€17.5bn
(Dec.
2022:
€17.7bn
or
€16bn
excluding Eurobank Direktna operations).
As a result, the (net) loan–to–deposit (L/D) ratio stood at 72.3%
for the
Group (Dec. 2022
2
: 72.4%) and at 78.3% for Greek operations (Dec. 2022: 79.5%).
The funding from
the European
Central
Bank
(ECB)
refinancing
operations
reduced
by
€5bn
to
€3.8bn
(Dec.
2022:
€8.8bn)
(note
31
of
the
consolidated
financial statements).
During the
year,
in the
context of
the
implementation
of its
medium-term
strategy
to
meet
the
Minimum Requirements
for
Eligible
Own
Funds
and
Eligible
Liabilities
(MREL),
the
Bank
proceeded
with the
issuance of
two preferred
senior notes
of €500m each,
at a coupon
of 7% and
5.875% and
maturities
in
January
2029
and
November
2029,
respectively.
More
recently,
in
January
2024,
the
Company
completed the issue of a €300m
Subordinated Tier II debt instrument, at a coupon of 6.25%
and maturity in April
2034
(notes
4
and
34
of
the
consolidated
financial
statements).
The
Group
Liquidity
Coverage
ratio
(LCR)
maintained at high level
reaching 178.6% (31 December
2022: 173%).
Pre-provision
Income
(PPI)
amounted
to
€1,999m
or
€1,902m
excluding
a)
the
€111m
gain
on
investment
in
Hellenic Bank (Cyprus) accounted
for as an associate and
b) the €14m contribution to
restoration initiatives after
natural
disasters
(2022
2
: €2,184m
or €1,859m
excluding the
€325m gain
on sale
of Bank’s
merchant
acquiring
business
(project
“Triangle”)),
while
core
pre-provision
income
(Core
PPI)
increased
by
58.6%
year-on-year
to
€1,802m or €
1,816m excluding
the €14m
contribution as
above
(2022
2
: €1,145m).
Net interest
income (NII)
grew
by 46.9%
to €2,174m
(2022
2
: €1,480m), mainly driven
by the
higher interest
rates, the
organic loans growth
and
the increased
positions in investment
bonds partly offset
by higher
debt issued and deposits
cost. Net interest
margin
(NIM)
stood
at
2.75%
(2022
2
:
1.91%)
with
the
fourth
quarter
reaching
2.90%.
Fees
and
commissions
expanded by 4.2% to €544m (2022
2
: €522m), of which banking fees and commissions by
4.8% to €447m (2022
2
:
€427m), mainly due
to the increased fees from lending activities and
despite the negative impact from merchant
acquiring
disposal.
Fees
and
commission
accounted
for
69bps
of
total
assets
(2022
2
:
67bps).
Operating
expenses increased
by 5.2% to €902m
excluding the
€14m contribution as
above (2022
2
: €857m) due
to higher
costs from
international
operations,
inflationary
pressures
and investments
in IT
infrastructure
projects,
partly
offset
by
lower
contributions
to resolution
and deposit
guarantee
funds.
Costs from
international
operations
amounted to
€258m (2022
2
: €212m)
including the
effect
from
the
acquisition of
BNP Paribas
Bulgaria end
of
May 2023, while in Greece slightly decreased by 0.1%
to €644m (2022: €645m). The cost to income (C/I) ratio
for
the Group
reached 32.2%,
excluding the
€111m gain on
investment
in Hellenic Bank
and the
€ 14m contribution
as above
(2022
2
: 31.6%, excluding
the €325m
gain on project
“Triangle”),
while the
international
operations
C/I
ratio
stood at
33.1%
(2022
2
: 42.7%). The
respective cost
to core
income
3
ratio
for the
Group improved
at 33.2%
compared to 42.8%
2
for 2022.
Trading
and other
activities recorded
net income
of €196m
(2022
2
: €1,039m
income)
mainly including
a) €86m
derivatives’
gains (2022
2
: €625m
gains), b)
€57m gains
on sale
of investment
bonds at
FVOCI
net of
hedging
(2022
2
: €26m loss)
and c) €68m net other income, including the €111m gain on investment Hellenic Bank
(2022
2
:
€323m income, including the
€325m gain on project "Triangle")
(notes 9 and 10 of consolidated FS).
The NPE
formation was
positive by €138m,
out of which € 119m referring
to a single corporate
customer,
(fourth
quarter
2023: €29m
negative),
(2022: €40m
positive
excluding
Serbian
operations).
In total,
the
Group’s
NPE
stock stood at €1.5bn, following
the classification
of the loan portfolio
of project “Leon” as held for
sale, the sale
of Eurobank
Direktna,
and the
write-offs
during the
year
(31 December
2022: €2.3bn)
driving the
NPE ratio
to
3.5%
(31
December
2022
(2)
:
5.2%).
The
loan
provisions
(charge)
reached
€412m
or
€345m,
excluding
the
loss
1
Definitions of the selected financial ratios and the source of the financial data are provided in the Appendix.
2
The
comparative information
has been adjusted
due to a)
the retrospective
application of
IFRS 17 by
the Group’s
associate Eurolife
FFH
Insurance Group Holdings S.A. and b) the presentation of operations
of Eurobank Direktna a.d. disposal group as discontinued.
3
Total operating
expenses divided by total core income.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
2
|
Page
€ = Euro
m = million
bn = billion
recorded for
projects
“Leon” and “Solar” and
corresponded to
0.85% of average
net loans (2022
2
: €276m which
corresponded to 0.71%
of average net
loans), while the NPE coverage
ratio stood at 86.4%
(31 December 2022
2
:
75.5%). The
NPEs after deducting
the accumulated
stock of loan
provisions,
amounted to €0.2bn
(31 December
2022: €0.6bn).
Furthermore,
the Group
recognised in
2023 other
impairments, risk
provisions
and related
costs amounting to
€96m (2022
2
: €103m), which
are analysed
in a) €49m
impairment on
real estate
properties,
out of which
€23m
remeasurement
loss
related
to
the
subsidiary
IMO
Property
Investments
Sofia
E.A.D.
which
was
disposed
of
during the year,
b) €17m impairment on computer hardware and software
(notes 26 and 28 of consolidated FS),
and
€30m
other
impairments,
litigation
and
conduct-related
provisions
and
costs.
Moreover,
it
recorded
restructuring costs of €37m (2022
2
: €89m) including an
amount of €11m related to
the acquisition of BNP Paribas
Personal
Finance
Bulgaria
by
Eurobank
Bulgaria
A.D. (note
23.2). The
Group’s
share
of associates/JVs
results
amounted
to
€88m
income,
of
which
€58m
income
relates
to
Hellenic
Bank
profits
for
the
six-month
period
ended 30 September 2023.
Finally,
in 2023
following
the
completion of
the
disposal of
the Bank’s
70% shareholding
in Eurobank
Direktna,
the
Group
recorded
€141m
net
loss
from
discontinued
operations
attributable
to
shareholders,
including
the
recyclement
of
€
124m
cumulative
losses
to
the
income
statement
(mainly
currency
translation
differences),
previously recognized
in other
comprehensive income.
Profit or Loss
Overall,
in 2023, the
profit attributable
to shareholders amounted
to €1,140m
(2022
2
: €1,347m profit), as set
out
in the consolidated income statement. The adjusted net profit, excluding
the €111m gain
on investment in Hellenic
Bank,
accounted
for
as
an
associate,
€
141
million
net
loss
from
discontinued
operations,
€48m
net
loss
on
projects
“Solar”
and
“Leon”
related
to
the
NPE
reduction
plan,
€10m
provision
(after
tax)
for
the
Bank’s
contribution
to
the
restoration
initiatives
after
natural
disasters,
and
€29m
restructuring
costs
(after
tax)
amounted to €1,256m
(2022
2
: €1,178m), of which €468m
profit was related to the
international operations (2022
2
:
€211m profit).
Based on the Group’s
profits for 2023,
the Earning per Share (EPS) reached
€ 0.31 (2022
2
: €0.36) and the Return
(adjusted profit)
on Tangible
Book Value
(RoTBV) amounted
to 18.1%
(2022
2
: 11.4%, after
deducting €516m non-
recurring trading
gains net of tax mainly from derivative
financial instruments).
Going forward,
the
Group,
pursues its
objectives
set out
in the
business plan
for
the
period
2024-2026,
which
includes targets
for a)
loans organic
growth,
b) maintaining resilient
core profitability
in a lower
interest
rates
environment, c) improvement of the asset quality ratios, d) solid organic capital generation adequate to support
the business
growth,
and e) reward
of shareholders,
starting from a payout
ratio,
in the
form of cash
dividends
and/or share
buybacks, subject
to regulatory
approval,
of at
least 25%
in 2024
and gradually
increasing over
coming years, mainly through
the following
initiatives and actions:
a)
Maintain high NII mainly driven by the
organic increase of Group’s
performing loans,
which may offset
the pressures from the
potential decrease in ECB rates, the change in deposits (time/sight) mix and the
issuance of MREL eligible senior notes,
b)
Strengthening
core
markets
presence
and
increasing
earnings
and
volumes
contribution
by
international
activities,
which
will
be
further
enhanced
by
the
full
consolidation
of
Hellenic
Bank
in
Cyprus,
c)
Growth of
fee and commission income
in a number of fee
business segments such as lending,
network
and
assets
under
management
activities,
bancassurance,
cards
issuing
and
investment
property
rentals,
d)
Initiatives
for
pursuing further
operating
efficiency,
cost containment
of “run
the
bank” activities,
and
proceeding with further simplification
and digitalization in Greece and abroad, maintaining the annual
increase of the operating expenses at a
low to mid-single digit
%, considering the inflationary pressures
and the
“grow
the
bank” needs.
In February
2024, the
Group
launched
a new
Voluntary
Exit Scheme
(VES) for eligible units in Greece
,
e)
Maintaining
low
NPE
ratios
with
high
coverage
levels
in
all
core
markets
in
which
the
Group
has
presence,
which may be
challenged by
the higher
interest rates
and inflationary
pressures'
impact on
households’ disposable income and
corporate profit
margins,
f)
Major
transformation
initiatives
introduced
in
the
context
of the
Group’s
transformation
plan
“Eurobank 2030”,
g)
Support
the
green
transition
and
financial
inclusion
through
the
further
implementation
of
the
Environment, Social and Governance
(ESG) criteria in all Group’s
activities and processes.
The geopolitical
and macroeconomic risks, including the
sustained - albeit easing - inflationary
pressures, set a
number of challenges
to the
achievement
of the
Group’s 2024-2026
Business Plan, mainly
related with
growth
potential,
lending
margins,
deposit
rates,
asset
quality
and
operating
cost.
The
headwinds
coming
from
the
geopolitical upheaval
and the macroeconomic
environment are
likely to be mitigated by:
a)
The efficient
mobilization of
the already
approved
EU funding, mainly through
the Recovery
and Resilience
Facility (RRF),
b)
The substantial pipeline
of new investments,
c)
The decrease
of the unemployment
rate in 2024 at single digit
levels, close to historical lows,
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
3
|
Page
€ = Euro
m = million
bn = billion
d)
The positive
developments in the
tourism sector and the strong
investment inflows,
e)
The
upgrade
of
the
Greek
sovereign
to
investment
grade
by
four
out
of
the
five
Eurosystem-approved
External Credit Assessment
Institutions.
(see also further
information in the
section “Macroeconomic Outlook
and Risks”)
Capital adequacy
As at 31
December 2023,
the Group’s
Total
Regulatory Capital
amounted to €8.4bn
(31 December
2022: €8bn)
and accounted
for
19.4%
(total CAD)
of Risk Weighted
Assets (RWA)
(Dec. 2022:
19.2%),
compared
to the
CAD
Overall
Capital
Requirements
(OCR)
ratio
of 14.68%
4
. Respectively,
the
Common Equity
Tier
1 (CET1)
stood at
16.9%
of RWA
(Dec. 2022:
16%) compared
to the
CET1 OCR
ratio
of 9.98%
4
or 12.20%, including
the
Additional
Tier 1
(AT1) and
Tier 2 capital
shortfall. Both
total CAD and CET1
ratios for
2023 carried
the effect
of the ending
of
the
5-year
transition
period
for
the
recognition
of
the
IFRS
9
impact
on
the
regulatory
capital
and
the
reversion to the
standardized approach as of 1 March 2023. Pro-forma for
the completion of the projects “Solar”
and “Leon”
(note 20
of the
consolidated financial
statements) and
the issuance
of €300m Subordinated
Tier
II
debt instruments
in January 2024,
the total
CAD and CET1
ratios
would be
20.2% and 17%
respectively
(note 4
of the consolidated
financial statements).
As
at
31
December
2023,
the
Bank’s
MREL
ratio
at
consolidated
level
stands
at
24.91%
of
RWAs
(Dec.
2022:
23.07%),
higher
than
the
interim
non-binding
MREL
target
of
23.23%, which
is
applicable
from
January
2024
(note 4 of the consolidated
financial statements).
In the context of the Group’s initiatives for the optimization of its regulatory capital, in
December 2023, the Bank
proceeded
with the
execution of another
synthetic risk
transfer
transaction (project
“Wave
IV”) in the
form of a
financial guarantee,
providing
credit protection
over
the mezzanine
loss of
a portfolio
of performing
SME and
Large
Corporate
loans amounting
to €
1.5 billion,
which resulted
in a
capital benefit
of 41
bps (note
20 of
the
consolidated financial statements).
Pursuant to the Regulation (EU)
No 575/2013 (CRR),
the deferred tax assets (DTAs) that rely on future profitability
and
exceed
certain
limits
shall
be
deducted
in
the
calculation
of
the
CET1
capital.
This
deduction
should
be
applied gradually by 2025. The enactment of the article 27A of Law 4172/2013, as
in force, provided for the Greek
credit institutions that the eligible DTAs are accounted on a) the losses from the Private Sector
Involvement (PSI)
and the
Greek State
Debt Buyback
Program
and b)
on the
sum of
(i) the
unamortized part
of the
crystallized
loan losses from write-offs and disposals, (ii) the accounting debt write-offs and (iii) the
remaining accumulated
provisions and other
losses in general due to credit
risk recorded up to 30 June 2015 and can
be converted into
directly enforceable
claims (tax credits) against the
Greek State, provided
that the Bank’s after
tax accounting
result for the
period is a loss. This
legislative provision
enabled the Greek
credit institutions, including the
Bank,
not to deduct the eligible
DTAs
from CET1 capital but recognise
them as a 100% weighted
asset, with a positive
effect
on the
capital
position. As
at
31 December
2023,
the
Bank’s eligible
DTAs
for
conversion
to tax
credits
amounted
to
€
3,212m
(Dec.2022:
€3,402m)
(note
13
to
the
consolidated
financial
statements).
A
potential
change in
the
regulatory
treatment
of eligible
DTAs
as tax
credits
may have
an adverse
effect
in the
Group’s
capital position.
2023 Stress Test
Results
On 28 July 2023, the
Company announced that
Eurobank Holdings
Group successfully
completed the 2023 EU-
wide Stress Test
(ST), which was coordinated
by the
European Banking
Authority (EBA) in
cooperation
with the
ECB and the European Systemic Risk Board (ESRB). Eurobank has significantly improved its results and resilience
to stress under the
adverse scenario
compared to the
ST 2021 exercise.
The
starting point of the
exercise was
the financial
and capital position
of the
Group as
at 31 December
2022,
as calculated based on the Standardised Approach (STD). On that date, the Fully Loaded (FL) CET 1 ratio (based
on the
full implementation
of Basel III
rules) amounted to
14.4%. Under
the Baseline
scenario, the
FL CET1 ratio
increases by 360bps over
the 3-year ST horizon, reaching the
level of 18% at the end of 2025. Under the
Adverse
scenario, the
FL CET1 ratio
decreases by
220bps at the
end of 2025
and it stands
at 12.2%, while
at the
end of
the first year (2023)
the Group registered
its highest FL CET 1 ratio
capital depletion, at 316bps.
2024 Cyber Resilience Stress Test
In 2024 the
ECB will conduct a
cyber resilience
stress test on 109
directly supervised
banks, including Eurobank.
The exercise will assess how
banks respond to
and recover from a cyberattack, rather than their ability to prevent
it.
In
particular,
under
the
stress
test
scenario,
the
cyberattack
succeeds
in
disrupting
banks’
daily
business
operations.
Banks will
then
test their
response
and recovery
measures,
including the
activation
of emergency
procedures
and contingency plans
and the
restoration
of normal operations.
The
ECB will assess
the extent
to
which banks can cope under such a scenario.
This stress test exercise
will not have an impact on capital through
the Pillar 2 guidance (P2G), which is a bank-
specific
capital
recommendation
on top
of the
binding capital
requirements.
Rather,
the
ECB will
discuss
the
findings and
lessons learned
with
each bank
as part
of the
2024 Supervisory
Review
and Evaluation
Process
(SREP), which assesses
a bank’s individual risk
profile. The
exercise’s
main findings will be
communicated in
the
summer of 2024.
4
The
‘Overall
capital
requirement
(OCR)’
is
the
sum
of
the
total
SREP
capital
requirement
(TSCR)
and
the
combined
capital
buffer
requirement.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
4
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International Operations
The
Group
has
a
significant
presence
in
three
countries
apart
from
Greece.
In
Cyprus,
Eurobank
Cyprus
Ltd
(Eurobank
Cyprus)
operates
a network
of 8
banking
centres
in all
major cities
across
the
island, and
has five
main pillars of business namely, corporate banking, wealth management, international
business banking, global
markets
and
affluent
banking.
In
Luxembourg,
Eurobank
Private
Bank
Luxembourg
S.A.
in
parallel
to
its
operations
in Luxembourg, operates
one branch in London and one
in Athens, and offers
products and services
to private banking customers,
fund management services,
as well as tailored made corporate
banking services.
In Bulgaria,
Eurobank
Bulgaria AD
(Postbank), is
a universal
bank offering
a wide range
of banking services
to
individuals and companies, through
a network of 235 branches
and business centres.
On 2 March 2023,
the Bank announced
that it signed a
binding share purchase
agreement with
AIK Banka a.d.
Beograd
(AIK)
for
the
sale
of
its
70%
shareholding
in
its
subsidiary
in
Serbia,
Eurobank
Direktna
a.d..
On
2
November
2023,
following
the
receipt
of
the
approvals
by
all
competent
regulatory
authorities
the
Bank
announced
that
the
abovementioned
sale was
completed for
a cash
consideration
of €198m.
The
transaction
was consistent with
Eurobank’s
strategy
to direct capital
to opportunities with
more compelling RoTBV
and to
further
enhance
its
presence
in
its
core
markets,
namely
Greece,
Bulgaria
and
Cyprus
(note
30
to
the
consolidated financial statements).
On 4 April
2023 the
Bank announced
that, after
the receipt
of the
relevant regulatory
approvals,
it completed
the
acquisition
of
an
additional
13.41%
holding
in
Hellenic
Bank
Public
Company
Limited
(“Hellenic
Bank”),
a
financial institution
located in
Cyprus,
for a
consideration
of €70m. Following
that, the
total holding
in Hellenic
Bank,
including the
previously
held participation
of 15.8%,
on the
above
date reached
29.2%
and the
Group is
considered
to
have
significant
influence
over
the
entity.
Therefore,
from
the
second
quarter
of
2023,
the
investment in Hellenic Bank is accounted
for as a Group’s
associate.
Furthermore,
in August
2023, the
Bank announced
that
it has
entered
into share
purchase agreements
(SPAs)
with certain
shareholders
of the
Hellenic Bank,
pursuant to which,
it has agreed
to acquire
an additional
total
holding of 26.1%
in the entity,
for a total consideration
of € 253.2 million
(announcements dated
on August 23
rd
,
25
th
and 30
th
). The
consideration
for
the
said transactions
is subject
to possible
adjustments
depending
inter
alia
on
the
timing
of
the
completion
and
the
terms
of
the
mandatory
tender
offer
in
accordance
with
the
provisions of the Takeover
Bids Law of
2007 in Cyprus.
The completion of the acquisitions is subject
to the receipt
of all customary regulatory approvals. Following
their completion, the
total holding in Hellenic Bank will amount
to
55.3%.
More
recently,
following
the
approval
of
the
Commission
for
the
Protection
of
Competition
of
the
Republic of Cyprus in its meeting
on 2 February
2024, the acquisition
of the additional total
holding of 26.1%
in
Hellenic Bank,
as per
the aforementioned
signed agreements
with certain
of its shareholders,
is subject
to the
approvals of the
Central Bank of Cyprus/European
Central Bank and the
Superintendent of Insurance
of Cyprus
(note 24 to the consolidated
financial statements).
Further
to
the
announcement
of
9
December
2022,
on
1
June
2023,
Eurobank
Ηοldings
announced
that
the
acquisition
of BNP
Paribas
Personal
Finance
Bulgaria by
Postbank
was completed
on 31
May 2023,
following
the
receipt
of the
approvals
by
all competent
regulatory
authorities.
The
transaction
strengthens
Postbank’s
position in the Bulgarian retail sector,
while it also provides significant opportunities for
cross selling, given BNP
Paribas Personal
Finance Bulgaria’s clientele
of more than
300 thousand clients.
The operational
integration
is
being
designed
aiming
to
maximize
synergies
while
exploiting
the
best
practices
currently
employed
in
the
Personal Finance business model
(note 23.2 to the consolidated
financial statements).
International operations
remain a fundamental competitive
advantage for the
Bank, with notable contribution
to the
Group’s
results. The
prospects
for the
performance
of Group’s
International
Operations
remain positive
despite the challenges in the
global economic and geopolitical environment.
International Operations
business
model and
solid
fundamentals
allow to
effectively
respond
to the
challenges,
safeguarding
their
profitability,
promote
sustainable
prosperity
in
the
local
communities
and
create
value
for
their
clients,
employees,
shareholders, and the
society at large.
Risk management
The
Group acknowledges
that
taking risks
is an
integral
part of
its operations
in order
to achieve
its business
objectives.
Therefore,
the
Group’s
management
sets adequate
mechanisms to
identify those
risks at
an early
stage and assesses their potential
impact on the achievement
of these objectives.
Due
to
the
fact
that
economic,
industry,
regulatory
and
operating
conditions
will
continue
to
change,
risk
management
mechanisms
are
set
in
a
manner
that
enable
the
Group
to
identify
and
deal
with
the
risks
associated with those changes. The Bank’s structure, internal processes
and existing control mechanisms ensure
both the
independence principle and the exercise
of sufficient supervision.
The Group's
Management considers effective
risk management as a top priority, as well as a major competitive
advantage,
for
the
organization.
As
such,
the
Group
has
allocated
significant
resources
for
upgrading
and
maintaining
its
policies,
methods
and
infrastructure
up
to
date,
in
order
to
ensure
compliance
with
the
requirements
of the
European
Central
Bank (ECB)
and of
the
Single Resolution
Board
(SRB), the
guidelines
of
the
European
Banking
Authority
(EBA)
and
the
Basel
Committee
for
Banking
Supervision
as
well
as
the
best
international banking
practices. The
Group implements
a well-structured
credit approval
process, independent
credit reviews
and effective
risk management policies
for all material
risks it is exposed
to, both in
Greece and
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
5
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in each
country of
its international
operations.
The
risk management
policies
implemented
by
the
Group
are
reviewed
on a regular basis.
Risk
culture
is
a
core
element
of
the
organisation.
Risk
management
function
provides
the
framework,
procedures and guidance
to enable all employees to proactively
identify, manage and monitor the
risks in their
own areas
and improve
the control
and co-ordination
of risk taking
across their
business. Ongoing
education,
communication and awareness takes place via dedicated learning programs,
monthly meetings, sharing of best
practices
and other
initiatives.
The
Group
has also
a policy
in place
to address
any risks
associated
with
the
introduction, significant
modifications and periodic
monitoring of its products and services.
The
amount of
risk which
the
Group is
willing to
assume
in the
pursuit of
its strategic
objectives
is articulated
via
a
set of
quantitative
and qualitative
statements
for
risks
assessed
as material,
that
are
described
in the
Group’s Risk Appetite
Framework.
The objectives
are to support the Group’s
business growth,
balance a strong
capital position with
higher returns on
equity and to ensure
the Group’s
adherence
to regulatory requirements.
The
Risk Appetite,
that
is clearly
communicated
throughout
the
Group
determines
risk culture
and forms
the
basis on which risk
policies and risk limits
are established at Group and regional level. Aiming to identify
relevant
and
material
risks
the
Bank
maintains
a
well-defined
Risk
Identification
and
Materiality
Assessment
(RIMA)
Framework.
The
identification
and
the
assessment
of
all
risks
is
the
cornerstone
for
the
effective
Risk
Management. The
Group aiming
to ensure
a collective
view on the
risks linked
to the
execution of
its strategy,
acknowledges the
new developments at
an early stage and assesses the potential
impact.
The
Board Risk
Committee (BRC)
is a
committee of
the
Board of
Directors (BoD)
and its
task is
to advise
and
support the BoD regarding the monitoring of
Group’s overall
actual and future risk appetite
and strategy, taking
into account
all types
of risks
to ensure
that
they
are
in line
with
the
business strategy,
objectives,
corporate
culture and
values of the
institution. The
BRC assists the
BoD in overseeing
the implementation
of Group’s
risk
strategy and
the corresponding
limits set. It also oversees
the implementation
of the strategies
for capital
and
liquidity management
as well
as for
all other
relevant
risks, such
as credit
and market
risks, non-financial
risks
such
as
operational,
reputational
conduct,
legal,
cyber,
outsourcing
climate
and
environmental,
in
order
to
assess
their
adequacy
against
the
approved
risk
appetite
limits.
The
BRC
consists
of
five
(5)
non-executive
directors, meets on
a monthly basis and
reports to the BoD
on a quarterly basis
and on ad hoc instances if
it is
needed.
The Management Risk Committee (MRC) is
a management committee established by the Chief Executive Officer
(CEO)
and
its
main
responsibility
is
to
oversee
the
risk
management
framework
of
the
Group.
As
part
of
its
responsibilities, the
MRC facilitates
reporting to
the
BRC on the
range of
risk-related
topics under
its purview.
The
MRC proactively
supports the
Group Chief
Risk Officer,
Chairman of
the MRC,
to identify
material risks,
in
addition
to those
identified independently
by
the
Group
CRO and
the
Group
Risk Management
Unit, and
to
promptly
escalate
them
to
the
BRC
and
assists
the
Group
CRO
in
ensuring
that
the
necessary
policies
and
procedures
are in place to prudently manage risk and to comply with regulatory
requirements.
The
Group’s
Risk
Management
Unit
which
is
headed
by
the
Group
Chief
Risk
Officer
(GCRO),
operates
independently
from
the
business
units
and
is
responsible
for
the
identification,
assessment,
monitoring,
measurement and management of the risks that the Group is exposed to. It comprises of the Group Credit (GC),
the Group Credit Control
(GCC), the Group Credit Risk Capital Adequacy Control
(GCRCAC), the Group
Market
and Counterparty
Risk
(GMCR), the
Group
Operational
and Non-Financial
Risks
(GONFR), the
Group
Model
Validation and Governance
(GMVG), the Group Risk Management Strategy Planning Operations & Climate Risk
(GRMSPO&CR), the Supervisory
Relations and Resolution Planning
(SRRP), and the Risk Analytics (RA) Units.
As part of its overall system
of internal controls, Eurobank
Ergasias Services and Holdings
S.A. has engaged in a
Service
Level
Agreement
(SLA)
with
Eurobank
S.A.
(the
banking
subsidiary
of
the
Group)
in
order
to
receive
supporting and advisory services in all areas
of risk management undertaken
by the Group.
The most important types of
risk that are addressed
by the risk management
functions of the
Group are:
Credit Risk
Credit risk is
the risk
that a counterparty
will be unable to
fulfil its payment
obligations in
full when
due. Credit
risk is also
related with country risk and
settlement risk. Credit risk arises
principally from the wholesale and retail
lending activities of the Group, as well as from credit enhancements
provided, such as financial guarantees and
letters of credit. The Group is also exposed to credit risk arising from other activities such as investments in debt
securities, trading,
capital markets
and settlement activities.
Taking
into account that
credit risk is
the primary
risk the Group is exposed to,
it is very closely managed and monitored by
specialised risk units, reporting to the
GCRO.
The
credit
review
and approval
processes
are
centralized
both
in Greece
and in
the
International
operations
following
the
“four-eyes”
principle and
specific
guidelines
stipulated
in the
Credit
Policy
Manual
and the
Risk
Appetite
Framework.
The
segregation
of
duties
ensures
independence
among
executives
responsible
for
the
customer relationship, the
approval process and the loan disbursement, as well as monitoring of the loan during
its lifecycle. The credit approval
process in Corporate Banking is centralized
through the establishment of Credit
Committees with escalating Credit
Approval Levels,
which assess and limit to the extent possible the
corporate
credit risk. Rating
models are used
in order to calculate
the credit
rating of corporate
customers, reflecting
the
underlying
credit
risk. The
most significant
ones
are
the
MRA (Moody’s
Risk Analyst)
applied
for
companies
-
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
6
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mostly-
with
industrial
and
commercial
activity
and
the
slotting
rating
models,
used
for
specialised
lending
portfolios
(shipping,
real
estate
and
project
finance)
with
ring
fenced
transactions.
Credit
risk
assessment
is
performed
by
Group
Credit
(GC),
which
assesses
the
credit
requests
submitted
by
the
Business
Units,
a
procedure including the evaluation
of the operational and financial profile of the customer,
the validation of the
borrower’s
rating and the
identification of potential risk factors
for the
Bank.
The credit review and approval processes
for loans to Small Businesses (turnover up to €5m)
are also centralised
following
specific
guidelines
and
applying
the
‘four-eyes’
principle.
The
assessment
is
primarily
based
on the
analysis
of
the
borrower's
operational
characteristics
and
financial
position.
The
same
applies
for
Individual
Banking (consumer
and mortgage
loans), where
the
credit
risk assessment
is based
on criteria
related
to the
characteristics of the
retail portfolio,
such as the financial position of the
borrower,
the payment behaviour,
the
existence of real estate property
and the type and quality of securities.
The
ongoing monitoring
of
the
portfolio
quality
and
of
any deviations
that
may arise,
lead to
an immediate
adjustment
of
the
credit
policy
and
procedures,
when
deemed
necessary.
The
quality
of
the
Group’s
loan
portfolios
(business, consumer
and mortgage
in Greece
and abroad)
is monitored
and assessed
by the
Group
Credit
Control
(GCC)
via
field,
desktop
and
thematic
reviews
in
order
to
timely
identify
emerging
risks,
vulnerabilities,
compliance
to
credit
policies
and
consistency
in
underwriting.
Furthermore,
the
GCC
assumes
oversight
and
supervisory
responsibilities
for
proper
operation
of
corporate
rating
and
impairment
models.
Moreover,
GCC regularly
reviews
the
adequacy of
provisions
of all
loan portfolios.
The
sector also
formulates
Group’s
credit
policies,
reviews
policies
developed
by other
units and
participates
in the
development
of new
loan
products.
Finally,
it
monitors
regulatory
developments,
emerging
trends
and
best
practices
proposing
relevant
policy
updates
or product
enhancements
when
necessary.
GCC operates
independently
from
all the
business units of the Bank and reports
directly to the GCRO.
The
measurement,
monitoring and
periodic
reporting of
the
Group’s
exposure
to counterparty
risk (issuer
risk
and market driven counterparty risk), which is the risk
of loss due
to the customer’s failure to meet its contractual
obligations
in
the
context
of
treasury
positions,
such
as
debt
securities,
derivatives,
repos,
reverse
repos,
interbank
placings,
etc. are
performed
by
the
Group
Market
and Counterparty
Risk
(GMCR). The
Group
sets
limits on the level
of counterparty risk that are
based mainly on the counterparty’s
credit rating, as provided
by
international
rating
agencies,
the
product
type and
the
maturity
of the
transaction
(e.g. control
limits on
net
open
derivative
positions
by
both
amount
and
term,
sovereign
bonds
exposure,
corporate
securities,
asset
backed securities, etc.). GMCR
maintains and updates
the limits’ monitoring systems
and ensures the correctness
and compliance
of all
financial institutions
limits with
the Bank’s
policies as
approved
by the
Group’s
relevant
bodies. The utilization
of the abovementioned
limits, any excess of them, as well
as the aggregate exposure
per
Group’s
entity, counterparty
and product
type are
monitored by
GMCR on a
daily basis.
The
Group from
2021
applies
the
new
regulatory
framework
for
the
counterparty
risk
from
derivatives
Standardised
Approach
for
measuring counterparty credit
risk (SA-CCR).
Market Risk
The Group
has exposure to market
risk, which is the
risk of potential financial
loss due to an adverse
change in
market
variables.
Changes
in
interest
rates,
foreign
exchange
rates,
credit
spreads,
equity
prices
and
other
relevant
factors,
such as
the implied
volatilities,
can affect
the Group’s
income or
the fair
value of its
financial
instruments.
The
market
risks,
the
Group
is
exposed
to,
are
monitored,
controlled
and
estimated
by
GMCR.
GMCR is
responsible
for
the
measurement,
monitoring, control
and reporting
of the
exposure
on market
risks
including the
Interest
Rate Risk
and the
Credit Spread
Risk in
the
Banking Book
(IRRBB/CSRBB) of
the
Group.
The
GMCR reports to
the GCRO.
The
exposures and
the utilisation
of the
limits are reported
to the
Board Risk
Committee
and to the BoD .
Market risk in Greece and
International Subsidiaries is managed and monitored
mainly using Value at Risk
(VaR)
methodology,
sensitivity
and
stress
test
analysis.
VaR
is
a
methodology
used
in
measuring
financial
risk
by
estimating the potential negative
change in the market value of a portfolio at a given confidence level and over
a specified
time horizon. The
VaR
that the
Group measures
is an estimate
based upon a
99% confidence
level
and a holding
period of
1 day and
the methodology
used for
the calculatio
n
is Monte Carlo
simulation (full
re-
pricing of the
positions is performed).
Since VaR
constitutes an integral
part of the
Group's market
risk control
regime, VaR
limits have been established
for all portfolios
(trading and investment)
measured at fair
value and
actual exposure is monitored daily by
management. However,
the use of this approach
does not prevent
losses
outside
of
these
limits
in
the
event
of
extraordinary
market
movements.
For
that
reason
the
Group
uses
additional
monitoring
metrics
such
as:
Stressed
VaR,
Expected
Shortfall
and
Stress
Tests.
Finally,
the
Group
already
monitors the
impact from
the
new
regulatory
framework
for
market
risk (Fundamental
Review
of the
Trading
Book-FRTB)
and
monitors
the
evolution
of
the
relevant
capital
charges
until
its
official
application
(2025) based on a set of established systems and procedures.
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Interest Rate Risk in the
Banking Book (IRRBB)
The IRRBB
is defined as
the current
and the
prospective
risk of a negative
impact to the
institution’s economic
value
of
equity,
or
to
the
institution’s
net
interest
income,
taking
market
value
changes
into
account
as
appropriate, which arise from
adverse movements
in interest rates
affecting interest
rate sensitive instruments,
including gap risk, basis risk and option risk.
GMCR is
the
unit responsible
for
the
monitoring, control,
reporting and
estimation
of IRRBB
on a
group
level.
Both
the
Economic
Value
of
Equity
(EVE)
and
NII
sensitivity
to
a
number
of
stresses
on
interest
rates
are
estimated
on
a
periodic
basis
and
are
compared
with
the
approved
BoD
Risk
Appetite
Statements
(RAS)
thresholds. The
Group is now using the
established Asset and Liability Management
(ALM) tool for a significant
part of the analysis on a solo level. The plan is to further increase the use of the ALM tool for any analysis related
to IRRBB on a group level.
Furthermore,
the Group already
applies a set of extra stress test analysis
for specific
parts
of its
Banking Book
for
the
assessment
to the
exposure
on Mark-to-Market
(MTM) volatility
and for
the
assessment of the CSRBB (Credit
Spread Risk in the Banking Book). The
policy for the management
of IRRBB as
approved
by BRC
and BoD
provides
a clear
description of
the
methodologies,
the
governance,
the
limits that
are used for the
management of IRRBB & CSRBB.
Liquidity Risk
The Group
is exposed on a daily basis
to liquidity risk due to deposits
withdrawals, maturity
of medium or long
term
notes,
maturity
of secured
or unsecured
funding
(interbank
repos
and money
market
takings), collateral
revaluation
as a
result
of market
movements,
loan draw
-downs
and forfeiture
of guarantees.
The
Board
Risk
Committee and
the BoD
sets in the
RAS Framework
the liquidity
risk thresholds
to ensure
that sufficient
funds
are available to meet
all of these
contingencies under any scenario.
The Group
monitors on a continuous basis
the level of liquidity risk using regulatory and
internal metrics and methodologies (Liquidity Coverage Ratio/LCR,
Net Stable Funding Ratio/NSFR, Liquidity Buffer analysis, cash flow analysis,
short-term and medium-term stress
test etc.).
BRC
role
is
to
approve
all
strategic
liquidity
risk
management
decisions
and
monitor
the
quantitative
and
qualitative aspects of liquidity risk. Group
Assets and Liabilities Committee (G-ALCO) has the
mandate to form
and implement
the
liquidity policies
and guidelines
in conformity
with Group's
risk appetite,
and to
review
at
least monthly
the overall
liquidity position
of the
Group. Group
Treasury
is responsible
for the
implementation
of the
Group's
liquidity strategy,
the
daily management
of the
Group’s
liquidity and
for
the
preparation
and
monitoring of
the
Group’s
liquidity budget,
while GMCR
is responsible
for
measuring,
control,
monitoring and
reporting the liquidity
of the Group
to the G-ALCO,
BRC, BoD and to the regulatory bodies.
Operational
& Non-Financial Risks (NFRs)
Aiming to
strengthen
further
the
existing Operational
Risk Framework
in alignment
with increased
regulatory
expectations as
defined in the:
i) EBA Guidelines
on Internal Governance
(2021) under
Directive
2013/36/EU, (ii)
BCBS Revisions to the
Principles for the
Sound Management of Operational
Risk (2021), (iii) BCBS Principles
for
Operational Resilience, and (iv) EBA
Guidelines on ICT
and security risk
management EBA/GL/2019/04, the Group
had decided to move towards
managing Non-Financial Risks (NFRs) holistically.
NFR is defined by
exclusion, that is,
any risk other
than the
financial risks such as credit,
market, and liquidity.
It
includes
operational
risk and
reputational
risk as
well
as specific
aspects of
other
risks, such
as business
and
strategic risk.
Operational risk is defined as the risk of
loss resulting from inadequate or failed internal processes,
people, and
systems or from
external events
(definition includes
legal risk but
excludes business,
strategic
and
reputational risk).
Eurobank is gradually implementing the
Risk Appetite Framework to cover
NFRs, which sets out the mechanisms
through
which
the
Group
establishes
its
risk
appetite
and
ensures
that
its
risk
profile
remains
within
that
appetite to bear risk in relation to the
internal and external events
as well as other
constraints.
Governance
responsibility
for
Non-Financial
Risks
management
stems
from
the
Board
of
Directors
(BoD),
through the Executive Board and Senior Management, and
passes down to
the Heads and staff of
every business
unit. The BoD establishes
the mechanisms used
by the Group
to manage NFRs, sets the tone and
expectations,
and delegates
relevant responsibilities.
The
Board Risk
Committee and
the Audit
Committee monitor
the NFR
levels and profile,
including relevant events.
NFR
management
comprises
risk
identification,
assessment,
and
mitigation
while
employing
independent
oversight and an effective
risk culture to ensure that business objectives are met
within the NFR appetite that is
reflected in the Group’s
Policies and Guidelines.
The Heads
of each Business Unit (the
risk owners) are
primarily responsible for
the day-to-day management
of
NFRs and
the
adherence
to relevant
controls.
Each Business
Unit has
appointed an
Operational
Risk Partner
(OpRisk Partner)
or an Operational
Risk Management
Unit (ORMU) depending on
the size of
the business
unit,
which are
responsible for
coordinating the
internal risk
management efforts
of the
business unit
while forming
the link between Line
1 and Line 2.
Eurobank
has
adopted
a
Themes-based
risk
taxonomy,
developed
along
the
lines
of
the
industry
reference
taxonomies, for risk management and reporting purposes. Each Risk Themes is overseen by Theme Coordinators
(Second Line of Defense). The
risk themes which fall
within the scope of NFR are
the following:
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Group
Operational
and
Non-Financial
Risks
Unit
(GONFR)
has
been
positioned
as
an
overlaying
framework
coordinator for all Non-Financial Risks (NFRs).
GONFR’s overlaying responsibilities aim to harmonize the Second
Line of Defense activities across
the Group
and to holistically ensure the
effective,
consistent application of the
Risk Appetite Framework.
The 2LoD Units maintain their
responsibilities for specific
Risk Theme(s)
owned.
Climate related and environmental
risks
The Group
has recognized climate change as a material
risk and based on supervisory guidelines, has adapted
its policies and methodologies
for identifying and monitoring the
relevant risks.
Specifically,
climate
related
and
environmental
risks
are
defined
as
the
risks
deriving
from
potential
loss
or
negative
impact
to
the
Group,
including
loss/damage
to
physical
assets,
disruption
of
business
or
system
failures, transition
expenditures and reputational effects
from the adverse
consequences of climate change and
environmental degradation.
Climate-related and environmental
risks include the following:
a)
Climate related
and environmental
physical
risk: Physical
risk refers
to the
financial impact
of a
changing
climate,
including more
frequent
extreme
weather
events
and gradual
changes in
climate,
as well
as the
impact of environmental
degradation.
b)
Climate
related
and
environmental
transition
risk:
Transition
risk
refers
to
financial
loss
that
can
result,
directly
or
indirectly,
from
the
process
of
adjustment
towards
a
lower-carbon
and
more
environmentally
sustainable economy,
c)
Environmental risk: Risk of actual or potential
threat associated
with the dependency on nature
and nature
impacts
and/or
the
misalignment
between
the
Group’s
strategy
and
the
changing
regulatory,
policy,
or
societal landscape in which it operates.
Environmental risk excludes the
impacts from climate change.
The
Group is
adopting a
strategic
approach towards
sustainability,
climate change
risk identification
and risk
management,
signifying
the
great
importance
that
is
given
in
the
risks
and
opportunities
arising
from
the
transitioning
to
a
low-carbon
and
more
circular
economy.
In
this
context,
the
Bank
has
approved
and
implements its Financed Impact
Strategy,
which focuses on:
a)
Clients’ engagement and awareness
to adapt their business so as to address
climate change challenges,
b)
Actions for supporting clients in their transition
efforts towards
a more ESG-friendly economic environment,
c)
Enablers and tools such as frameworks
and products to underpin Sustainable
Financing,
d)
The assessment
and management of climate-related
risk of exposures.
In
line
with
good
practices
identified
by
the
ECB,
the
Financed
Impact
Strategy
of
the
Bank
will
focus
on
sustainable
financing
targets
/
commitments.
In
particular,
the
Bank
identified
total
portfolio
and
sectoral
targets with regards
to financing the green transition
of its clients.
The Bank has set the
following targets
for sustainable disbursements in the
following years:
a)
New
disbursements:
€2bn
new
green
disbursements
to
businesses
until
2025
or
20%
of
the
annual
new
corporate disbursements
to be classified as green/ environmentally
sustainable,
b)
Renewable
energy:
35% of
new
disbursements
in the
energy
sector will
be directed
to Renewable
Energy
Sector (RES) financing,
c)
Green
buildings:
80%
of
disbursements
related
to the
construction
of
new
buildings
will be
allocated
to
green buildings,
d)
RRF: €2.25bn total green contribution through
RRF funds in the Greek
economy by 2026,
e)
Green stock / exposure evolution: 20% stock of green exposures for the corporate portfolio
by 2027 (up from
11% in 2022), and
f)
Double retail green gross
disbursements within 2023 compared
to 2022.
To facilitate
the classification of sustainable/green
financing opportunities in a structural manner,
the Bank has
developed
its
Sustainable
Finance
Framework
(SFF).
Through
its
SFF,
the
Bank
is able
to
classify
sustainable
lending solutions offered
to its clients, specifying the
applied classification
approach and
the activities defined
as
eligible
to
access
sustainable
financing
(eligible
green
and
social
assets).
Furthermore,
the
Group
has
updated its
governance
structure by
introducing
and defining
the
roles
and responsibilities
in relation
to ESG
and
climate
related
and
environmental
(CR&E)
risks,
embedding
regulatory
guidelines
and
market
practices
involving
various key
stakeholders
(i.e. Business
functions,
Units, and
Committees). The
Group applies
a model
of defined roles and responsibilities
regarding the
management of CR&E risks across the
3 Lines of Defense.
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In this context and taking into account the significant impact of climate-related and environmental (CR&E) risks
both
on financial
institutions
and on
the
global economy,
the
Group
developed
and approved
its CR&E
Risks
Management Policy which
aims at fostering a
holistic understanding of the effects
of CR&E risks on its business
model, as well as
support decision-making regarding
these matters
and provide a
robust governance
under its
Risk Management Framework.
The
Group
Risk
Management
Strategy
Planning
Operations
&
Climate
Risk
(GRMSPO&CR)
has
the
overall
responsibility for overseeing, monitoring, and managing CR&E risks.
Specifically, the Unit operates as the Project
office
responsible for
the
implementation
of the
Climate
related
and Environmental
risks roadmap
(“Program
Field”),
with
a
coordinating
and
supervisory
role
on
all
related
project
streams
to ensure
alignment
with
the
Bank’s
business
strategy
and
the
regulatory
authorities’
expectations.
In
this
context,
the
Unit
ensures
the
implementation of corresponding
environmental and sustainability initiatives
(frameworks,
policies, procedures
and products)
and compliance
with relevant
existing and
upcoming regulations,
under an
ongoing bank-wide
program,
in line
with
the
supervisory
agreed
roadmap,
which
is
accelerated
where
possible.
Also,
the
Unit
is
responsible for
coordinating
with Business
and other
Risk Units,
preparing
and submitting
for
approval
of the
Financed Impact
Strategy,
as well
for
monitoring its implementation.
Furthermore,
the Unit
leads the
2nd Line
of Defense independent sustainable lending re-assessment process.
Specifically, in the context of implementing
the
approved
Sustainable
Finance
Framework
(SFF),
the
Unit
is
responsible
for
assessing
the
sustainability
features of new loans and products
according to the criteria set within the SFF.
Further information
on ESG risks
is provided in the
Consolidated Pillar 3 Report on the
Company’s website.
The Group participates in the European Central
Bank’s (ECB) supervisory One-off Fit-for-55 climate risk scenario
analysis, which
was launched
in December
2023. The
climate risk
scenario
analysis –
with the
participation
of
110 significant
banks –
aims to gain
insights into
the capacity
of the
financial system
to support the
transition
to a
lower
carbon economy
under conditions
of stress.
The
Group
is in
the
process
of successfully
completing
this exercise, and continues to
work in order to implement its
climate risk action plan,
to further integrate climate
risks
into
its
business
strategy
and
risk
management
practices,
and
to
support
its
clients
towards
climate
transition and sustainable business
growth.
The Group applies the elements of the Three
Lines of Defense model for the management of all types of risk. The
Three
Lines
of
Defense
Model
enhances
risk
management
and
control
by
clarifying
roles
and
responsibilities
within the organization. Under the oversight
and direction of the Management Body, the responsibilities of each
of these lines of defense
are:
Line
1
-
Own
and
manage
risk
and
controls.
The
front
line
business
and
operations
are
accountable
for
this
responsibility as they own
the rewards
and are the primary risk generators,
Line 2
- Monitor
risk and
controls
in support
of Executive
Management,
providing
oversight,
challenge, advice
and group-wide direction.
These mainly include the
Risk and Compliance Units,
Line 3 - Provide
independent assurance
to the
Board and Executive
Management concerning
the effectiveness
of risk and control management.
This refers
to Internal Audit.
Further
information
on the
Group’s
financial risk
management
objectives
and policies,
including the
policy for
hedging each major type of transaction for
which hedge accounting is used is set out in the notes 2, 5 and 19 to
the consolidated
financial statements for
the year ended 31 December
2023.
Non Performing Exposures
(NPE) management
The
Group
realizes
the
NPE
Strategy
Plan
through
its
implementation
by
doValue
Greece
for
the
assigned
portfolio and
the securitization transactions.
Troubled
Assets Committee
The Troubled Assets Committee (TAC) is established according to the regulatory provisions and its main purpose
is to act
as an independent
body, closely
monitoring the
Bank’s troubled
assets portfolio
and the
execution of
its NPE Management Strategy.
Remedial and Servicing Strategy
(RSS)
Remedial
Servicing &
Strategy
Sector (RSS)
has the
mandate to
inter alia
devise the
NPE reduction
plan and
closely monitor the overall performance
of the NPE portfolio as well as the relationship of the Bank with doValue
Greece.
Furthermore,
following
Eurobank’s
commitments
against the
significant risk
transfer
(SRT) monitoring
regulatory
requirements
pertaining
to Bank’s
concluded
transactions,
RSS has
a pivotal
role
in ensuring
that
relevant
process
is performed
smoothly and
in a
timely manner
and that
any shortcomings
are appropriately
resolved, while providing any required clarifications or additional
material required by the regulatory authorities.
The Head of RSS reports
to the General
Manager of Group Strategy.
In this context, RSS has been assigned inter alia with
the following
responsibilities:
a)
Develop and actively
monitor the NPE targets
and reduction plan,
b)
Set the
strategic
principles, priorities,
policy framework
and KPIs
under which
doValue
Greece
is servicing
the portfolio,
c)
Closely monitor
the
execution
of
the
approved
strategies,
as well
as all
contractual
provisions
under
the
relevant
contractual
agreements
for
Eurobank’s
portfolio
assigned
to
doValue
Greece
including
the
securitized portfolio
of ERB Recovery DAC,
d)
Monitoring of the performance
of the senior notes of the
securitizations in collaboration
with Group Risk so
as to
ensure compliance to
significant risk transfer (SRT) and
to the Hellenic
Asset Protection Scheme (HAPS),
e)
Budget and monitor the Bank’s expenses and revenues
associated with the
assigned portfolio,
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f)
Cooperate closely with
doValue Greece
on a daily basis in achieving the
Group’s objectives,
g)
Maintain supervisory dialogue.
NPE Management Strategy
and Operational
targets
Ιn
line
with
the
regulatory
framework
and
Single
Supervisory
Mechanism’s
(SSM)
requirements
for
Non-
Performing
Exposures’
(NPE) management,
the
Group’s
new NPE
Management Strategy
for
2024-2026,
along
with
the
annual NPE
stock targets
at both
Bank and
Group
level
envisages
the
decrease
of the
Group’s
NPE
ratio at
3.2% in 2026.
Project “Solar”
In the context of
its NPE management strategy, the Group has structured another NPE securitization transaction
(project ‘Solar’), as part
of a joint initiative with the
other
Greek systemic banks, in order
to decrease further
its
NPE
ratio
and
strengthen
its
balance
sheet
de-risking.
In
addition,
the
Group
targets
to
the
prudential
and
accounting
derecognition
of
the
underlying
corporate
loan
portfolio
from
its
balance
sheet
by
achieving
a
Significant
Risk Transfer
(SRT) and
including ‘Solar’
securitization
under
the
Hellenic Asset
Protection
Scheme
(HAPS), thus the senior
note of the securitization
to become entitled to the Greek
State’s guarantee.
On
2
November
2023,
the
Bank
announced
the
execution
of
a
binding
agreement
between
the
four
Greek
systemic banks (the
Banks) and Waterwheel
Capital Management,
L.P.,
with respect
to the
sale to the
latter of
95% of the Mezzanine
notes and of 95% of
the Junior notes
to be issued in the
context of “Solar” securitization.
The
Banks
will
hold
100%
of
the
Senior
notes
as
well
as
5%
of
the
Mezzanine
and
of
the
Junior
notes.
The
completion
of
the
transaction
is
subject
to
the
fulfillment
of
customary
conditions
for
such
transactions,
including, among others,
the HAPs guarantee
and SRT approval mentioned
above (note 20 to the
consolidated
financial statements).
Project “Leon”
In December 2023,
the Bank, aiming to accelerate
further its
NPE reduction plan, initiated
the sale process
of a
mixed NPE
portfolio
of total
gross
book
value
ca.
€400m, engaging
in parallel
in negotiations
with
potential
investors. The transaction is expected to be completed by the end of 2024.
Accordingly, as at 31 December 2023,
the Bank classified the
above loan portfolio
as held for sale (note
20 to the consolidated
financial statement).
Macroeconomic Outlook
and Risks
Despite
the
fragile
international
environment,
the
economies
of
Greece,
Bulgaria
and
Cyprus
remained
in
expansionary territory
in 2023, overperforming
their European
Union (EU) peers.
More specifically,
according to
provisional data by the Hellenic Statistical Authority (ELSTAT), the Greek economy expanded by 2%
on an
annual
basis
in 2023
(2022:5.6%),
driven
by
increases
in exports
of
goods
and
services,
household
consumption
and
fixed
investment.
According
to its
Winter
Economic
Forecast
(February
2024),
the
European
Commission
(EC)
expects a
GDP growth
rate of
2.3% in 2024 and
2025. Amid
strong base
effects
and easing energy
prices, the
inflation rate as measured by the annual change in
the Harmonized Index of
Consumer Prices (HICP) decelerated
to 4.2%
in 2023 from 9.3%
in 2022 according to
ELSTAT,
with the Commission
forecasting
further
de-escalation
to 2.7%
in 2024,
and
2% in
2025.
The
average
quarterly
unemployment
rate
decreased
to 11.1%
in 2023
from
12.4% in 2022, with the
International Monetary
Fund forecasts
for 2024 and
2025 standing at 9.2%
and 8.5% in
2024 and 2025 respectively,
according to its January 2024 Art. IV Country Report.
Growth
in Greece
as well
as in Bulgaria
and Cyprus
is expected to
receive
a significant
boost from
EU-funded
investment projects
and reforms. Greece
shall receive €36bn (€18.2bn in grants and €17.7bn
in loans) up to 2026
through the Recovery and Resilience Facility (RRF), Next
Generation EU (NGEU)’s largest instrument, out
of which
€14.7bn
(€7.4bn
in grants
and
€7.3bn
in loans)
has
already
been disbursed
by
the
EU. A
further
€40bn
is
due
through
EU’s
long-term
budget
(MFF),
out
of
which
€20.9bn
is
to
fund
the
National
Strategic
Reference
Frameworks
(ESPA
2021–2027). Moreover,
following
the September
2023 floods in
the
Thessaly
region, Greece
could benefit from EU support of up to € 2.65 billion, according
to the EC President.
On monetary
policy developments,
the Governing
Council of the
ECB, in line
with its
strong commitment
to its
price stability
mandate, proceeded
with ten rounds
of interest
rate hikes
in 2022 and in
2023 (the
most recent
one in September 2023), raising the three key ECB interest rates by 450 basis points on aggregate. Furthermore,
although net bond purchases under the
temporary Pandemic Emergency
Purchase Programme
(PEPP) ended in
March 2022, as
scheduled, the
ECB will continue to reinvest
principal from
maturing securities at
least until the
end of 2024, including purchases of Greek Government
Bonds (GGBs) over and above
rollovers
of redemptions.
On the
fiscal front,
according to
the
2024 State
Budget, the
general
government
is expected
to post
primary
surpluses of 1.1%
and 2.1%
of GDP in 2023 and
2024 respectively,
up from 0.1%
of GDP in 2022. The
gross public
debt-to-GDP
ratio,
having
declined
significantly
to
172.6%
in
2022
(from
195%
in
2021)
due
to
the
strong
economic recovery
and the effect
of the high inflation on nominal
GDP,
is expected to decline further
to 160.3%
in
2023
and
152.3%
in
2024.
In
2023,
the
Greek
government
issued
or
re-opened
twelve
bonds
of
various
maturities (from
5 to 19
years) through
the Public
Debt Management
Agency (PDMA),
raising a
total of
€ 11.45
billion from
the international
financial markets. In
February
2024, the
PDMA issued a new
10-year bond, raising
€4bn at a yield of 3.478%, and reopened two bonds with remaining
maturities of 4.25 and 9.25 years for
€200m
each, with their yields closing
at 2.58% and 3.32% respectively.
Regarding sovereign
rating changes, Scope Ratings
upgraded the credit
rating of Greece
to investment-grade
status in August 2023, followed
by DBRS
Morningstar in
September 2023,
Standard &
Poor’s (S&P)
in October
2023,
and
Fitch
in
December
2023.
As
of
March
2024,
Greek
government’s
long-term
debt
securities
were
considered
investment
grade
by
four
out
of
the
five
Eurosystem-approved
External
Credit
Assessment
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
11
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€ = Euro
m = million
bn = billion
Institutions
(Fitch,
Scope,
S&P:
BBB-,
stable
outlook;
DBRS:
BBB(low),
stable
outlook),
and
one
notch
below
investment grade
by the fifth one, Moody’s (Βa1,
stable outlook, upgraded
from Ba3 in September 2023).
According
to Bank
of Greece
(BoG) data,
the
stock of
credit
to the
non-financial private
sector amounted
to
€109.1bn
at
the
end
of
2023,
up
from
€107.1bn
at
the
end
of
2022,
marking
a
gross
annual
increase
of
1.8%.
Adjusted for write-offs,
reclassifications and
foreign exchange
fluctuations, the
annual growth rate
of domestic
credit to the
non-financial sector stood at
2.7%. On the other
side of the ledger,
domestic non-financial private
sector deposits had increased to €190.7bn at the end of 2023 from €185.1bn
at the end of 2022 (+3%). According
to provisional
BoG data,
residential real
estate prices
recorded
an average
annual increase
of 13.4%
in 2023,
and commercial real
estate prices an average
annual increase of 6.9%
in the first half of 2023.
The
Bulgarian economy
is rendered
as an
outperformer
among regional
economies
as it
expanded
by
2% in
2023 compared
to 3.9%
in 2022.
Private consumption
remained the
key growth
driver,
underpinned
by strong
labour market
conditions which
in turn
improved
consumer
confidence despite
the abating,
still high,
inflation
throughout
2023. Annual
HICP inflation
decelerated
from
14.3% in
December
2022 to
8.6% in
December
2023
with
potential
of further
decrease
in 2024.
According
to EC’s
Winter
Economic Forecast
(February
2024), real
GDP is expected to grow by
1.9% and 2.5% in 2024 and
2025 respectively,
with private consumption continuing
to be considered the key growth
driver,
while the HICP is forecast to decrease
to 3.4% in 2024 and 2.9% in 2025.
The
revival
of
investments
spotted
in
third
quarter
of
2023
was
not
sustained
in
fourth
quarter
of
2023
yet
prospects for
2024 regarding this
GDP component remain positive,
mostly on the
back of higher
absorption of
EU funds, as outlined in the
country’s Recovery and Resilience
Plan. A possible delay in the euro
adoption could
materialise given the slow convergence on prices, resulting in Bulgaria entering the euro area later than January
2025.
The
entry
into
the
Schengen
area
from
March
2024
is
embraced
positively.
Still,
the
limitations
of
the
access only to air and sea cut down respectively
the benefits only for
tourism.
According to the GDP flash estimate
for fourth quarter 2023, the economy of Cyprus grew by 2.5%
in 2023, down
from 5.1% in 2022. The deceleration
in 2023 is
mainly due to
the milder increase in household consumption, under
persisting
inflationary
pressures
(average
HICP
inflation
of
3.9%
in
2023
after
8.1%
in
2022,
according
to
Eurostat), despite
higher partial indexation
of wages since
June 2023 (66.7%
instead of 50% in previous
years).
Nonetheless,
based
on
the
European
Commission’s
winter
economic
forecasts
(February
2024),
the
growth
performance
in 2023
is among
the
top-3 in
the
Euro
area and
the
real GDP
in Cyprus
is expected
to grow
by
2.8% and 3% in 2024 and 2025 respectively, while the HICP is estimated at 2.4% in 2024 and 2.1% in 2025 (2023:
3.9%). Disinflation along with a tight labour market, as
unemployment is projected to de-escalate to 6.1% in 2024
and 5.9%
in 2025,
against 6.4%
in 2023,
will support
consumption spending
expansion
in these
two years.
On
the other hand, slower GDP growth in 2024-2025 relative to
2022 will
stem from the deterioration of the external
balance, mainly of the
goods component, due to the
weakened growth
momentum in Cyprus’ trading
partners,
while
exports
of
services
are
more
resilient,
although
a
protracted
war
in
the
Middle
East
will
weigh
on
the
tourism outlook given the
vital role of tourists from Israel
to the spike in tourism revenue
in the first nine months
of 2023
(+25% Year
on Year).
On the
investment
side, after
the freezing
of the
RRF financing
in 2023
pending
the implementation of Recovery and Resilience Plan (RRP) milestones (reforms etc.), the restart of
capital inflows
in 2024 will
boost green
and digital
infrastructure
in 2024-2025.
Particularly,
strong demand
for real
estate in
2023,
with
sales at
a 16-year
high, will
support
construction
activity,
however,
the
market
outlook is
linked
to
developments in the
Middle East war due to the Israeli’s
significant market share
last year.
Regarding the
outlook for
the next
12 months, the
major macroeconomic risks
and uncertainties
in Greece and
our
region
are
associated
with:
(a)
the
open
war
fronts
in
Ukraine
and
the
Middle
East,
their
implications
regarding
regional and
global stability
and security,
and their
repercussions
on the
global and
the
European
economy,
including the
disruption
in global
trade
caused
by
the
recent
attacks
on trading
vessels
in the
Red
Sea,
(b)
a
potential
prolongation
of
the
ongoing
inflationary
wave
and
its
impact
on
economic
growth,
employment,
public
finances,
household
budgets,
firms’
production
costs,
external
trade
and
banks’
asset
quality,
as
well
as
any
potential
social
and/or
political
ramifications
these
may
entail,
(c)
the
timeline
of
the
anticipated interest
rate cuts by
the ECB and
the Federal
Reserve Bank,
as persistence on
high rates
for longer
may keep exerting pressure on sovereign
and private borrowing costs and certain financial institutions’
balance
sheets,
but early
rate
cuts entail
the
risk of
a rebound
in inflation,
(d) the
prospect
of Greece’s
and Bulgaria’s
major trade partners, primarily the
Euro Area, remaining stagnant or even
facing a temporary downturn, (e) the
persistently large
current
account deficits
that have
started to
become once
again a
structural
feature
of the
Greek economy, (f) the
absorption capacity of the
NGEU and MFF funds and the
attraction of
new investments
in
the
countries
of
presence,
especially
in
Greece,
(g)
the
effective
and
timely
implementation
of
the
reform
agenda
required
to
meet
the
RRF
milestones
and
targets
and
to
boost
productivity,
competitiveness,
and
resilience
and
(h)
the
exacerbation
of
natural
disasters
due
to
the
climate
change
and
their
effect
on
GDP,
employment, fiscal balance
and sustainable development
in the long run.
Materialization
of the
above
risks would
have
potentially
adverse
effects
on the
fiscal
planning of
the
Greek
government, as it could decelerate
the pace of expected growth and on the liquidity, asset quality, solvency
and
profitability of the Greek banking
sector. In this context, the
Group Management and Board, also mindful of the
recent
banking
turmoil
across
some
markets,
are
continuously
monitoring
the
developments
on
the
macroeconomic,
financial
and
geopolitical
fronts
as
well
as
the
evolution
of
the
Group’s
asset
quality
and
liquidity
KPIs
and
have
increased
their
level
of
readiness,
so
as
to
accommodate
decisions,
initiatives
and
policies
to
protect
the
Group’s
capital,
asset
quality
and
liquidity
standing
as
well
as
the
fulfilment,
to
the
maximum possible degree,
of its strategic
and business
goals in accordance
with the
business plan for
2024 –
2026.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
12
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€ = Euro
m = million
bn = billion
Share Capital
As at 31 December 2023:
a)
The
total
share
capital
of
Eurobank
Holdings
amounted
to
€
817,625,550.94
divided
into
3,716,479,777
common voting shares
of nominal value of €0.22 each.
All shares are
registered, listed
on the Athens
Stock
Exchange and incorporate all the
rights and obligations set by
the Greek legislation,
b)
The
number
of
Eurobank
Holdings
shares
held
by
the
Group’s
subsidiaries
in the
ordinary
course
of
their
business was 4,346,566 (31 December 2022: 260,036)
(note 37 to the consolidated
financial statements),
c)
The number
of own shares held by Eurobank
Holdings was 52,080,673.
Own shares
The
BoD decided
on 27
June 2023
to propose
at the
Annual General
Meeting (AGM)
to approve
to purchase
the
Company’s
shares
held
by
the
HFSF,
via
a
pre-agreed
transaction
(“Repurchase”).
The
Repurchase
is
provided
for
in the
HFSF's Divestment
Strategy
and has
been approved
by the
Single Supervisory
Mechanism
(SSM). Following the above, the AGM held on 20
July 2023 approved the acquisition of
own shares in
accordance
with article 49 of Law 4548/2018, and in particular the acquisition of all of
the Company’s shares which the HFSF
owns, under the
following conditions:
a)
Maximum number of shares to be
acquired: According to article 49 of Law
4548/2018, the maximum number
of shares that
the Company may
acquire, added together
with the
shares belonging to the
Company from
time to
time, cannot
exceed 10%
of the
Company's paid
share capital.
Specifically,
in this
transaction,
the
number
of
shares
to
be
purchased
will
be
the
total
of its
issued
shares
held
by
the
HFSF,
i.e.
52,080,673
shares, which correspond
to approximately 1.40% of its share
capital,
b)
The duration
for which the
approval is granted
is set at 6 months from the
day of the General
Meeting,
c)
The
maximum purchase
price is
set at
€1.90
per share
and the
minimum purchase
price
is set
at €1.10
per
share,
d)
To
authorize
the
Board
of
Directors
to
determine
the
specific
conditions
and
relevant
details
for
the
acquisition, taking into account the
supervisory approvals.
The
transaction
was completed
on 9
October
2023 at
a price
of €1.80
per share
and a
total consideration
of
€93,745,211.40.
The
Company
intends
to
proceed
to
the
cancellation
of
the
aforementioned
treasury
shares,
subject
to
the
approval of the
Annual General Meeting and regulatory
authorities.
Share options
Under the
five-year
shares award
plan approved
in 2020 and
started in 2021,
the executives
and personnel
of
Eurobank Holdings and its affiliated companies are granted share options rights, which are exercised in portions
annually during
the
term of
the
plan by
issuing new
shares
with a
corresponding
share
capital increase.
Each
portion may
be exercised
wholly or
partly and
converted
into shares
at the
employees’
option, provided
that
they remain
employed by
the Group
until the
first available exercise
date. The
maximum number of
rights that
can
be
approved
was
set
at
55,637,000
rights,
each
of
which
would
correspond
to
one
new
share
and
the
exercise price of each new
share would be equal to € 0.23.
In July 2023,
the Group
awarded to
its executives
12,101,092
new share
options, exercisable
in annual portions
up to
2028. From
the
share options
exercisable
in 2023,
a number
of 5,802,269 options
were
exercised
during
the year, resulting in the issue of an
equal number of new
common voting shares.
Further information is provided
in note 39 to consolidated financial statements.
Dividends
/
Distribution of Profits
In December
2023, the
Bank proceeded
with the
distribution of
non-mandatory reserves
totalling €410
million
to its sole shareholder,
Eurobank Holdings,
in order to
enable the
latter to distribute
dividend out of the
profits
of the
financial year
2023 to its
shareholders
in accordance
with the
provisions
of article
159 of Company
Law
4548/2018.
Based on
the
Group’s
financial performance
for
the
financial year
2023, Eurobank
Holdings aims
to distribute
to its
shareholders
a cash
dividend equivalent
to at
least 25%
of the
Group's
adjusted net
profit
for
financial
year
2023,
subject
to
the
approval
of
the
Annual
General
Meeting
of
its
shareholders
and
the
regulatory
authorities.
In
addition,
Eurobank
Holdings
intends
to
proceed
also
with
the
distribution
of
profits
to
the
employees
in
accordance
with
its
remuneration
policy,
subject
to
the
approval
of
the
Annual
General
Meeting
of
its
shareholders.
Major Shareholders
Based on the most recent notifications that
Eurobank Holdings has received
from shareholders controlling
5 per
cent or more of Eurobank
Holdings’ voting
rights, such significant shareholders
are the following:
a)
“Fairfax Financial Holdings Limited”,
controlling 32,93%
of Eurobank Holdings’
total number of voting rights,
corresponding
to 1,224,002,259 voting rights
of Eurobank
Holdings’ ordinary
shares (the
reporting date
for
the aforementioned is on 14 July
2021, while the percentage calculation is based
on the new total
Company’s
listed shares that are tradeable on the Athens
Stock Exchange, following the last share capital increase
due
to the exercise
of stock option rights),
b)
“The Capital
Group Companies, Inc”,
controlling 5,05%
of Eurobank
Holdings’ total number
of voting rights,
corresponding to 187,812,291
voting rights of Eurobank Holdings’
ordinary shares. (the reporting date for
the
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
13
|
Page
€ = Euro
m = million
bn = billion
aforementioned
is
on
1
December
2020,
while
the
percentage
calculation
is
based
on
the
new
total
Company’s listed shares
that are
tradeable on the
Athens Stock
Exchange, following
the last
share capital
increase due to the exercise
of stock option rights),
c)
The
“Helikon
Investments
Limited”,
controlling
5,00%
of Eurobank
Holdings’
total
number
of voting
rights,
corresponding
to 185,957,220
voting
rights of
Eurobank
Holdings’
ordinary
shares.
(the
reporting date
for
the
aforementioned
is
on
25
January
2023,
while
the
percentage
calculation
is
based
on
the
new
total
Company’s listed shares
that are
tradeable on the
Athens Stock
Exchange, following
the last
share capital
increase due to the exercise
of stock option rights).
Sundry information
required under Law 3556/2007
(article 4, par.7)
According to the Articles
of Association:
a)
there
are no restrictions on the
transfer
of the Eurobank
Holdings’ shares,
b)
there
are no shares with special controlling
or voting rights,
c)
there
are no restrictions on voting
rights,
d)
the
rules
related
to
the
appointment
and
replacement
of
directors
as
well
as
to
the
amendment
of
the
Articles of Association are in accordance
with the provisions
of company law.
Eurobank
Holdings
is not
aware
of any
shareholders’
agreements
resulting
in restrictions
in the
transfer
of its
shares or
in the
exercise of
the shares’
voting rights.
There
are no significant
agreements that
enter into
force,
are amended
or expire if there
is change in the
control of Eurobank
Holdings following
a public offer.
There
are
no
agreements
between
Eurobank
Holdings
and
the
Directors
or
the
staff
for
compensation
in
the
event
of
departure as a result of a public offer.
Board of Directors
The Board
of Directors (BoD) was elected by the Annual General
Meeting (AGM) of the Shareholders
held on 23
July 2021 for
a three-year
term of office
that will
expire on
23 July 2024,
prolonged
until the
end of the
period
the AGM for
the year 2024 will take
place.
Further to that:
-
The
AGM of
the Shareholders
held on
20 July
2023 approved
the appointment
of Mr.
Burkhard Eckes
and
Mr.
John
Arthur
Hollows
as
new
independent
non-executive
members
of
Eurobank
Holdings
BoD,
whose
term of
office
will expire
concurrently with
the term
of office
of the
other
members of
the BoD
(comprising
of fifteen members from
now onwards). On the
same day the BoD decided
on its constitution.
-
On 9
October
2023,
Eurobank
Holdings
announced
the
acquisition
of
all of
its
issued
shares
held
by
the
HFSF,
namely 52,080,673 common registered shares. On the same
day, the HFSF notified Eurobank
Holdings
that
effective
as
of
11
October
2023,
the
HFSF
will
no
longer
have
the
special
rights
provided
in
law
3864/2010,
including
the
right
to
appoint
a
representative
in
the
Board
of
Directors
and
the
Board
Committees.
In
this
framework,
the
HFSF
representative
Mrs.
Efthymia
Deli,
member
of
the
Boards
of
Directors and of
the Committees of the Boards of
Eurobank Holdings and Eurobank, submitted on 26.10.2023
her
resignation
from
the
abovementioned
positions,
effective
as of
7 November
2023.
Accordingly,
on 10
November 2023,
the BoD decided, in accordance with the
provisions of article 82 par.
2 of L. 4548/2018 and
article 7 par. 2 of the Company’s Articles of
Association, on the continuation of the Company’s management
and
representation
by
the
BoD,
comprising
of
its
remaining
fourteen
(14)
members,
as
well
as
on
its
constitution.
-
Mr.
Andreas
Athanasopoulos,
Deputy CEO
and Executive
Member
of the
Boards
of Directors
of Eurobank
Holdings and Eurobank,
submitted on 31 October 2023 his resignation
from the abovementioned
positions,
effective
as of 31 December 2023. Accordingly,
on 8 January 2024, the BoD decided, in accordance with
the
provisions
of article 82
par.
2 of L.
4548/2018 and article
7 par.
2 of the
Company’s Articles
of Association,
on
the
continuation
of
the
Company’s
management
and
representation
by
the
BoD,
comprising
of
its
remaining thirteen (13) members,
as well as on its constitution.
The BoD of Eurobank
Holdings is set out in note 47 to the consolidated financial statements.
Personal details of
the Directors are
available on the website
of Eurobank Holdings
(www.eurobankholdings.gr).
Information required
under Law 4548/2018 (article 97,
par.1
(b))
According to article
97 par.
1 (b) of Law 4548/2018
the BoD members
owe to disclose
in a timely and adequate
manner to the other
members of the BoD their
own interests, which may arise from the
company's transactions,
which fall
within their
duties, as
well as
any conflict
of their
interests
with those
of the
company or
its related
companies. In
such case
and in line
with the
provisions
of article
97 par
3 of the
same law,
the member
of the
BoD is not entitled to vote on issues in which there is a conflict of interest with
his own company or persons with
whom he is a related party.
In these cases, decisions
are taken by the
other BoD members.
For 2023,
the following
issues were
noted in which there
was a conflict of interest with Eurobank
Holdings:
For the
purposes of decisions related
to the acknowledgement of the
expiration of the
deadline of par. 3 of art.
100 of
Law 4548/2018
concerning
the
conclusion
of a
Share
Purchase
Agreement
(SPA),
which pertains
to the
Eurobank’s
participation
in
the
company
“Grivalia
Hospitality
S.A.”
(Grivalia
Hospitality
οr
GH)
between
Eurobank
and “Eurolife
FFH Life
Insurance
Single Member
Société Anonyme”
(Eurolife),
which is a
related party
of the
parent company
of Eurobank,
Eurobank
Holdings, within
the meaning
of paragraph
2 (a) of article
99 of
Greek
Law
4548/2018,
according
to
IAS
24,
the
BoD
member
Mr.
Martin
also
Vice
Chairman
of
Strategic
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
14
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€ = Euro
m = million
bn = billion
Investments at Fairfax, which holds 32.93% of the shares of the parent company of
Eurobank, Eurobank Holdings,
and
also
controls
Eurolife’s
parent
company,
“Eurolife
FFH
Insurance
Group
Holdings
Société
Anonyme”,
and
indirectly Eurolife
itself, was not entitled
to vote according
to the provisions
of par.
3 of Art. 97 of the
Company
Law 4548/2018 due to conflict of interest.
For the purposes of decisions related to
the Hellenic Financial Stability
Fund (HFSF) share buy-back
and decisions
in the
context of this
buy-back related
to a) the
issuance of a
common bond loan
and b) instructions
of voting
for the
Extraordinary General
Meeting of Eurobank, the
BoD member and HFSF representative
Ms. Deli was not
entitled to vote according to the
provisions of par.
3 of Art. 97 of the Company Law 4548/2018 due to conflict of
interest.
For
the
purposes
of
decisions
relating
to
a)
the
Stock
Options
plan
(2nd
and
3rd
series
implementation)
approved
by
the
Annual General
Meeting of
Shareholders
in July
2021,
b) variable
remuneration
awarded
in
instruments
and c)
executives'
Remuneration,
the
CEO Mr.
F.
Karavias
and the
Deputy CEOs
Messrs. Ioannou,
Vassiliou
and Athanasopoulos
were
not entitled
to vote,
according to
the
provisions
of par.
3 of
art. 97
of the
Law 4548/2018, due to conflict of interests.
Related party transactions
In
January
2022,
an
occupational
insurance
fund
(“Institution
for
occupational
retirement
provision-
occupational insurance
fund Eurobank’s
Group personnel” henceforth
“the Fund”) was established
as a not-for-
profit legal entity under Law 4680/2020, for
the benefit of the employees
of the Company, the
Bank and certain
other
Greek entities
of the
Group,
which constitute
the
sponsoring employers
of the
Fund. Accordingly,
in line
with IAS 24 Related Parties, the
Fund is considered to be related party
to the Group.
As at
31 December
2023,
the
Group’s
outstanding balances
of the
transactions
and the
relating
net income
/
expense for 2023 with (a) the
key management personnel
(KMP) and the entities controlled
or jointly controlled
by
KMP
are:
compensation
€9.7m,
receivables
€5.8m,
liabilities
€20.2m,
net
expense
€18.1m,
of
which
€4m
expense
relating
with
equity
settled
share
based
payments,
(b)
the
Fairfax
group
(excluding
Eurolife
FFH
Insurance
Group
Holdings S.A.,
which is
also a
Group’s
associate)
are: receivables
€132.5m, liabilities
€129.4m,
guarantees
issued
€2.5m,
net
income
€6.4m,
(c)
the
associates
and
joint
ventures
are:
receivables
€171.7m,
liabilities €201.9m,
net expense €76.2m (d) the Fund are: liabilities
€1m.
At
the
same
date,
the
Company’s
outstanding
balances
of
the
transactions
and
the
relating
net
income
/
expense for
2023 with
(a) KMP
are:
compensation
€0.2m that
is referring
mainly to
KMP services
provided
by
Eurobank
S.A.
in
accordance
with
the
relevant
agreement,
(b)
the
Fairfax
group
refer
to
receivables
and
operating
income of €0.3m related
to financial consulting services,
(c) the subsidiaries
are: receivables
€1,677m,
liabilities
€31.13m
and
net
income
€505.3m,
including
€410m
dividend
income
and
(d)
the
Group’s
associate
Eurolife FFH Insurance
Group Holdings S.A. are:
operating expense
of €0.1m.
All transactions
with related
parties are
entered
into the
normal course
of business
and are
conducted on
an
arm's length basis. Further
information
is provided
in the note
45 to the
consolidated financial statements
and
note 19 to the financial statements
of the Company.
External Auditors
The Eurobank
Holdings’ Shareholders
Annual General Meeting held
on 20 July 2023 approved the
appointment
of KPMG, as
statutory auditor
for the
financial statements
(separate
and consolidated)
for the
year ending
31
December 2023.
During
2023,
the
Audit
Committee
reviewed
KPMG’s
independence
and
effectiveness,
along
with
its
annual
audit plan. In
addition, the Audit Committee ensured
on a
quarterly basis that a) the
non-audit services assigned
to KPMG,
have
been reviewed
and approved
as required
and b)
there
is a
proper
balance between
the
audit
and non-audit fees
paid to KPMG, in accordance
with the
relevant provisions
of the Group’s
Policy on External
Auditors’ Independence (note
46 of the consolidated financial statements).
NON-FINANCIAL INFORMATION
Business model
The
Eurobank
Holdings Group
(the
Group)
offers
a wide
range
of financial
products
and services
in retail
and
business
banking
and
has
a
significant
international
presence
in
three
countries
outside
Greece
(see
further
information in the section
“International Operations”).
It is among the leading providers of banking services and
credit
to large
corporates,
SMEs, small
businesses,
professionals
and households,
concentrating
its efforts
on
financing the growth cycle
of the Greek economy and the other
countries of presence, including an instrumental
participation in Recovery
and Resilience Facility (RRF) funds. In addition,
the Group has a strategic
focus in fee-
generating
activities, such as asset management, private banking,
equity brokerage,
treasury sales, investment
banking, factoring, real
estate, trade finance
and bancassurance.
The Group has a diversified (through business line, geography and customer) and resilient business model,
which
is based
on three
revenue
streams i.e.
the
Greek
banking operations,
the
international
activities and
the
real
estate
business.
Its
strategy
aims
at
optimizing
its
financial
performance,
maintaining
a
strong
capital
and
liquidity base, rewarding its
shareholders as well as contributing
to the economy
and society in
a holistic manner.
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The Group
continues to implement the Transformation
Program “Eurobank
2030”, which is a material enabler in
achieving
the
bank’s
strategic
objectives
and
enhancing
its
competitive
position,
as
it
focuses
on
business
growth, sustained
operational resilience,
constantly improving operational
efficiencies and, ultimately,
ensuring
increased
customer
value
and
satisfaction.
In
tandem,
the
Group
is
investing
in
the
People
–
Technology
–
Sustainability
three-fold,
by
combining
cutting
edge
technology
and
the
expertise
of
its
highly
trained
staff,
using
best
practices
to contribute
to the
effort
for
sustainable
development
for
all. The
Group
implements
a
holistic sustainability strategy which is based on: a) the Operational Impact Strategy, which concerns the
Bank’s
own
operations
and
activities
and
includes
Environmental
Impact,
Social
and
Business
Impact
and Employer
Impact and b) the
Financed Impact Strategy,
which involves the
Bank’s investment choices
and actions related
to extending customer financing and
working with them in meeting environmental goals and addressing climate
change.
Its operating model evolves
around the following
key pillars:
a)
Financing
landmark
projects
and
investments
of
large
and
medium
size
businesses,
mainly
through
investments based on ESG criteria,
b)
Fully supporting SMEs, in combination with
the major funding potential
available through European
and/or
Greek programmes for
small businesses, aiming to boost their competitiveness, gain access to international
markets, create jobs
and thus distribute the benefits
of growth across
society,
c)
Sustaining a leading position in Retail Banking by
offering
high quality services and innovative
products to
distinct client segments leveraging on advanced multi-channel strategies and tailored to customer evolving
needs,
d)
Developing a people-centred
‘phygital’ model, a hybrid of physical and digital, that combines state-of-the-
art technological
infrastructure
with the
Group’s
human resources,
offering
simple, fast,
personalised, and
secure services.
In conducting
its business
activities,
the
Group
considers
the
particular
and diverse
needs of
its stakeholders
and focuses on creating
value for them. In
this context, the Group:
a)
designs and offers savings and investment
products to its depositors and investors; makes
appropriate use
of available funds for supporting
households and businesses to realise
their plans, financing the
economies
in which it operates,
b)
deploys a client-centric orientation
with segmental approach
and relationship-based management,
c)
relies
on
the
skills
and
expertise
of
its
human
resources
for
the
implementation
of
its
business
strategy
including
the
improvements
of
products
and
services
to
customers;
for
this
purpose,
it
enhances
staff
engagement
by
strengthening
the
knowledge
and
experience
of
its
employees
through
training
and
development
programmes
and providing
a safe
and productive
work environment,
where
diversity,
equity
and inclusion are strongly promoted,
d)
invests
in IT
infrastructures
and digital
transformation
to systemically
address
the
evolving
technological
developments and continuously
improve its business
and operational
model,
e)
has
established
a
system
of
internal
controls
that
is
based
on
international
good
practice
and
aims
to
minimize the
possibility of error
or financial loss,
to protect
the interest
of shareholders
and depositors, as
well as to ensure that the
requirements of the relevant
regulatory authorities are complied with at all times,
f)
uses natural resources
for its operation,
while being committed to minimizing its environmental footprint by
adopting environmentally friendly practices and promoting a green economy.
Green procurement practices
are applied, embedding environmental
specifications and guidance
for selection of products
and suppliers,
g)
develops
an ongoing
dialogue
with stakeholders
and supports
society and
local
communities. The
Group
monitors
and
reviews
information
related
to
its
stakeholders
and
their
requirements,
shaping
a
specific
framework
of cooperation
and approach to communication
in each case.
The corporate
governance
principles of transparency,
credibility, social
responsibility and accountability define
the framework
for the achievement
of the Group’s objectives, govern
the organization, operations
and activities
and reflect
its values,
safeguarding
the
interests
of shareholders
and of
all other
stakeholders.
The
corporate
values of empathy, drive, cooperation, innovation and trust support
a strong yet adaptive
business culture, which
enables
the
Group
to provide
top quality
services
to every
client,
household
or business,
to support
inclusive
growth and to create
sustainable prosperity for
all the communities it serves.
Materiality Assessment
Materiality
assessment
is
the
key
process
used
to
define
the
content
of
the
Annual
Report
-
Business
&
Sustainability and
is largely
informed
and influenced
by stakeholder
engagement.
For
the
first time,
the
Bank
proactively adopts a Double Materiality approach,
incorporating a financial materiality assessment, in addition
to the
impact
materiality
assessment
already
adopted
from
previous
years,
in
order
to identify
the
material
impacts, risks and opportunities to be reported.
The
double materiality
approach
will define the
materiality perspectives
of the
Bank by combining
the impact
materiality perspective
(inside-out) and the financial materiality
perspective (outside-in).
A sustainability matter is material
from an impact perspective
when it pertains to the Bank’s material
actual or
potential,
positive
or negative
impacts
on people
or the
environment
(environmental,
social and
governance
matters) over
the short,
medium and long
term time
horizons. It includes
impacts connected
to the
Bank’s own
operations
and
value
chain,
including
through
its
products
and
services,
as
well
as
through
its
business
relationships.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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A sustainability matter
is material
from a
financial perspective
if it generates
risks or opportunities
that affect
(or could reasonably
be expected
to affect)
the Bank’s
financial position,
financial performance,
cash flows,
or
cost of capital over
the short, medium or long term.
An
integral
part
of
the
Bank’s
approach
towards
Sustainable
Development
is
the
fostering
of
strong
relationships, cooperation
and mutual benefit with all stakeholders
affected, positively
or negatively,
directly or
indirectly by its activities. In this context, the Bank promotes
two-way communication and develops
an ongoing
dialogue with stakeholders.
The overall
Bank’s Materiality Assessment methodology,
the validated Material Topics,
Sustainability Indicators
per
the
GRI
Standards
and
information
regarding
initiatives
across
the
ESG
spectrum
along
with
ESG
data
submitted by
the
Group’s
subsidiaries
are
included in
the
Annual Report
– Business
& Sustainability,
which is
published on www.eurobankholdings.gr.
Group’s approach
towards sustainable development
The Group
supports the sustainable transition
of the economy and considers sustainability
and climate change
as
an
opportunity.
A
key
strategic
objective
is
to
adapt
its
business
and
operation
in
a
way
that
addresses
climate
change
challenges,
accommodate
social
needs
within
its
banking
business
model,
and
safeguard
prudent
governance
for
itself and
its
counterparties,
in accordance
with
supervisory
initiatives
and
following
international standards
/ best practices.
Committed to actively
contributing to the
achievement
of the
United Nations Sustainable
Development
Goals
(SDGs) and the 2030 Agenda goals, the Bank
is a signatory of
the UN Global Compact since 2008. In September
2019 Eurobank
signed the
UNEP FI
Principles for
Responsible Banking
(PRB), affirming
its commitment
to play
an active
role
in implementing
the SDGs
and the
Paris Agreement
on Climate
Change. In
full compliance
with
its obligations
relating to
implementing the
Principles, the
Bank has issued
its 3
rd
PRB Progress
Report as part
of the Annual Report 2022 – Business and Sustainability.
A dedicated Group
-wide programme
to address the requirements
of the ESG ecosystem
The
Group
launched
an
initiative,
namely
“Program
Field”,
with
an
aim
to
develop
and
implement
its
Sustainability
Strategy,
integrate
climate
risks,
fulfil
its
UNEP
FI
PRB
signatory
commitments
and
ensure
readiness to comply
with sustainability-related
regulations (i.e.
“EU Green Deal”, ECB
Guide on climate-related
and environmental
risks, EU
Taxonomy
Regulation,
etc.). Through
this initiative,
the
Group
has also
identified,
assessed and implements
climate-related
and environmental
(CR&E) risk action
plans within the
three Lines
of
Defence.
Group Sustainability Strategy
Eurobank has expressed
the Environmental,
Social, Governance
(ESG) aspect of its business through
the lens of
Impact
generation.
The
Sustainability
Strategy
has
been defined
in a
holistic
approach
across
two
pillars
of
impact: the operational
impact arising from its own activities and the financed impact resulting from the Bank’s
lending and
investing
activities to
specific sectors
and clients.
These
two
pillars of
impact aim
to capture
the
essence of the
Bank’s business effect
on the climate,
the protection
of the natural
environment,
its contribution
to addressing
societal challenges at
large, the
prosperity of
its own people,
its contribution to
raising business
capacity
in
the
markets
where
the
Bank
operates,
and
the
internal
processes
that
build
and
secure
the
confidence of its stakeholders.
Eurobank
has designed,
approved
and is currently
implementing the
Group’s
Sustainability Strategy
including
targets and commitments along the
two key pillars:
A.
Operational
Impact Strategy
The Bank aims to create
positive economic, social, and environmental
impacts from all aspects and areas
of its
operations. To
this end, the Operational
Impact strategy comprises
of 3 strategic pillars, namely:
i.
Environmental
impact with the
objective to minimize
negative
impact across
the Bank’s value
chain to
promote
environmental
stewardship.
The
aim
is
to
minimize
Scope
1
and
2
emissions,
become
a
paperless banking network
and extend circular economy practices
.
ii.
Employer’s
impact
with
the
objective
to
empower
people
to
perform
at
their
best
through
an
environment
that
promotes
ethics
and
integrity.
The
aim
is
to
embed
diversity
and
inclusion,
encompassing a wellbeing culture,
along with stimulating an innovative
environment.
iii.
Social
and
business
impact
with
the
objective
to
drive
positive
change
for
entrepreneurs
and
wider
communities
to
foster
sustainable
development
and
ensure
social
prosperity.
The
aim
is
to
intensify
sustainable procurement
practices,
rationalize
Socio-Economic
Impact
as well
as boost
transparency
and ESG capacity.
B.
Financed Impact Strategy
The
Bank endeavours
to foster
favourable
economic, social, and
environmental
outcomes across
all facets
and sectors of
its financing endeavours,
with a commitment
to sustainability and
responsible stewardship.
To achieve
this objective, the
Financed Impact strategy
is structured around four
strategic pillars namely:
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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i.
Clients’
engagement
and
awareness
to
adapt
their
business
so
as
to
address
climate
change
challenges,
ii.
Actions
for
supporting
clients
in
their
transition
efforts
towards
a
more
ESG-friendly
economic
environment,
iii.
Enablers and tools such as frameworks
and products to underpin Sustainable
Financing,
iv.
The assessment
and management of climate-related
material exposures.
Making progress along the
two pillars of the Sustainability Strategy,
the Bank aims to maximize its contribution
to achieving the Paris
Climate Agreement’s targets
and the UN Sustainable Development
Goals. Through
a set
of actions with
measurable targets,
the Sustainability
Strategy reflects
the Group’s
vision in the
short, medium
and long term
in relation
to the
environment,
its social footprint,
with focus
on its people,
and the
ESG impact
on the market and its portfolio.
Progress on Operational
Impact against targets for
2023
The
Group
is
committed
to
specific
Operational
Impact
targets
including
both
quantitative
and
qualitative
elements. More
specifically,
the
Bank has
successfully managed
to accomplish 2023
impact targets.
Indicative
achievements are
as follows:
• Environmental impact
o
Operational
Net Zero Action
Plan (including carbon reduction
curves) in place.
o
Verified operational
carbon footprint
as per ISO 14064, in line with National
Climate Law stipulations.
o
Considerable
reduction
in total
electricity consumption
and equivalent
Scope 2
emissions
of 9,4%
for
both metrics, in 2023,
compared to 2022.
o
98.04%
of
total
electricity
consumed
in
2023
was
sourced
by
Renewable
Energy
Sources
(certified
guarantees of origin).
o
Car Policy
for Hybrid/Electric
vehicles approved
in September
2023 and is
currently applied,
aiming at
maximizing the percentage
of low emissions vehicles in the
corporate fleet.
o
As
of
31
December
2023,
nineteen
buildings
of
the
Bank
are
certified
as
"green"
according
to
LEED/BREEAM standards.
o
Photovoltaic
installations
(PV)
completed
under
the
Net
Metering
principle
in
N.
Ionia
&
Acharnes
buildings and energy production
scheduled to start in 2024.
o
Establishment
of
a
special
purpose
vehicle
(Eurobank
Renewables
S.A.
-
EuroRES)
for
developing
standalone Photovoltaic
(PV) Plants in central Greece.
o
The
“Just
Go
Zero”
new
recycling
program
is
in
operation
for
the
Nea
Ionia
complex,
the
Central
Warehouse
and the new Headquarter
buildings.
• Employer’s impact
o
Launch of
the “myProsperity”
initiative
(inspirational
talks by
external experts)
in July 2023,
as part
of
the Bank’s Wellbeing
Framework.
o
Activation of the Culture Shift program
in September 2023 and launch of the 12 principles program “We
think innovatively,
we work differently”,
promoting new
ways of collaboration
in the workplace.
o
Launch of training programs
to promote diversity
and inclusion.
o
Launch of an Anti-Harassment learning
program, addressed
to all employees.
o
Completion of wellbeing initiatives
to promote mental health.
o
Design and
execution of
a full
scope People
Engagement
Survey,
including a
wellbeing
and life-work-
balance section.
• Social and business impact
o
Continuous
initiatives
through
the
broad
programs
“Moving
Education
Forward”
and “Moving
Family
Forward”.
o
Resilience and recovery: Continuing contribution
supporting society through natural disaster restoration
efforts,
mobilizing employee volunteer
teams.
o
ESG evaluation criteria
for IT and non-IT procurement
tenders in place.
o
Launch of inclusion initiatives targeting
specific social groups.
o
Continuous
support
to
entrepreneurs
and
startups
through
the
enter.grow.go
(egg)
Accelerator
/
Incubator (11th consecutive
annual cycle run in 2023).
o
Extensive ESG upskilling programs
for all staff members
and dedicated sessions to specific staff groups
on emerging ESG topics.
o
ESG External
Capacity
Building: awareness
initiatives
for
clients, including
the
Digital Academy
series
of ESG webinars: 2
workshops took place for “Energy Transition / Green Buildings” and “ESG: New model
of Sustainable Tourism”
with 324 clients participating.
The
operational
impact
initiatives
are
detailed
in
the
Annual
Report
–
Business
&
Sustainability
(https://www.eurobank.gr/en/group/esg
-environment-society-governance/esg
-reporting).
Progress on Financed
Impact against targets for
2023
The
Group
is committed
to specific
Financed
Impact
targets
which include
both
qualitative
and quantitative
elements. More specifically,
the relevant
achieved targets for
2023 included the following:
Qualitative targets
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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●
Roll-out of our
Sustainability Strategy leading
to tangible outcomes
●
Significant progress
in the integration
of CR&E risks in our 3 LoD Model
●
Incorporation of climate
risk elements into the
Remuneration
Policy
●
Deployment
of
the
ESG
Questionnaire,
which
has
been
developed
at
Interbank
level with
the
coordination of the
Hellenic Bank Association
●
Integration
of the
ESG Risk Assessment
process,
a combination
of the
internal Climate
Risk Scorecard
and the Interbank ESG
Questionnaire
●
Operationalisation
of the
web-based
Sustainable Finance
Assessment
Tool
for
the
classification
and
evaluation of sustainable financing opportunities
for Corporate
portfolio
●
Assessment of
CR&E risks through
Sectoral Analysis
and forward
-looking Scenario
Analysis, as part
of
the Task
Force
on Climate-Related Financial Disclosures (TCFD)
report
●
Alignment of our Risk Appetite with the
articulated Sustainability Strategy
●
Incorporation of climate
risk aspects into collateral
valuation
●
Publication of the
TCFD Climate-related
& Environmental Risk Report
●
Disclosure of
Eurobank’s
GHG financed
emissions for
loans, bonds
and shares
positions based
on the
Partnership for
Carbon Accounting Financials (PCAF) methodology
●
Performance
of training
sessions for
our employees
in relation
to Climate
Risk, Sustainable
Financing,
ESG Risk Disclosures and ESG Risk Assessment
●
Awareness initiatives
for our clients, including the
Digital Academy series of ESG webinars
Quantitative targets
●
More than 20% of new corporate
disbursements are classified as Green/Environmental
●
More than 50% of new disbursements
in Energy Sector were
directed to RES
●
Solid 100% of disbursements related
to construction of new buildings were
directed to green buildings.
●
More than 2 times increase
in our new green disbursements
towards households and small businesses.
●
€ 2.1bn Green/Environmental
Exposures as of 31.12.2023,
c. 14% of CIB portfolio
●
€0.2bn in Assets under Management in ESG Focused
mutual funds
●
€0.6bn exposure in Green/Sustainable
Bonds in our Banking Book
Eurobank has set the
following targets
based on its Financed Impact Strategy
for the
following years:
Portfolio
targets
New disbursements
●
€2bn in new green disbursements to businesses
by 2025
●
20% of the annual new Corporate & Investment
Banking (CIB) portfolio
disbursements to be classified
as Green/ Environmentally
sustainable.
Green stock / Exposure evolution
●
20% stock of green exposures by 2027
for the CIB
portfolio (up from
11% in 2022)
Recovery and Resilience
Facility (RRF)
●
Mobilize €2.25bn total green RRF funds in the
Greek economy by 2026.
Sectoral targets
Renewable energy
●
35% of
new
disbursements
in the
energy
sector will
be directed
to Renewable
Energy
Sources
(RES)
financing.
Green buildings
●
80% of disbursements related to the construction of new buildings will
be allocated to green buildings.
Next milestones
Portfolio
alignment and net zero
●
Commit to the Net Zero
Banking Alliance at a Group
level within 2024.
●
Align loan portfolio
and investments with a
net zero carbon footprint
by 2050 by developing
a robust
action
plan
and
roadmap
including
intermediate
targets
to
net
zero
and
commitment.
Actively
support clients’
climate transition
journey with
an ambition
to further
increase sustainable
financing
going forward.
●
Implement
the
ESG
Risk
Assessment
supported
by
the
roll
out
of
the
Hellenic
Bank
Association
initiative
(Interbank
ESG
Questionnaire),
ensuring
a
harmonized
assessment
approach
for
Bank’s
clients.
●
Further integrate
climate risk regulatory requirements
into its business strategy and risk management
framework,
leveraging
on key
initiatives:
a) Governance,
policies, and
control
framework,
b) Climate
risk modelling and data management and c) Commercial
strategies/ sector policies.
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The
Operational
and
Financed
pillars
of
the
Sustainability Strategy
are
combined
for
addressing
Eurobank’s
path
towards Net
Zero by
2050. In
line with
Eurobank’s
commitment to
the UNEP
FI Principles for
Responsible
Banking, development
of the
Sustainability Strategy
is aligned
with the
requirements
for
identifying the
most
significant positive and negative
impacts on the societies and environment
where it operates.
ESG Governance
Sustainability
at
Eurobank
is
deployed
across
an
ESG
governance
structure
that
addresses
both
regulatory
requirements
and voluntary
commitments.
BoD oversight
with respect
to Sustainability
Strategy
is addressed
through the inclusion of ESG items in the Board Meetings agenda, as per international best practice.
The Three
Lines of Defence model enhances risk management and control by clarifying roles and responsibilities within the
organization Eurobank’s
updated governance
structure also ensures that the
management of relevant climate-
related
and environmental
risks is
integrated
into the
Bank’s three
lines of
defence,
as well
as aims
to further
enhance the effective
oversight of ESG and CR&E matters
at management / Board level.
In this context and taking into account the significant impact of climate-related and environmental (CR&E) risks
both
on financial
institutions
and on
the
global economy,
the
Group
developed
and approved
its CR&E
Risks
Management Policy which
aims at fostering a holistic
understanding of the effects
of CR&E risks on its business
model,
as
well
as
support
decision-making
and
provide
a
robust
governance
under
its
Risk
Management
Framework.
In
addition,
the
Bank
has
assigned
an
executive
member
as
the
BoD
member
responsible
for
climate
and
environmental
risks. As
part
of his
duties, the
member
responsible updates
the
Board
Risk Committees
(BRC),
which in accordance with their Terms of Reference are responsible to oversee, among others, the climate change
and environmental related
risks at least on a semi-annual basis.
Eurobank has also established the
Environmental, Social & Governance
Management Committee (ESG ManCo),
chaired by
the BoD member
responsible for
climate-related and
environmental
risks. The
ESG ManCo provides
strategic direction
on Environmental,
Social & Governance
(ESG) initiatives, reviews
the Sustainability Strategy
prior
to approval,
intergrate
s
the
elements
of the
Sustainability Strategy
into the
Eurobank’s
business
model
and
operations,
approves
eligible
assets
of
Green
Bond
Frameworks,
regularly
measures
and
analyses
the
progress
of
the
ESG
goals
and
performance
targets,
as
well
as
ensures
the
proper
implementation
of
ESG
related policies and procedures
in accordance with supervisory
requirements and voluntary
commitments.
Further
information
on the
ESG governance
structure for
the oversight
and management
of sustainability and
climate
related
&
environmental
matters
is
provided
in
the
TCFD
–
Climate-related
and
Environmental
Risk
Report.
ESG &CR&E Data
The Group recognizes
the importance of relevant and reliable data in order
to produce meaningful information,
appropriate for
decision-making purposes. Having already
performed
an assessment of CR&E data availability
in
its
internal
systems
against
regulatory
requirements/
expectations,
the
Group
continues
to
enhance
its
environmental risk data aggregation capabilities and IT infrastructure accordingly,
while also using appropriate
controls and safeguards to ensure the accuracy and completeness of
the compiled information. The Group seeks
to
further
improve
environmental
risk
data
granularity,
through
the
allocation
of
detailed
roles
and
responsibilities
for
the
purposes
of
CR&E
data
management
and
the
implementation
of
approaches
for
the
remediation
of
identified
data
gaps
(i.e.,
engagement
with
external
data
providers,
development
of
methodological
approaches for
the estimation of required
information).
The
ESG Unit
is responsible
for
the
design
and monitoring
of the
implementation
of the
Operational
Impact
Strategy (OIS), the monitoring of the Operational ESG performance
and coordination of ESG linked operational
activities that
enhance the
Bank’s Impact.
In this
context, the
Unit is
responsible for
the collection,
calculation
and review of data related
to the operational
impact in line with the associated certified
management systems
(ISO 14001/EMAS, ISO
50001, ISO 14064).
The Head of ESG
acts as secretary to
the ESG Management Committee.
The
Group Climate
Risk Division
is responsible
for
establishing internal
reporting and
disclosure
processes
for
the
financed
impact
as well
as
the
oversight
of the
associated
data
collection,
in
line
with
the
Group’s
data
governance framework.
Internal ESG awareness and capacity
building
The Group
is placing great
emphasis on building
capacity among its
employees, so
they be
able to support its
clients
on
their
sustainability
journey
and
their
green
transition.
To
this
end,
in
addition
to
launching
ESG
initiatives for
its clients, the
Bank implements
an ESG upskilling
plan for
its employees.
Apart from
the general
upskilling programmes,
within 2022-2023 the
Bank conducted dedicated
sessions tailored to
the requirements
of
specific
business
units
and
functions,
to
enhance
their
understanding,
crucial
for
delivering
the
Bank’s
Strategy.
Eurobank’s internal
awareness sessions regarding
ESG and CR&E matters cover
both members
of the
management
body
and
other
stakeholders
across
the
Bank
(e.g.
Business
Units).
Additionally,
the
Bank
has
offered
trainings
to stakeholders
from
all Three
Lines of
Defense
(i.e., Business
Units, Risk
Management
Units,
Internal
Audit
function)
regarding
the
SFF
in
order
to
enhance
their
understanding
of
sustainable
financing
criteria.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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ESG ratings
The
Bank
actively
participates
in
internationally
recognised
ESG
ratings
to
highlight
the
continuous
improvement
in its
environmental,
social and
governance
performance,
upgrade
the
relevant
disclosures
and
further
enhance
investor
confidence
in
its
practices.
In
2023,
the
Bank
posted
significant
improvements
compared to 2022 in important ESG ratings
such as Sustainalytics (from 12.1
to 10.6, maintaining the
“Low Risk”
mark), MSCI (from BBB to A), S&P (from 50 to
52), CDP (improved by 2 notches from D to B) and FTSE (from 2.8/5
to 3.4/5) and ISS ESG (from E:2/ S:2/ G:5 to E:1/ S:2/ G:3).
Specially with respect to
Sustainalytics, the Bank achieved the international ESG Regional
Top Rated distinction,
the
ESG Industry
Top
Rated distinction
for
the
2
nd
consecutive
year and
has been
included in
the
Morningstar
Sustainalytics'
2024
Top-Rated
ESG
Companies
List.
These
distinctions
are
a
strong
demonstration
of
Eurobank's
commitment
to
ESG
practices
and
rank
it
among
the
best
performing
banks
globally.
Eurobank
ranked
45
th
among 1,030 participating
banks. This
remarkable recognition
was based on
an assessment
of the
Bank's performance
and management practices
across a wide range
of ESG impacts including Human Capital,
Data Protection
and Security,
Business Ethics, Corporate
Governance,
Product Governance,
and Integration
of
ESG criteria into financial activities.
In the
context of networking
with market
for sustainable
development
issues, the
Bank participates
in the
ESG
Coordinating
Committee
of
the
Hellenic
Bank
Association,
the
Corporate
Responsibility
Committee
of
the
American-Hellenic Chamber
of Commerce and
the Greek Network
of the UN Global Compact.
Protection of environment
As climate
change is becoming
a dominant threat
for the
planet and its
people, the
Group takes
on an active
role,
with
actions
that
benefit
the
environment
for
the
benefit
of future
generations.
The
Bank systematically
manages its operational
environmental impact. To
this end, Eurobank
has adopted an Environmental Policy,
an
Energy Management
Policy and
a Water
Management Policy,
aiming to protect
the environment
in all aspects
of its operations.
In
line
with
these
policies,
the
Bank applies
certified
management
systems,
in accordance
with
International
Standards,
including
an
Environmental
Management
System
(ISO
14001,
EMAS)
and
an
Energy
Management
System
(ISO
50001),
publishes
an
annual
Environmental
Report
in
accordance
with
the
European
EMAS
Regulation (Eco-Management and Audit Scheme),
and since 2022 certifies its carbon footprint according to the
international ISO 14064 Standard.
The implementation
of these management systems
is supported by relevant
e-learning training programs.
Furthermore, the
Bank, has established sustainability practices
in procurement, in
order to select, where
possible, environmentally and socially responsible
goods and suppliers.
Moreover,
the
international
subsidiaries
of
the
Group
are
actively
following
Eurobank's
footsteps
towards
environmental
protection.
As a result,
Eurobank
Cyprus was certified
according to ISO
14001 in 2023 and
listed
in
the
European
Eco-Management
and
Audit
Scheme
(EMAS)
Register
for
Environmental
Management,
underscoring its commitment to environmental
protection and
sustainable practices.
The environmental
performance,
with respect to the improvement
of the operational
environmental footprint,
is
monitored
through
specific
environmental
indicators
in
order
to
identify
any
deviations
and
take
corrective
actions and
is included in
the Annual
Report – Business
& Sustainability and
the Environmental
Report (as per
EMAS Regulation).
Both reports
are assured
by independent
parties and
are available
on the
Group’s
and the
Bank’s websites (www.eurobankholdings.gr
and www.eurobank.gr
respectively).
Environmental
performance
data
are
monitored
at
Group
level
(specifically
for
energy,
water
and
waste).
However,
the
related
Management
Systems
(ISO
14001/EMAS,
ISO
50001
and
ISO
14064)
and
corresponding
certification
scopes apply only at Bank level and therefore
environmental performance
is assured and reported
only at Bank level.
In the
context of minimising its
environmental impact,
the Bank
has implemented
an integrated
action plan to
reduce paper consumption
and fully digitize its operations.
As a result of these efforts
in 2023, the paper
supply
amounted
to
188
tons.
In
addition,
the
increase
in
the
use
of
the
e-statement
service
continued
for
another
consecutive
year,
as
more
than
190,000
additional
e-Banking
users
chose
e-statements,
resulting
in
the
additional
savings
of
420,000
physical
statements.
The
Bank’s
financial
savings
from
the
discontinuation
of
physical statements are
also substantial, amounting to €38m since the
service became
available.
According
to its
Water
Management Policy,
the
Bank aims
to responsibly
manage the
use of
water
resources
and efforts
for
savings. In
2023,
the
water
consumption
amounted to
54,894m
3
, which
represents
a marginal
increase of 0.80% compared
to 2022.
In
the
view
of
circular
economy
and
the
Bank’s
commitment
to
implementing
comprehensive
waste
management practices,
aiming to recycle
or redirect all solid
waste it generates,
the Bank has achieved
a 3.9%
decrease
in the
total
waste
directed
to landfill
and
has
concurrently
decreased
total
solid
waste
(recycled
&
domestic) by 9.3%
compared to 2022.
The Group
is actively involved
in a series of International and European
initiatives for
environmental protection
and Sustainable Development, such as
the EU Eco-Management and
Audit Scheme (EMAS) and
the Mastercard’s
Priceless Planet Coalition global
initiative.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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Energy and Emissions Management
The
importance
of
Climate
Change
makes
energy
consumption
monitoring
one
of
the
most
important
environmental
priorities
of
the
Bank.
The
Bank
implements
a
certified
Energy
Management
System
(EMS)
in
accordance with the
ISO 50001 standard, with the purpose of responsible
energy management in all the
Bank’s
facilities (it concerns all the Bank’s Administration
Buildings / Branches and covers 100% of its operations), which
aims to
minimize energy
cost, the
environmental
impact
of harmful
greenhouse
gas emissions,
as well
as the
depletion of fossil fuels.
In accordance
with the
applicable
legislative
requirements
(Greek
Climate Law
4936/2022) and
international
best practices, the
Bank was certified according
to the International
Standard ISO 14064 for
the quantification
and
reporting
of
greenhouse
gas
emissions
(Category
1-7),
with
the
aim
of
the
reduction
of
greenhouse
gas
emissions and its environmental
footprint.
The
Bank
also
maintains
the
corresponding
matching
in
line
with
the
methodology
of
the
“GHG
Protocol
Corporate Accounting and Reporting
Standard” (Scope 1, 2 & 3).
Through
the
certified
management
systems,
Eurobank
monitors
its
performance
and
minimises
its
carbon
footprint by:
• Setting specific targets.
• Undertaking mitigation initiatives.
• Designing and developing projects
to protect the
environment and improve
the use of natural
resources.
In order to achieve
these broader
objectives, as well as
the specific quantitative
ones, environmental programs
are designed and implemented within
the Environmental Management System, while for energy and greenhouse
gas emissions, actions
are carried
out within the
Energy Management
System.
To this
end, the Bank addresses
its:
• Identified negative impacts through
in-house operations which contribute to the release
of Greenhouse Gas
emissions as a direct factor
contributing to climate change.
• Positive impacts through
energy reduction
and efficiency in operations.
Direct
Green
House Gases
(GHG) Emissions
(Scope 1)
result
from
the
Bank’s consumption
of natural
gas
and
heating oil to heat
buildings and the
use of fuel for
the Bank’s own
vehicles for
transportation within
the Attica
region. It also includes the data on fluorinated gases (F-gases) released by the air conditioning installations and
automatic fire
extinguishing systems
of the
Bank (fugitive
emissions), as
well as
the greenhouse
gas emissions
from the use
of leased company cars by the
Bank’s employees.
Eurobank
is undertaking
the
complete replacement
of its
vehicle
fleet,
offering
users
purely
electric
or hybrid
vehicles. By the end
of 2025, 75% of the
fleet will be replaced, and within
a 4-year period,
all corporate vehicles
will be electric or hybrid electric.
Regarding
electric energy
use (indirect
emissions -
Scope
2), the
Bank calculates
its emissions
using both
the
location-based
and market-based
methods, using
national annual CO
2
emission conversion
factors. The
Bank,
demonstrating
a
long-term
commitment
to
environmental
and
energy
management,
displayed
remarkable
reflexes, during the current
energy crisis.
To achieve its target of a 10%
reduction in electricity consumption, cumulative for the years 2022-2023, Eurobank
has taken various actions,
including:
• Replacement of air conditioning/ventilation systems and lighting in 120 locations in 2022 and in 55 branches
and 2 office buildings in 2023.
• Replacement of over 3,500 lights with new LED technology, conversion of air conditioning systems to
inverter,
and a series of energy-saving interventions, especially in the Data Center of the building complex in Nea Ionia.
• Self-production
of energy
through the
construction of photovoltaic
panels on the
roof of the
same complex
and the Bank's building in Menidi, while efforts
for licensing autonomous RES installations
are underway.
• Central temperature
control programming.
• Transition
of IT applications from
physical servers
to cloud environments.
• Deactivation of illuminated signs at
branches during nighttime
hours.
In this
context, in 2023
the total
electricity consumption
was at
34,721 ΜWh
decreased
by 9.38%
compared to
2022,
exceeding
the
target
of
3%
decrease
set
for
2023.
The
attainment
of
16%
reduction
for
electricity
consumption
cumulatively
for
the
years
2002
and
2023,
exceeds
Eurobank’s
declared
commitment
for
10%
reduction for
the same period.
Additionally,
natural gas consumption was at
2,269 MWh, decreased by 28.25%,
while
the
declared
target
for
Electric
Energy
consumption
for
2024
is
a
decrease
by
5%.
The
total
energy
consumption (all energy sources)
was decreased by 10.88% compared
to 2022.
Furthermore,
98.04%
of total
electricity
consumed
was sourced
by
Renewable
Energy
Sources
(RES),
certified
through “Guarantees of Origin”, while the same process
will continue for 2024. Compared to 2022, this indicator
was improved
by 0.15%.
Τhe total
energy consumption
per employee
was 6,159
(KWh/employee), decreased
by
8.14% while total
energy consumption
by surface
area was 141 (KWh/m
2
), also decreased by 9.
4%.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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The
direct greenhouse
gas emissions (scope
1) in carbon
equivalents was
at 2,262 tCO
2
e, decreased
by 4.43%,
while the
indirect
(scope
2) was
at
18,545 tCO
2
e also
decreased
by
9.38%.
The
declared
target
for
emissions
reduction for
2024 is -2% for Scope 1 and -5% for
Scope 2.
Regarding Operational
Scope 3 emissions,
the Bank
monitors multiple emission
categories related
to business
travel,
employees’
commuting,
waste
generated,
transportation
and
distribution
of
goods,
as
well
as
cloud
computing usage. Operational
scope 3 emissions are
calculated at 3,912
tCO
2
e representing a
25,3% decrease
compared to 2022.
As of 31
December
of 2023,
nineteen buildings
of the
Bank are
certified
as "green"
according to
LEED/BREEAM
standards. Certified properties
have been included in the
SBC Yearbook
for Green Buildings.
Recently,
Eurobank's
headquarters
moved
to a
new,
privately owned
building in
the
historic center
of Athens.
Eurobank
underwent
a
radical
reconstruction
and
energy
upgrade,
transforming
it
into
a
modern
"green"
building
with
high
aesthetics
and
standards,
incorporating
bioclimatic
features
in
line
with
international
standards.
This
choice
underscores
Eurobank's
commitment
to a
modern
approach
to resource
management
with
a
focus
on
Sustainability.
The
relocation
to
the
new
Headquarters
building
has
a
direct
and
significant
effect
on the
environmental
impact, including
a 37%
reduction
in energy
consumption per
employee
or a
47%
reduction in energy
consumption per square meter.
The environmental performance
data may be modified as per the outcome of the assurance engagement of the
Environmental Report disclosures. The
final data will be available in the Annual Business & Sustainability Report
2023.
Further
to
issuance
of
new
emissions
conversion
coefficients
from
the
Ministry
of
Environment,
the
environmental 2022 data regarding GHG emissions are restated.
Changes in conversion coefficients may affect
the emissions targets.
Employee and Social Matters
Employee Engagement
Group’s
employees
constitute
its
greatest
asset
as
far
as
development
and
sustainability
are
concerned.
Starting
from
its
recruitment
process,
the
Group
aims
to
establish
a
long-term
and
mutually
beneficial
relationship
with
every
employee.
As
of
31
December
2023,
the
Group
employed
10,728
(Dec.2022:
11,328)
employees of which 4,405 (Dec.2022: 5,060) abroad.
To
ensure
equal
and
fair
opportunities
to
all
employees,
the
Group
follows
several
guidelines
surrounding
Compensation &
Benefits, Recruitment,
People & Talent
Development,
Performance
Management, Kniship
and
Health & Safety,
Learning, Engagement & Communication.
In 2022, the Bank launched
three new policies
on C-
Level
Succession
Planning, Diversity,
Equity &
Inclusion and
Workplace
anti-Violence
& anti-Harassment
,
while
its objective is to recruit and retain
its employees regardless
of race, religion,
age, gender,
sexual orientation or
disability.
The
Group strives
to ensure
that its
workforce
reflects the
communities in which
it operates
and the
international profile of the organization. The Group recognizes that diversity is a key component
of a responsible
business
strategy
in
support
of
its
international
operations.
Related
matters
mentioned
above
are
also
addressed in the 2020 Code
of Conduct & Ethics for the
Group.
The Group
is constantly revising its compensation and benefits
policies, taking into account market trends, and
aiming to
create
a competitive
offering
that
will attract,
engage and
retain its
employees,
while at
the
same
time complies to all regulatory and legal requirements. As a result, the basic principles of the compensation and
benefits framework
which ensure
alignment between
individual objectives
and the
Group’s
business strategy,
as well as the long-term
value creation for
the shareholders,
are the following:
a)
Ensure gender-neutral
compensation policies.
b)
Safeguard that total reward is sufficient for retaining and attracting executives
with high skill and expertise.
c)
Ensure internal equity between
Business Units.
d)
Avoid taking excessive
risks, including direct and indirect sustainability risk.
e)
Link compensation with long-term
performance.
Furthermore,
the
Bank has
set up
the
Eurobank
Group's
Occupational
Pension
Fund, seeking
to provide
long-
term
support
to
all
its
employees,
while
committing
to
strong
ESG
standards.
The
establishment
of
the
Occupational
Pension
Fund
(OPF),
acting
as
an
additional
pillar
of
a
modern
Retirement
Scheme,
allows
all
Group
employees
to participate
on a
voluntary
basis. Following
a written
agreement
between
the employees
and the employer,
the OPF is set up as
a Private Legal Entity
to work in tandem and complement the mandatory
Public Pension System.
Internal Job Market (IJM)/ Internal
Mobility
The
Bank
focuses
on
deploying
its
existing
workforce
to
meet
internal
staffing
needs,
according
to
their
qualifications.
In
this
context,
the
Bank
actively
promotes
equal
opportunities
for
all
employees
to
fully
participate
in
IJM,
regardless
of
role,
level
and
general
division.
In
2023,
76
Job
openings
were
published
in
Internal Job Market, 300 internal
candidates applied and 48% of job vacancies
in Greece were
filled internally.
Learning
Building
and
strengthening
professional
expertise
with
updated
skills
and
capabilities,
as
well
as
providing
modern learning
curriculums
and methodologies
constitute a
major priority
for the
transformation
strategy
of
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the
Group.
The
Group’s
leading Learning
Management
System offers
enhanced
self-service
capabilities
to all
employees that
boost learner engagement,
while redefining and upgrading the
knowledge and skills needed in
the workplace
(reskilling & upskilling).
The size of investment
in learning for 2023 is reflected
briefly in the following
indicators:
a)
The total
number of learning participations reached
84,659 in Greece,
b)
The total
number of training hours exceeded
206,500 hours for employees
working in Greece,
c)
Over
83%
of
the
learning
activity
regarding
employees
working
in
Greece
takes
place
online
or
through
virtual classrooms.
Upskilling,
capitalizing
on technology
and
learning certifications
constitute
the
axes of
the
strategic
learning
framework
of the Group.
More specifically:
a)
LinkedIn Learning Solutions: The
strategic partnership with
LinkedIn Learning allows all Group employees
in
Greece
to access
the platform’s
online learning
courses and
highlights the
Group’s
actual commitment
to
addressing current
needs of
the
current
era
and helping
its people
further
develop
their
skills. In
addition,
The
Group has
extended its
partnerships
with other
internationally
recognized
learning platforms
such as
Interskill, Microsoft LxP and Udemy,
offering
thousands of courses on cutting-edge technologies.
b)
Leadership
skills: The
Group’s
Top
Management
and the
Heads of
the
Group’s
subsidiaries get
the
latest
information
from the
world of business
while they
get the
opportunity to connect
and communicate
online
about
the
latest
trends
in
strategic
leadership
transformation.
During
2023,
emphasis
was
placed
on
handling
strategic
complex
challenges
within
a
VUCA
environment
and
the
rise
of
technological
issues,
around
Cloud
governance
and
Security.
In
addition,
a
specialized
management
development
program,
addressed to
Retail Branch
Network’s Area
managers, aims at
the successful
transition to
a new
model of
people-based leadership, aligned with
Group's principles.
c)
Code of Conduct
& Ethics (CoCE):
a digital learning
program for all Group’s employees in Greece and Cyprus,
aiming to
establish a
baseline
knowledge
of Eurobank’s
code of
conduct &
ethical
standards,
in order
to
reinforce
professional ethical
culture (associated with ESG indicators).
d)
Anti-money laundering (AML) Workshops: in
collaboration with ICA (Internal Compliance Association), highly
practical
and interactive
virtual workshops, addressing
approximately 1,000
managers in Retail,
Corporate
and Private
Banking Networks,
as well
as all
AML related
central
units. Moreover,
Anti-money
laundering
(AML) video-based workshops, addressing approximately 4,000
employees in the above mentioned business
and central units.
e)
Preventing
and
managing
Violence
&
Harassment
in
the
workplace:
a
digital
learning
initiative
for
all
Group’s
employees
in Greece,
aiming to
acknowledge behaviors
and effects
of Violence
& Harassment
at
work, and
develop
the
appropriate
actions for
the
safety
of the
working environment.
Moreover,
a virtual
workshop for 1,.250 Managers launched in
October 2023, providing practical knowledge and skills to
prevent
and manage the behaviors and
incidents of Violence
& Harassment in their
team.
f)
“This
is how
we Hybrid”:
a blended
learning experience,
consisting of
3-modules, that
supports employees
participating in the
hybrid working model to develop
essential skills (growth
mindset, energy
management
and teaming in hybrid)
g)
Cybersecurity
awareness:
all
newcomers
in
Greece
have
the
assignment
to
complete
a
digital
learning
program
that
provides
awareness
on cyber
security issues,
so that
they
can recognize
potential
risks and
apply the
right practices.
In addition,
the
same
assignment
applies
for
all the
Group’s
Top
Management
and the
Heads
of the
Group’s
subsidiaries
in Greece,
while an
in-class Cyber
-War
game
live
workshop
is
delivered for
ExBo members, General
Managers and CEO’s - Subsidiaries in Greece.
h)
“PROSPER”: a
customized talent development
program
aiming to equip
the talent
pools with
future-proof
leadership skills and state of the art knowledge and experiences
in numerous fields such as ESG, Innovation
and Strategy.
Within 2023 Prosper
-Class 2022 was completed.
i)
ESG Thinking:
a 3-module digital
learning program
with the
aim to increase
awareness on
all ESG related
matters, as well as familiarize
all employees on the
Group’s strategic
priorities around the
ESG agenda.
j)
Role-specific
certification
of
knowledge
and
skills:
The
Group
supports
its
employees
acquire
all
the
professional and regulatory
certifications required
by their role within the
organization, offering
web-based
courses and virtual classes to help them
prepare for
their certification
exams.
To
fully
meet
employees’
and
the
Group’s
learning
needs,
the
Group
implements
policies
and
procedures
certified
according
to
the
ISO
9001
standard.
At
the
same
time
and
since
2015
the
Bank
holds,
the
ACCA
Approved
Employer
(Professional
Development
Stream)
distinction,
documenting
the
high learning
standards
provided to its employees. Aimed at empowering
employees on more demanding roles
and enhance leadership
capabilities,
the
Group
Human
Resources
Division
designs
and
implements
specialized
programs,
such
as
Development
&
Succession
planning,
Talent
Development
&
Management,
Career
Development
&
Planning,
Knowledge & Experience Sharing
(mentoring & reverse
mentoring).
Talent
Management Programme
In
2023
the
Bank
concluded
the
assessment
and
implementation
of
the
bank-wide
Talent
Management
Programme,
aiming at
the
identification,
development,
retention
and effectively
utilization
of a
robust
talent
pipeline. Also, it has designed and introduced
new segmentation for
the Talent
pool with a focus on mobility as
well
as
structured
talent
career
discussions
providing
talents
focused
career
plans
with
mapped
next
career
moves. Talent
development programs
aiming at upskilling and reskilling the
Talent
pool run across the
Bank.
Performance
Management
Performance
Management
in
the
Group
has
a
transparent,
consistent
and
effective
framework
concerning
continuous improvement
of the
employees
and aligning
with the
strategic
objectives
and values
of the
Group.
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Its framework translates the Group’s strategy into tangible quantitative business goals (“what”) for all
employees
and supports a common culture by driving
the Group’s organizational
capabilities and qualitative competencies
(“how”) throughout
the organization.
Performance
Management is grounded
on two main tools implemented
in
Greece& Cyprus and are formally implemented on SAP SuccessFactors
access. Both tools have a developmental
focus and continuous feedback
on their core.
Career Development
Career Development
is of great importance for
the Group.
In this context, the Group
utilizes both Development
Plans and Improvement
Plans, giving value to a wide range
of functionalities like
Career Development.
On that
basis,
employees
can
design with
support by
their
manager and
depending on
their
personal
needs,
either
a
Development
Plan to support
further
their professional
advancement
and career
planning or an
Improvement
Plan which
serves
as roadmap
to enhance
their
performance
and address
areas
needing
improvement.
Both
Plans
aim,
through
relevant
training
and
development
activities,
to
further
develop
employees’
skills
and
behaviors, bolstering their
profile to match either
their current
role or a different
one in the future.
C-Level Succession
Planning
The
Bank’s
C-Level
Succession
Planning
framework
is
assessed
annually
following
a
structured
and
comprehensive
process,
according
to
the
guidelines
of
the
Bank’s
Nomination
and
Corporate
Governance
Committee
and
the
BoD
of
the
Bank.
The
Bank
has
a
C-level
Succession
Planning
Policy
in
place,
to
ensure
executive ‘bench strength’
for the C-level
roles aligned with the
Group strategy,
purpose and leadership culture,
aiming to achieve business continuity
and growth.
Diversity,
Equity & Inclusion
In 2023, the
Bank launced the
2
nd
Season of Women
in Banking (WiB)
- Transforming
Leadership, following
the
successful and multi-awarded 1
st
Season. WiB is a Leadership Acceleration
program, focusing
on how women at
Eurobank
can
accelerate
their
progression
to
higher
hierarchical
positions,
participate
in
transforming
leadership within the Bank, and serve as ambassadors of an
inclusive and non-discriminatory work environment.
It's
a
program
by
women
for
women,
combining
mentoring
with
continuous
learning
through
interactive
workshops, virtual masterclasses,
gaming, and other
activities.
In 2023 and for
second consecutive
year the
Bank was included
in the
Bloomberg Gender
Equality Index (GEI).
This distinction reflects the
Bank’s commitment to support responsible development
without discrimination and
its commitment in the application of
Diversity, Equity & Inclusion criteria and more generally of ESG
in all aspects
of the Group's
operations.
Improving Employee
Experience
The Group,
through the
investment in the
SAP SuccessFactors upgrades
the working environment
and expands
the possibilities
of cooperation.
As part of the
project, the
basic technological infrastructure
has been enriched
with modern
applications
related to
the acquisition
of "talent" (talent
acquisition) and
performance
appraisal.
The
applications
of the
SAP SuccessFactors
platform
improve
the
daily communication
in the
Group,
increase
the degree of autonomy and
mobility of the users,
while managers can monitor and manage their
teams. More
particularly,
the
functions
are available
both
from
the
office
space
and "smart"
devices
and the
users, among
others:
a)
Have access, wherever
they are, to their
personal profiles and contact details of
their colleagues,
b)
Register and manage with self-service
process, license
requests and change of personal data,
c)
Have
access
to learning
and training
planning for
themselves
and their
teams, can
attend
online courses
and connect to online libraries that
are available (Learning Management System),
d)
Have access to a modern evaluation
and continuous feedback application.
Strengthening Dialogue
& Information
Eurobank’s
internal corporate
intranet serves
as a vital
resource
for the
employees,
keeping them
informed
on
all
strategic,
business,
HR
and
technology-related
matters.
It
is
a
digital
platform
that
promotes
the
Bank’s
actions
and initiatives,
providing
the
employees
with
immediate
access
to important
information.
Within
the
intranet,
employees
can
peruse
information
pertaining
to
social
issues,
physical
or
virtual
visits
by
the
management team, corporate
functions, as well
as interviews conducted by
the Group's
management for
both
print
and
digital
media
etc.
Additionally,
to
encourage
internal
social
networking
and
the
exchange
of
information
and ideas,
the Yammer
platform
is also
available to
the
employees.
To
communicate
its strategy
and
foster
2-way
dialogue
between
the
management
team
and
the
employees,
Eurobank
held
executive
meetings,
with
extended
number
of the
members
of the
management
team participating.
At the
same
time,
visits
took
place
in
regional
markets
across
Greece.
Additionally,
onsite
visits
from
Retail
Management
took
place in regional markets across Greece. Strengthening the Bank’s profile, as a modern and attractive employer,
in
the
midst
of
a
dynamic
process
of
transformation
both
technologically
and
operationally,
Eurobank
also
organised CEO Breakfasts.
Remote Working
In 2023, the Group maintained
its pursuit of
continuous improvement of the Hybrid Work Model, the combination
of
alternating
between
working
on
premises
and
at
home.
This
effort
aligns
with
the
Group’s
increasing
environmental sensibilities, and the
continued focus on a positive and modern employee
experience. In order to
further
improve said experience,
a questionnaire pertaining to how Group
employees experienced
the first year
of
officially
working
with
the
Hybrid
Model
and
what
suggestions
they
might
have
for
its
improvement,
was
launched. The
results were
resolutely positive,
and in late
2023, a
few of
the suggestions
employees
proposed,
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such as the scheduling
of remote work
without needing manager
approval, were
implemented, showcasing
the
Group’s commitment
to enhancing the Hybrid Model, despite
its already successful run.
Recognition and Reward Policy
In acknowledgment
of long-term
loyalty,
the
Group
bestows
commendations
upon
its employees
marking
15
and 25 years of dedicated
service.
Furthermore,
Eurobank
values
highly
education
and
recognises
the
importance
of
rewarding
exceptional
academic performance.
In line with
this, it has
launched a merit
-based reward
programme
for top-performing
students,
known
as
“Aristouchoi”.
The
programme
awards
monetary
prizes
to
both
the
employees
and
their
children who have achieved outstanding results in secondary school or higher education.
Eurobank also extends
this recognition to those who are pursuing postgraduate
degrees or PhDs. Over the past 21 years, Eurobank
has
presented awards
to more than
3,500 deserving students.
In 2023 Eurobank
proudly presented
356 awards for
the 2021-2022 school/academic
year.
In alignment with the ethos of community engagement, the Group has established and
actively backs the "Team
Up" initiative, a voluntary
program
involving employee
participation since
2018. Throughout
the year,
a total of
10
events
were
organized,
during
which
1,300 employees
generously
volunteered
over
2,358
hours
of
service,
exemplifying the Group's
commitment to giving back to the
community.
In 2023 Eurobank also established the
Eurobank Running Team,
a running team open to employees from across
the
entire
organization.
This
initiative
aims
to
facilitate
interactions
among
colleagues,
foster
a
sense
of
community and inclusion within the
organization.
Support at work - HR4U
The
call
center
“HR4U”
supports
the
employees
of
the
Bank
and
responds
daily at
each
employee’s
request,
taking all
the
necessary
actions for
their
best service.
In 2023,
more than
27,673
requests
were
seen to
HR4U.
Topics include
a wide range of questions about benefits
and programs,
as well as urgent needs.
Labour Unions
The
Group
respects
employees’
constitutional
right
to
membership
in
Labour
Unions.
Six
such
Unions
are
currently
active within
the Bank,
representing
85,08% of
the staff,
i.e. 5,142
employees. The
most multitudinous
of
these
Unions
is
recognized
as
the
official
representative
Union
in
labour
negotiations
with
the
Bank’s
Management. All
employees
of the
Bank are
employed
full-time
and covered
by collective
labour agreements
(industry-wide
and
enterprise-level),
while
labour
relations
are
regulated
by
the
current
laws
and
the
Bank’s
Statute
of
Internal
Service.
Furthermore,
the
Bank's
Management
cooperates
with
the
labour
unions
and
supports the
scheduled working
meetings to
strengthen
the dialogue
and to
monitor the
developments
in the
working environment.
Corporate Social Responsibility
Driven by
its sense of responsibility
and commitment
to giving back
to society,
the Group
has made corporate
responsibility
one
of
the
foundations
of
its
strategic
planning,
which
is
directly
linked
to
the
UN
Sustainable
Development
Goals
(SDGs).
Through
its
corporate
responsibility
strategy,
and
responding
to
the
needs
of
today’s
ever-changing
environment,
the
Group
aims
to
actively
contribute
to
improving
the
economy
and
society where it operates,
by adopting responsible practices
that promote transparenc
y
and business ethics.
The
Bank has
a
solid
framework
of
procedures
for
the
implementation
of
its
Corporate
Social
Responsibility
(CSR) strategy,
aiming at maximizing the
value created by
CSR initiatives and
shielding the
Organization from
the
possibility
of
corruption,
conflict
of
interest
and
money
laundering.
The
annual
Corporate
Social
Responsibility
action
plan
is
approved,
as
part
of
the
Marketing
&
Corporate
Communication
budget
formulation process,
by the Communication Committee (COMCOM) in which the
CEO, the deputy CEOs and the
Group General
Manager of Marketing
& Corporate
Communication participate.
Finally, all expenses
related to
sponsorships,
donations
and
other
Corporate
Social
Responsibility
actions
are
subject
to
approval
levels
depending on the amount but also the
criticality and importance for
the Bank and their
recipients.
Corporate social responsibility
is based on the following
pillars:
Education
Education is a key pillar
of the Bank's
corporate responsibility strategy.
In this context,
in 2003 the Bank
launched
Moving Education
Forward,
according
to which
awards are
provided
to high-school
graduates
across
Greece
who achieve top marks in the annual national university entrance
exams. In the last 21 years it has been running,
a
total
of
22,572
students
have
been
awarded,
many
of
whom
have
gained
recognition
in
the
economic,
academic
and
scientific
life
of
Greece.
The
Bank awarded
1.035
top
graduates
during
the
2022-2023
school
year.
Supporting the Society
Moving
Family
Forward
is
a
corporate
social
responsibility
initiative,
aiming
to
address
the
country’s
demographic
challenge, by providing
young families
with incentives
for
taking the
decision to
have children.
It
focuses on the eastern borders
of Greece - Prefecture of Evros, North Aegean islands and the
Dodecanesee and
includes collaborations
with non-governmental
organisations (NGOs) for
supporting future and young parents,
offering banking products with favourable
terms for customers in those areas and several actions for setting the
demographic challenge higher
in the agenda of public dialogue.
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The Bank has announced that
it will contribute directly and significantly to the restoration
of the natural
wealth
of Rhodes which was affected by the catastrophic
fires during the summer of 2023. In this context, it has funded
a special study for
prevention
as well as
anti-flooding projects
in the affected
areas of the
island. Additionally,
following
the devastating
floods in Thessaly,
the bank has announced
its substantial support of the
restoration
of
the
affected
areas
alongside
the
Hellenic
Bank
Association.
The
total
support
of
the
four
systemic
banks
amounts
to
€50m.
Moreover,
the
Bank
has
responded
to
the
ever-increasing
needs
of
the
National
Health
System once
more by
proceeding
with the
construction of
6 negative
pressure units
in the
Special Respiratory
Infections Unit of the
Sotiria Thoracic
Diseases Hospital of Athens.
In 2023 the
Bank supported 33
NGOs and institutions
operating
across Greece,
which mainly support children
and
vulnerable
social
groups,
with
the
amount
of
€440,000.
In
addition,
it
has
been
steadily
supporting
the
important
work
of the
PNOE –
Friends of
Children's
Intensive
Care
non-profit
association,
helping
it meet
its
objective,
which
is
to
create
and
equip
paediatric
Intensive
Care
Units
(ICUs)
and
to
support
children
hospitalised in ICUs and their parents.
In particular,
in 2000 the Bank launched
the EuroLine
card and has since
been donating 0.20% of the total value
of transactions carried
out by EuroLine cardholders
to this cause.
Access to financial services
for all /Financial inclusion
As
part
of
the
EaSI
programme
for
employment
and
social
innovation,
the
Bank
has
been
working
with
the
Action Finance Initiative (AFI), providing micro
-credit facilities (up to €12,500 per individual) to support the long-
term unemployed,
vulnerable
social groups
and businesspeople
with limited
access to
bank loans.
This
way,
it
offers
them the
opportunity to create
their own job
(self-employment)
or establish small businesses resulting
in
the creation of new jobs.
In 2023,
through the AFI, 88 entities have been
provided with credit facilities amounting
in total to € 0.99m,
with favourable
terms, which are guaranteed by the EIF.
we have strategically forged
alliances
with esteemed partners.
Digital literacy and inclusion
The
Bank has
launched the
“Eurobank
Digital Academy
for
Business”, a
resource
hub on
digital skills for
Greek
companies’
technology
as a
key
enabler,
and digital
transformation
as a
growth
strategy
and a
competitive
edge. Since 2019,
19 events have been held with 1,685 participations,
of which 3 events with 1,023 participants in
2022. In
addition, the Bank has
created a dedicated hotline for digitally
illiterate elder groups who wish to
access
its digital channels.
Supporting entrepreneurship and
innovation
The
Bank
actively
contributes
to
economic
growth
and
recognises
the
importance
of
entrepreneurship
as
a
major
lever
for
the
expansion
of
the
Greek
economy.
It
focuses
on
supporting
the
extroversion
of
Greek
businesses
and
encouraging
new
business
initiatives.
In
this
context,
the
Bank
has
launched
Exportgate,
an
international trade
portal that promotes
the business networking
of Greek and Cypriot companies
worldwide.
In a strategic partnership with Banco Santander for Global Trade,
the Bank has joined the “Trade Club Alliance”,
the first
Global Digital Business
Interconnection
Network, supported
by 13 international
banking groups.
Using
artificial intelligence
and other
technologies, the
network
connects more
than 22,700
businesses in
more than
60 countries.
In
2016
the
Bank,
in
partnership
with
Grant
Thornton,
established
the
Growth
Awards
to
award
business
excellence
as a
growth
lever
of the
Greek economy.
To
date, the
7 Growth
Awards
ceremonies
have awarded
44 of the most robust
Greek enterprises.
In the area
of innovative youth
entrepreneurship, the
Bank has established
the egg-enter•grow•go
initiative, a
comprehensive
business incubation
and acceleration
programme,
in partnership
with
Corallia.
Since
2013 the
egg
has
been
continuously
helping
the
Greek
startup
community
to
improve
its
competitiveness
within
a
challenging
global
market,
under
3
main
pillars
extroversion,
financing
and
business
networking.
It
has
been
playing a crucial role in shaping the Greek startup scene, boosting innovative entrepreneurship
through the egg
Start-Up (incubator)
and egg
Scale-Up
(accelerator)
platforms.
In particular,
its business
and social
footprint
includes, among other:
a)
More than
€12m has been
invested in the
egg accelerator
by the
Bank, €3.2m which has
been provided
by
the
Bank
as
financing
to
49
egg
startups,
and
€45.8m
in
equity
funding,
which
has
been
drawn
by
67
businesses,
b)
350 startups which have
been created through
the egg, 183 startups
which have become
businesses, 101 of
which
with
a
combined
turnover
of
€12,25m.
Specifically,
during
2023,
36
startups
have
been
created
through the
egg and 29 startups have become businesses.
The Corporate Social Responsibility actions are described in the Annual
Report 2022 – Business
& Sustainability,
which is published on www.eurobankholdings.gr.
Respect of Human Rights
The Group,
in accordance with its
Statement of Human
Rights, is committed
to respecting and
promoting human
rights and to avoid unintentionally causing
or contributing to adverse human rights impacts
that may affect
its
employees, suppliers, contractors,
clients and other parties directly linked to its operations,
products or services.
In line with international leading practice, it has established pertinent policies and procedures, such as the Code
of Conduct
and Ethics,
that
reflect
this
commitment.
The
Group
acknowledges
the
UN Guiding
Principles on
Business & Human Rights and, in particular,
the corporate
responsibility to respect human rights.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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One of the most important priorities for
the Group is to ensure
that all employees are
treated with respect and
dignity,
including the
exclusion of
forced
and child
labor,
fair and
equitable compensation
and working
hours,
freedom of
association,
data privacy
and respect
of freedom
to act.
In addition,
a safe,
healthy
and inclusive
work
environment
is
promoted.
The
Group
applies
a
zero-tolerance
approach
for
any
forms
of
violence,
harassment
and
sexual
harassment
in
the
workplace
and
such
violations
are
strictly
prohibited
for
all.
In
addition, the Group engages with suppliers and external providers / contactors who respect human rights, labor
rights, employment laws and environmental
regulations.
A
strong
relationship
of
trust
that
respects
human
rights
is
cultivated
in
all
of
the
Group’s
activities
with
its
customers.
Key
elements
of
maintaining
responsible
customer
relationships
include
responsible
provision
of
information
and customer
service,
personal data
protection
and complaints
management. The
Group applies
the
regulatory
framework
and the
Banking Code
of Conduct
and has
control
mechanisms
in place
to ensure
compliance with the
legislative framework.
The Group ensures that individuals (e.g. employees, customers) can exercise
their rights regarding their personal
data. It implements appropriate technical and
organizational measures, which are designed to
implement data-
protection
principles, in
an effective
manner and
to integrate
the necessary
safeguards
into the
processing
in
order
to meet
the
requirements
of the
General
Data
Protection
Regulation (GDPR)
and any
other
applicable
privacy legislation and protect
the rights of individuals.
All of the
Group’s
stakeholders
are encouraged
to bring to
the Group’s
attention instances
where
its business
services
have
potential
or
real
human
rights
impacts.
The
Group
applies
the
Policy
of
Reporting
Unethical
Conduct
in
line
with
which
any
actual,
attempted
or
suspected
unethical
conduct
can
be
reported
by
any
member of the
Group’s staff
and concerned third
parties.
Supply Chain
The Bank has established
and implements a Procurement
Policy,
which sets out the general
principles and rules
governing the
procurement of goods and services.
Its implementation ensures the
transparency,
objectivity and
integrity
of
procurement
execution,
while
ensuring
suppliers'
compliance
with
applicable
local,
national
and
international
legislative
and
regulatory
requirements,
through
appropriate
mechanisms,
as a
prerequisite
for
starting and
maintaining a
business
relationship
with
them.
In addition,
the
establishment
of an
Outsourcing
Policy ensures the
effective
monitoring of third party relations
based on the relevant
risks that arise.
The
Bank
operates
with
a
centralized
and
upgraded
procurement
model,
which
covers
both
domestic
and
foreign
subsidiaries,
managing
requests
for
procurement
of
goods
and
services
through
a
single
purchasing
system as well
as a contract
management system,
which facilitate
approval flows,
while achieving
efficiency in
the execution of purchases
,
based on the final bidder principle, as well
as in the finalization of new
assignments
or renewals
and contracts.
For
the
most effective
monitoring of
contract
completion, Group
Procurement
Unit
established a
special indicator based
on which the
time of completion
of a contract
is recorded
from the
date
of dispatch of the relevant assignment (supply,
work or services) to the supplier.
In addition, in order to minimize
its
environmental
footprint
and
efficiency,
the
Bank
uses
an
electronic
invoicing
system,
in
cooperation
with
specific suppliers
,
while at
the
same time,
electronic
auctions are
conducted for
the
supply of
certain
types of
goods and services.
Group Procurement
Unit evaluates
the Bank's
suppliers on the
basis of qualitative
and quantitative
criteria, in
order
to assess
risks such
as the
quality of
services,
the
financial condition,
business continuity
of the
supplier
and its
legal/regulatory
compliance. Specifically,
on an
annual basis,
it measures
and weights
all key
financial
data
from
suppliers'
balance
sheets,
while
supplementing
the
evaluation
with
qualitative
data,
such
as
ISO
certifications,
through
special targeted
questionnaires to
specialized evaluators
from various
business units
of
the Bank
together
with evaluators
of the
Procurement
Unit. In the
end, a weighted
objective
score is obtained
for each supplier
reflecting the progress
and quality of the relationship
between the Bank and the
supplier.
In addition, the
Bank monitors through
Procurement
Unit operational
key risk indicators,
such as suppliers with
low ratings
as well
as complaints
from
internal customers
and suppliers
that
have not
been resolved
on time,
with the aim of initiating
corrective
actions.
In addition,
for reasons
of transparency
and safeguarding
the interests
of the
Group, the
Bank adheres
to the
Due Diligence
process
for
the
inclusion of
a new
supplier
in the
Bank. Based
on this
process,
the
new
entrant
supplier is obliged,
among other conditions,
to submit published financial statements and all
necessary financial
data for
a period
of three
years, information
on the
legal form
of the
company, its
beneficial owners
and legal
representatives,
as well as regulatory
certifications
it holds, aiming at
the completeness
of a supplier's file
with
the Bank.
On
an
annual
basis,
the
Bank conducts
an
evaluation
for
IT
suppliers,
consulting,
technical
and
construction
services, as well as for
other goods and services,
maintaining,
for quality and risk management reasons, specific
indicators that measure
the degree of dependence of suppliers and the
Bank on the relationship between
them
in terms of the total turnover
of each party. In addition, in the
context of enriching and updating its relationship
with suppliers, the competent unit for business customers of the Bank provides information
and feedback on the
corporate relationship
of each supplier,
in order to have a complete pictu
re of the relationship
with a supplier.
As a rule, if during the evaluation of suppliers
a low score of one of them is derived,
then an exploratory process
and actions are followed
to improve
the products
/ services provided
or potentially replace these
suppliers.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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The Bank’s suppliers and respective relations with each of them are reviewed
at regular intervals through formal
procedures.
The Procurement
Committee ensures that
the relevant
procedures are
followed,
both in relation
to
the necessity
of the procurement
and in terms of the containment
of operating costs.
In the context of the
implementation of Sustainable Procurement
practices, ESG criteria
have been established
for
the
tendering
process
of both
IT and
non-IT goods
and services,
in accordance
with
the
provisions
of the
tendering procedure.
Factors related to the
impact of a product/ service/ project
on ESG issues of the company
/ supplier, are taken into account. As such,
contributing to the protection of the environment, green development
and the local community is considered
to have a positive effect.
In
addition,
regarding
governance
factors,
certifications
are
requested
from
suppliers
(e.g.
ISO
9001,
14001,
50001), as well as disclosures regarding their
operating footprint,
ESG Ratings results and Sustainability Report.
According
to
the
applicable
procedure,
these
criteria
are
incorporated
in
a
specific
section
on
Requests
for
Proposals (RFPs)/ Requests for
Quotations (RFQs) and
are examined during the
technical evaluation phase.
The overall
objective is to select, where
possible, environmentally and socially
responsible goods from suppliers
that
are
aligned
with
those
principles.
Procurement
processes
are
part
of
the
Bank's
certified
Management
Systems in
accordance
with the
international
standards
ISO 9001,
ISO 14001
and ISO
50001. Furthermore,
the
Bank cooperates
mainly with
suppliers
that
are active
and registered
or have
an office
in Greece,
promoting
and supporting the local economy.
It is
noted
that
in 2023,
the
Bank, through
the
Group
Procurement
Unit, wishing
to promote
the
principles
of
sustainable procurement, initiated
the necessary actions for certifying
its sustainable procurement practices
as
per
the
international
standard
ISO 20400
(Sustainable Procurement
Management
System), thus
contributing
positively
to
society
and
the
economy
through
making
sustainable
purchasing
decisions
and
encouraging
suppliers and other
stakeholders to do the
same.
Anti -Corruption and Bribery
Actions against corruption
and bribery incidents
The
Group is
committed to pursuing
the fundamental
values of integrity,
transparency
and accountability.
It is
also committed to safeguarding its reputation
and client base.
The
Group
follows
best business
practices,
having accepted
and integrated
in its
culture
the
ten principles
of
the
UN
Global
Compact.
The
10th
principle
on
Anti-Corruption
states
that
“Businesses
should
work
against
corruption
in all its
forms, including
extortion and
bribery”. The
Group has
adopted a zero
tolerance
approach
against
all
types
of
fraud,
including
bribery.
In
accordance
with
the
relevant
legislation,
the
Group
prohibits
bribery in any form
either
direct or indirect
(through a
third party). The
principle of zero
tolerance
applies to all
staff
and
prohibits
all
forms
of
bribery,
whether
active
or
passive,
direct
or
indirect
and
is
also
reflected
in
contractual documents
adopted when entering
into relationships
with third
parties, either
natural or legal.
The
principle of zero
tolerance
also applies to clients of the
Group, as the
Organisation for
Economic Co-operation
and Development (OECD)
anti-bribery convention
is followed.
In this context, the Group has adopted the following
policies and procedures to govern
the treatment of bribery
and corruption cases
encountered:
a)
Code of Conduct and Ethics,
b)
Anti-Bribery & Corruption
Policy (policy statement
is posted on the Group’s
website),
c)
Policy for
Reporting Illegal or Unethical Conduct,
d)
Management of Sponsorships and Donations.
Recognizing that any involvement
in cases of bribery not only constitutes a crime, but also reflects
adversely on
its reputation and client base, the Group takes
the following
measures aimed at limiting its exposure to bribery:
a)
Setting out a clear approach to deal with
the risk of bribery,
b)
Establishing a robust system of internal
controls that
does not tolerate
bribery and corruption,
c)
Establishing mechanisms for
monitoring potential incidents of bribery,
d)
Providing
confidential reporting
mechanisms and
encouraging
their
use by
both staff
and third
parties by
setting out measures for
their protection.
e)
Providing
ongoing
training
and
briefing
to
staff
on
the
prevention
and
identification
of
bribery
and
corruption incidents.
Group
Compliance
is responsible
for
issuing policies
and procedures
to combat
bribery and
corruption
cases.
Each unit of the
Bank is responsible for
complying with the
existing policies. Internal
Conduct & Ethics of Group
Compliance
carries
out
risk
assessment
exercises
on
anti-bribery
and
anti-corruption
issues
and
performs
specialized
monitoring
exercises
for
potential
violations.
Forensic
Audit
&
Special
Projects
of
Group
Internal
Audit investigates all cases
of suspected internal fraud
/ corruption.
Actions against Money Laundering
(ML) and Terrorist
Financing (TF)
Money Laundering
(ML) and
Terrorist
Financing (TF)
activities are
threats
against the
integrity and
stability of
the international financial system that may cause significant economic losses and reputational damages for the
Group. The Group
has responsibility towards its customers,
shareholders, and authorities to conduct business in
a lawful and ethical way.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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Based on
the implementation of the Anti-money laundering/ combating the financing
of terrorism and Sanctions
Policy (the Policy) and of a
set of
interpretative documents, the Group aims at achieving the following objectives:
a)
Maintaining its integrity, credibility,
and reputation
against such threats,
b)
Implementing internationally
accepted best practices,
c)
Implementing and complying with all the
legal and regulatory requirements
that govern
its operations,
d)
Ensuring that
its business, channels,
products, and
services are
not used, intentionally
or unintentionally,
to
facilitate ML and/or TF,
e)
Ensuring that sanctions measures
and controls assist in applying effectively
applicable regulation,
f)
Ensuring that adequate processes, systems, and controls are in place, up
to date and fit
for purpose, in order
to detect, prevent and
deter any activities related to ML/ TF and Sanctions violations.
The
requirements
set forth
in the
Policy apply
to the
Group,
including all its
staff,
all its functions
and units,
as
well as third parties
who are given access to Group’s
information and premises.
The
Group’s
AML/CFT
and
Sanctions
Control
Framework
includes
policies,
guidelines
and
procedures
for
conducting business
activity consistent
with
legal and
regulatory
requirements
and the
AML Compliance
Risk
Appetite.
At the same time, AML/CFT and Sanctions Governance Structure, determines Roles and Responsibilities that are
allocated
among the
Three
Lines
of Defence,
including the
role
and responsibilities
of the
Money
Laundering
Reporting
Officer
(MLRO)
and
Group
MLRO,
together
with
ongoing
training
necessary
to
support
effective
execution of their roles
and responsibilities.
Group’s implementation
of the EU Taxonomy
Regulation
The
EU Taxonomy
(Regulation
(EU) 2020/852
of the
European
Parliament
and of
the
Council) was
adopted in
2020 by the
European Parliament
and represents
an important step for
the EU to achieve
the Paris
Agreement
climate
neutrality
goals.
It
sets
out
the
criteria
to
establish
a
common
classification
system
for
sustainable
economic activities. The
EU Taxonomy
Regulation determines
whether
an economic activity
is environmentally
sustainable and obligates
financial and non-financial
entities subject to
the Non-Financial
Reporting Directive
(NFRD) to disclose the alignment of their
activities.
Separate
reporting
requirements
and
extensive
criteria
are
established
for
financial
and
non-financial
undertakings under
the Art.8 Delegated
Act of EU Taxonomy
Regulation. Article
8 of the
Taxonomy
Regulation
states that
companies subject
to the
Non Financial Reporting
Directive
(NFRD), including financial
companies,
must publish to what extent their
activity is eligible and aligned with the
Taxonomy
criteria.
For the years
2021 and 2022, financial undertakings subject to NFRD were required to disclose the proportion of
taxonomy-eligible
and
taxonomy
non-eligible
activities
related
to
the
environmental
objectives
of
climate
change adaptation (CCA) and climate change
mitigation (CCM).
In 2023, two new Delegated
acts issued by the European
Commission have been adopted:
●
The
Delegated
Regulation
2023/2485,
which
extends
the
number
of
eligible
activities
in
the
climate
change adaptation and mitigation
objectives.
●
The
Delegated
Regulation
2023/2486,
which
establishes
the
technical
screening
criteria
for
the
economic activities of the remaining four
environmental objectives.
For
the
current
reporting
year,
credit
institutions
shall
disclose,
according
to
the
EU
Taxonomy
regulation,
taxonomy eligibility
and taxonomy
alignment information
on the
first two
environmental
objectives
(CCM and
CCA) and taxonomy eligibility informatio
n
for the
additional four objectives,
and more specifically:
a)
Sustainable use and protection
of water and marine resources,
b)
Transition
to a circular economy,
c)
Pollution control
and prevention,
and
d)
Protection and restoration
of biodiversity and ecosystems.
Therefore,
for the
first time in
2023, credit
institutions will publish
the Green
Asset Ratio
(GAR), on each
of the
first
two
environmental
objectives
(CCM
and
CCA),which
determines
the
extent
to
which
the
Group’s
assets
finance and
are invested
in taxonomy-aligned
economic activities,
that
is the
ratio
of the
Group's
taxonomy-
aligned assets to
covered
assets (total assets
excluding exposure
to sovereigns,
central banks
and the
trading
portfolio). Moreover,
as required by the EU Taxonomy Regulation,
activities, to be taxonomy-aligned, must meet
the specific taxonomy criteria and ensure that
they cause no significant harm to any of the other
environmental
objectives (DNSH)
and meet minimum
social safeguards
(MSS). Additional KPIs
are required
regarding the
off-
balance
sheet
exposures
and specifically
for
financial guarantees
to financial
and non-financial
undertakings
(FinGuar KPI) and assets under management
(AuM KPI).
With the
gradual adoption of the new Corporate
Sustainability Reporting Directive (CSRD) by large companies,
small and medium
listed companies and large
companies outside the
EU with significant
activity in the
EU, the
Group's KPIs are expected
to improve as the
number of companies subject to this new
directive will increase.
Integration of Taxonomy
in the Group’s
business strategy,
operating model, products
and customers
In line
with
best
market
practices,
the
Group
has
integrated
the
requirements
of the
EU Taxonomy
within
its
three Lines of Defense
with key roles
consisting of:
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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●
client engagement in the context of ESG/Climate
Risk and Sustainable Finance Assessment,
●
establishment and
monitoring of climate
risk and EU Taxonomy
-related KPIs
to ensure alignment
with
risk limits and sustainable financing strategy/targets
as well as
●
the development
of relevant disclosures.
As part of
its sustainability strategy,
the Group
is implementing initiatives
that will,
among others,
enable it to
increase the share
of taxonomy-aligned assets in the
coming years:
a)
Development
of sectoral
near,
mid and
long-term financed
emissions reduction
pathways,
in line
with
science-based decarbonisation
pathways.
b)
Performing perimeter analysis of Taxonomy
-related sectors, counterparties and financings
affecting the
Green
Asset
Ratio
and
developing
action
plans
for
increasing
Taxonomy
-aligned
financings
in
the
future.
c)
Further
integrating
ESG, CR&E risks
and sustainable
financing considerations
in the
business planning
process (e.g., project budgeting and prioritisation), to reflect the Group’s business strategy and relevant
targets.
Committed
to being
transparent
about its
approach
and to
ensure
that
decision-
making is
in line
with
best
practices in environmental
protection and sustainability,
Eurobank has developed
guiding frameworks,
defining
the approach
and criteria for classifying its financing and
investing activities as sustainable:
The Sustainable Finance
Framework
Through
its
Sustainable
Finance
Framework
(SFF),
the
Group
is
able
to
classify
sustainable
lending
solutions
offered
to
its
clients,
specifying
the
applied
classification
approach
and
the
activities
defined
as
eligible
to
access
sustainable
financing.
The
purpose
of
establishing
the
SFF
is
to
provide
a
clear
and
comprehensive
methodology
for
classifying,
monitoring, and
reporting
sustainable financing
in line
with
the
financed
impact
strategy.
The SFF has been
drawn from international best practices and is based
on two key guiding frameworks:
The ICMA
principles on sustainable financing (Green
Bond Principles, Green Loan
Principles and Sustainability-
linked
Bond
Principles)
and
the
EU
Taxonomy.
Currently,
the
SFF follows
the
EU
Taxonomy
criteria
on a
best
effort
basis. The
Group aims to further
align the SFF with the
EU Taxonomy
requirements.
Along the same lines,
Eurobank will closely monitor
the developments
of the EU Taxonomy,
to update its SFF and embed the
relevant
requirements to the
extent possible. The
SFF defines two levels of transaction
alignment:
●
SFF alignment - Fulfilment of criteria
dictated by best market practice
●
EU Taxonomy
alignment -
Fulfilment of
criteria associated
with each
of the
EU Taxonomy
assessment
steps (substantial contribution, DNSH, minimum social safeguards)
Through
the
dedicated
purpose
financing
approach
(i.e.
known
use
of
proceeds)
the
Group
assesses
and
classifies financings / transactions as “Not
SFF aligned”, “SFF aligned” or “SFF & EU Taxonomy
aligned”.
For
general
purpose
financing
/
transactions
(i.e.
not
known
use
of
proceeds)
the
SFF
defines
two
other
approaches:
a)
Company Business mix -
Financing to companies that fulfil the eligibility
green/ social criteria and derive
the majority of their
revenues from
eligible activities.
b)
Sustainability-linked
loans -
Financing linked
to ambitious
and predefined
Sustainability Performance
Targets
(SPTs).
As part of
the integration of sustainable financing and the SFF
into its core operations, the Group has developed
governance
structures and functions
as well as a digital
tool (Sustainable Finance
Framework
assessment tool)
that facilitate
the day-to-day implementation
of the SFF.
The
SFF
assessment
tool
supports
the
process
of
assessing
the
financings
/
transactions
against
the
criteria
defined in
the
SFF and
the
EU Taxonomy
and incorporates
both
the
internal criteria
defined by
the
Group,
as
well
as
the
assessment
steps
and
criteria
defined
by
the
EU
Taxonomy
regulation.
Through
the
Sustainable
Finance Framework assessment tool, users categorise financing to
the applicable eligible activity
and are guided
through
the
assessment
steps which
involve
substantiating
alignment with
the
criteria of
each step,
including
Taxonomy
alignment
assessment
(Technical
Screening
Criteria,
Do
Not
Significant
Harm
criteria,
Minimum
Social Safeguards).
Going forward,
the
Group’s
key priorities
include the
development
of a
strong
and realistic
sectoral
roadmap
towards
net zero
and the
increasing
client support
towards
climate transition
and sustainable
financing. This
plan also entails the gradual,
over the
years increase of the
Group’s Taxonomy
-aligned assets.
Approach for
the preparation
of disclosures relating to Article
8 of the Taxonomy
Regulation
The
preparation
of
mandatory
reporting
of
taxonomy
eligibility
and
alignment
is
based
on
the
prudential
consolidation
for
the
Group,
in
accordance
with
the
supervisory
reporting
of
institutions
according
to
the
Commission Implementing Regulation
(EU) 2021/451 (FINREP).
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The
Group, upon reviewing
its business activities,
to align Taxonomy
reporting with
its core activities,
provides
the
key
performance
indicators
(KPIs)
and
other
disclosure
requirements
related
to
its
dominant
financial
undertakings as laid down in the
Art. 8 Delegated Act.
For
the
current
year,
credit institutions
shall disclose
the
aggregate
GAR for
covered
on-balance
sheet assets
and the breakdown by environmental
objective and by type of counterparty.
In addition, credit institutions shall
disclose the percentage
of their total assets that
are excluded from the
numerator
and the denominator of the
GAR. Credit
institutions shall
also disclose
a complementary
ratio
on the
level
of association
with
Taxonomy-
aligned
economic
activities
of
off-balance
sheet
exposures.
These
exposures
include
financial
guarantees
granted by the financial institution and assets under management. As per Delegated Regulation (EU) 2021/2178,
the calculation of KPIs for off
-balance sheet exposures shall consider financial guarantees granted
by the credit
institution
and
assets
under
management
for
guarantee
and
investee
non-financial
undertakings.
Other
off-
balance sheet exposures
such as commitments shall be excluded from
that calculation.
The
application
of the
EU taxonomy
differs
for
general
purpose
financing and
specific
purpose financing
(i.e.
‘known use
of proceeds’).
Specifically,
for
general
purpose financing,
the
Group
uses counterparties’
reported
eligibility and alignment information
from the latest published
taxonomy information. Specifically
for corporate
counterparties,
the Group
uses actual information
that has
been disclosed
and collected
by its counterparties
reporting
under
the
Non-Financial
Reporting
Directive
(NFRD).
This
information
may
not
include
economic
activities under the
new Delegated
Acts for
the additional
four environmental
objectives,
as this information
is
currently limited.
In
order
to
determine
which
companies
are
subject
to
the
NFRD,
an
assessment
is
carried
out
in
order
to
determine that all of the following criteria
are met: a) if the country of incorporation of the counterparty is in the
EU, and b) whether
the enterprise
is either
a listed company,
a credit institution,
or an insurance
company, and
c) whether
the entity’s
net revenue
exceeds €40m or
its total assets
exceed €20m and
d) the
counterparty has
over 500
employees. The
identification of companies
subject to NFRD and
companies not subject to
NFRD has
been
carried
based
on
internal
customer
segmentation
in
the
core
banking
systems
as
well
as
external
information.
The
Taxonomy
-aligned
assets
presented
include
the
reported
alignment
for
exposures
to
non-financial
companies
subject
to
NFRD
based
on
the
Turnover
and
capital
expenditure
(CapEx)
KPI
published
by
the
counterparties.
The
Taxonomy
KPI
operating
expenses
(OpEx)
is
not
used
for
assessing
Taxonomy
-aligned
activities.
For
financial
undertakings
subject
to
NFRD,
the
Group’s
exposures
have
been
weighted
to
the
counterparty’s proportion
of Taxonomy
-aligned assets.
For financial
undertakings the
information is
limited as this is the
first year of alignment
reporting, and most of
the financial undertakings have
not yet published their
2023 annual reports. Therefore,
the Taxonomy
reporting
for
financial undertakings
is based
on data
publicly available
from
2022 which
do not
include information
for
alignment.
Financial and non-financial
undertakings that
do not meet
the aforementioned
requirements
are identified
as
non-NFRD. Undertakings that are not required
to report under the EU Taxonomy
regulation (non-NFRD) are not
included
in
the
calculation
of
eligible
and
aligned
assets
since
estimations
in
mandatory
reporting
are
not
allowed.
Therefore,
assets
on
the
Group’s
balance
sheet
to
non-NFRD
undertakings
are
not
assessed
for
taxonomy
eligibility.
Assets
of
non-NFRD
counterparties,
derivatives,
hedge
accounting
and
on-demand
interbank loans are not included
in the calculation
of Taxonomy
-eligible and Taxonomy
-aligned assets.
For
specific
purpose
financing
where
the
use
of
proceeds
is
known,
project-specific
KPIs
are
used
in
the
assessment
for
Taxonomy
-eligibility
and
Taxonomy
-alignment
to
the
extent
that
Taxonomy
eligibility
and
Taxonomy
alignment can
be demonstrated
for
the underlying
transaction.
As part
of the
Sustainable Finance
alignment procedures,
standalone dedicated
purpose financings
are assessed
to evaluate
alignment with
the
EU
Taxonomy
requirements.
The
assessment
is
carried
out
with
prudential
principles,
based
on
available
documentary
evidence
provided
by
the
counterparties,
required
to
ensure
adherence
to
EU
Taxonomy
and
based
on
applicable
National
Legislation
in
specific
financing
cases
(i.e.
Resilience
and
Recovery
Fund
investments, which embed
the Do No Significant Harm assessment).
In relation
to households, loans
collateralised
by residential
real estate,
loans granted
for renovation
purposes
and loans granted with purpose
to finance the purchase
of vehicles were
assessed for taxonomy-alignment.
In
the
current
year,
the
Group
is
also
reporting
its
exposure
to
economic
activities
related
to
fossil
gas
and
nuclear
energy
for
the
first
time,
according
to
Commission
Delegated
Regulation
(EU)
2022/1214.
Hence,
the
taxonomy-non-eligible nuclear energy related activities are included in the denominator of our key performance
indicators. The Group
also uses the relevant templates included in the Delegated Act to disclose information for
nuclear and fossil gas related
activities.
The Group’s approach
for the disclosures prepared as of 31 December 2023
is based on
the best effort to adhere
to the
applicable regulations
and new regulatory
developments.
In accordance
with the
guidance published
in
December 2023
FAQs,
no estimates were
included in the calculation
of eligibility and alignment
for mandatory
disclosures presented.
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The
Group
continues
its
work
on
implementing
the
EU
taxonomy
requirements
and
further
enhancing
its
reporting methodology to ensure transparency
and completeness of the information disclosed as further
robust
information
becomes
available from
counterparties.
For
the
Group’s
processes
to ensure
data quality,
please
refer to the
“ESG data” section.
Results
The Group’s
total green asset ratio
based on turnover
and total green asset
ratio based
on CAPEX, as at year-
end 2023 cover
the two
climate-related EU
environmental
objectives (CCM
and CCA) and are
presented in the
summary below:
Summary EU Taxonomy
KPIs
31 December 2023
Assets
Gross carrying amount
(in € million)
Turnover
KPIs
Capex KPIs
GAR - Covered assets in both
numerator and
denominator
21,655
Assets excluded from the numerator
for GAR
calculation (covered
in the denominator)
38,795
Taxonomy
-eligible assets
12,605
20.90%
14,481
24.00%
Taxonomy
-aligned assets
1,484
2.50%
2,088
3.50%
Total
GAR assets
60,449
Total assets
81,165
Impairment for loans and advances at
amortised cost, debt instruments and other
adjustments, according to EU taxonomy
methodology
(1,384)
Total assets according
to the Consolidated
balance sheet as at 31 December 2023
79,781
The
reported main and
additional KPIs calculated
on 31 December
2023 for
the Group,
including the
reporting
templates
as
set
out
in
the
Taxonomy
Regulation
and
FAQs,
are
presented
in
the
Appendix
1.
Eligibility
information
for
the
additional four
environmental
objectives
have not
been reported
for
2023 as
there
are no
available
data
by
the
counterparties,
based
on
the
latest
published
taxonomy
information.
Moreover,
comparative
information for
2022 is not reported.
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Corporate Governance
Statement
In
compliance
with
the
art.
17
of
the
Law
4706/2020
for
the
listed
companies,
which
stipulates
that
listed
companies should adopt and
implement a corporate governance code, prepared by a recognized
and reputable
body, and following a relevant
resolution of the Board of Directors of Eurobank
Holdings on 29 September 2021,
Eurobank
Holdings
has adopted
and implements
the
Hellenic Corporate
Governance
Code (Code).
The
Code
has been posted on Eurobank Holdings’
website (www.eurobankholdings.gr
).
The Corporate
Governance Statement
for the year
2023, attached herewith,
is an integral part of the Directors’
Report, and outlines how the principles stipulated by the Code were
applied, during 2023, to Eurobank Holdings
and to Eurobank S.A. (100% subsidi
ary of Eurobank Holdings).
Georgios Zanias
Fokion
Karavias
Chairman
Chief Executive Officer
28 March 2024
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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APPENDIX 1
Reporting templates in accordance with Delegated Regulation
(EU) 2021/2178, Annexes VI and XII
0. Summary of KPIs to be disclosed by credit institutions
under Article 8 Taxonomy
Regulation
Total environmentally sustainable
assets
⁽
¹
⁾
KPI
⁽
³
⁾
KPI
⁽⁴⁾
% coverage (over total
assets)
⁽⁵⁾
% of assets excluded from the
numerator of the GAR (Article 7
⁽
²
⁾
and
⁽
³
⁾
and Section 1.1.2. of Annex V)
% of assets excluded from
the denominator of the GAR
(Article 7
⁽
¹
⁾
and Section 1.2.4
of Annex V)
Main KPI
Green asset ratio (GAR) stock
1,484
2.5
3.5
74.5
47.8
25.5
Total environmentally sustainable
activities
⁽
²
⁾
KPI
⁽
³
⁾
KPI
⁽⁴⁾
% coverage (over total
assets)
% of assets excluded from the
numerator of the GAR (Article 7
⁽
²
⁾
and
⁽
³
⁾
and Section 1.1.2. of Annex V)
% of assets excluded from
the denominator of the GAR
(Article 7
⁽
¹
⁾
and Section 1.2.4
of Annex V)
Additional
KPIs
GAR (flow)
650
6.9
11.0
31.5
N/A
N/A
Trading book
⁽⁶⁾
Financial guarantees
⁽⁷⁾
44
1.9
6.5
Assets under management
⁽⁷⁾
24
0.4
2.1
Fees and commissions income
⁽⁶⁾
(1)
Total environmentally
sustainable assets used for turnover
KPI. Total environmentally
sustainable assets used for Capex KPI amounts to €2,088m
(2) Total environmentally
sustainable assets used for turnover
KPI. Total environmentally
sustainable assets used for Capex KPI amounts to €1,042m for
GAR flow
(3) Based on the Turnover
KPI of the counterparty
(4) Based on the CapEx KPI of the counterparty
(5) % of assets covered by
the KPI over
Group’s total assets
(6) "Trading book"
and "fees and commissions income" KPIs shall apply from
financial year 2025 onwards
(7) Total
environmentally sustainable assets
used for turnover
KPI. Total
environmentally sustainable
assets used for Financial guarantees
- Capex KPI amounts to €152m and
for assets under
management is €116m.
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1.Assets for the
calculation of GAR - Turnover
Million EUR
Total [gross]
carrying
amount
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Of which towards taxonomy
relevant sectors (Taxonomy
-eligible)
Of which towards taxonomy
relevant
sectors (Taxonomy
-eligible)
Of which towards taxonomy
relevant sectors (Taxonomy
-eligible)
Of which environmentally
sustainable (Taxonomy
-aligned)
Of which environmentally
sustainable (Taxonomy
-aligned)
Of which environmentally sustainable
(Taxonomy
-aligned)
Of which Use of
Proceeds
Of which
transitional
Of which
enabling
Of which Use of
Proceeds
Of which
enabling
Of which Use of
Proceeds
Of which
transitional
Of which
enabling
GAR- Covered assets in both
numerator and
denominator
1
Loans and advances, debt securities and
equity
instruments no HfT eligible for
GAR calculation
21,065
11,393
1,474
1,327
9
62
173
10
-
1
12,015
1,484
1,327
9
63
2
Financial undertakings
2,519
9
4
-
0
0
5
-
-
-
463
4
-
0
0
3
Credit institutions
2,447
-
-
-
-
-
-
-
-
-
446
-
-
-
-
4
Loans and advances
987
-
-
-
-
-
-
-
-
-
169
-
-
-
-
5
Debt securities, including UoP
1,451
-
-
-
-
-
-
-
-
-
275
-
-
-
-
6
Equity instruments
9
-
-
-
-
-
-
-
1
-
-
-
7
Other financial corporations
71
9
4
-
0
0
5
-
-
-
18
4
-
0
0
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
12
of which management companies
14
-
-
-
-
-
-
-
-
-
1
-
-
-
-
13
Loans and advances
12
-
-
-
-
-
-
-
-
-
1
-
-
-
-
14
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
1
-
-
-
-
-
-
-
0
-
-
-
16
of which insurance undertakings
12
-
-
-
-
-
-
-
-
-
2
-
-
-
-
17
Loans and advances
0
-
-
-
-
-
-
-
-
-
0
-
-
-
-
18
Debt securities, including UoP
12
-
-
-
-
-
-
-
-
-
2
-
-
-
-
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
5,016
1,794
1,434
1,291
9
62
167
10
-
1
1,961
1,444
1,291
9
63
21
Loans and advances
4,286
1,663
1,377
1,291
2
56
95
1
-
-
1,758
1,378
1,291
2
56
22
Debt securities, including UoP
721
126
57
-
6
5
72
9
-
1
198
66
-
6
6
23
Equity instruments
9
5
0
0
0
0
-
-
5
0
0
0
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m = million
bn = billion
Million EUR
Total [gross]
carrying
amount
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Of which towards taxonomy
relevant sectors (Taxonomy
-eligible)
Of which towards taxonomy
relevant
sectors (Taxonomy
-eligible)
Of which towards taxonomy
relevant sectors (Taxonomy
-eligible)
Of which environmentally
sustainable (Taxonomy
-aligned)
Of which environmentally
sustainable (Taxonomy
-aligned)
Of which environmentally sustainable
(Taxonomy
-aligned)
Of which Use of
Proceeds
Of which
transitional
Of which
enabling
Of which Use of
Proceeds
Of which
enabling
Of which Use of
Proceeds
Of which
transitional
Of which
enabling
24
Households
13,512
9,590
36
36
-
-
-
-
-
-
9,590
36
36
-
-
25
of which loans collateralised
by
residential immovable property
9,162
9,162
-
-
-
-
-
-
-
-
9,162
-
-
-
-
26
of which
building renovation loans
36
36
36
36
-
-
-
-
-
-
36
36
36
-
-
27
of which motor vehicle loans
392
392
-
-
-
-
-
-
-
-
392
-
-
-
-
28
Local governments financing
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local govemment
financing
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained
by taking possession:
residential and commercial immovable
properties
590
590
-
-
-
-
-
-
-
-
590
-
-
-
-
32
Assets excluded from the numerator
for GAR
calculation (covered
in the denominator)
38,795
33
Financial and Non-financial undertakings
28,901
34
SMEs and NFCs (other
than SMEs) not
subject to NFRD disclosure obligations
23,799
35
Loans and advances
21,576
36
of which loans collateralised
by
commercial immovable property
7,074
37
of which building renovation
loans
-
38
Debt securities
2,038
39
Equity instruments
185
40
Non-EU country counterparties not
subject
to NFRD disclosure obligations
5,102
41
Loans and advances
4,732
42
Debt securities
321
43
Equity instruments
49
44
Derivatives
897
45
On demand interbank loans
19
46
Cash and cash-related assets
502
47
Other categories of assets (e.g. goodwill,
commodities etc.)
8,476
48
Total GAR
assets
60,449
11,983
1,474
1,327
9
62
173
10
-
1
12,605
1,484
1,327
9
63
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
37
|
Page
€ = Euro
m = million
bn = billion
Million EUR
Total [gross]
carrying
amount
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Of which towards taxonomy
relevant sectors (Taxonomy
-eligible)
Of which towards taxonomy
relevant
sectors (Taxonomy
-eligible)
Of which towards taxonomy
relevant sectors (Taxonomy
-eligible)
Of which environmentally
sustainable (Taxonomy
-aligned)
Of which environmentally
sustainable (Taxonomy
-aligned)
Of which environmentally sustainable
(Taxonomy
-aligned)
Of which Use of
Proceeds
Of which
transitional
Of which
enabling
Of which Use of
Proceeds
Of which
enabling
Of which Use of
Proceeds
Of which
transitional
Of which
enabling
49
Assets not covered for
GAR calculation
20,715
50
Central governments
and Supranational
issuers
9,914
51
Central banks exposure
10,422
52
Trading book
379
53
Total assets
81,165
11,983
1,474
1,327
9
62
173
10
-
1
12,605
1,484
1,327
9
63
Off-balance sheet exposures
-Undertakings subject to
NFRD disclosure obligations
54
Financial guarantees
2,323
360
44
-
3
4
28
0
-
0
387
44
-
3
4
55
Assets under management
5,441
142
21
-
3
7
27
2
-
0
169
24
-
3
7
56
Of which debt securities
629
107
10
-
1
1
13
1
-
0
120
11
-
1
1
57
Of which equity instruments
237
35
11
-
2
6
14
1
-
0
49
13
-
2
6
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
38
|
Page
€ = Euro
m = million
bn = billion
1.Assets for the
calculation of GAR - Capex
Million EUR
Total
[gross]
carrying
amount
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant
sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which environmentally
sustainable (Taxonomy-
aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
GAR- Covered assets in both numerator
and denominator
1
Loans and advances, debt securities and
equity instruments no HfT eligible for GAR
calculation
21,065
12,469
2,081
1,327
26
78
333
7
-
1
13,251
2,088
1,327
26
79
2
Financial undertakings
2,519
19
18
-
1
-
4
-
-
-
472
18
-
1
-
3
Credit institutions
2,447
-
-
-
-
-
-
-
-
-
446
-
-
-
-
4
Loans and advances
987
-
-
-
-
-
-
-
-
-
169
-
-
-
-
5
Debt securities, including UoP
1,451
-
-
-
-
-
-
-
-
-
275
-
-
-
-
6
Equity instruments
9
-
-
-
-
-
-
-
1
-
-
-
7
Other financial corporations
71
19
18
-
1
-
4
-
-
-
26
18
-
1
-
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
12
of which management companies
14
-
-
-
-
-
-
-
-
-
1
-
-
-
-
13
Loans and advances
12
-
-
-
-
-
-
-
-
-
1
-
-
-
-
14
Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
1
-
-
-
-
-
-
-
-
-
-
-
16
of which insurance undertakings
12
-
-
-
-
-
-
-
-
-
2
-
-
-
-
17
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
Debt securities, including UoP
12
-
-
-
-
-
-
-
-
-
2
-
-
-
-
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
5,016
2,860
2,027
1,291
25
78
329
7
-
1
3,189
2,034
1,291
25
78
21
Loans and advances
4,286
2,498
1,811
1,291
3
67
247
1
-
-
2,745
1,811
1,291
3
67
22
Debt securities, including UoP
721
357
216
-
21
11
82
6
-
1
440
222
-
21
11
23
Equity instruments
9
5
1
-
-
-
-
-
5
1
-
-
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
39
|
Page
€ = Euro
m = million
bn = billion
Million EUR
Total
[gross]
carrying
amount
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant
sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which environmentally
sustainable (Taxonomy-
aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
24
Households
13,512
9,590
36
36
-
-
-
-
-
-
9,590
36
36
-
-
25
of which loans collateralised by
residential immovable property
9,162
9,162
-
-
-
-
-
-
-
-
9,162
-
-
-
-
26
of which
building renovation
loans
36
36
36
36
-
-
-
-
-
-
36
36
36
-
-
27
of which motor vehicle loans
392
392
-
-
-
-
-
-
-
-
392
-
-
-
-
28
Local governments financing
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local govemment financing
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking
possession: residential and commercial
immovable properties
590
590
-
-
-
-
-
-
-
-
590
-
-
-
-
32
Assets excluded from the numerator for
GAR calculation (covered in the
denominator)
38,795
33
Financial and Non-financial
undertakings
28,901
34
SMEs and NFCs (other than SMEs) not
subject to NFRD disclosure obligations
23,799
35
Loans and advances
21,576
36
of which loans collateralised by
commercial immovable property
7,074
37
of which building renovation loans
-
38
Debt securities
2,038
39
Equity instruments
185
40
Non-EU country counterparties not
subject to NFRD disclosure obligations
5,102
41
Loans and advances
4,732
42
Debt securities
321
43
Equity instruments
49
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
40
|
Page
€ = Euro
m = million
bn = billion
Million EUR
Total
[gross]
carrying
amount
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant
sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which environmentally
sustainable (Taxonomy-
aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which
Use of
Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
44
Derivatives
897
45
On demand interbank loans
19
46
Cash and cash-related assets
502
47
Other categories of assets (e.g. goodwill,
commodities etc.)
8,476
48
Total GAR
assets
60,449
13,059
2,081
1,327
26
78
333
7
-
1
13,841
2,088
1,327
26
79
49
Assets not covered for GAR calculation
20,715
50
Central governments and
Supranational issuers
9,914
51
Central banks exposure
10,422
52
Trading book
379
53
Total assets
81,165
13,059
2,081
1,327
26
78
333
7
-
1
13,841
2,088
1,327
26
79
Off-balance sheet exposures-Undertakings subject to
NFRD disclosure obligations
54
Financial guarantees
2,323
462
152
-
4
6
25
-
-
-
487
152
-
4
6
55
Assets under management
5,441
287
116
-
3
11
22
1
-
-
309
116
-
3
11
56
Of which debt securities
629
205
64
-
1
3
12
-
-
-
217
64
-
1
3
57
Of which equity instruments
237
82
52
-
2
8
10
1
-
-
92
53
-
2
8
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
41
|
Page
€ = Euro
m = million
bn = billion
2. GAR sector information - Turnover
31 December 2023
Breakdown by sector - NACE 4 digits level
(code and label)
Million EUR
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
1
Other B7 - Mining of metal ores
16
-
16
-
16
-
2
C10.6.1 - Manufacture
of grain mill
products
-
-
-
-
-
-
3
Other C11 - Manufacture of
beverages
4
-
4
-
4
-
4
C13.9.5
- Manufacture of non-wovens
and articles made from non-wovens,
except apparel
1
1
1
-
1
1
5
Other C17 - Manufacture of paper
and paper products
3
-
3
-
3
-
6
C18.1.0 - Printing and service activities
related to printing
1
-
1
-
1
-
7
C19.2.0 - Manufacture of refined
petroleum products
542
3
542
-
542
3
8
Other C19 - Manufacture of coke and
refined petroleum products
53
1
53
-
53
1
9
C20.4.2 - Manufacture of perfumes
and toilet preparations
27
-
27
-
27
-
10
C20.5.9 - Manufacture
of other
chemical products n.e.c.
2
2
2
-
2
2
11
Other C20 - Manufacture of
chemicals and chemical products
4
-
4
-
4
-
12
C22.2.1 - Manufacture of plastic
plates, sheets, tubes and profiles
-
-
-
-
-
-
13
C22.2.2 - Manufacture of plastic
packing goods
2
1
2
-
2
1
14
C23.5.0 - Manufacture of cement,
lime and plaster
-
-
-
-
-
-
15
C23.5.1 - Manufacture of cement
20
1
20
1
20
2
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
42
|
Page
€ = Euro
m = million
bn = billion
31 December 2023
Breakdown by sector - NACE 4 digits level
(code and label)
Million EUR
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
16
Other C23 - Manufacture of other
non-metallic mineral products
106
5
106
5
106
9
17
C24.1.0 - Manufacture of basic iron
and steel and of ferro-alloys
89
9
89
-
89
9
18
C24.4.2 - Aluminium production
11
1
11
-
11
1
19
C24.4.4 - Copper production
47
-
47
-
47
-
20
C24.5.1 - Casting of iron
51
5
51
-
51
5
21
C27.2.0 - Manufacture of batteries
and accumulators
-
-
-
-
-
-
22
C27.3.2 - Manufacture of other
electronic and electric wires and
cables
92
35
92
-
92
35
23
Other C29 - Manufacture of motor
vehicles, trailers and semi-trailers
10
1
10
-
10
1
24
D35.1.1
- Production of electricity
1,100
1,087
1,100
-
1,100
1,087
25
D35.1.3 - Distribution of electricity
164
-
164
-
164
-
26
D35.1.4 - Trade
of electricity
441
-
441
-
441
-
27
Other D35 - Electricity, gas, steam
and air conditioning supply
250
15
250
2
250
17
28
F41.2.0 - Construction of residential
and non-residential buildings
1
-
1
-
1
-
29
F42.2.2 - Construction of utility
projects for electricity and
telecommunications
200
200
200
-
200
200
30
F42.9.9
- Construction of other civil
engineering projects n.e.c.
2
2
2
-
2
2
31
Other F42 - Civil engineering
39
4
39
-
39
4
32
F43.9.9
- Other specialised
construction activities n.e.c.
4
-
4
-
4
-
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
43
|
Page
€ = Euro
m = million
bn = billion
31 December 2023
Breakdown by sector - NACE 4 digits level
(code and label)
Million EUR
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
33
G45.1.1
- Sale of cars and light motor
vehicles
-
-
-
-
-
-
34
G45.3.0 - Sale of motor vehicle parts
and accessories
5
-
5
-
5
-
35
Other G45 - Wholesale and retail
trade and repair of motor vehicles
and motorcycles
1
-
1
-
1
-
36
G46.3.6 - Wholesale of sugar and
chocolate and sugar confectionery
14
-
14
-
14
-
37
G46.3.9 - Non-specialised wholesale
of food, beverages and tobacco
-
-
-
-
-
-
38
G46.4.5 - Wholesale of perfume and
cosmetics
-
-
-
-
-
-
39
G46.4.6 - Wholesale of
pharmaceutical goods
-
-
-
-
-
-
40
G46.4.7 - Wholesale of furniture,
carpets and lighting equipment
21
-
21
-
21
-
41
G46.5.1 - Wholesale of computers,
computer peripheral equipment and
software
3
-
3
-
3
-
42
G46.5.2 - Wholesale of electronic and
telecommunications equipment and
parts
4
-
4
-
4
-
43
G46.7.0
- Other specialised wholesale
2
-
2
-
2
-
44
G46.7.1
- Wholesale of solid, liquid
and gaseous fuels and related
products
66
1
66
-
66
1
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
44
|
Page
€ = Euro
m = million
bn = billion
31 December 2023
Breakdown by sector - NACE 4 digits level
(code and label)
Million EUR
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
45
G46.7.2 - Wholesale of metals and
metal ores
11
1
11
-
11
1
46
G46.7.7
- Wholesale of waste and
scrap
4
-
4
-
4
-
47
G47.1.1
- Retail sale in non-specialised
stores with food, beverages
or
tobacco predominating
-
-
-
-
-
-
48
G47.7.1
- Retail sale of clothing in
specialised stores
2
-
2
-
2
-
49
G47.7.8
- Other retail sale of new
goods in specialised stores
2
-
2
-
2
-
50
Other H51 - Air transport
4
-
4
-
4
-
51
H52.1.0 - Warehousing
and storage
1
-
1
-
1
-
52
H52.2.1 - Service activities incidental
to land transportation
22
5
22
-
22
5
53
H52.2.3 - Service activities incidental
to air transportation
238
2
238
-
238
2
54
Other H52 - Warehousing and
support activities for transportation
2
2
2
-
2
2
55
H53.2.0 - Other postal and courier
activities
-
-
-
-
-
-
56
I55.1.0 - Hotels and similar
accommodation
43
-
43
-
43
-
57
Other J58 - Publishing activities
3
-
3
-
3
-
58
Other J61 - Telecommunications
28
-
28
-
28
-
59
J62.0.1 - Computer programming
activities
1
1
1
-
1
1
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
45
|
Page
€ = Euro
m = million
bn = billion
31 December 2023
Breakdown by sector - NACE 4 digits level
(code and label)
Million EUR
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
60
Other J62 - Computer programming,
consultancy and related activities
20
-
20
-
20
-
61
K64.1.9
- Other monetary
intermediation
25
3
25
-
25
3
62
K64.2.0 - Activities of holding
companies
35
7
35
-
35
7
63
K64.3.0 - K64.3.0 - Trusts, funds and
similar financial entities
50
-
50
-
50
-
64
L68.1.0 - Buying and selling of own
real estate
185
-
185
-
185
-
65
L68.2.0 - Renting and operating of
own or leased real estate
116
-
116
-
116
-
66
L68.3.2 - Management of real estate
on a fee or contract basis
23
-
23
-
23
-
67
Other L68 - Real estate activities
9
1
9
-
9
1
68
M70.2.2 - Business and other
management consultancy activities
31
-
31
-
31
-
69
M71.2.0 - Technical testing and
analysis
2
-
2
-
2
-
70
Other M74 - Other professional,
scientific and technical activities
1
-
1
-
1
-
71
N77.1.1
- Renting and leasing of cars
and light motor vehicles
49
2
49
-
49
2
72
N79.1.1
- Travel agency activities
-
-
-
-
-
-
73
Other R92 - Gambling and betting
activities
421
-
421
-
421
-
74
Q86.1.0 - Hospital activities
54
-
54
-
54
-
75
Other unallocated
234
34
234
3
234
37
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
46
|
Page
€ = Euro
m = million
bn = billion
2. GAR sector information - Capex
31 December 2023
Breakdown by sector - NACE 4 digits level
(code and label)
Million EUR
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
1
Other B7 - Mining of metal ores
16
-
16
-
16
-
2
C10.6.1 - Manufacture
of grain mill
products
-
-
-
-
-
-
3
Other C11 - Manufacture of
beverages
4
1
4
1
4
1
4
C13.9.5
- Manufacture of non-wovens
and articles made from non-wovens,
except apparel
1
1
1
-
1
1
5
Other C17 - Manufacture of paper
and paper products
3
-
3
-
3
-
6
C18.1.0 - Printing and service activities
related to printing
1
-
1
-
1
-
7
C19.2.0 - Manufacture of refined
petroleum products
542
277
542
-
542
277
8
Other C19 - Manufacture of coke and
refined petroleum products
53
40
53
-
53
40
9
C20.4.2 - Manufacture of perfumes
and toilet preparations
27
-
27
-
27
-
10
C20.5.9 - Manufacture
of other
chemical products n.e.c.
2
2
2
-
2
2
11
Other C20 - Manufacture of
chemicals and chemical products
4
-
4
-
4
-
12
C22.2.1 - Manufacture of plastic
plates, sheets, tubes and profiles
-
-
-
-
-
-
13
C22.2.2 - Manufacture of plastic
packing goods
2
1
2
-
2
1
14
C23.5.0 - Manufacture of cement,
lime and plaster
-
-
-
-
-
-
15
C23.5.1 - Manufacture of cement
20
3
20
-
20
3
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
47
|
Page
€ = Euro
m = million
bn = billion
31 December 2023
Breakdown by sector - NACE 4 digits level
(code and label)
Million EUR
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
16
Other C23 - Manufacture of other
non-metallic mineral products
106
17
106
-
106
17
17
C24.1.0 - Manufacture of basic iron
and steel and of ferro-alloys
89
9
89
-
89
9
18
C24.4.2 - Aluminium production
11
8
11
-
11
8
19
C24.4.4 - Copper production
47
-
47
-
47
-
20
C24.5.1 - Casting of iron
51
5
51
-
51
5
21
C27.2.0 - Manufacture of batteries
and accumulators
-
-
-
-
-
-
22
C27.3.2 - Manufacture of other
electronic and electric wires and
cables
92
33
92
-
92
33
23
Other C29 - Manufacture of motor
vehicles, trailers and semi-trailers
10
2
10
-
10
2
24
D35.1.1
- Production of electricity
1,100
1,097
1,100
-
1,100
1,097
25
D35.1.3 - Distribution of electricity
164
-
164
-
164
-
26
D35.1.4 - Trade
of electricity
441
-
441
-
441
-
27
Other D35 - Electricity, gas, steam
and air conditioning supply
250
79
250
3
250
81
28
F41.2.0 - Construction of residential
and non-residential buildings
1
-
1
-
1
-
29
F42.2.2 - Construction of utility
projects for electricity and
telecommunications
200
200
200
-
200
200
30
F42.9.9
- Construction of other civil
engineering projects n.e.c.
2
2
2
-
2
2
31
Other F42 - Civil engineering
39
24
39
-
39
24
32
F43.9.9
- Other specialised
construction activities n.e.c.
4
-
4
-
4
-
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
48
|
Page
€ = Euro
m = million
bn = billion
31 December 2023
Breakdown by sector - NACE 4 digits level
(code and label)
Million EUR
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
33
G45.1.1
- Sale of cars and light motor
vehicles
-
-
-
-
-
-
34
G45.3.0 - Sale of motor vehicle parts
and accessories
5
-
5
-
5
1
35
Other G45 - Wholesale and retail
trade and repair of motor vehicles
and motorcycles
1
-
1
-
1
-
36
G46.3.6 - Wholesale of sugar and
chocolate and sugar confectionery
14
-
14
-
14
-
37
G46.3.9 - Non-specialised wholesale
of food, beverages and tobacco
-
-
-
-
-
-
38
G46.4.5 - Wholesale of perfume and
cosmetics
-
-
-
-
-
-
39
G46.4.6 - Wholesale of
pharmaceutical goods
-
-
-
-
-
-
40
G46.4.7 - Wholesale of furniture,
carpets and lighting equipment
21
-
21
-
21
-
41
G46.5.1 - Wholesale of computers,
computer peripheral equipment and
software
3
-
3
-
3
-
42
G46.5.2 - Wholesale of electronic and
telecommunications equipment and
parts
4
-
4
-
4
-
43
G46.7.0
- Other specialised wholesale
2
-
2
-
2
-
44
G46.7.1
- Wholesale of solid, liquid
and gaseous fuels and related
products
66
44
66
-
66
44
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
49
|
Page
€ = Euro
m = million
bn = billion
31 December 2023
Breakdown by sector - NACE 4 digits level
(code and label)
Million EUR
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
45
G46.7.2 - Wholesale of metals and
metal ores
11
1
11
-
11
1
46
G46.7.7
- Wholesale of waste and
scrap
4
-
4
-
4
-
47
G47.1.1
- Retail sale in non-specialised
stores with food, beverages
or
tobacco predominating
-
-
-
-
-
-
48
G47.7.1
- Retail sale of clothing in
specialised stores
2
-
2
-
2
-
49
G47.7.8
- Other retail sale of new
goods in specialised stores
2
-
2
-
2
-
50
Other H51 - Air transport
4
-
4
-
4
-
51
H52.1.0 - Warehousing
and storage
1
-
1
-
1
-
52
H52.2.1 - Service activities incidental
to land transportation
22
16
22
-
22
16
53
H52.2.3 - Service activities incidental
to air transportation
238
29
238
-
238
29
54
Other H52 - Warehousing and
support activities for transportation
2
2
2
-
2
2
55
H53.2.0 - Other postal and courier
activities
-
-
-
-
-
-
56
I55.1.0 - Hotels and similar
accommodation
43
-
43
-
43
-
57
Other J58 - Publishing activities
3
-
3
-
3
-
58
Other J61 - Telecommunications
28
-
28
-
28
-
59
J62.0.1 - Computer programming
activities
1
-
1
1
1
1
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
50
|
Page
€ = Euro
m = million
bn = billion
31 December 2023
Breakdown by sector - NACE 4 digits level
(code and label)
Million EUR
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
Non-Financial corporates
(Subject to NFRD)
SMEs and other NFC not
subject to NFRD
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
[Gross] carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCM)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable (CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
Mn EUR
Of which
environmentally
sustainable
(CCM + CCA)
60
Other J62 - Computer programming,
consultancy and related activities
20
-
20
-
20
-
61
K64.1.9
- Other monetary
intermediation
25
-
25
-
25
-
62
K64.2.0 - Activities of holding
companies
35
25
35
-
35
25
63
K64.3.0 - K64.3.0 - Trusts, funds and
similar financial entities
50
18
50
-
50
18
64
L68.1.0 - Buying and selling of own
real estate
185
-
185
-
185
-
65
L68.2.0 - Renting and operating of
own or leased real estate
116
2
116
-
116
2
66
L68.3.2 - Management of real estate
on a fee or contract basis
23
-
23
-
23
-
67
Other L68 - Real estate activities
9
1
9
-
9
1
68
M70.2.2 - Business and other
management consultancy activities
31
-
31
-
31
-
69
M71.2.0 - Technical testing and
analysis
2
-
2
-
2
-
70
Other M74 - Other professional,
scientific and technical activities
1
-
1
-
1
-
71
N77.1.1
- Renting and leasing of cars
and light motor vehicles
49
5
49
-
49
5
72
N79.1.1
- Travel agency activities
-
-
-
-
-
-
73
Other R92 - Gambling and betting
activities
421
-
421
-
421
-
74
Q86.1.0 - Hospital activities
54
-
54
-
54
-
75
Other unallocated
234
77
234
3
234
80
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
51
|
Page
€ = Euro
m = million
bn = billion
3. GAR KPI Stock - Turnover
% (compared to total covered assets in the
denominator)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of
total assets
covered
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt securities
and equity instruments not HfT
eligible for GAR calculation
18.8
2.4
2.2
0.0
0.1
0.3
0.0
-
0.0
19.9
2.5
2.2
0.0
0.1
26.0
2
Financial corporations
0.0
0.0
-
0.0
0.0
0.0
-
-
-
0.8
0.0
-
0.0
0.0
3.1
3
Credit institutions
-
-
-
-
-
-
-
-
-
0.7
-
-
-
-
3.0
4
Loans and advances
-
-
-
-
-
-
-
-
-
0.3
-
-
-
-
1.2
5
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
0.5
-
-
-
-
1.8
6
Equity instruments
-
-
-
-
-
-
-
-
0.0
-
-
-
0.0
7
Other financial corporations
0.0
0.0
-
0.0
0.0
0.0
-
-
-
0.0
0.0
-
0.0
0.0
0.1
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
12
of which
management
companies
-
-
-
-
-
-
-
-
-
0.0
-
-
-
-
0.0
13
Loans and advances
-
-
-
-
-
-
-
-
-
0.0
-
-
-
-
0.0
14
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
-
-
-
-
-
-
-
-
0.0
-
-
-
0.0
16
of which insurance
undertakings
-
-
-
-
-
-
-
-
-
0.0
-
-
-
-
0.0
17
Loans and advances
-
-
-
-
-
-
-
-
-
0.0
-
-
-
-
0.0
18
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
0.0
-
-
-
-
0.0
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
52
|
Page
€ = Euro
m = million
bn = billion
% (compared to total covered assets in the
denominator)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of
total assets
covered
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
20
Non-financial corporations
3.0
2.4
2.1
0.0
0.1
0.3
0.0
-
0.0
3.2
2.4
2.1
0.0
0.1
6.2
21
Loans and advances
2.8
2.3
2.1
0.0
0.1
0.2
0.0
-
-
2.9
2.3
2.1
0.0
0.1
5.3
22
Debt securities, including
UoP
0.2
0.1
-
0.0
0.0
0.1
0.0
-
0.0
0.3
0.1
-
0.0
0.0
0.9
23
Equity instruments
0.0
0.0
-
0.0
0.0
-
-
-
0.0
0.0
-
0.0
0.0
24
Households
15.9
0.1
0.1
-
-
-
-
-
-
15.9
0.1
0.1
-
-
16.6
25
of which loans collateralised
by residential immovable
property
15.2
-
-
-
-
-
-
-
-
15.2
-
-
-
-
11.3
26
of which building renovation
loans
0.1
0.1
0.1
-
-
-
-
-
-
0.1
0.1
0.1
-
-
0.0
27
of which motor vehicle loans
0.6
-
-
-
-
-
-
-
-
0.6
-
-
-
-
0.5
28
Local governments financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.0
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local government
financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.0
31
Collateral obtained by taking
possession: residential and
commercial immovable properties
1.0
-
-
-
-
-
-
-
-
1.0
-
-
-
-
0.7
32
Total GAR assets
19.8
2.4
2.2
0.0
0.1
0.3
0.0
-
0.0
20.9
2.5
2.2
0.0
0.1
26.7
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
53
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Page
€ = Euro
m = million
bn = billion
3. GAR KPI Stock - Capex
% (compared to total covered assets in the
denominator)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of
total assets
covered
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt securities
and equity instruments not HfT
eligible for GAR calculation
21.7
3.4
2.2
-
0.1
0.6
-
-
-
23.0
3.5
2.2
-
0.1
26.0
2
Financial corporations
-
-
-
-
-
-
-
-
-
0.8
-
-
-
-
3.1
3
Credit institutions
-
-
-
-
-
-
-
-
-
0.7
-
-
-
-
3.0
4
Loans and advances
-
-
-
-
-
-
-
-
-
0.3
-
-
-
-
1.2
5
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
0.5
-
-
-
-
1.8
6
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
7
Other financial corporations
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.1
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
12
of which
management
companies
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
16
of which insurance
undertakings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
54
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Page
€ = Euro
m = million
bn = billion
% (compared to total covered assets in the
denominator)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of
total assets
covered
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
18
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial corporations
4.7
3.4
2.1
-
0.1
0.5
-
-
-
5.3
3.4
2.1
-
0.1
6.2
21
Loans and advances
4.1
3.0
2.1
-
0.1
0.4
-
-
-
4.5
3.0
2.1
-
0.1
5.3
22
Debt securities, including
UoP
0.6
0.4
-
-
-
0.1
-
-
-
0.7
0.4
-
-
-
0.9
23
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
24
Households
16.9
0.1
0.1
-
-
-
-
-
-
16.9
0.1
0.1
-
-
16.6
25
of which loans collateralised
by residential immovable
property
16.2
-
-
-
-
-
-
-
-
16.2
-
-
-
-
11.3
26
of which building renovation
loans
0.1
0.1
0.1
-
-
-
-
-
-
0.1
0.1
0.1
-
-
-
27
of which motor vehicle loans
0.6
-
-
-
-
-
-
-
-
0.6
-
-
-
-
0.5
28
Local governments financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local government
financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking
possession: residential and
commercial immovable properties
1.0
-
-
-
-
-
-
-
-
1.0
-
-
-
-
0.7
32
Total GAR assets
22.7
3.4
2.2
-
0.1
0.6
-
-
-
24.0
3.5
2.2
-
0.1
26.7
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
55
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Page
€ = Euro
m = million
bn = billion
4. GAR KPI flow - Turnover
% (compared to flow of total eligible
assets)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of
total new
assets covered
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant
sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt securities
and equity instruments not HfT
eligible for GAR calculation
13.4
6.8
6.2
0.0
0.1
0.6
0.1
-
-
14.8
6.9
6.2
0.0
0.1
31.1
2
Financial undertakings
0.0
0.0
-
0.0
0.0
0.0
-
-
-
0.9
0.0
-
0.0
0.0
4.4
3
Credit institutions
-
-
-
-
-
-
-
-
-
0.8
-
-
-
-
4.3
4
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
0.8
-
-
-
-
4.2
6
Equity instruments
-
-
-
-
-
-
-
-
0.0
-
-
-
0.1
7
Other financial corporations
0.0
0.0
-
0.0
0.0
0.0
-
-
-
0.1
0.0
-
0.0
0.0
0.2
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
12
of which
management
companies
-
-
-
-
-
-
-
-
-
0.0
-
-
-
-
0.0
13
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
-
-
-
-
-
-
-
-
0.0
-
-
-
0.0
16
of which insurance
undertakings
-
-
-
-
-
-
-
-
-
0.0
-
-
-
-
0.1
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
56
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Page
€ = Euro
m = million
bn = billion
% (compared to flow of total eligible
assets)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of
total new
assets covered
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant
sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
17
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
0.0
-
-
-
-
0.1
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
7.5
6.8
6.2
0.0
0.1
0.6
0.1
-
-
8.0
6.8
6.2
0.0
0.1
20.8
21
Loans and advances
7.0
6.5
6.2
0.0
0.1
0.4
0.0
-
-
7.4
6.6
6.2
0.0
0.1
19.6
22
Debt securities, including
UoP
0.4
0.3
-
0.0
0.0
0.2
0.0
-
-
0.7
0.3
-
0.0
0.0
1.2
23
Equity instruments
0.0
0.0
-
0.0
0.0
-
-
-
0.0
0.0
-
0.0
0.0
24
Households
5.9
-
-
-
-
-
-
-
-
5.9
-
-
-
-
5.9
25
of which loans collateralised
by residential immovable
property
5.7
-
-
-
-
-
-
-
-
5.7
-
-
-
-
5.7
26
of which building renovation
loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27
of which motor vehicle loans
0.2
-
-
-
-
-
-
-
-
0.2
-
-
-
-
0.2
28
Local governments financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local government
financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking
possession: residential and
commercial immovable
properties
0.4
-
-
-
-
-
-
-
-
0.4
-
-
-
-
0.4
32
Total GAR assets
13.7
6.8
6.2
0.0
0.1
0.6
0.1
-
-
15.2
6.9
6.2
0.0
0.1
31.5
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
57
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Page
€ = Euro
m = million
bn = billion
4. GAR KPI flow - Capex
% (compared to flow of total eligible
assets)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of
total new
assets covered
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant
sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt securities
and equity instruments not HfT
eligible for GAR calculation
21.1
11.0
6.2
0.1
0.1
0.8
-
-
-
22.7
11.0
6.2
0.1
0.1
31.1
2
Financial undertakings
0.2
0.2
-
-
-
-
-
-
-
1.0
0.2
-
-
-
4.4
3
Credit institutions
-
-
-
-
-
-
-
-
-
0.8
-
-
-
-
4.3
4
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
0.8
-
-
-
-
4.2
6
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
0.1
7
Other financial corporations
0.2
0.2
-
-
-
-
-
-
-
0.2
0.2
-
-
-
0.2
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
12
of which
management
companies
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
16
of which insurance
undertakings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.1
17
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
58
|
Page
€ = Euro
m = million
bn = billion
% (compared to flow of total eligible
assets)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of
total new
assets covered
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant
sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
18
Debt securities, including
UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.1
19
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
15.1
10.8
6.2
0.1
0.1
0.8
-
-
-
15.9
10.9
6.2
0.1
0.1
20.8
21
Loans and advances
14.6
10.4
6.2
-
0.1
0.5
-
-
-
15.1
10.4
6.2
-
0.1
19.6
22
Debt securities, including
UoP
0.5
0.4
-
0.1
-
0.2
-
-
-
0.7
0.4
-
0.1
-
1.2
23
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
24
Households
5.9
-
-
-
-
-
-
-
-
5.9
-
-
-
-
5.9
25
of which loans collateralised
by residential immovable
property
5.7
-
-
-
-
-
-
-
-
5.7
-
-
-
-
5.7
26
of which building renovation
loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27
of which motor vehicle loans
0.2
-
-
-
-
-
-
-
-
0.2
-
-
-
-
0.2
28
Local governments financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
Housing financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30
Other local government
financing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking
possession: residential and
commercial immovable
properties
0.4
-
-
-
-
-
-
-
-
0.4
-
-
-
-
0.4
32
Total GAR assets
21.5
11.0
6.2
0.1
0.1
0.8
-
-
-
23.1
11.0
6.2
0.1
0.1
31.5
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5. KPI off-balance
sheet exposures-
Stock- Turnover
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
% (compared to total eligible off-
balance sheet assets)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which Use of
Proceeds
Of which
transitional
Of which
enabling
1
Financial guarantees (FinGuar KPI)
15.5
1.9
-
0.1
0.2
1.2
0.0
-
0.0
16.7
1.9
-
0.1
0.2
2
Assets under management
2.6
0.4
-
0.1
0.1
0.5
0.0
-
0.0
3.1
0.4
-
0.1
0.1
5. KPI off-balance
sheet exposures-
Stock- Capex
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
% (compared to total eligible off-
balance sheet assets)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which
Use of
Proceeds
Of which
enabling
Of which Use of
Proceeds
Of which
transitional
Of which
enabling
1
Financial guarantees (FinGuar KPI)
19.9
6.5
-
0.2
0.2
1.1
-
-
-
20.9
6.5
-
0.2
0.2
2
Assets under management
5.3
2.1
-
0.1
0.2
0.4
-
-
-
5.7
2.1
-
0.1
0.2
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5. KPI off-balance
sheet exposures-
Flow-
Turnover
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
% (compared to total eligible off-
balance sheet assets)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
1
Financial guarantees (FinGuar
KPI)
8.6
1.8
-
-
-
4.5
0.0
-
0.0
13.1
1.8
-
-
0.0
5. KPI off-balance
sheet exposures-
Flow-
Capex
a
b
c
d
e
f
g
h
i
aa
ab
ac
ad
ae
% (compared to total eligible off-
balance sheet assets)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
TOTAL
(CCM + CCA)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
Of which Use
of Proceeds
Of which
enabling
Of which Use
of Proceeds
Of which
transitional
Of which
enabling
1
Financial guarantees (FinGuar
KPI)
15.1
11.9
-
-
-
1.4
-
-
-
16.5
11.9
-
-
-
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Template 1
Nuclear and fossil gas related activities
Row
Nuclear energy related activities
1.
The undertaking carries
out, funds or has exposures to research, development,
demonstration and
deployment of innovative electricity generation
facilities that produce
energy from nuclear
processes with minimal waste from the
fuel cycle.
NO
2.
The undertaking carries
out, funds or has exposures to construction and safe
operation of new
nuclear installations to produce electricity or process
heat,
including for the purposes of district heating or industrial processes
such as
hydrogen production,
as well as their safety upgrades,
using best available
technologies.
YES
3.
The undertaking carries
out, funds or has exposures to safe operation
of existing
nuclear installations that produce electricity or process
heat, including for the
purposes of district heating or industrial processes such as hydrogen
production
from nuclear energy,
as well as their safety upgrades.
YES
Fossil gas related activities
4.
The undertaking carries
out, funds or has exposures to construction or operation
of electricity generation facilities
that produce electricity using fossil
gaseous
fuels
YES
5.
The undertaking carries
out, funds or has exposures to construction, refurbishment,
and operation of combined heat/cool
and power generation
facilities using fossil
gaseous fuels.
YES
6.
The undertaking carries
out, funds or has exposures to construction, refurbishment
and operation of heat
generation facilities
that produce heat/cool
using fossil gaseous
fuels.
YES
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Turnover
KPI Tables
Table 1 - Taxonomy
-aligned economic activities (denominator)
Row
Economic activities
Amount (in Million EUR) and proportion (the information is
to be presented in monetary amounts and as percentages)
(CCM + CCA)
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
Amount
%
Amount
%
Amount
%
1.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.26 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
2.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.27 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
3.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.28 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
9
-
9
-
-
-
4.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.29 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
5.
Amount and proportion of taxonomy-aligned economic activity EN
3 EN referred to in Section 4.30 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
6.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.31 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
7.
Amount and proportion of other taxonomy-aligned economic
activities not referred to in rows
1 to 6 above in the denominator
of the applicable KPI
1,475
2
1,465
2
10
-
8.
Total applicable KPI
1,484
3
1,474
2
10
-
Table 2 -Taxonomy
-aligned economic activities (numerator)
Row
Economic activities
Amount (in Million EUR) and proportion (the information is
to be presented in monetary amounts and as percentages)
(CCM + CCA)
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
Amount
%
Amount
%
Amount
%
1.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.26 of Annexes I and II to Delegated
Regulation 2021/2139 in the numerator of the applicable KPI
-
-
-
-
-
-
2.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.27 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
3.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.28 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
9
0.6
9
0.6
-
-
4.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.29 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
5.
Amount and proportion of taxonomy-aligned economic activity EN
3 EN referred to in Section 4.30 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
0.4
6.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.31 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
7.
Amount and proportion of other taxonomy-aligned economic
activities not referred to in rows
1 to 6 above in the denominator
of the applicable KPI
1,475
99.4
1,465
99.4
10
99.6
8.
Total amount and proportion of taxonomy-aligned economic
activities in the numerator of the applicable KPI
1,484
100.0
1,474
100.0
10
100.0
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Table 9 - Taxonomy
-eligible but not taxonomy-aligned economic activities
Row
Economic activities
Amount (in Million EUR) and Pproportion (the information is
to be presented in monetary amounts and as percentages)
(CCM + CCA)
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
Amount
%
Amount
%
Amount
%
1.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.26 of Annexes I
and II to Delegated Regulation 2021/2139 in the denominator of
the applicable KPI
-
-
-
-
-
-
2.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.27 of Annexes I
and II to Delegated Regulation 2021/2139 in the denominator of
the applicable KPI
-
-
-
-
-
-
3.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.28 of Annexes I
and II to Delegated Regulation 2021/2139 in the denominator of
the applicable KPI
-
-
-
-
-
-
4.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.29 of Annexes I
and II to Delegated Regulation 2021/2139 in the denominator of
the applicable KPI
52
0
52
0
-
-
5.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.30 of Annexes I
and II to Delegated Regulation 2021/2139 in the denominator of
the applicable KPI
3
-
3
-
-
-
6.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.31 of Annexes I
and II to Delegated EN 6 EN Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
7.
Amount and proportion of other taxonomy-eligible but not
taxonomy-aligned economic activities not referred to in rows 1 to
6 above in the denominator of the applicable KPI
10,476
17
9,864
16
162
0
8.
Total amount and proportion of taxonomy eligible but not
taxonomy-aligned economic activities in the denominator of the
applicable KPI
10,531
17
9,920
16
162
0
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Table 10 - Taxonomy
non-eligible economic activities
Row
Economic activities
Amount
(in
Million
EUR)
%
Amount and proportion of economic activity referred to in row 1 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
2.
Amount and proportion of economic activity referred to in row 2 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
3.
Amount and proportion of economic activity referred to in row 3 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
4.
Amount and proportion of economic activity referred to in row 4 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
5.
Amount and proportion of economic activity referred to in row 5 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of EN 7 EN the applicable KPI
-
-
6.
Amount and proportion of economic activity referred to in row 6 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
7.
Amount and proportion of other taxonomy-non-eligible economic
activities not referred to in rows
1 to 6 above in the denominator
of the applicable KPI
48,435
80.1
8.
Total amount and proportion of taxonomy-non-eligible economic
activities in the denominator of the applicable KPI
48,435
80.1
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CapexKPI Tables
Table 1 - Taxonomy
-aligned economic activities (denominator)
Row
Economic activities
Amount (in Million EUR) and proportion (the information is
to be presented in monetary amounts and as percentages)
(CCM + CCA)
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
Amount
%
Amount
%
Amount
%
1.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.26 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
2.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.27 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
2
-
2
-
-
-
3.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.28 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
14
-
14
-
-
-
4.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.29 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
5.
Amount and proportion of taxonomy-aligned economic activity EN
3 EN referred to in Section 4.30 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
6.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.31 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
7.
Amount and proportion of other taxonomy-aligned economic
activities not referred to in rows
1 to 6 above in the denominator
of the applicable KPI
2,072
3.4
2,065
3.4
7
-
8.
Total applicable KPI
2,088
3.5
2,081
3.4
7
-
Table 2 -Taxonomy
-aligned economic activities (numerator)
Row
Economic activities
Amount (in Million EUR) and proportion (the information is
to be presented in monetary amounts and as percentages)
(CCM + CCA)
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
Amount
%
Amount
%
Amount
%
1.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.26 of Annexes I and II to Delegated
Regulation 2021/2139 in the numerator of the applicable KPI
-
-
-
-
-
-
2.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.27 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
2
0.1
2
0.1
-
-
3.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.28 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
14
0.7
14
0.7
-
-
4.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.29 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
5.
Amount and proportion of taxonomy-aligned economic activity EN
3 EN referred to in Section 4.30 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
6.
Amount and proportion of taxonomy-aligned economic activity
referred to in Section 4.31 of Annexes I and II to Delegated
Regulation 2021/2139 in the denominator of the applicable KPI
-
-
-
-
-
-
7.
Amount and proportion of other taxonomy-aligned economic
activities not referred to in rows
1 to 6 above in the denominator
of the applicable KPI
2,072
99.2
2,065
99.2
7
100.0
8.
Total amount and proportion of taxonomy-aligned economic
activities in the numerator of the applicable KPI
2,088
100.0
2,081
100.0
7
100.0
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Table 9 - Taxonomy
-eligible but not taxonomy-aligned economic activities
Row
Economic activities
Amount (in Million EUR) and Pproportion (the information is
to be presented in monetary amounts and as percentages)
(CCM + CCA)
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
Amount
%
Amount
%
Amount
%
1.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.26 of Annexes I
and II to Delegated Regulation 2021/2139 in the denominator of
the applicable KPI
-
-
-
-
-
-
2.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.27 of Annexes I
and II to Delegated Regulation 2021/2139 in the denominator of
the applicable KPI
-
-
-
-
-
-
3.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.28 of Annexes I
and II to Delegated Regulation 2021/2139 in the denominator of
the applicable KPI
-
-
-
-
-
-
4.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.29 of Annexes I
and II to Delegated Regulation 2021/2139 in the denominator of
the applicable KPI
57
0.1
57
0.1
-
-
5.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.30 of Annexes I
and II to Delegated Regulation 2021/2139 in the denominator of
the applicable KPI
2
-
2
-
-
-
6.
Amount and proportion of taxonomy-eligible but not taxonomy-
aligned economic activity referred to in Section 4.31 of Annexes I
and II to Delegated EN 6 EN Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
7.
Amount and proportion of other taxonomy-eligible but not
taxonomy-aligned economic activities not referred to in rows 1 to
6 above in the denominator of the applicable KPI
11,744
19.4
10,969
19.0
327
0.5
8.
Total amount and proportion of taxonomy eligible but not
taxonomy-aligned economic activities in the denominator of the
applicable KPI
11,803
19.5
11,028
18.2
327
0.5
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Table 10 - Taxonomy
non-eligible economic activities
Row
Economic activities
Amount
(in
Million
EUR)
%
1.
Amount and proportion of economic activity referred to in row 1 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
2.
Amount and proportion of economic activity referred to in row 2 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
3.
Amount and proportion of economic activity referred to in row 3 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
4.
Amount and proportion of economic activity referred to in row 4 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
5.
Amount and proportion of economic activity referred to in row 5 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of EN 7 EN the applicable KPI
-
-
6.
Amount and proportion of economic activity referred to in row 6 of
Template 1 that is taxonomy-non-eligible in accordance with
Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
7.
Amount and proportion of other taxonomy-non-eligible economic
activities not referred to in rows
1 to 6 above in the denominator
of the applicable KPI
46,559
77.0
8.
Total amount and proportion of taxonomy-non-eligible economic
activities in the denominator of the applicable KPI
46,559
77.0
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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€ = Euro
m = million
bn = billion
APPENDIX 2
Definition
of
Alternative
Performance
Measures
(APMs)
in
accordance
with
European
Securities
and
Markets
Authority (ESMA) guidelines, which are
included in the Report of Directors/Financial
Statements:
a)
Loans to Deposits ratio:
Loans and advances
to customers at
amortised cost divided by
due to customers
at the end of the
reported period,
b)
Pre-Provision
Income (PPI):
Profit from
operations
before
impairments, provisions
and restructuring
costs
as disclosed in the financial statements
for the
reported period,
c)
Core income:
The
total of
net interest
income,
net banking
fee
and commission
income
and income
from
non banking services,
d)
Core
Pre-provision
Income
(Core
PPI):
The
core
income
minus
the
operating
expenses
of
the
reported
period,
e)
Net Interest
Margin (NIM):
The
net interest
income of
the
reported period,
annualised and divided
by the
average
balance
of continued
operations’
total
assets (the
arithmetic
average
of total
assets,
excluding
those related
to discontinued operations’,
at the end
of the reported
period, at the
end of interim quarters
and at the end of the
previous period),
f)
Fees and commissions:
The total of net
banking fee and commission income and income
from non banking
services of the
reported period,
g)
Fees
and commissions
over assets
ratio:
The
Fees
and commissions
of the
reported period
divided by
the
average
balance
of continued
operations’
total
assets (the
arithmetic
average
of total
assets,
excluding
those related
to discontinued operations’,
at the end
of the reported
period, at the
end of interim quarters
and at the end of the
previous period),
h)
Income from trading and other activities
: The total of net trading income, gains less
losses from investment
securities and other
income/ (expenses) of the
reported period,
i)
Cost to Income ratio:
Total
operating expenses
divided by total operating
income,
j)
Adjusted
net
profit:
Net
profit/loss
from
continuing
operations
excluding
restructuring
costs,
goodwill
impairment/
gain
on
acquisition,
gains/losses
related
to
the
transformation
and
NPE
reduction
plans,
contributions to restoration
initiatives following
natural disasters
and income tax adjustments,
k)
Non-performing
exposures (NPE):
Non Performing
Exposures (in
compliance with
EBA Guidelines)
are the
Group’s
material exposures
which are
more than
90 days
past-due or
for
which 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 the
number of
days past
due. The
NPE, as reported
herein,
refer
to the
gross loans
at
amortised cost except for
those that
have been classified as held for
sale,
l)
NPE
ratio:
NPE
divided
by
gross
loans
and
advances
to
customers
at
amortised
cost
at
the
end
of
the
reported period,
m)
NPE
formation:
Net
increase/decrease
of
NPE
in
the
reported
period
excluding
the
impact
of
write
offs,
sales and other
movements,
n)
NPE
Coverage
ratio:
Impairment
allowance
for
loans
and
advances
to
customers
and
impairment
allowance
for
credit
related
commitments
(off
balance
sheet
items),
divided
by
NPE
at
the
end
of
the
reported period,
o)
Provisions
(charge)
to
average
net
loans
ratio
(Cost
of
Risk):
Impairment
losses
relating
to
loans
and
advances
charged
in
the
reported
period,
annualised
and
divided
by
the
average
balance
of
loans
and
advances to
customers
at amortised
cost (the
arithmetic
average
of loans
and advances
to customers
at
amortised cost, including those that have been classified as held
for sale, at the end of the reported
period,
at the end of interim quarters
and at the end of the
previous period),
p)
Return
on
tangible
book
value
(RoTBV):
Adjusted
net
profit
divided
by
average
tangible
book
value.
Tangible
book value is the total equity excluding preference
shares, preferred
securities and non controlling
interests minus intangible assets,
Definition of capital and other
selected ratios in accordance
with the regulatory
framework,
which are included
in the Report of Directors/Financial Statements:
a)
Total
Capital
Adequacy
ratio:
Total
regulatory
capital
as
defined
by
Regulation
(EU)
No
575/2013
as
in
force,
based on the
transitional rules for
the reported
period, divided by
total Risk Weighted
Assets (RWA).
The RWA are the Group’s
assets and off-balance-sheet exposures, weighted according to risk factors based
on Regulation (EU) No 575/2013,
taking into account credit, market and operational
risk,
b)
Common Equity
Tier
1 (CET1):
Common Equity
Tier
I regulatory
capital
as defined
by
Regulation
(EU) No
575/2013 as in force,
based on the transitional
rules for the
reported period, divided by
total RWA,
c)
Fully loaded Common Equity
Tier I (CET1):
Common Equity Tier I regulatory capital as
defined by Regulation
No 575/2013 as in force,
without the application
of the relevant transitional
rules, divided by total RWA,
d)
Liquidity Coverage
Ratio (LCR):
The
total amount of
high quality
liquid assets divided
by the
net liquidity
outflows for a 30-day stress
period.
e)
Minimum
Requirements
for
Eligible
Own
Funds
and
Eligible
Liabilities
(MREL)
ratio:
The
sum
of
i)
total
regulatory
capital
(at
Eurobank
S.A. consolidated
level)
as
defined
by
Regulation
(EU)
No
575/2013
as
in
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m = million
bn = billion
force,
based on the
transitional rules for
the reported
period ii) part
of any Tier
2 instruments to the
extent
that it
does not qualify
as Tier
2 capital (amortized
part counts towards
MREL), and iii)
liabilities issued by
Eurobank
S.A.
that
meet
the
MREL-eligibility
criteria
set
out
in
Regulation
(EU)
No
575/2013
as
in
force,
divided by RWA
.
The following
table presents the
components of the
calculation of the
above APMs,
which are derived
from the
Company’s consolidated
financial statements
for the
year ended
31 December
2023 and for
the year
ended 31
December 2022:
Components of Alternative Performance
Measures
€ million
FY 2023
FY22
(Restated)
⁽⁸⁾
Net Interest Income
⁽
¹
⁾
2,174
1,480
Fees and commissions
544
522
Total
Operating income
⁽
²
⁾
2,914
3,041
Total
Operating income,
excluding the gain on investment
in Hellenic Bank in
2023 and on project "Triangle"
in 2022
⁽
²
⁾
2,803
2,716
Total
Operating expenses,
excluding the contribution to restoration
initiatives
after natural
disasters
⁽
³
⁾
(902)
(857)
Pre-provision
income (PPI)
1,999
2,184
Pre-provision
income (PPI), excluding the
gain on investment in Hellenic Bank
and the contribution to restoration
initiatives after
natural disasters in 2023
and on project "Triangle"
in 2022
1,902
1,859
Core Pre-provision
income (Core PPI), excluding the
contribution to restoration
initiatives after natural
disasters in 2023
1,816
1,145
Net profit/(loss) from continued
operations
1,281
1,345
Gain on project "Triangle"
(before tax)
-
325
Gain on project "Triangle"
(after tax)
-
231
Restructuring costs, after tax
(29)
(63)
Gain on investment in Hellenic Bank (associate)
111
-
Contribution to restoration
initiatives after
natural disasters, before
tax
(14)
-
Contribution to restoration
initiatives after
natural disasters, after
tax
(10)
-
Loss on projects "Solar" and "Leon", after
tax
(48)
-
Loss on projects "Solar" and "Leon",
before tax
(67)
-
Adjusted net profit
1,256
1,178
Impairment losses relating to loans
and advances
(412)
(276)
Impairment losses for
loans, excluding the loss on projects
"Solar" and "Leon"
(345)
(276)
NPE formation
⁽⁴⁾
138
40
Non performing exposures
(NPE)
1,512
2,156
Due to customers
57,442
55,609
Gross Loans and advances to customers
at amortized cost
42,773
41,811
Impairment allowance for
loans and advances to customers
(1,258)
(1,572)
Impairment allowance for
credit related commitments
(48)
(57)
Due to customers (Greek operations)
39,955
39,575
Gross Loans and advances to customers
at amortized cost (Greek operations)
32,308
32,812
Impairment allowance for
loans and advances to customers
(Greek
operations)
(1,003)
(1,332)
Average
balance of continued operations’
total assets
⁽⁵⁾
79,106
77,672
Average
balance of loans and advances to customers
at amortized cost
⁽⁶⁾
40,645
38,834
Average
balance of tangible book value
⁽⁷⁾
6,957
5,793
(1)
4Q2023
NIM:
Net
interest
income
of
the
fourth
quarter
2023
(€573m),
annualised,
divided by
the
average
balance
of
continued
operations’
total
assets
(€78,902m).
The
average
balance
of
continued
operations’
total
assets,
has
been
calculated as the arithmetic
average of their balances at the
end of the reporting period (31 December 2023: €79,781m) and
at the end of interim quarter (30 September 2023: €78,023m).
(2)
International
Operations:
Operating
income:
€778m
(2022,
adjusted:
€497m).
Greek
operations:
Operating
income:
€2,025m, excluding the gain on investment in Hellenic Bank of €111m
(2022: €2,219m, excluding the gain on project "Triangle"
of €325m).
(3)
International Operations:
Operating
expenses: €258m
(2022, adjusted:
€212m). Greek
operations:
Operating
expenses:
€644m, excluding contribution to restoration initiatives
after natural disasters of €14m (2022: €645m).
(4)
NPEs formation
has been
calculated
as the
decrease of
NPE in
2023 (€745m),
after deducting
the
impact of
write-offs
€405m, classifications as held for
sale / sales €493m and other movements
(€15m).
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
REPORT OF THE DIRECTORS
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€ = Euro
m = million
bn = billion
(5)
The
average
balance
of continued
operations’
total
assets, has
been calculated
as the
arithmetic
average
of the
their
balances
at the
end of
the
reporting period
(31 December
2023: €79,781m),
at the
end of
interim quarters
(30 September
2023: €78,023m, 30 June 2023: €79,137m and 31 March 2023: €79,538m), and at the end of the previous
period (31 December
2022:
€79,052m).
The
respective
figures
for
31
December
2022:
€79,052m,
30
September 2022:
€81,065m
30
June 2022:
€77,847m
31 March 2022: €74,873 and 31 December 2021: €75,521m.
(6)
The
average
balance
of
loans
and
advances
to
customers
measured
at
amortized
cost,
excluding
Eurobank
Direktna
operations, has been calculated as the arithmetic average of their balances at the
end of the reporting period (31 December
2023: €41,515m), at the end of interim quarters (30 September
2023: €40,734m, 30 June 2023: €40,604m and 31 March 2023:
€40,137m), and at the end of the previous period (31
December 2022 €40,237m). The respective figures for 31
December 2022:
€40,237m, 30 September 2022: €39,754m 30 June 2022: €38,970m 31 March 2022: €37,761 and 31 December 2021: €37,445m.
(7)
The average
balance of tangible book value, has been calculated
as the arithmetic
average of the
total equity minus the
intangible assets and non
controlling interests
at the
end of the
reporting period (31
December 2023: €7,565m),
at the
end
of interim quarters (30 September
2023: €7,221m, 30 June 2023: €7,039m and 31 March 2023: €6,618m) and at the end of the
previous period
(31 December 2022: €6,340m).
The respective
figures for
31 December 2022: €6,340m, 30
September 2022:
€6,038m 30 June 2022: €5,934m
31 March 2022: €5,380 and 31 December 2021: €5,270m.
(8)
The comparative information
has been adjusted
due to a)
the retrospective application of IFRS 17 by the Group’s associate
Eurolife
FFH Insurance
Group Holdings
S.A. and b) the
presentation of
operations of
Eurobank Direktna
a.d. disposal group
as discontinued.
Source of financial Information
The
Directors’
Report
includes
financial
data
and
measures
as
derived
from
the
Company’s
consolidated
financial statements
for
the
year
ended 31
December
2023 and
for
the
year
ended 31
December
2022, which
have
been
prepared
in
accordance
with
International
Financial
Reporting
Standards
(IFRS).
In
addition,
it
includes
information
as
derived
from
internal
information
systems,
consistent
with
the
Group’s
accounting
policies,
such
as
the
selected
financial
information
for
the
Group’s
two
main
reportable
segments
a)
Greek
Operations,
which
incorporate
the
business
activities originated
from
the
Company,
the
Bank and
the
Greek
subsidiaries and b)
International Operations, which incorporate the business activities originated from the banks
and the
other
local
subsidiaries
operating
in Bulgaria,
Cyprus
and Luxembourg
(as described
at the
relevant
section on page 4).
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
ATTACHMENT
TO THE REPORT OF THE DIRECTORS
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CORPORATE GOVERNANCE STATEMENT
2023
1.
Adoption of the Hellenic Corporate Governance Code
In compliance with art. 17 of L.4706/2020 for
the listed companies (effective from 18.7.2021 onwards), which
stipulates that
listed companies should adopt and
implement a corporate governance
code, prepared by a
recognized and reputable body,
Eurobank
Ergasias
Services
and
Holdings
S.A.
(Company,
Eurobank
Holdings,
Holdings
or
HoldCo)
has
adopted
and
implements the Hellenic Corporate Governance Code (the Code).
The
Code
is available on Eurobank Holdings’ website (https://www.eurobankholdings.gr/en/corporate-
governance/corporate-governance-principles/).
Given
that
the
Eurobank
Holdings
Group
(the
Group)
consists
mainly
of
Eurobank
S.A.
(Eurobank
or
Bank)
and
its
subsidiaries
(the
Eurobank
or
Bank
Group),
the
present Corporate
Governance
Statement
outlines
how
the
principles
stipulated by the Code were applied to both Eurobank Holdings and Eurobank during 2023.
2.
Board of Directors
5
2.1
General
The HoldCo/Bank are managed
by their respective Boards
of Directors (Board or
BoD), which are collectively
responsible
for
their
long-term
success.
The
Boards
exercise
their
responsibilities
in
accordance
with
the
Greek
legislation
and
international best practices, as well as with their Articles of Association and the
shareholders’ General Meetings’ legitimate
decisions.
The role of the
Board is to
offer entrepreneurial leadership to
the Group within
a framework of
prudent and effective controls,
facilitating the assessment and
management of risks. The
Board establishes the Group's strategic
objectives, ensures the
availability
of
essential
financial
and
human
resources
for
the
Group
to
fulfil
its
purpose,
and
evaluates
management
performance. It also defines
the Group's values and
standards, ensuring that its
responsibilities to shareholders and
other
stakeholders are acknowledged and fulfilled.
All members of the Board
are required to act
in the best interests of
the Group,
aligning with their legal duties.
2.2
Composition of the Board
The
members
of
the
Board
are
elected
by
the
HoldCo’s
and
Eurobank’s
General
Meetings,
which
determine
the
exact
number of the
directors and their
term of office,
within the limits of
the law and of
the HoldCo’s and
Eurobank’s Articles of
Association and also designates the independent non-executive directors.
During 2023:
-
further
to
the
discussions
and
the
decisions
reached
at
HoldCo/Bank
NomCo
meetings
dated
22.06.2023,
23.06.2023
and
27.06.2023
and
the
resolutions
of
the
HoldCo/Bank
Annual
General
Meeting
(AGM)
of
shareholders 2023, the number of the HoldCo/Bank BoD members increased to fifteen members with the election
of Messrs Burkhard
Eckes and John
Hollows who were
appointed as independent
Non-Executive Directors. The
term of office
of the
aforementioned new
members expires concurrently
with the term
of office of
the other members
of the HoldCo/Bank
Board and more specifically
on 23.07.2024, prolonged until
the end of the
period the Annual
General Meeting for the year 2024 will take place.
-
following the Hellenic Financial Stability
Fund’s (HFSF) divestment from HoldCo, and
taking into consideration that
the HoldCo and Bank
are no longer subject to law 3864/2010 and
to the special rights of the HFSF provided for in
such
law,
including
HFSF’s
right
to
appoint
its
representative
in
the
HoldCo
and
Bank
Boards
and
Board
Committees,
the
HFSF
representative
Mrs.
Efthymia
Deli, submitted
her
resignation
from
the
abovementioned
positions on 26 October 2023, effective as of 7 November 2023.
-
On 31 October 2023, Mr. Andreas Athanasopoulos, Deputy
CEO and Executive Member of
the HolDCo/Bank BoD
submitted his resignation from the above positions with effect from December 31, 2023.
5
Information regarding the Board’s composition is also included
in relevant note of the consolidated accounts of
HoldCo and Eurobank
respectively.
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
ATTACHMENT
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Following the above,
the current
Boards, as of
the date of
approval of the
here-in Statement,
consist of thirteen
(13) Directors
of whom, three (3) executives, three (3) non-executives and seven (7) independent non-executives:
Eurobank Holdings
Eurobank
First
appointment
End of
Term
First
appointment
End of
Term
Georgios P. Zanias
Chairperson, Non-Executive Director
Mar. 2019
2024
Mar. 2020
2024
Georgios K. Chryssikos
Vice-Chairperson, Non-Executive Director
Jun. 2014
2024
Mar. 2020
2024
Fokion C. Karavias
Chief Executive Officer
Jun. 2014
2024
Mar. 2020
2024
Stavros E. Ioannou
Deputy Chief Executive Officer
Apr. 2015
2024
Mar. 2020
2024
Konstantinos V. Vassiliou
Deputy Chief Executive Officer
July 2018
2024
Mar. 2020
2024
Bradley Paul L. Martin
Non-Executive Director
Jun. 2014
2024
Mar. 2020
2024
Rajeev K. L. Kakar
Non-Executive Independent Director
July 2018
2024
Mar. 2020
2024
Jawaid A. Mirza
Non-Executive Independent Director
Jun. 2016
2024
Mar. 2020
2024
Alice K. Gregoriadi
Non-Executive Independent Director
Apr. 2020
2024
Apr. 2020
2024
Irene Rouvitha Panou
Non-Executive Independent Director
Apr. 2020
2024
Apr. 2020
2024
Cinzia V. Basile
Non-Executive Independent Director
Dec. 2020
2024
Dec. 2020
2024
Burkhard Eckes
Non-Executive Independent Director
Jul. 2023
2024
Jul. 2023
2024
John Arthur Hollows
Non-Executive Independent Director
Jul. 2023
2024
Jul. 2023
2024
The
short
CVs
of
the
HoldCo
and
Eurobank
Boards
members
as
summarized
below
are
evidence
that
the
Boards’
composition reflects the knowledge, skills
and experience required for the execution of
their duties, in accordance with the
Board Nomination Policy and the HoldCo’s/Bank’s business model and strategy.
It is also
noted that the
directorships of the
HoldCo and Eurobank
Boards members as
at 31.12.2023, are
outlined in Section
2.7, “Directorships of Board members”.
Georgios Zanias
Chairperson, Non-Executive Director
Year of birth: 1955
Nationality: Hellenic
Number of shares in Eurobank Holdings: -
George
P.
Zanias
joined
Eurobank
as
the
Chairman
of
the
Board
of
Directors
in
2019.
He
is
also
a
Professor
Emeritus
of
Economics
at
the
Athens University of Economics and Business and a Member of the
Board
of IOBE.
In
the
past,
Mr
Zanias
has
served
as
the
Minister
of
Finance
(2012),
Chairman of the Board of
Directors of the National Bank
of Greece (2012-
2015), Chairman
of the
Board of
the Hellenic
Banking Association (2012-
2015), Member
of the
Board of
the European
Banking Federation
(2012-
2015), Member of
the Board of
the American-Greek Chamber
of Commerce
( 2019-2022), Chairman
of the Council of
Economic Advisors at
the Ministry
of Finance (2009-2012), General Secretary of the Ministry
of Economy and
Finance
(2001-2004),
Chairman
and
Scientific
Director
of
the
National
Economic Institute (KEPE) (1998-2001).
He
has
also
served
as
a
Director on
the
Boards
of
Hellenic
Exchanges
(2000-2001),
Public
Debt
Management
Office
(PDMA)
(2009-2012),
General
Bank
(1997-1998),
CHIPITA
SA
(2015-2019),
the
European
Financial Stability Mechanism (EFSF/ESM)
(2010-2012). Also: Member of
the
Board
of
Governors of
the
Black
Sea
Trade
and
Development Bank
(2003-2004), Alternate
Governor of
the Board of
Governors of
EBRD (2002-
2004),
Member
of
the
European
Securities
Committee
(2001-2002),
Member of the
Monetary Policy Committee
of the Bank
of Greece (May-July
2012), Chairman of
the Board of
Directors of Piraeus
Real Estate SA
and
Picar SA (2017-2019), Vice Chairman
of the Board of
ETVA Industrial Zone
SA (2018-2019).
He holds a Doctorate from Oxford University, an M.Sc. for the University of
Reading
and
a
B.Sc.
from
the
Athens
University
of
Economics
and
Business.
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George Chryssikos
Vice Chairman, Non-Executive Director of the BoD
Membership in Board Committees:
Remuneration Committee
– Member
Year of birth: 1972
Nationality: Hellenic
Number of shares in Eurobank Holdings: 800.000
Mr.
Chryssikos is the
Founder and BoD
Member of
Grivalia Management
Company SA and also serves as Chairman & CEO of
Grivalia Hospitality.
In the
past, Mr.
Chryssikos had
also the
following significant
posts: Non-
Executive Director of
the BoD, MYTILINEOS
(2017-2019), Member of
the
BoD,
Praktiker
Hellas
(2014-2019),
Member
of
the
BoD
and
General
Secretary,
British
Hellenic
Chamber
of
Commerce
(2014-2017),
CEO,
Executive Director of the BoD and Chairman of the Investment Committee,
Grivalia Properties REIC (2013-2019), Non-Executive Director
of the BoD,
Lamda Hellix (2013-2017),
General Manager, Executive
Director of
the BoD
and
Chairman
of
the
Investment
Committee,
Grivalia
Properties
REIC
(2008),
Investment
Manager
and
Member
of
the
Investment
Committee,
Grivalia Properties REIC (2006).
He
holds
an
MBA
in
Corporate
Finance
&
Strategy
from
the
Columbia
Business School,
USA, an
MSc in
Engineering &
Construction Management
from UC
Berkeley,
USA, as
well as
a MEng
in Civil
Engineering from the
National Technical University of Athens.
Fokion Karavias
Chief Executive Officer (CEO)
Year of birth: 1964
Nationality: Hellenic
Number of shares in Eurobank Holdings: 269.495
Mr.
Karavias
joined
Eurobank
in
1997
and
served,
inter
alia,
as
Senior
General Manager, Group Corporate
& Investment Banking,
Capital Markets
&
Wealth
Management
(2014-2015)
and
Executive
Committee
Member
(2014-2015), General Manager
and Executive Committee
Member (2005-
2013), Deputy General Manager and Treasurer (2002-2005), Head
of fixed
income and derivative product trading (1997).
In the past, Mr. Karavias had also the following significant posts: Treasurer
of
Telesis
Investment
Bank
(2000),
Head
of
fixed
income
products
and
derivatives in Greece of
Citibank, Athens (1994)
and has also worked
in the
Market Risk Management Division of JPMorgan NY
(1991).
He
holds
a
PhD
in
Chemical
Engineering
from
the
University
of
Pennsylvania, Philadelphia, USA and an MA in
Chemical Engineering from
the same university, as well as
a Diploma in Chemical
Engineering from the
National Technical University of Athens.
He has published
articles on topics
related to his academic research.
Stavros Ioannou
Deputy Chief Executive Officer (CEO), Group Chief
Operating Officer (COO) & International Activities
Membership in Board Committees:
Board Digital and Transformation Committee - Member
Year of birth: 1961
Nationality: Hellenic
Number of shares in Eurobank Holdings: 133.154
Mr.
Ioannou holds several
other posts in
the Eurobank Group
as member
of the BoD of Eurobank Bulgaria AD
(since October 2015), Vice-Chairman
in Eurobank Cyprus
Ltd (since November 2022)
and is also
the Chairman
of
the
BoD,
BE-Business
Exchanges
SA
(since
January
2014).
Group
Private Banking is
also in the
area of his
responsibilities since 2019 while
he
has
been
appointed
as
the
responsible
BoD
member
of
Eurobank
Holdings and Eurobank for climate-related and environmental risks and for
the outsourcing function.
He
is
currently
Non-Executive
Board
member
of
Grivalia
Management
Company S.A. (since September 2019).
In the past, Mr.
Ioannou had also the following significant posts: Chairman
of
the
Executive
Committee
in
the
Hellenic
Banking
Association
(2020-
2022)
where he had been
member since 2013, Vice
Chairman at Cardlink
SA (2013-2015),
Member of
the BoD
in Millennium
Bank, responsible
for
Retail,
Private
Banking
and
Business
Banking
(2003),
Head
at
Barclays
Bank PLC, responsible for Retail Banking, Private Banking and Operations
(1990-1997).
He holds an MA
in Banking and Finance from the
University of Wales, UK
and a
Bachelor Degree
in Business
Administration from
the University
of
Piraeus.
Kostas Vassiliou
Deputy Chief
Executive Officer
(CEO), Head
of Corporate &
Investment Banking
Year of birth: 1972
Nationality: Hellenic
Number of shares in Eurobank Holdings: 131.626
Mr. Vassiliou holds several other posts in
the Eurobank Group
as Chairman
of the BoD
of Eurobank Factors
Single Member
SA (since December
2018),
Member of the BoD of Eurobank Equities Single Member SA
(since March
2015).
He
also
serves
as
Vice-Chairman
of
the
BoD
of
Eurolife
FFH
Insurance
Group
Holdings
SA
(since
January
2021),
Eurolife
FFH
Life
Insurance SA (since December 2020) and Eurolife FFH General Insurance
SA (since December 2020).
In the
past, Mr.
Vassiliou
had also the
following significant posts:
Country
Manager
for
Greece,
Cyprus
and
the
Balkans,
Mitsubishi
UFJ
Financial
Group, London
(2000-2005) and Senior
Relationship Manager,
Mitsubishi
UFJ Financial Group, London (1998-2000).
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He
holds
an
MΒΑ
from
Boston
University,
USA
and
a
BA
in
Business
Administration from the Athens University of Economics
and Business.
Alice Gregoriadi
Independent Non-Executive Director
Membership in Board Committees:
Board Risk Committee – Member
Remuneration Committee – Member
Board Digital and Transformation Committee – Chairwoman
Year of birth: 1968
Nationality: Hellenic
Number of shares in Eurobank Holdings: -
Mrs.
Gregoriadi
also
serves
as
an
Affiliate
Partner
–
Management
Consultant
at
True
North
Partners
LLP,
London,
UK.
In
the
past,
Mrs.
Gregoriadi had also the
following significant posts: Hellenic Corporation of
Assets
&
Participations
(HCAP), Greece,
Non-Executive Board
member,
Audit
Committee
member,
Corporate
Governance
and
Nominations
Committee member (February 2017 –
February 2021), JPMorgan, London,
UK, various posts
as Managing Director
(February 2010 –
May 2015), IBOS
Board Director (April
2010 – August
2014), ABN Amro
Bank, Amsterdam,
Netherlands & London, UK,
various posts as Managing
/ Executive Director
(November
2001
–
December
2009),
Citibank
NA,
London,
UK,
various
Senior Executive Director posts (February 1994
– August 2001) , Clearing
House Automated Payments
System (CHAPS), UK,
Board Director (June
1997 – July 2000).
She holds an MBA
from the Manchester
Business School, UK (1991-1993),
including an MBA international exchange
program from the E.J.Cox School
of
Management,
Texas,
USA
–
(1992),
an
Executive
Certification
on
Blockchain
for
business
from
University
College
London
(2019),
an
Executive Certification
on eCommerce
from the
Darden School
of Business,
Virginia University, USA (2000) and a BSc in Business Administration from
the The American College, Athens, (1987-1990).
Rajeev Kakar
Independent Non-Executive Director
Membership in Board
Committees:
Audit Committee – Member
Board Risk Committee – Chairman
Nomination & Corporate Governance Committee –
Member
Board Digital and
Transformation Committee –
Vice Chairman
Year of birth: 1963
Nationality: Indian
Number of shares in Eurobank Holdings: -
Mr. Kakar is a senior international
banker with 35 years
of financial services
experience,
and
currently
also
serves
as
a
board
member
of
several
Financial Institutions-
including Commercial
International Bank
(Egypt), Gulf
International Bank
Group Board
(Bahrain), Gulf
International Bank
(Saudi
Arabia), UTI Asset Management Company
Ltd. (India), and is also
a Global
Advisory
Board
member
at
the
University
of
Chicago’s
Booth
School
of
Business.
In
the
past
Mr.
Kakar
has
also
served
as
board
member
on
several
international
financial
institutions/bank
boards
-
eg.,
as
Board
Member
of
Visa
International
CEEMEA
(United
Kingdom
2004-2006),
Chairman of
the BoD,
Fullerton Securities &
Wealth Advisors
(New Delhi,
India 2008-2017), board Member of
Fullerton India Credit Company
(India
2009-2017), Member of the Board of Commissioners,
Adira Dinamika Multi
Finance Tbk, subsidiary of Bank Danamon (Indonesia
2010-2013), etc.
Between
2006-2018,
Mr.
Kakar
served
as
the
Global
Co-Founder
of
Fullerton
Financial
Holdings
(Singapore)
-
a
wholly
owned
subsidiary
of
Temasek
Holdings, Singapore. In this role,
he also concurrently served as
Fullerton’s
Global CEO
of Consumer
Banking, Regional
CEO for
Central
Europe,
Middle
East
and
Africa,
and
also
as
the
Founder,
Managing
Director and
CEO of
Dunia Finance
(Fullerton’s UAE
subsidiary). Prior
to
2016, he was at Citibank
for 20 years working across
various countries and
held
various
senior
management
positions,
including,
his
most
recent
Citibank
assignment
where
he
served
as
the
Regional
CEO
&
Division
Executive for Citibank-Turkey, Middle East and Africa until Jan 2006.
Mr. Kakar
holds an MBA,
Finance & Marketing from
the Indian Institute
of
Management,
Ahmedabad
(India)
and
a
Bachelor
of
Technology,
Mechanical Engineering from the Indian Institute of Technology (India).
Bradley Paul Martin
Non-Executive Director
Membership in Board Committees:
Board Risk Committee – Member
Nomination
&
Corporate
Governance
Committee
–
Vice
Chairman
Year of birth: 1959
Nationality: Canadian
Number of shares in Eurobank Holdings: 122.500
Mr. Martin
also serves as a Vice
Chairman in Strategic Investments of
the
Fairfax
Financial
Holdings,
where
he
has
been
a
senior
executive
since
1998.
In
the
past Mr.
Martin has
also served
as: Member
of the
BoD,
Bank
of
Ireland
(2013-2017),
Chief
Operating
Officer
(COO),
Fairfax
Financial
Holdings (2006-2012) and Partner, Torys LLP law firm (before 1998).
He holds a
ΒΑ from
Harvard University, USA
and an
LLB from
the University
of Toronto, Canada.
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Jawaid Mirza
Independent Non-Executive Director
Membership in Board Committees:
Audit Committee – Chairman
Nomination & Corporate Governance Committee –
Member
Board Digital and Transformation Committee – Member
Remuneration Committee – Vice Chairman
Year of birth: 1958
Nationality: Canadian
Number of shares in Eurobank Holdings: -
Mr.
Mirza is
a strong proponent
and practitioner of
international corporate
governance and brings
with him over
35 years of diversified
experience and
a
solid
track
record
in
all
facets
of
financial
and
risk
management,
technology, mergers and acquisitions, business turnarounds and operation
management.
In
the
past,
Mr.
Mirza
was
also
the
lead
Director
with
Commercial
International Bank of
Egypt, as well as
Independent Non-Executive Director
with
South
Africa
Bank
of
Athens
(Johannesburg).
He
also
served
Commercial Bank of
Egypt (CIB) as
Managing Director
& CEO of
Consumer
Banking
and
Group
COO.
Over
the
years,
Mr.
Mirza
has
worked
with
global institutions
like Citibank
and ABN
AMRO Bank
Ltd where
he held
several senior positions as CFO European Region, Managing Director and
Chief Operating Officer for Global
Private Banking, Asset Management
and
New
Growth
Markets,
Chief
Financial
Officer
for
Asian
region
including
Australia/New
Zealand
and
Middle
East.
Mr.
Mirza
led
several
due
diligences for acquiring
banks in Europe,
Asia, and Latin
America. Mr. Mirza
was also a member
of the Top Executive Group (TEG)
of ABN AMRO Bank
as well as member of the Group Finance and
Group COO Board.
Mr. Mirza also serves as Non-Executive Independent
Director of AGT Food
& Ingredients (Canada), IDRF (Canada).
Mr.
Mirza
holds
various
business
management
courses
from
reputable
institutions
like
Queens
Business
school,
Wharton
Business
school,
Stanford Graduate School
of Business and
is also a member
of the Institute
of Corporate Directors, Canada.
Irene Rouvitha Panou
Independent Non-Executive Director
Membership in Board Committees:
Nomination & Corporate Governance Committee –
Chairwoman
Audit Committee – Vice Chairwoman
Year of birth: 1958
Nationality: Cypriot
Number of shares in Eurobank Holdings: -
Mrs. Rouvitha
Panou is
Independent Non-Executive
Director of
CAC Cyprus
Asset Management Company
KEDIPES where she
is Member of the
Board
Audit and Risk Committees, Member of
the Board of Trustees of UK-based
Stelios Philanthropic
Foundation, Member
of the
Advisory Council
of School
of Economics &
Management University of
Cyprus, Member of
the British
High
Commission
Judging
Panel
for
UK
Study
Awards,
Member
of
the
International Advisory Committee of Komvos Global Hellenism
Network.
In the
past, she
had the
following significant
posts: Chair
of the
Board of
Cyta
(Cyprus’ leading
integrated electronic
communications provider)
for
two
consecutive
tenures
(July 2016-July
2021),
Chair
of
the
Pensions &
Grants
Fund
of
the
Personnel
of
Cyta
(January
2019-July
2021),
Board
member of Τhe
Cyprus Employers and
Industrialists Federation (May
2020-
July 2021) and
of Cyprus public
company Vassiliko Cement, where
she was
Member of the Board Audit
Committee (February 2012-October
2014). She
was Independent Non-Executive
Director of Alpha
Bank Group subsidiaries
(Alpha
Bank
Romania,
Alpha
Bank
Cyprus,
Alpha
Leasing
in
Greece),
where she was
Chair/Member of the Board Audit,
Risk and Remuneration
Committees (November
2014-April 2020).
She was
Chair of
the Board
of
Cyprus
Development Bank
following the
Bank’s
privatisation (September
2008-April
2014).
She
worked
at
Laiki
Group
(HSBC
associate
bank)
(October
1991-November
2006)
where
she
was,
among
others,
Group
General Manager (January
2000-November 2006) and Managing
Director
of
Laiki
Bank
Hellas
SA
(April
2002-November
2006),
also
serving
as
Director on the
Boards of Laiki
Group and
its banking
subsidiaries in
Greece
and
Australia. She
held senior
positions in
the field
of
management and
financial services consulting based in Boston, USA (June 1994-September
1991).
She graduated from
London School of
Economics, UK (B.Sc.
Economics,
Metcalfe Scholar) with
postgraduate studies
at University of
Cambridge, UK
(M.Phil.
Economics)
and
Massachusetts
Institute
of
Technology,
USA
(Master of Science in Management, Fulbright Scholar).
Cinzia Basile
Independent Non-Executive Director
Membership in Board Committees:
Board Risk Committee – Vice Chairwoman
Remuneration Committee – Chairwoman
Year of birth: 1971
Nationality: Italian
Number of shares in Eurobank Holdings: -
In the past, Mrs. Basile
had also the following significant posts: she
set up
and
ran
Credit
Suisse
AG’s
Investment
Bank
multi-asset
investment
management
business
(Custom
Markets)
in
the
UK,
Ireland
and
Luxembourg, Non-Executive
Member of
the BoD
and Chair
of the Operating
and
Risk
Committee
of
Credit
Suisse
Custom
Markets,
a
sponsored
management company of Credit Suisse located Luxembourg
(August 2011
–
August
2017),
Non-Executive
Member
of
the
BoD
and
Chair
of
the
Operating of
Custom Markets
plc and
Custom Markets
QIAF,
sponsored
management companies of Credit
Suisse located in Ireland (August
2011 –
August
2017),
Non-Executive
Member
of
the
BoD
and
Chair
of
the
Operating and
Risk
Committee of
Custom
Markets QIAF
a subsidiary
of
Credit Suisse located in Ireland (August 2011 – August 2017).
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She
holds
a
Juris
Doctor
Degree
from
the
University
of
Rome
“La
Sapienza”,
Italy
and
she
was
awarded
a
Thesis
Scholarship
(derivative
instruments), London School of Economics, UK.
John Arthur Hollows
Independent, Non-Executive Director
Membership in Board Committees:
Board Risk Committee – Member
Board Digital and Transformation Committee – Member
Year of birth: 1956
Nationality: British
Number of shares in Eurobank Holdings: -
Mr. Hollows served for
26 years in
the KBC Group
as Member of
the Boards
of Directors,
KBC Bank
and KBC
Insurance (2009-2022),
Member of
the
Executive
Committee,
KBC
Group
(2009-2022),
Chair
of
the
Board
of
Directors
of
Československá
obchodní
banka,
a.
s.
(ČSOB)
and
CEO
(2014-2022), Member of the Board of Directors of KBC Group N.V.,
Group
Chief
Risk
Officer
(2010-2014),
CEO,
Central
and
Eastern
Europe
and
Russia
(2009-2010),
Senior
General
Manager,
Banking,
Central
Europe
Business Unit, KBC
Group, Brussels (2006-2009), CEO,
Kereskedelmi es
Hitelbank Rt.,
Hungary (2003-2006), General
Manager, Asia
Pacific, KBC
Bank
N.V.
(1999-2003), General
Manager,
Shanghai Branch,
KBC
Bank
N.V.
(1997-1999)
and
Commercial
Banking
Head,
Hong
Kong
Branch,
Kredietbank N.V (1996).
In the
past. Mr.
Hollows served at
Barclays Bank PLC
as Chief
Manager,
Taipei
Branch (1991-1995), Head of
International Trade Services,
London
(1989-1991), Manager,
Export Finance Department,
London (1986-1989),
Corporate Manager, Watford Branch
(1984-1986), Assistant
Manager, Cost
Control Unit, General Manager’s Office (1982-1984) and Graduate
Trainee
(1978-1982). He has also
served as Chair, European Council
of Commerce
and
Trade
(1994-1995)
and
Deputy
Chair,
British
Exporters
Association
(1989-1991).
He
holds a
Master
of Arts,
Sidney Sussex
College, Cambridge
(law and
economics).
Burkhard Eckes
Independent, Non-Executive Director
Membership in Board Committees:
Audit Committee – Vice Chairman
Nomination and Corporate
Governance Committee
– Member
Year of birth: 1960
Nationality: German
Number of shares in Eurobank Holdings: -
Mr. Eckes
served for more than
30 years at
PwC as Senior Advisor,
PwC
Germany and
EMEA (Europe,
Middle East and
Africa) (2022
- 2023),
Global
Banking
and
Capital
Markets
(BCM),
ESG
Leader
and
member
of
the
Global
Financial
Services
(FS)
ESG
Leadership
Team
(2019
-
2022),
responsible
for
BCM
activities
in
ESG
consulting
globally
EMEA
BCM,
Leader
and
member
of
the
EMEA
FS
Leadership
Team
(2017
-
2022),
responsible for BCM client relationships,
projects and strategy in consulting
and
assurance
services,
including
development
and
implementation
of
banking
strategies,
business
models,
supervisory
and
regulatory
requirements and practices,
governance, risk
management, accounting
and
reporting best practices, ESG,
bank restructuring and bank transformation
advice,
Member
of
the
Global
BCM
Leadership
Team
(2009
-
2022),
German
BCM
Leader and
member of
the
German FS
Leadership Team
(2009 - 2018), responsible for
consulting and assurance services,
including
HR, people development
and statutory audits
of large German
banks, Chair
of
the Global
Banking International
Accounting Group
(2002 -
2023) and
Partner (1996 - 2022).
In the past.
Mr. Eckes
has served as Chair
of the Banks
Working Party of
Accountancy
Europe
(former
FEE
-
Fédération
des
Experts
Comptables
Européens)
(2015
-
2022),
Chair
of
the
Banking
Committee
(Bankenfachausschuss –
BFA)
of the
German Institute
of Public
Auditors
(Institut der Wirtschaftsprüfer - IDW)
(2017 - 2022) and member of the
BFA
(2008 -
2022), Member
of the
European Parlamentary
Financial Services
Forum
-
EPFSF
(2012
-
2023)
and
Member
of
the
Steering
Committee
Sustainability of IDW (2020 - 2022).
He holds an MBA from the University
of Saarland, Saarbrücken (1986) and
is a Certified Public Auditor (German Wirtschaftsfprüfer)
(1996).
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The short CV of the Secretary to the BoD is the following:
Ioannis Chadolias
Secretary to the BoD, Head of Group Company
Secretariat
Secretary to the following
Board Committees:
Remuneration Committee
Nomination & Corporate Governance Committee
Board Digital and Transformation Committee
Year of birth: 1970
Nationality: Hellenic
Number of shares: 10.000
Mr. Chadolias is responsible to provide effective company secretarial support
to the Board and
Board Committees of Eurobank and Eurobank
Holdings as
well as
to their
most important Executive
Committees, and to
safeguard the
integrity of the corporate governance framework of
these companies.
Mr.
Chadolias
has
served
within
Eurobank
Group
as
Deputy
Company
Secretary
(September
2016
–
January
2021),
Head
of
Group
Corporate
Governance
Division
(September
2009
–
August
2016)
and
Subsidiaries
Control and Compliance Manager (December 2006 –
September
2009).
He
holds
a
Master
of
Science
(MSc)
in
Project
Analysis,
Finance
and
Investment from the University of York (United Kingdom), a Bachelor Degree
in Economics from
the Economic University
of Athens (Greece)
and several
professional qualifications.
There
are
no
limitations
regarding
the
re-election
and
cessation
of
Directors
in
the
Articles
of
Association
of
the
HoldCo/Bank. In cases where a member's membership has expired, the Board has the authority to continue managing and
representing the HoldCo/Bank without replacing
the expired members, as long as the
remaining members constitute more
than half of the original number of members prior to the lapse event, and in any case, not fewer than three (3).
As per the Articles of Association of HoldCo/Bank, in compliance with Law 4548/2018, the Board can consist of three (3) to
fifteen (15) members.
Additionally, in accordance with
Law 4706/2020 on
corporate governance, independent
non-executive
Directors are
appointed by
the General
Meeting and
must constitute
at least
one-third (1/3)
of the
total number
of Board
members (rounded to the nearest integer), and in any case, not fewer than two (2).
For
the
year
2023,
the
HoldCo/Bank
Nominations
and
Corporate
Governance
Committees,
at
their
meetings
held
on
30.05.2023
and
12.12.2023,
reviewed
the
independence
criteria
as
per
Law
4706/2020,
European
Commission
Recommendation 2005/162/EC and the Joint ESMA and EBA Guidelines on the “Assessment of the suitability of members
of
the
management
body
and
key
function
holders”
(EBA/GL/2021/06).
The
Committees
concluded
that
the
seven
Independent Non-Executive Members still meet the relevant independence criteria.
2.3
HFSF and Tripartite Relationship Framework Agreement (TRFA)
After the complete
divestment on 9.10.2023 of
the shares held by
the Hellenic Financial Stability
Fund (HFSF) in
HoldCo,
the HoldCo and the Bank are no longer bound by Law 3864/2010 or the special rights granted to HFSF under that law,
nor
are they subject to the provisions outlined in the Tripartite Relationship Framework Agreement ("TRFA").
2.4
Division of responsibilities
There
is a
distinct
allocation of
responsibilities
at the
top level
of
the
HoldCo and
the
Bank, separating
the
governance
functions overseen by the Chairperson from
the operational and managerial aspects handled
by the Chief Executive Officer
(CEO) and Deputy CEOs. Notably, the roles of Chairperson and CEO are held by different individuals.
Chairperson
The Chairperson of the HoldCo/Bank
Boards is a Non-Executive Director and
does not concurrently serve as Chairperson
of
either
the
Risk
or
Audit
Committees.
Elected
by
all
Board
members,
including
the
Independent
Non-Executives,
in
accordance with L. 4548/2018 and the Articles of Association, the Chairperson presides over Board meetings
and ensures
their effective and efficient operation and organization.
The Chairperson is responsible to:
●
organize and coordinate the work of the Board,
●
set the Board’s agenda and ensure that adequate time is available for discussion of all agenda items, in particular
strategic issues,
●
promote a culture of open-mindedness and constructive dialogue,
●
facilitate and promote the
establishment of good and
constructive relationships between the
members of the Board
and the effective contribution of all non-executive members,
●
ensure that
the Directors
receive accurate,
timely and
clear information
and that
their developmental
needs are
met, with the view of enhancing the effectiveness of the Board as a team,
●
ensure continuous
and clear
communication with
the representatives
of the
Ministry of
Finance, the
BoG and
of
other public authorities,
●
ensure that the Board as a whole has a satisfactory understanding of the views of the shareholders,
●
ensure effective communication
with all shareholders as
well as the fair
and equitable treatment of
their interests
and the development of constructive dialogue with them in order to understand their positions,
●
work closely with the CEO and Corporate Secretary to prepare the BoD and to fully inform its members.
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The Board has also elected a Vice-Chairperson. The Vice-Chairperson who
is a Non-executive Director, supports the Chair
and acts as a liaison between the Chair and the members of the Board.
It is noted that the Board has not appointed a Senior Independent Director.
CEO
The CEO of HoldCo/Bank is responsible and accountable
for strategy development and its execution in alignment with the
Group's vision. His role involves leading the organization towards the realization of its goals and objectives.
Executive Directors
The
Executive
Directors
of
HoldCo/Bank,
including
the
CEO
and
Deputy
CEOs,
bear
responsibility
for
the
day-to-day
management and oversight of the Group, as well as the execution of its strategy as
defined by the Board. Additionally, they
are tasked with the following responsibilities:
●
regularly consulting with non-Executive Directors to assess the appropriateness of the implemented strategy,
●
providing
updates
to
the
Board,
in
collaboration
with
other
senior
managers
of
HoldCo/Bank,
regarding
market
conditions and any other developments affecting HoldCo/Bank,
●
promptly informing the Board, either
jointly or individually in writing, by
submitting a report with their assessments
and
proposals, of crisis situations or risks that are anticipated to impact the financial situation of HoldCo/Bank.
The CEO and Deputy CEOs of HoldCo/Bank fulfill their
duties as outlined in the HoldCo's and Bank's
Internal Governance
Control Manuals (IGCMs),
which are endorsed
by the respective
HoldCo's/Bank's Board. These
IGCMs, designed to
comply
with
legal
and
regulatory
standards
related
to
corporate
governance,
detail
the
comprehensive
framework
guiding
the
direction and supervision of HoldCo/Bank.
Non-Executive Directors
The non-Executive Directors hold the
responsibility for promoting and safeguarding the
interests of HoldCo and Bank as a
whole. Additionally, they are tasked with:
●
monitoring and evaluating the strategy and its execution, along with assessing the attainment of objectives,
●
ensuring effective oversight of the executive members, including monitoring and evaluating their performance,
●
reviewing and providing feedback on proposals presented by the Executive Directors based on available information,
●
approving, revising, and overseeing the implementation of the remuneration policy at the Group level.
The non-Executive
Directors have
the authority
to request,
following HoldCo's/Bank's
established internal
procedures, to
engage
with the
executives of
the company's
senior management.
This can
be facilitated
through
regular presentations
conducted by the heads of departments and services.
The non-Executive
Directors convene
at least
once a
year,
or as
deemed appropriate,
without the
presence of
executive
members to evaluate their
performance. During these meetings, the
non-Executive Directors do not
function as a de
facto
body or a committee of the Board. In 2023, the HoldCo's/Bank's non-Executive Directors held a meeting on 26.01.2023.
The HoldCo and the
Bank encourage the non-Executive Directors
to take care of their
information regarding all the issues
that the respective Board deals with.
The
Independent
non-Executive
Directors
have
the
responsibility
to
present,
either
individually
or
collectively,
their
own
reports to the Annual or Extraordinary General Meeting of Shareholders, in addition to the reports submitted by the Board.
2.5
Operation of the Board
The
operation
of
the
Board,
including
its
meeting
protocols,
decision-making
processes
and
procedural
guidelines,
is
outlined in
the HoldCo's/Bank's
Internal Governance
Control Manual
(IGCM). This
manual is
endorsed by
the respective
HoldCo's/Bank's
Board and
is formulated
to
adhere to
legal and
regulatory standards
concerning corporate
governance
issues, in addition to considering the relevant provisions of the HoldCo's/Bank's Articles of Association.
Board Meetings
The Board convenes regularly every quarter and on an ad hoc basis whenever required by
law or the needs of HoldCo and
Bank. Annually, and within the 3rd Quarter of the preceding year, the Board establishes an annual calendar of meetings for
the Board and
its Committees, along
with an annual action
plan. This plan
is adjusted as necessary
to ensure the proper,
comprehensive
and
timely
execution
of
its
responsibilities,
as
well
as
the
thorough
examination
of
all
matters
requiring
decisions.
Any
updates
or
amendments
to
the
annual
calendar
are
promptly
communicated
to
all
Board
and
Board
Committees members to facilitate their planning.
Board meetings are convened with a notice period of
at least two (2) business days or at least
five (5) business days if the
meeting
is held
outside the
HoldCo/Bank's registered
office,
as mandated
by Company
Law 4548/2018
provisions. The
invitation must clearly state the agenda items. If the agenda is not clearly mentioned, a decision
can only be made when all
Board members are
present or represented,
and no objections
are raised regarding
the meeting's convocation
and decision-
making. Documents submitted to the Board are typically circulated along with the agenda.
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Dissemination of Information
The Board utilises technological tools with the necessary security
specifications for real-time information and facilitates the
connection and information of members.
The
CEO and
senior management
shall ensure
that any
information necessary
for the
performance of
the duties
of the
members of the Board is available to them at any time.
Quorum in the Board Meetings
The Board is deemed to
have a quorum and
conducts valid meetings when at
least half plus one
of its members are
present
or
represented.
The
number of
present
or
represented
members
cannot
fall
below
three (3),
disregarding
any
resulting
fraction when determining the quorum. Decisions of the Board are made by an absolute
majority of the Directors present or
represented. In the event of a tie vote, the Chairperson of the Board does not have a decisive vote.
Board Decisions and Minutes
Decisions are taken following
discussions which exhaust the
agenda items to the
satisfaction of all members
present. Board
meetings minutes are
kept by the
Company Secretary of
the Board, are
approved at subsequent
Board meetings and
signed
by
all
members
present.
Finally,
the
drawing
up
and
signing
of
minutes
by
all
the
members
of
the
Board
or
their
representatives is equal to a decision of the Board, even if no meeting has preceded.
Company Secretary
The Boards of HoldCo/Bank are assisted by a
capable, skilled, and experienced Company Secretary to ensure
adherence
to internal procedures and
policies, as well
as compliance with
relevant laws and
regulations, enabling effective and
efficient
operations. The Company Secretary of HoldCo/Bank
holds a senior management position
and is appointed or dismissed
by
the Board based on the recommendation of the Chair.
The Company Secretary serves as the head of the Group Company Secretariat, a division within the Bank. In collaboration
with the Chair, the Company Secretary holds several responsibilities, including:
●
ensuring prompt, transparent, and comprehensive communication to the Board and Board Committees,
●
managing the integration of new members into the Board and Board Committees,
●
organizing General Meetings of Shareholders,
●
facilitating communication between shareholders and the Board,
●
facilitating communication between the Board and senior management.
Furthermore,
the
Company
Secretary
is
tasked
with
providing
advice
to
the
Board,
through
the
Chairperson,
on
all
governance matters and ensuring adherence to Board procedures.
All
members
are
entitled
to
access
the
advice
and
services
offered
by
the
Company
Secretary,
who
is
responsible
for
facilitating their orientation and supporting their professional growth.
2.6
Attendance of Board members in the Board and Board Committees
In accordance
with HoldCo’s
and Bank’s
Board and
Board Committees’
Attendance Policy, the
Board members
are expected
to attend all Board and Board Committees’ meetings to which they are appointed.
It
is
accepted,
though,
that
the
Board
members
may
be
unable
to
attend
some
meetings
due
to
conflicts
with
other
commitments or other
unforeseen circumstances. In
this context, a
mandatory minimum attendance
of not less
than 85%
for each
member should
be achieved
every calendar
year.
Individual meetings
up to
15% can
be missed
only if
a valid
excuse is provided.
In addition,
according to
L. 4706/2020,
in case
of unjustified
absence of
a Board
member in
at least
two (2)
consecutive
meetings of
the Board,
this member
shall be
considered as resigned.
This resignation
is established
by a
decision of
the
Board, which replaces the member, in accordance with the procedure provided by the law.
During 2023, HoldCo/Bank
NomCo reviewed the
attendance of
Directors to the
Board and Board
Committees on
30.05.2023
and on
12.12.2023. In
addition, during
2023, the
average Directors’
of HoldCo
and Eurobank
Board attendance
was as
follows:
Company
Meetings
Average ratio of
Directors’ attendance
2023
2022
2023
2022
HoldCo
24
20
96.4%
99.6%
Bank
23
21
96.3%
98%
During
2023,
at
individual
level,
the
attendance
of
the
Directors
to
the
Board
(with
the
exception
of
Mr.
Andreas
Athanasopoulos), stood above the 85% threshold. However, Mr.
Andreas Athanasopoulos provided representation proxies
for his missed
Board attendances (21
out of 24
meetings), leading to
an attendance rate
(physical and under
representation)
of 100%.
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In particular, the Directors’ attendance rates at the Board meetings in 2023 were the following:
Eurobank Holdings Board
Eurobank Board
Eligible to attend
Attended in
person (# and
%)
Eligible
to attend
Attended in
person
(#
and %)
Georgios Zanias,
Chairperson, Non-Executive Director
24
24
100%
23
23
100%
Georgios Chryssikos,
Vice-Chairperson, Non-Executive Director
24
22
92%
23
21
91%
Fokion Karavias,
Chief Executive Officer
1
24
24
100%
23
23
100%
Stavros Ioannou,
Deputy Chief Executive Officer
24
24
100%
23
23
100%
Konstantinos Vassiliou,
Deputy Chief Executive Officer
24
24
100%
23
23
100%
Andreas Athanasopoulos,
Deputy Chief Executive Officer
1
24
21
88%
23
19
83%
Bradley Paul Martin,
Non-Executive Director
24
22
92%
23
23
100%
Rajeev Kakar,
Non-Executive Independent Director
24
23
96%
23
23
100%
Jawaid Mirza,
Non-Executive Independent Director
24
24
100%
23
23
100%
Alice Gregoriadi,
Non-Executive Independent Director
24
24
100%
23
23
100%
Irene Rouvitha Panou,
Non-Executive Independent Director
24
23
96%
23
22
96%
Cinzia Basile,
Non-Executive Independent Director
24
23
96%
23
23
100%
Burkhard Eckes,
Non-Executive Independent Director
2
13
13
100%
13
11
85%
John Arthur Hollows,
Non-Executive Independent Director
2
13
11
85%
13
11
85%
Efthymia Deli,
Non-Executive Director, HFSF Representative
3
20
20
100%
19
18
95%
1
Mr. Andreas Athanasopoulos resigned on 31.12.2023.
2
Mr. Burkhard Eckes and Mr. John Arthur Hollows were appointed as BoD members
on 20.07.2023.
3
Ms. Efthymia Deli resigned on 7.11.2023.
The
average
Director’s
attendance
rates
to
HoldCo’s
and
Eurobank’s
Board
Committees,
along
with
the
individual
attendance
rates
per
Board
Committee
are
presented
separately,
under
the
subsection
of
the
present
Corporate
Governance Statement, referring to the Board Committees.
2.7
Directorships of Board members
The
directorships
of
the
Board members
(including
significant
non-executive
commitments
to
companies
and
non-profit
organisations)
are
notified
before
their
appointment
to
the
Nomination
&
Corporate
Governance
Committee
(NomCo)
Chairperson
and/or
the NomCo
in
accordance
with the
HoldCo and
Bank External
Engagements
Policy.
In
parallel, the
Board members notify
changes regarding their
directorships to the
Bank Group Company
Secretariat as soon
as they occur.
The number of directorships which may be held
by the Board members at the same time comply
with the provisions of art.
83
of
the
Law
4261/2014
(Law),
according
to
which
the
Directors
shall
not
hold
more
than
one
(1)
of
the
following
combinations of directorships at
the same time: a)
one (1) executive directorship
with two (2) non-executive
directorships;
and b) four (4) non-executive directorships. This restriction is not applied to directorships within the Group. Bank of Greece
(BoG) as the competent authority may allow Board members to hold one (1) additional non-executive directorship.
In addition, it is noted that directorships in organizations, which do not pursue predominantly commercial objectives, do not
count for regulatory purposes.
In the
context of
Board’s overall
effectiveness assessment
through which
the NomCo
assesses annually
the knowledge,
skills,
experience
and
contribution
of
individual
Board
members
and
of
the
Board
collectively
and
reports
to
the
Board
accordingly,
the Board
members’ directorships
were also
reviewed for
2023. The
relevant review
revealed that
all Board
members are compliant with the Law’s provisions.
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HoldCo
and
Eurobank
Board
Members’
Directorships
(including
Directorships
within
Eurobank
Group)
as
at
31.12.2023
Georgios Zanias –
Chairperson, Non-Executive Director
Foundation for Economic and Industrial Research (IOBE) –
Board Member
1
Georgios Chryssikos –
Vice-Chairperson, Non-Executive Director
Grivalia Management Company S.A. –
Vice Chairman, Non-Executive Director
Grivalia Hospitality S.A. –
Chairman of the BoD, Chief Executive Officer
Fokion Karavias –
Chief Executive Officer
Hellenic Bank Association (HBA) –
Vice Chairman
1
Stavros Ioannou
– Deputy Chief Executive Officer
Grivalia Management Company S.A. –
Non-Executive Director
Be-Business Exchanges S.A. of Business Exchanges Networks and Accounting and Tax Services –
Chairman
Eurobank Cyprus Ltd –
Non-Executive Director
2
Eurobank Bulgaria AD –
Non-Executive Director, Supervisory Board
2
Konstantinos Vassiliou
– Deputy Chief Executive Officer
Hellenic Exchanges – Athens Stock Exchange S.A. –
Non-Executive Director
Marketing Greece S.A. –
Non-Executive Director
1
Eurolife FFH General Insurance Single Member S.A –
Vice Chairman, Non-Executive Director
3
Eurolife FFΗ Life Insurance Single Member S.A. –
Vice Chairman, Non-Executive Director
3
Eurolife FFH Insurance Group Holdings S.A.
– Vice Chairman, Non-Executive Director
3
Eurobank Equities Investment Firm Single Member S.A. –
Non-Executive Director
2
Eurobank Factors Single Member S.A. –
Chairman
2
Bradley Paul Martin –
Non-Executive Director
Blue Ant Media Inc.-
Non-Executive Director
AGT Food and Ingredients Inc –
Non-Executive Director
Rajeev Kakar –
Non-Executive Independent Director
Gulf International Bank, Bahrain –
Non-Executive Director
4
Gulf International Bank, Kingdom of Saudi Arabia –
Non-Executive Director
4
Commercial International Bank (CIB) –
Non-Executive Director
7
Commercial International Bank (CIB) Kenya Limited –
Non-Executive Director
7
UTI Asset Management Co. Ltd (UTIAMC) –
Non-Executive Director
Jawaid Mirza –
Non-Executive Independent Director
AGT Food and Ingredients Inc –
Non-Executive Director
Commercial International Bank (CIB) –
Non-Executive Director
7
Alice Gregoriadi –
Non-Executive Independent Director
Hellenic Blockchain Hub
–
Non-Executive Director
1
Cinzia Basile –
Non-Executive Independent Director
Creditis Servizi Finanziari S.p.A. –
Non-Executive Director
6
Brent Shrine Credit Union (trading name My Community Bank) –
Non-Executive Chair of the Board
1
Zenith Service S.p.A. –
Non-Executive Director
Nikko Europe Asset Management –
Non-Executive Director
5
Nikko AM Global Umbrella Fund
– Non-Executive Director
5
Fincentro Finance S.p.A
. – Non-Executive Director
6
Irene Rouvitha Panou –
Non-Executive Independent Director
Stelios Philanthropic Foundation –
Member of the Board of Trustees
1
Cyprus Asset Management Company Ltd (KEDIPES) –
Non-Executive Director
Burkhard Eckes –
Non-Executive Independent Director
Solaris SE –
Non-Executive Member of Supervisory Board
Bank Pictet & Cie (Europe) AG –
Non-Executive Member of Supervisory Board
Inexogy Energy Holding KGaA –
Non-Executive – Chairman of Supervisory Board
John Hollows – Non-Executive Independent Director
None
1
Organization that does not pursue predominantly
commercial objectives.
2
Company that belongs to Eurobank
Group and along with
directorships in HoldCo, Eurobank and the
other companies of the
Group is
considered as 1 (one) directorship for each
Board membe.r
3
Company that belongs to Eurolife
FFH Group and along with
directorships in the other companies
of that group, is considered
as 1 (one)
directorship for each Board member.
4
Company that belongs to Gulf International
Bank Group and along with directorships
in the other companies of that group,
is considered
as 1 (one) directorship for each Board member.
5
Company that belongs
to Nikko Asset
Management Group
and along with
directorships in
the other companies
of that group,
is considered
as 1 (one) directorship for each Board member.
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6
Company that belongs to
Columbus HoldCo S.a.r.l Group and
along with directorships
in the other companies
of that group, is
considered
as 1 (one) directorship for each Board member.
7
Company that belongs to Commercial International Bank (CIB) Group and along with directorships in the other companies of that
group,
is considered as 1 (one) directorship for each
Board member.
2.8
Conflicts of interest
The Group has implemented a "Conflicts of
Interest Policy," endorsed
by the HoldCo's and Eurobank's Board of
Directors,
which includes a set
of policies, procedures, systems,
and controls to
identify, prevent, and manage situations that
may lead
to actual, potential, or perceived conflicts of interest arising from the Group's business activities.
To
prevent
conflicts
of
duties,
the
Group
has
established
procedures
that
segregate
the
executive
and
non-executive
responsibilities
of Board
members, including
differentiating
the responsibilities
of
the Chairperson
of
the Board
from the
executive responsibilities of the CEO. These procedures ensure effective segregation of duties to avoid incompatible roles,
conflicts of interest among Board members, Management, and Executives, and the misuse of inside information or assets.
Board members are expected to:
●
adhere to high standards of professional ethics and apply the principles of the Conflicts of Interest Policy,
●
act independently, making sound, objective, and independent decisions and judgments,
●
disclose any personal interests that may conflict with Holdings' (or
the Group's) interests or any other potential conflicts
of interest,
●
maintain privacy and confidentiality
of non-public information and
avoid behaviors constituting market
abuse or conflict
of interest.
Board members are
required to disclose
any engagements, directorships,
or interests outside
the Group and
provide any
necessary information to
the Group. They
must also disclose
ongoing or new
facts that may
affect the assessment of
conflict
of interest and independence of mind.
All
actual or
potential conflicts
of
interest at
the Board
level should
be communicated,
discussed,
documented, decided
upon, and managed/mitigated
by the Group.
Persistent conflicts
of interest are
managed continuously, while one-off
conflicts
arising unexpectedly
are addressed
with specific
measures. Board
members must
abstain from
voting on
matters where
they have identified conflicts of interest.
2.9
Remuneration
Eurobank Holdings
has established
a Board
of Directors’
Remuneration Policy
(Remuneration Policy) in
accordance with
the relevant requirements of Law
4548/2018 (the Law), with the latest
version of the Policy approved by
the Annual General
Meeting of Shareholders on 20.7.2023. This Remuneration Policy has been designed to meet the specific provisions of the
Law, including articles 109, 110,
111,
112, and 114.
The Remuneration
Policy outlines
the essential
components and
considerations of
the remuneration
structure for
Board
members. Its
objective is
to ensure
that remuneration
is fair,
gender-neutral, and
adequate to
retain and
attract directors
possessing
the
necessary
skills
and
experience
to
develop
and
implement
Eurobank
Holdings’
business
strategy.
Additionally,
it aims
to safeguard the
long-term interests
and sustainability
of the
organization by
avoiding excessive
risk-
taking. This is accomplished through
continuous monitoring of market
trends and best practices at
both domestic and global
levels. The remuneration
framework defines
the salary structure
and ranges, tailored
to attract
and retain talented
individuals
appropriately.
In establishing the
Remuneration Policy,
external and independently produced
benchmarking analyses of remuneration
in
the financial and
banking sectors in
Greece are utilized. This
benchmarking also includes the
remuneration framework for
Board members, ensuring alignment with industry standards and best practices.
In addition, regarding the Remuneration Policy, it is noted that:
●
the process of its development is characterised by objectivity and transparency,
●
the
Board
members
exercise
independent
judgment
and
discretion
when
approving
and
recommending
to
the
General Meeting its approval and generally when approving any remuneration, taking into account
both individual
performance and the performance of the company.
Eurobank
Holdings
produces,
for
each
financial
year,
a
Remuneration
Report
concerning
the
remuneration
and
other
financial benefits
paid to
each Executive
and Non-Executive
Directors of
the Board
during the
reporting financial
year,
in
line
with
the
requirements
of
Article
112
of
the
Law.
The
Eurobank
Holdings
Remuneration
Report
for
2022
(https://www.eurobankholdings.gr/-/media/holding/omilos/grafeio-tupou/etairikes-anakoinoseis/2023/etairiki-anakoinosi-28-
06-23/ekthesi-apodoxon-2022-eng.pdf) has been
approved by the
Annual General Meeting
on 20.7.2023 and
for reasons
of transparency and
efficient information, presents
clearly the additional
remuneration of the
Board members participating
in committees.
The remuneration of the
executive Directors, as well
as the senior management
of the company,
are related to the size
of
the company, the extent of their responsibilities, the corporate strategy,
the company's objectives and their realisation, with
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the ultimate goal of avoiding excessive risk-taking including
with respect to direct or indirect sustainability risks
and creating
long-term value in the company.
In addition, regarding the remuneration of the executive Directors, it is noted that:
●
the Stock Options that are provided to them are completely matured after four (4) years from the date of granting,
●
they have not received bonus during 2023, therefore there was no need for the Board to examine the refund of all
or part of the bonus awarded to them, due to breach of contractual terms or incorrect financial statements.
Due to same
composition of the
Board of the
HoldCo and Bank and
since the Directors are
paid solely by one
of the two,
that being the Bank, any reference to the remuneration and /or the benefits payable to the Directors of Eurobank Holdings,
applies to the relevant remuneration they receive as Directors of the Bank.
The 2023 Board and
key management remuneration disclosure
is included in the
relevant note of the
consolidated accounts
of Eurobank Holdings
and in
compliance with
the provisions
of the
Company Law
4548/2018 and
in order
to ensure
adequate
transparency
to
the
market
of
the
remuneration
structures
and
the
associated
risks,
is
uploaded
at
website
www.eurobankholdings.gr
.
2.10
Board Role and Responsibilities
The principal duties
and responsibilities of
the HoldCo/Bank’s Board
encompass a wide
range of strategic,
oversight, and
governance functions:
●
review, guide,
and approve the strategy,
major plans of action,
risk policy,
business and restructuring plans,
and set
performance objectives,
●
monitor performance and oversee major
capital expenditures, acquisitions, divestitures, and
formation of new entities,
including special purpose vehicles,
●
ensure the availability of necessary financial and human resources, as well as an internal control system,
●
approve the annual budget and monitor its implementation quarterly,
●
approve the three-year business plan and monitor its implementation,
●
review
and
approve
at
least
annually
the
risk
strategy
and risk
appetite,
ensuring
alignment
with
overall
business
strategy and other plans,
●
receive and discuss comprehensive risk reports on a quarterly basis,
●
develop and deliver objectives in agreed restructuring plans under applicable laws,
●
provide oversight to senior management and approve corporate governance practices and values,
●
set standards shaping corporate culture and integrate desired culture into systems, policies, and behaviors,
●
approve risk and capital strategy and monitor CEO and Executive Board implementation,
●
approve organization chart and related policies as required by law or internal processes,
●
ensure rigorous processes for
monitoring organizational compliance with
strategy, risk appetite, laws, and regulations,
●
select, compensate, monitor, and replace key executives as needed and oversee succession planning,
●
align executive and board remuneration with long-term interests of Group and shareholders,
●
facilitate formal and transparent board nomination and election processes,
●
monitor and manage potential conflicts of interest among management, board, and shareholders,
●
ensure integrity of accounting and financial reporting systems, including independent audit and control systems,
●
review and monitor Non-Performing Loans (NPL) and Non-Performing Exposures (NPE) performance,
●
oversee disclosure and communication processes,
●
determine appropriate level of remuneration for Board and Committees’ members pending ratification,
●
address matters related to new technologies and environmental issues,
●
identify and engage with important stakeholders, understanding their interests and interactions with Group strategy,
●
facilitate open dialogue
with stakeholders and
utilize various communication
channels for effective
engagement and
understanding.
These
duties
collectively
contribute
to
the
effective
governance,
strategic
direction,
risk
management,
and
sustainable
growth of the HoldCo/Bank and its operations.
2.11
Main issues the Board dealt with during 2023
In 2023, the HoldCo’s/Bank’s Board
has reviewed the corporate strategy,
the main risks to the business and the system of
internal controls.
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In more detail, in discharging its responsibilities for 2023 the main issues Holdco’s/Bank’s BoDs dealt with related to:
Eurobank Holdings
Bank
a)
Governance:
●
approval
(subject
to
the
approval
of
the
Annual
General Meeting
(AGM)) of
the nomination
of new
member/s to the BoD and AC
●
approval
of
changes
at
the
Board
Committees’
composition
●
approval
of
revised
Terms
of
Reference
of
the
Nomination and Corporate
Governance Committee
and the Remuneration Committee.
●
preparation
and
convocation
of
the
Shareholders
General Meeting
●
annual
evaluation
of
the
Board
and
the
Board
Committees and
approval of
the 2023
Action Plan
that
included
recommendations
from the
BoD and
BoD Committees Self-Assessment 2022
●
review of
the attendance
of Directors
to the
Board
and Board Committees
●
approval by the Non-Executive Directors
of the BoD
of
CEO’s
performance
evaluation
for
2022
and
of
his financial and non-financial objectives for 2023
●
approval
of
the
External
Engagements
Policy,
the
Board and Board
Committees Evaluation Policy, the
Policy for
Reporting Illegal
or Unethical
Conduct &
the
appointment
of
the
Report
Receiving
&
Monitoring Officer the
Group Compliance
Policy, the
Conflicts
of
Interest
Policy,
the
Anti-Bribery
and
Corruption
Policy
and
the
Dividend
Distribution
Policy
●
approval
and
further
submission
to
the
Annual
General
Meeting
for
approval,
of
the
Board
Nomination Policy
●
approval
by
the
Non-Executive
Directors
of
the
Board
of
the
Remuneration
Policy
and
the
Separation Policy
●
approval
and
further
submission
to
the
Annual
General
Meeting
for
approval,
of
the
‘Board
and
Board
Committees’
fees
for
Non-Executive
Directors, the Remuneration Policy for
the Directors
and the Remuneration
Report for the financial
year
2022
●
approval of
the 8th
stock option
plan implementation
for 2023
●
approval
by
the
Non-Executive
Directors
of
a
Voluntary Exit Scheme (VES)
●
approval
by
the
Non-Executive
Directors
of
the
Remuneration
Framework
of
Eurobank
Holdings
and the Group Variable Remuneration Pool
●
approval
of
HoldCo’s
Internal Governance
Control
Manual
●
approval
of
the
revised
HoldCo
Group
Organizational Chart
●
regular update on Board Committees’ matters
●
approval of Board and
Board Committees calendar
for 2024,
●
various remuneration issues
●
approval
and
further
submission
to
the
Annual
General Meeting for approval,
of the appointment of
the auditors for the financial Year 2023
●
discussion
on
the
Preliminary Supervisory
Review
and
Evaluation
Process
(SREP)
assessment
of
2023 and updates for the relevant decisions
●
approval of the
next steps following
the disposal of
HFSF’s entire stake in HoldCo.
a) Governance:
●
approval
(subject
to
the
approval
of
the
Annual
General Meeting
(AGM)) of
the nomination
of new
member/s to the BoD and AC
●
approval
of
changes
at
the
Board
Committees’
composition
●
approval
of
revised
Terms
of
Reference
of
the
Nomination and Corporate
Governance Committee
and Remuneration Committee
●
preparation
and
convocation
of
the
Shareholders
General Meetings
●
annual
evaluation
of
the
Board
and
Board
Committees and
approval of
the 2023
Action Plan
that
included
recommendations
from the
BoD and
BoD Committees Self-Assessment 2022
●
review of
the attendance
of Directors
to the
Board
and Board Committees
●
approval by the Non-Executive Directors
of the BoD
of
CEO’s
performance
evaluation
for
2022
and
of
his financial and non-financial objectives for 2023
●
approval
of
the
Board
Nomination
Policy,
Group
Subsidiary Board Remuneration
Policy, the External
Engagements
Policy,
the
Board
and
Board
Committees
Evaluation
Policy,
the
Policy
for
Reporting
Illegal
or
Unethical
Conduct
&
the
appointment
of the
Report Receiving
& Monitoring
Officer, the
Group Compliance Policy,
the Dividend
Distribution
Policy,
the
Conflicts
of
Interest
Policy,
the
Anti-Bribery
and
Corruption
Policy
and
the
AML/CFT and Sanctions Policy
●
approval
by
the
Non-Executive
Directors
of
the
Board
of
the
Remuneration
Policy
and
the
Separation Policy
●
approval
and
further
submission
to
the
Annual
General
Meeting
for
approval,
of
the
Board
and
Board
Committees’
fees
for
Non-Executive
Directors
●
update
on
the
implementation
of
the
Group
Subsidiary Board Remuneration
Policy through the
Group during 2022
●
approval
by
the
Non-Executive
Directors
of
a
Voluntary Exit Scheme (VES)
●
approval
by
the
Non-Executive
Directors
of
the
Remuneration
Framework
of
Eurobank
Holdings
and the Group Variable Remuneration Pool
●
approval
of
Bank’s
Internal
Governance
Control
Manual
●
approval
of
the
revised
Eurobank
Group
Organizational Chart
●
regular update on Board Committees’ matters
●
approval of Board and
Board Committees calendar
for 2024
●
various remuneration issues, including
issues of the
international
subsidiaries
(performance
related
variable
remuneration,
remuneration
adjustments
etc)
●
approval
and
further
submission
to
the
Annual
General Meeting for approval,
of the appointment of
the auditors for the financial Year 2023
●
●
update from its international banking subsidiaries
●
approval of credit facilities to related parties
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●
Approval
of
the
appointment
of
the
BoD
member
responsible
for
the
implementation
of
the
Greek
AML Law
●
approval of the
next steps following
the disposal of
HFSF’s entire stake in HoldCo.
b)
Environmental, Social & Governance (ESG) issues:
●
approval
of
the
Environmental
and
Social
Governance (ESG) Strategy
●
update on various ESG matters
●
update
by
the
responsible
BoD
member
for
climate-related and environmental risks
b)
Environmental, Social & Governance (ESG) issues:
●
approval
of
the
Environmental
and
Social
Governance (ESG) Strategy
●
update on various ESG matters
●
update by the responsible BoD member
for climate-
related and environmental risks
●
c)
Strategic issues including Corporate and other actions:
●
discussion of various strategy issues
●
approval of the share
capital increase following
the
exercise
of
stock
option
rights (stock
options)
and
amendment of article 5
of the Articles
of Association
of the Company according
to article 113
par. 3
of l.
4548/2018.
●
approval
(subject
to
the
approval
of
The
Annual
General
Meeting
(AGM)
of
the
share
buyback
of
HFSF’s shares
●
approval of the issuance of a common bond loan in
the context of share buyback of HFSF’s shares
c)
Strategic issues including Corporate and other actions:
●
discussion of various strategy issues
●
approval
of
the
merger
of
the
Bank
with
“STANDARD
SINGLE
MEMBER
REAL
ESTATE
SOCIETE ANONYME”
by way
of its
absorption by
the Bank
●
approval
of
the
merger
of
the
Bank
with
“CLOUD
HELLAS
SINGLE
MEMBER
KTIMATIKI
S.A.”
by
way of its absorption by the Bank
●
approval
of
the
merger
of
the
Bank
with
“ADEXA
MONOPROSOPI
ANONYMI
ETAIREIA
DIACHEIRISHS
KAI
EKMETALLEFSHS
AKINITON” by way of its absorption by the Bank
●
approval of sale in Serbia (Project Leo)
●
approval of
acquisition of
additional stake
in Hellenic
Bank (Project Hermione)
●
approval
of
revised
Real
Estate
Owned
(REO)
Strategy
●
approval of Real Estate acquisitions
●
approval
of
Arbitration
Agreements
and
authorizations
●
approval of Bank’s Covered Bonds Programme II
of
up to €5b
●
approval
of
HAPS
Securitization
of
a
Syndicated
Corporate Positions
across all four
systemic banks
of c.1.2bn (Project Solar)
●
approval
of
Covered
Bond
Programme
II
-
Use
of
the “European Covered Bond (Premium)” label
●
approval of Bank’s Covered Bond Programme
IIΙ up
to €5 billion
●
discussion of an NPE portfolio sale (Project Leon)
d)
Capital adequacy:
●
approval
of
the
2023
Internal
Capital
&
Liquidity
Adequacy Statements
(CAS &
LAS) in
the context
of
the
Internal
Capital
&
Liquidity
Adequacy
Assessment Process (ICAAP & ILAAP 2023).
●
approval of
ad-hoc data
collection on
financial and
macroeconomic projections
●
update on capital projections and MREL plan
d)
Capital adequacy:
●
approval
of
the
2023
Internal
Capital
&
Liquidity
Adequacy Statements
(CAS &
LAS) in
the context
of
the
Internal
Capital
&
Liquidity
Adequacy
Assessment Process (ICAAP & ILAAP 2023)
●
approval of
ad-hoc data
collection on
financial and
macroeconomic projections
●
approval of securitizations
of the Bank’s receivables
from portfolios of business and other loans.
e)
Business monitoring:
●
approval
of
the
2022
annual
financial
statements
and the 2023 interim financial statements
●
approval
of
the
Annual
Budget
2024
and
the
3-
Years Business Plan for the period 2024-2026
●
discussion of 2023 performance versus budget
●
discussion of business developments and liquidity.
●
discussion
of
the
top-down
Business
and
Capital
Plan 2023-2025
e)
Business monitoring:
●
approval of
the 2022
annual consolidated
financial
statements
and
the
2023
interim
consolidated
financial statements
●
approval
of
the
Annual
Budget
2024
and
the
3-
Years Business Plan for the period 2024-2026
●
approval of the Group’s NPE Targets
for the period
2023-2025 and the NPE management Strategy
●
update
on
significant
subsidiaries
activities
and
strategic priorities
●
discussion of 2023 performance versus budget
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●
review of business developments and liquidity.
f)
Risk Management and Internal Control:
●
briefing on the assessment on Internal
Audit Group
and Group Compliance annual regulatory reports
●
update on significant
internal audit and
compliance
issues
●
update on significant legal issue
●
approval
of
the
Risk
Appetite
Framework,
Group
Risk
and
Capital
Strategy
and
Risk
Appetite
Statements
●
approval
of
Risk
Identification
and
Materiality
Assessment (RIMA) framework and reports
●
approval of the updated Funding Plan
●
approval of the
consolidated Pillar
3 Reports
(capital
and
risk
management
disclosures)
for
2022,
3Μ2023, 6M2023 and 9M2023
●
regular
briefing
on
Board
Risk
and
Audit
Committees’ matters
●
update
on
significant
risk
issues,
including
the
Group
Chief
Risk
Officer’s
Annual
Report
for
the
year 2022
●
update
on
the
2022
Annual
Activity
Report
of
the
Audit
Committee
before
submission
to
the
Annual
General Meeting
●
approval of new or
revised policies and plans
as per
the
legal
and
regulatory
framework
and
internal
processes,
including
the
Non-Financial
Risk
Management
Policy,
the
Non-Financial
Risks
Improvements Plan and the Outsourcing Policy
●
approval of the 2023 Group Recovery Plan
●
approval
of
the
appointment
of
Group
Corporate
Security
as
the
Control
Function
responsible
for
managing
and
overseeing
“Information
and
Communications
Technology
(ICT)
and
Security
risks”,
as
per
BoG
Executive
Committee’s
Act
190/2/16.6.2021
requirements,
which
adopts
European
Banking
Authority
(EBA)
Guidelines
on
ICT and Security Risk Management.
f)
Risk Management and Internal Control:
●
briefing on the assessment on Internal
Audit Group
and Group Compliance annual regulatory reports
●
update on significant internal audit issues
●
update
on significant
compliance
issues,
including
the
Anti-money
Laundering
Business
Risk
Assessment and Compliance Risk Assessment
●
update on significant legal issue
●
approval of the
Risk Appetite Framework,
the Group
Risk
and
Capital
Strategy
and
Risk
Appetite
Statements
●
approval
of
Risk
Identification
and
Materiality
Assessment (RIMA) framework and reports
●
approval of the consolidated Pillar 3 Report (capital
and risk management disclosures) for 2022
●
update
on
credit
and
NPE
related
issues
through
various reports
●
regular
briefing
on
Board
Risk
and
Audit
Committees’ matters
●
update
on
significant
risk
issues,
including
the
Group
Chief
Risk
Officer’s
Annual
Report
for
the
year 2022
●
update
on
the
2022
Annual
Activity
Report
of
the
Audit
Committee
before
submission
to
the
Annual
General Meeting
●
approval of new or
revised policies as per the
legal
and
regulatory
framework
and
internal
processes,
including
the
Non-Financial
Risk
Management
Policy, the Non-Financial Risks Improvements Plan
and the Outsourcing Policy
●
initial approval
for the
successor of the
Chief Audit
Executive (to be effective within 2024)
●
approval
of
the
appointment
of
Group
Corporate
Security
as
the
Control
Function
responsible
for
managing
and
overseeing
“Information
and
Communications
Technology
(ICT)
and
Security
risks”,
as
per
BoG
Executive
Committee’s
Act
190/2/16.6.2021
requirements,
which
adopts
European
Banking
Authority
(EBA)
Guidelines
on
ICT and Security Risk Management.
g)
Transformation Project:
●
received
regular
updates
on
the
transformation
project.
g)
Transformation Project:
●
received
regular
updates
on
the
transformation
project.
Board Strategy Day
In addition to
the formal meetings
concerning Eurobank’s
annual budget and
its 3-year business
plan, an annual
strategy
meeting, known
as the
Board Strategy
Day,
is held
outside the
regular Board
of Directors'
meetings. During
this informal
gathering, no formal minutes are kept. The purpose of the Board Strategy Day is to provide ample time for Board members
to
engage
in
discussions
and
deliberations
regarding
the
top
strategic
initiatives
relevant
to
Eurobank’s
growth
and
its
competitive position among its peers.
The most
recent Board
Strategy Day
took place
on 29
and 30
September 2023,
with a
primary focus
on Transformation
priorities and in-depth analyses of key transformation streams.
2.12
Board and Board Committees overall effectiveness assessment
Board and Board Committees Evaluation conducted internally
The HoldCo/Bank NomCo is tasked with
evaluating the structure, size, composition, and
performance of the Board and its
Committees, making recommendations for
necessary changes. The
NomCo oversees the
self-evaluation of the
Board's and
Committees' effectiveness (Internal Evaluation), typically using a self-assessment questionnaire.
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The
2023
Internal
Evaluation
utilized
Board
self-assessment
questionnaires
as
the
primary
tool.
These
questionnaires,
administered through Diligent’s secure web-based platform,
covered various areas such as
strategy oversight, engagement
with
management,
risk
management,
Board
composition,
dynamics,
Chairperson's
role,
secretarial
support,
and
Board
Committees' effectiveness.
The results of
the Internal Evaluation
indicated that the
HoldCo/Bank Boards continued
to function effectively
in 2023, similar
to 2022. The key findings in different areas are as follows:
Strategy:
●
Positive impression
regarding the
Board's role
in strategy,
including review
and approval
of business
plans and
budget.
Relationship with Management:
●
Positive view on senior management performance and frequency of reporting to the Board.
Strategic HR and Remuneration:
●
Improvement noted in remuneration practices.
Risk Governance and Internal Control:
●
Board has a comprehensive
understanding of risk
profile and exercises
adequate oversight over risk
management.
Board Profile and Composition:
●
Adequate knowledge, skills, experience, and diversity within the Board.
Board Functioning and Dynamics:
●
Adequate meeting frequency, preparedness, agenda planning, and constructive discussions.
Board Chairman's Role:
●
Reflects the leadership needs of the Board effectively.
Board Secretarial Support:
●
Effective support provided with timely delivery of documents and quality Board packs and minutes.
While
the evaluation
highlighted
positive aspects,
it
also
identified
areas
for
improvement,
particularly
in
enhancing
risk
governance and internal control, focusing on non-financial risks like climate and cybersecurity.
The main
conclusions of the
Internal Evaluation regarding
Board Committees
have been integrated
into the
relevant sections
detailing the Committees' functioning and operations.
Assessment
of
the
knowledge,
skills
and
experience
(KSE)
of
the
Board
collectively
as
well
as
the
KSE
and
contribution of individual Board members.
The NomCo has
also the responsibility
to assess the
knowledge, skills and
experience (KSE) of
the Board collectively
as
well as the KSE and contribution of individual Board members and to report to the Board accordingly.
Individual Evaluations
The individual evaluations (i.e. the assessment of the Board Chairperson, the assessment of NEDs and the assessment of
the
Executive
Directors)
take
into
account
the
status
of
the
member
(executive,
non-executive,
independent),
the
participation in committees, the
undertaking of specific responsibilities
/ projects, the time
devoted, the behavior and
the use
of knowledge and experience.
A. Assessment of the Board Chairperson
The
Board
Chair’s evaluation
is
part
of
the
Internal
Evaluation
(mentioned
above)
and
is
conducted
by
all
other
Board
members via the Questionnaire for the self-evaluation of the Board’s and the Board Committees’ effectiveness.
The HoldCo/Bank Board Chair’s evaluation in 2023 remained very strong (similarly to the respective evaluation in 2022).
B. Assessment of the Non-Executive Directors’ (NEDs), excluding the Chairperson, contribution to the Board
The Board Chair
is responsible to
conduct the assessment
of the NEDs’
contribution to the
Board and present
the results
to the NomCo.
The assessment of the NEDs’ contribution to the Board is performed in the following discrete steps:
●
the NomCo approves the NEDs self-evaluation questionnaire,
●
the questionnaire is distributed to the NEDs. Responses are strictly confidential and can only be sent
to the Board Chair and/or those expressly mandated to assist in the task by him/her,
●
the Board Chair holds
confidential one-on-one interviews with
each NED, using
the individual NEDs
self-evaluation Questionnaire as an input,
●
the Board Chair presents an overall report on his findings to the NomCo,
●
the Board Chair’s views on
NEDs performance and contribution of
knowledge, skills and experience
are
presented
and
discussed
at
the
NomCo
also
during
the
process
of
developing
the
NomCo’s
proposals for discussing the (re)appointment / succession planning of individual Board members.
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In
accordance
with
the
procedure
described
above,
the
2022
annual
assessment
of
the
NEDs’
contribution
to
the
HoldCo/Bank Board was
directed by the
Board Chair with
the use of
an individual self-evaluation
questionnaire consisted
of 10
questions aiming
to identify
the strengths
and areas
for improvement
of individual
Directors across
the following
5
areas:
●
contribution to overall Board profile skillset
●
Board participation and quality of contributions to Board deliberations
●
punctuality and attendance
●
team Spirit and demeanor
●
independent Thinking and Constructive Challenge
The 2023 annual assessment of the NEDs’
contribution to the HoldCo/Bank Board demonstrated that the
NEDs adequately
meet expectations for effectively accomplishing their role as Directors of the HoldCo/Bank.
C. Executive Directors’ Performance Evaluation
The
evaluation
of
the
Executive
Directors'
performance,
including
the
CEO
and
Deputy CEOs,
is
conducted
separately
through
a
structured
process
involving
the
CEO,
the
NomCo,
and
the
Board
Remuneration
Committee
(RemCo).
This
evaluation occurs
annually and
is based
on both
qualitative and
quantitative Key
Performance Indicators
(KPIs) that
are
approved by the Non-Executive Directors each year.
Specifically
for
the
CEO,
the
RemCo
proposes
relevant
KPIs
related
to
the
CEO's
remuneration
to
the
Non-Executive
Directors
for
approval.
The
CEO's
performance
is
then
assessed
based
on
these
approved
KPIs.
The
results
of
the
evaluation are communicated to the CEO and are considered in determining his remuneration.
Collective Suitability Assessment
During 2023, in
addition to the evaluation
of the Board
of Directors' performance,
an assessment of
the Board's collective
suitability was conducted based on the Joint ESMA/EBA Guidelines on the assessment of the suitability of members of the
management body
and key
function holders
(EBA/GL/2021/06). This
assessment was
carried out
with the
support of
the
NomCo.
The assessment
focused on
evaluating whether
the Board
of Directors
collectively possesses
the necessary
knowledge,
skills,
and
experience
to
understand
the
business
model,
strategy,
risks,
and
various
governance-related
matters.
It
concluded
that
the
Board
is
collectively
suitable
to
comprehend
these
areas
effectively.
However,
the
evaluation
also
emphasized
the
potential
for
improvement
in
certain
skillsets,
particularly
in
areas
such
as
technology
and
digitization,
specific business lines and products, various geographies, and subsidiaries.
2.13
Directors’ Induction and Continuous Professional Development Process
All new Board members undergo a comprehensive Induction
Program designed to achieve several key objectives.
Firstly, it
aims to convey
the vision and
culture of the
HoldCo/Bank. Secondly, it covers
practical procedural duties
to ensure a
smooth
transition into their roles. Thirdly, it aims to expedite their productivity
by reducing the time needed to familiarize
themselves
with their responsibilities. Fourthly,
it integrates them as valued members
of the Board. Fifthly,
it familiarizes them with the
HoldCo/Bank's
organizational
structure.
Lastly,
it
provides
an
understanding
of
the
HoldCo/Bank's
business,
strategy,
market dynamics, relationships, and its people.
Upon
their
appointment,
new
Board
members
also
receive
a
Manual
of
Obligations
outlining
their
main
responsibilities
towards Supervisory Authorities
and the HoldCo/Bank.
This manual informs
them about local
regulations and the
Board's
procedures. Additionally, meetings and presentations are arranged with Key Executives of the
HoldCo/Bank to provide new
Directors with a comprehensive overview of the organization.
Recognizing
the
importance
of
continuous
professional
development,
the
HoldCo/Bank
provides
resources
for
ongoing
knowledge
and
skill
enhancement
for
all
Board
members.
In
2023,
this
included
formal
training
sessions
on
Workforce
issues in banking, Cloud providers
and data protection, Cyber resilience
and security awareness, and
Generative Artificial
Intelligence
Challenges
and
Opportunities.
Furthermore,
Board
members
received
regular
updates,
reports,
and
presentations from senior management on operational and strategic targets, as
well as updates on risk, audit, compliance,
financial, human resources,
legal, and regulatory
matters. They also
received regular and
ad-hoc research and
economic
bulletins from Eurobank's Economic Analysis and Financial Markets Research Division.
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3.
Board Committees
The Boards of HoldCo/Bank are assisted in carrying out
their duties by Board Committees to whom they delegate some of
their responsibilities. In addition, the Boards approve their terms
of reference, receive regular and ad hoc reports from
them
and assess their performance as per the provisions of the Board and Board Committees Evaluation Policy.
3.1
Audit Committee
6
The primary function of the Audit Committee (AC) is
to assist the Board in discharging its oversight responsibilities
primarily
relating to:
●
the review
of the
adequacy of
the Internal
Control and
Risk Management
systems and
the compliance
with rules
and
regulations monitoring process,
●
the review of the financial reporting process and satisfaction as to the integrity of the HoldCO’s Financial Statements,
●
the External Auditors’ selection, performance and independence,
●
the effectiveness and performance of the Internal Audit and of the Compliance function.
In addition,
in the
context of
AC’s responsibility
to safeguard
External Auditors’
independence, the
AC ensures
that the
nature of non-audit services, prior to their being undertaken by the External Auditors, has been reviewed and approved
as
required and that there is proper balance between audit and non-audit work in accordance with Group’s / Bank’s policy on
External Auditors’ Independence.
AC Membership/Composition
The
HoldCo/Bank’s
AC
are
Committees
consisted
exclusively
by
Board
members
and
their
compositions
have
been
approved by the General
Meetings of the Shareholders
(as per the legal
framework), following the recommendation of
the
NomCos to the Boards. The
tenure of the Committee members
coincides with the tenure of
the HoldCo/Bank’s Boards, with
the option to renew
their appointment, but in
any case, the
service in the Committees
should not be
more than nine (9)
years
in
total.
The
Chairperson
of
the
Committees
is
appointed
by
the
members
of
the
Committees,
while
the
Committee’s
members may also appoint a Vice Chairperson.
All AC members have sufficient knowledge
in the field of HoldCo/Bank’s activities and the
necessary skills and experience
to carry out their duties and meet the requirement of established knowledge and experience in auditing and/or accounting.
The
ACs
consist
of
four
(4)
independent
non-executive
Directors
of
the
Board.
In
particular,
the
HoldCo/Bank’s
AC
composition is outlined below:
AC Chairperson:
Jawaid Mirza,
Non-Executive Independent Director of the Board
AC Vice-Chairperson:
Burkhard Eckes,
Non-Executive Independent Director of the Board
AC Members:
Irene Rouvitha Panou,
Non-executive Independent Director of the Board
Rajeev Kakar
,
Non-Executive Independent Director of the Board
It
is
noted
that
in
line
with
the
provisions
of
article
44
of
law
4449/2017,
as
in
force,
and
further
to
the
decision
of
the
HoldCo/Bank’s
Annual
General
Meetings
of
Shareholders
as
of
20.7.2023
regarding
the
recomposition
of
the
Audit
Committees and more
specifically regarding their
type, composition and
term of office;
and the BoDs’
decision of 23.06.2023
(in combination with 27.06.2023)
and 20.07.2023 regarding the nomination and appointment of a new member to
the ACs
respectively,
and in particular
of Mr.
Burkhard Eckes, following
relevant recommendations by
the NomCos of
22.06.2023,
the ACs decided on their constitution and on the appointment of their Chairman.
Compared to the previous ACs’ composition and following the recomposition of the ACs on 20.07.2023, the ACs’ members
remained four (4) since Ms. Efthymia Deli submitted her resignation on 27 October 2023, effective as of 7 November 2023,
from the BoDs, ACs and Remuneration Committees that was member at that time.
AC Meetings
The HoldCo/Bank’s ACs meet at least eight (8) times per year or more frequently, as circumstances require, report on their
activities to the HoldCo/Bank’s Boards on a
quarterly basis and submit the
minutes of their meetings and the
annual Activity
Reports (before their submission
to the HoldCo/Bank Shareholders’
Annual General Meeting)
to the HoldCo/Bank’s Boards.
Quorum in the AC Meetings
The ACs’ meeting is in
quorum and meets validly
when half of its members
plus one are present or
represented, provided
that at least three (3), including the Chairperson or the Vice Chairperson, are
present. Each member of the Committee may
validly
represent only
one
of
the
other Committee
members.
Representation
in
the
Committee may
not be
entrusted
to
persons other than the members thereof.
6
HoldCo/Bank’s
Audit
Committees’
Terms
of
Reference
may
be
found
at
the
HoldCo/Bank
websites
(
www.eurobankholdings.gr
&
www.eurobank.gr
).
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AC Decisions
The AC resolutions are validly
taken by an absolute majority
of the members who are
present and represented. In case of
a tie
of votes,
the Chairperson
and in
case of
his/her absence
the Vice
Chairperson has
the casting
vote. The
Board is
informed whenever a decision of the AC is not reached unanimously.
Attendance to the AC Meetings
During 2023 the attendance details for the Audit Committee were as follows:
Company
Meetings
Average ratio of
Directors’ attendance
2023
2022
2023
2022
HoldCo
17
14
100%
100%
Bank
16
14
100%
100%
AC Secretary and Minutes
The AC appoints its Secretary,
who reports to the Group Company Secretariat and cooperates with
the Chairperson of the
Committee.
The
Secretary
is
responsible
to
minute
the
proceedings
and
decisions
of
all
Audit
Committees’
meetings,
including the names of those present and in attendance and the action plans and follow ups
for assignments,
as well as for
the issuance of extracts. Decisions, actions and follow ups are disseminated to the responsible parties, as required.
AC Terms of Reference (ToR)
The AC’s ToR
are reviewed annually and revised if necessary,
unless significant changes necessitate earlier revision. The
ToR
are approved by the Board.
AC’s Performance Evaluation
The
AC
conducted
a
self-evaluation,
and
its
members
expressed
satisfaction
with
the
committee's
effectiveness
and
leadership. They commended
the AC's efficient use
of time, well-planned
meetings, and timely
scheduling. The Chairperson
of the
AC was
noted for
being well-prepared
and skilled
in guiding
discussions through
the agenda,
fostering critical
dialogue,
and ensuring all members
could express their views
freely. Participants were also acknowledged
for their preparedness and
active engagement in vital discussions, demonstrating a commendable level of challenge.
However,
the evaluation
identified areas
for improvement,
notably the
need for
enhanced oversight
on critical
audit and
compliance issues
within major subsidiaries.
There was also
a call for
strengthening cybersecurity mechanisms
and Anti-
Money
Laundering
(AML)
controls
and
measures.
Additionally,
the
evaluation
emphasized
the
importance
of
providing
training in
new areas
to enhance
the skills
of the
Internal Audit
Team.
These areas
of improvement
were highlighted
to
further enhance the effectiveness and capabilities of the AC in fulfilling its responsibilities.
AC’s Activity in 2023
For 2023, AC has amongst others:
Eurobank Holdings
Bank
●
decided
on
its
constitution
/
reconstitution
and
the
appointment of its Chairman
●
approved the
revised Internal
Audit Mandate
and Terms
of
Reference
(ToR)
and
the
revised
Compliance
Mandate
●
approved
the
annual
Plans
of
Internal
Audit
and
Compliance and monitored their progress
●
reviewed
and
discussed
reports
with
information
relating
mainly
to
the
Internal
Audit
and
Compliance
issues,
including
quarterly
reports
from
Internal
Audit
and Compliance functions
●
received updates on
various legal
and regulatory issues
●
ensured
that
an
annual
evaluation
of
the
System
of
Internal Controls for the year 2022 has been
performed
and documented by Internal
Audit and prepared
its own
assessment
report on
Internal Audit’s
evaluation. The
reports
were
further
submitted
to
the
Board
and
the
BoG in line with the BoG Act 2577/2006
●
reviewed the annual
Compliance Sector’s reports over
compliance activities for the
year 2022 and prepared
its
own
assessment
report
thereon.
The
reports
were
further submitted to the Board and the BoG, in line with
the BoG Governors Act 2577/2006
●
in the context of the independent triennial Evaluation of
the System
of Internal
Controls (SIC)
per BoG
Act 2577,
approved
the
proposed
scope
of
the
assignment
and
the appointment of the firm
●
decided
on
its
constitution
/
reconstitution
and
the
appointment of its Chairman
●
approved the
revised Internal
Audit Mandate
and Terms
of
Reference
(ToR)
and
the
revised
Compliance
Mandate
●
approved
and
further
submitted
to
the
BoD
for
information
the
annual
and
triennial
Plans
of
Internal
Audit and Compliance and monitored their progress.
●
reviewed
and
discussed
reports
with
information
relating
to
the
System
of
Internal
Controls,
including
quarterly
reports
from
Internal
Audit
Group,
Compliance, Operational Risk Sector, Clients Relations
Office, etc.
●
received updates on
various legal
and regulatory issues
●
ensured
that
an
annual
evaluation
of
the
System
of
Internal Controls has been performed and documented
by the Internal Audit
Group for the year
2022. The Audit
Committee has prepared its own assessment report on
Internal
Audit
Group’s
evaluation.
The
reports
were
further submitted to the Board and
the BoG in line with
the BoG Act 2577/2006
●
in the context of the independent triennial Evaluation of
the System
of Internal
Controls (SIC)
per BoG
Act 2577,
approved
the
proposed
scope
of
the
assignment
and
the appointment of the firm
●
focused particularly
on the
AML function
and received
regular updates on the AML issues
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●
reviewed
and
depending
on
the
case,
approved
or
approved and further submitted to
the BoD for approval
/ information
a) the
revised Code
of Conduct
and Ethics,
b) the
revised Policy
for Reporting
Illegal or
Unethical
Conduct
and the
appointment of
Report Receiving
&
Monitoring
Officer
in
Greece,
c)
the
revised
Group
Antitrust Compliance Policy, d) the revised Compliance
Policy,
e) the revised
Conflict of Interest
Group Policy,
f) the revised Anti-bribery and Corruption Policy
and g)
the revised Insider Dealing Guideline.
●
discussed
with
Management,
Internal
Audit
and
External Auditors issues relating
to the financial results,
●
reviewed
and
cleared
the
financial
statements
and
other financial reports and trading updates prior to their
release
●
discussed
with
Management
the
implementation
of
corrective
actions
to
recommendations
made
by
Internal
and
External
Auditors
and
Regulatory
Authorities
●
assessed
the
effectiveness,
objectivity,
and
independence of the
External Auditors for the
financial
year 2022, discussed the
results of their evaluation
with
Management
and
Internal
Audit
and
communicated
final results to the Board and to the External Auditors
●
approved the remuneration of External
Auditors for the
financial year 2023
●
proposed to the Board
and the Annual General
Meeting
of
Shareholders
for
approval
the
appointment
of
the
External Auditors for the financial year 2023
●
approved
the
External
Auditors’
Independence
Policy
and
monitored,
in
line
with
this
Policy,
the
non-audit
services provided by the External Auditor in 2023
●
approved
the
Key
Audit
Partner
(KAP)
selection/rotation
policy
which
is
addendum
of
the
Holdings Group Tendering
Policy and Procedure
●
discussed a 5-yr (2024-28) rolling plan on
the eligibility
of
audit
firms
for
the
statutory
audit
of
the
Group,
including
potential
conflict
of
interest
situations
with
eligible audit
firms, based
on Greek
Law 4449/17
and
EU Reg
537/14, and
requirements of
the International
Code
of
Ethics
for
Professional
Accountants
of
the
International
Ethics
Standards
Board
for
Accountants
(IESBA)
●
assessed the
performance of
the Internal
Auditor and
the
Head
of
Compliance
/
Anti-Money
Laundering
Reporting Officer
●
received updates on the progress
of the Annual Budget
●
in
accordance
with
the
provisions
of
Law
2533/1997,
the
Audit
Committee
reviewed
reports
on
substantial
stock
transactions
of
the
HoldCo’s
Directors
and
General
Managers
which
meet
the criteria
set
in Law
2533/1997 and notified the Board
●
approved and notified the Board
for further submission
to the Annual
General Meeting, the
annual AC Activity
Report for 2022
●
Discussed the Annual AC Plan for 2024.
●
discussed
and
further
submitted
to
the
BoD
for
discussion the Anti-Money Laundering (AML) Business
Risk Assessment and Compliance Risk Assessment
●
reviewed
the
annual
Group
Compliance
Sector’s
reports over AML and compliance activities of the Bank
for
the
year
2022
and
prepared
its
own
assessment
report
thereon.
The
reports
were
further
submitted
to
the Board and the BoG, in line with the BoG Governors
Act 2577/2006
●
reviewed
and
depending
on
the
case,
approved
or
approved and further submitted to
the BoD for approval
/ information
a) the
revised Code
of Conduct
and Ethics,
b) the
revised Policy
for Reporting
Illegal or
Unethical
Conduct
and the
appointment
of
Report
Receiving &
Monitoring
Officer
in
Greece,
c)
the
revised
Group
Antitrust Compliance Policy, d) the revised Compliance
Policy,
e) the revised
Conflict of Interest
Group Policy,
f) the
revised Anti-bribery and
Corruption Policy
g) the
revised
Insider
Dealing
Guideline,
h)
the
revised
Inducements
Policy,
i)
the
revised
AML/CFT
and
Sanctions Policy, j) the revised Order Execution Policy.
●
discussed
with
Management,
Internal
Audit
and
External Auditors issues relating
to the financial results,
●
reviewed
and
cleared
the
consolidated
financial
statements
●
discussed
with
Management
the
implementation
of
corrective
actions
to
recommendations
made
by
Internal
and
External
Auditors
and
Regulatory
Authorities
●
discussed
with
the
Audit
Committee
Chairpersons
ofEurobank Bulgaria,
Eurobank Cyprus
and Eurobank
Private
Bank Luxembourg
the key
audit
issues
of
the
International Subsidiaries
●
assessed
the
effectiveness,
objectivity
and
independence of the
External Auditors for
the financial
year 2022, discussed the
results of their
evaluation with
Management
and
Internal
Audit
and
communicated
final results to the Board and to the External Auditors
●
approved the remuneration of External
Auditors for the
financial year 2023
●
proposed to the Board
and the Annual
General Meeting
of
Shareholders
for
approval
the
appointment
of
the
External Auditors for the financial year 2023
●
approved
the
External
Auditors’
Independence
Policy
and and monitored,
in line with
this Policy, the non-audit
services provided by the External Auditor in 2023
●
assessed the performance of the Chief Audit Executive
and the
General Manager Head of Group Compliance
/ Anti-Money Laundering Reporting Officer
●
monitored the memberships
and the modus
operandi of
the
Audit
Committees
of
the
banking
subsidiaries,
as
required, and reviewed their Activity Reports
●
in
accordance
with
the
provisions
of
Law
2533/1997,
the
Audit
Committee
reviewed
reports
on
substantial
stock transactions of the Bank’s
Directors and General
Managers which meet the
criteria set in Law
2533/1997
and notified the Board
●
approved and notified the Board
for further submission
to the Annual
General Meeting, the
annual AC Activity
Report for 2022.
●
discussed the Annual AC Plan for 2024.
It is noted that in accordance with the Law 4449/2017 as in force, the HoldCo/Bank ACs submit an annual activity report to
their Shareholders’ Annual General Meeting on
the issues dealt with by
the ACs during the previous year,
also including a
description of the sustainability policy followed by each entity.
The 2023 HoldCo/Bank
AC Activity Reports
which are also part
of the 2023
HoldCo/Bank Annual Financial
Reports, refer
to the AC activity during 2023, the issues addressed and the sustainability policy.
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3.2
Board Risk Committee
7
The purpose of the HoldC/Bank’s Board Risk Committee (BRC) is to assist the Board in the following risk-related issues:
●
to advise
and support
BoD regarding
the monitoring
of overall
actual and
future risk appetite
and strategy,
taking into
account all
types of
risks to
ensure that
they are
in line
with the
business strategy,
objectives, corporate
culture and
values of the institution,
●
to provide BoD with recommendations on necessary adjustments to the risk strategy,
●
to assist BoD in overseeing the implementation of risk strategy and the corresponding limits set,
●
to oversee
the implementation
of the
strategies for
capital and
liquidity management
as well
as for
all other
relevant
risks, such as
credit and market
risks as well
as non-financial risks
such as operational,
reputational conduct legal,
cyber,
outsourcing
climate
and
environmental,
in
order
to
assess
their
adequacy
against
the
approved
risk
appetite
and
strategy,
●
to oversee the progress
made to enhance
resolvability in accordance with
the requirements of
the Resolution Authorities
(for Bank BRC only),
●
to review
a number
of possible
scenarios, including
stressed scenarios,
to assess
how the
risk profile
would react
to
external and internal events,
●
to oversee the alignment between all material financial products and services offered to clients and the business model
and risk strategy. The BRC should assess the risks associated with the
offered financial products and services and take
into account the alignment between the prices assigned to and the profits gained from those
products and services
(for
Bank BRC only,)
●
to provide advice on the appointment of external consultants that BoD may decide to engage for advice or support,
●
to
assess
the
recommendations
of
internal
or
external
auditors
and
follow
up
on
the
appropriate
implementation
of
measures taken,
●
to
ensure that
an appropriate
risk
management
framework has
been developed
which
is embedded
in the
decision-
making process
(e.g. new
products and
services introduction,
risk adjusted
pricing, internal
risk models,
risk adjusted
performance measures and capital allocation),
●
to define the risk management principles and ensure that there
are the appropriate methodologies, modeling tools, data
sources and sufficient and competent staff to identify, assess, monitor and mitigate risks, and
●
to set, approve and oversee
the implementation of the institution’s
risk culture, core values and expectations
regarding
credit risk.
BRC Membership/Composition
The BRC members
are appointed by
the BoD, following
the recommendation of
the NomCo, in
accordance with the
legal
and regulatory framework
where applicable. The Chairperson
qualifies as independent member
with a solid experience
in
commercial banking and preferably risk and/or Non-Performing Exposures management and is familiar with the Greek and
international
regulatory
framework.
The
appointment
of
the
Chairperson
and
the
Vice-Chairperson
shall
go
through
the
NomCo’s proposal process
and approved by
the Board. The tenure
of the BRC members
coincides with the
tenure of the
Bank’s Board, with the option to renew their appointment,
but in any case, the service in the BRC should not be more
than
nine (9) years in total.
The BRC consists of five (5) non-executive Directors, four (4) of whom are independent, including the Chairperson and the
Vice-Chairperson. One (1) of the BRC members is the HFSF Representative. In
particular, the BRC composition is outlined
below:
BRC Chairperson:
Rajeev Kakar,
Non-Executive Independent Director of the Board
BRC Vice-Chairperson:
Cinzia Basile,
Non-executive Independent Director of the Board
BRC Members:
Bradley Paul Martin,
Non-Executive Director of the Board
Alice Gregoriadi,
Non-Executive Independent Director of the Board
John Arthur Hollows
, Non-executive Independent Director of the Board
It is
noted that
during 2023
and following
NomCos’ recommendations
for the
recomposition of
the HoldCo/Bank’s
BoDs
Committees, the HoldCo/Bank’s BoDs decided on
29.09.2023, Mr. John Arthur Hollows to replace
Ms. Efthymia Deli (taking
also into consideration that her role as representative of the HFSF would cease after the disposal of
HFSF’s participation).
BRC Meetings
The BRC meets
at least on
a monthly basis
and the Chairperson
updates the BoD
members on the
material matters covered
by the Committee during the previous period (if any) at the quarterly meetings of the BoD.
Apart from the BRC members, the AC’s members may also attend BRC sessions when common issues are discussed (i.e.
on operational
risk matters,
on IT
security and
cyber risks).
The Chairperson
of the
BRC may
also invite
to the
meetings
other executives of the Group or external advisors or experts, as deemed appropriate.
7
HoldCo/Bank’s BRCs’ Terms of Reference may be found at the HoldCo/Bank websites (
www.eurobankholdings.gr
&
www.eurobank.gr
).
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Quorum in the BRC Meetings
Quorum requires the majority of members (half plus one) to be present or represented, provided that no less than three (3)
Committee members, including the Chairperson or the Vice Chairperson, are
present.
Each member of the Committee may
validly
represent only
one
of
the
other Committee
members.
Representation
in
the
Committee may
not be
entrusted
to
persons other than
the members thereof.
In determining the
number of members
for the quorum,
fractions, if any,
will not
be counted.
BRC Decisions
The BRC
resolutions require
a majority
vote of
the members
who are
present or
represented. In
case of
a tie,
the Chairperson
and in case of
his/her absence the Vice
Chairperson has the casting vote.
In case of non-unanimous
decisions, the views
of the minority are also minuted. The Board is informed of the BRC’s minutes.
Attendance to the BRC Meetings
During 2023, attendance details for the Board Risk Committee were as follows,
Company
Meetings
Average ratio of
Directors’ attendance
2023
2022
2023
2022
HoldCo
12
10
100%
95%
Bank
13
14
100%
97%
It is noted that in 2022,
Directors provided representation proxies for all
missed meetings in HoldCo/Bank’s BRCs,
leading
their overall attendance rates (physical and under representation) at 100% in BRC.
BRC Secretary and Minutes
The BRC appoints its
Secretary, who reports to the Group Company
Secretariat and cooperates with
the Chairperson of the
Committee
and
the
Group
Chief
Risk
Officer
(“GCRO”).
The
Secretary
is
responsible
to
minute
the
proceedings
and
resolutions of
all BRC meetings,
including the names
of those present
and in
attendance and the
action plans
and follow
ups for assignments, as well
as for issuance of extracts.
Decisions, actions and follow ups
are disseminated to the
Bank’s
responsible Units, as required.
BRC Terms of Reference (ToR)
BRC’s ToR
are reviewed at least annually and revised, if necessary, unless significant changes in the role, responsibilities,
organization and/or regulatory requirements necessitate earlier revision. The ToR are approved by the Board.
BRC’s Performance Evaluation
BRC’s performance is
evaluated annually according
to the provisions
of the Board
and Board Committees
Evaluation Policy.
The
self-evaluation
conducted by
the
BRC indicates
overall satisfaction
among
its
members
regarding the
Committee's
leadership and effectiveness.
Members
of
the
BRC
expressed
satisfaction
with
the
leadership
provided
by
the
Chairperson
of
the
Committee.
The
Chairperson is reported to be well-prepared for meetings and encourages critical discussions, ensuring that every member
can freely express their
views. Additionally, members of the BRC
are also well-prepared for
meetings, leading to a
high level
of participation in important discussions and maintaining an adequate level of challenge within the Committee.
However, the evaluation also highlighted areas for improvement. Specifically, the BRC's oversight of local market risks and
its focus on risks
related to cybersecurity, data protection, and
geopolitics were identified as
areas that should be
enhanced.
This
recognition underscores
the
importance
of
continuously
evolving
risk
management
strategies
to
address
emerging
threats and challenges in these areas effectively.
BRC’s Activity in 2023
For 2023, the BRC has, amongst others:
Eurobank Holdings
Bank
●
monitored
the
Group’s
overall
actual
and
future
risk
appetite
and
strategy,
taking
into
account
all
types
of
risks
to ensure
that they
are in
line
with
the business
strategy, objectives, corporate culture and values
of the
Group
●
approved,
among others,
the following
regulatory and
other reports, including risk policies and frameworks:
-
Internal Capital &
Liquidity Adequacy Assessment
processes ICAAP/ILAAP
-
Capital
Adequacy
Statements,
Liquidity
Adequacy Statements
-
Risk Identification and Materiality Process (RIMA)
Report
-
Group Recovery Plan
●
monitored
Eurobank’s
overall
actual
and
future
risk
appetite
and
strategy,
taking
into
account
all
types
of
risks
to
ensure that
they
are in
line
with the
business
strategy, objectives, corporate culture and values of
the
institution
●
monitored qualitative and quantitative aspects of
credit,
market, liquidity and operational risks,
●
reviewed Information
and Communication
Technology
(ICT) Risk and Security (incl. Cyber Security),
Physical
Security and Fraud detection
●
reviewed General
Data Protection
Regulation (GDPR)
and Payment Services Directive 2 (PSD2) status
●
approved,
among others,
the following
regulatory and
other reports, including risk policies and frameworks
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●
approved the GCRO Annual Report
●
approved the Group
Risk and Capital
Strategy and Risk
Appetite
Framework
as
well
as
Risk
Appetite
Statements incl. RAS dashboard
-
Single
Resolution
Board’s
(SRB’s)
Working
Priorities
and
Eurobank’s
Resolvability
Work
Programme (Bail in playbook, etc.)
-
Minimum
Requirement
for
Own
Funds
and
Eligible
Liabilities
(MREL)
Issuance
plan
&
Targets
-
Non-performing Exposures (NPE)
Reduction Plan
2023-2025:
Summary
report,
impairments
and
key risk metrics
EBA Dashboard
●
reviewed and/or approved:
Early Warning Framework
Forbearance reporting
Risk Parameters monitoring
Outsourcing
reports
incl.
OSI
regarding
IT
Outsourcing
SRT Securitisations performance updates
ALM tool governance framework guideline
●
approved several policies
incl. market risk,
counterparty
risk, liquidity, credit, collection etc.
●
EBA Stress Test
Exercise 2023
●
Climate Related and Environmental Risk Disclosures
3.3
Remuneration Committee
8
The HoldCo/Bank’s
Boards have
delegated to
the respective
RemCos the
responsibilities (a)
to provide
specialized and
independent advice for matters
relating to remuneration policy and
its implementation at HoldCo/Bank Group
level and for
the
incentives
created
while managing
risks, capital
and
liquidity,
(b)
to
safeguard
the
proper
exercise
of
its duties
and
responsibilities,
the
efficient
alignment
of
the
personnel’s
remuneration
with
the
risks
the
HoldCo/Bank
undertakes
and
manages and the required alignment between the HoldCo/Bank and the Group, and (c) to approve or propose for approval
all exposures of Key Management Personnel
9
and their relatives (spouses, children, siblings).
The Non-Executive Directors
of HoldCo/Bank have the responsibility to approve and periodically review HoldCo/Bank’s remuneration policy and oversee
its implementation both at Bank and Group level.
The implementation
of the
HoldCo/Bank remuneration
policy is
in line
with the
provisions of
Laws 3864/2010,
4261/2014
and Bank of Greece Governor’s Act 2650/2012.
The HoldCo/Bank RemCo is also responsible to:
●
determine the
remuneration system
for the
members of
the Board
of Directors
and the
senior executives
and to
make
a
relevant
recommendation
on
them
to
the
Board
of
Directors,
which
decides
on
them
or
to
make
recommendations to the General Meeting, where required,
●
propose
to
the
Non-Executive Directors
of
the
HoldCo/Bank’s
BoD
for
their
approval
the
goals
and
objectives
relevant
to the
HoldCo/Bank’s
CEO remuneration
and evaluate
his/her performance
in light
of these
goals and
objectives,
●
guide and monitor the external remuneration consultant (if hired) and ensure that it
receives appropriate reporting
from
him/her.
In
addition,
HoldCo/Bank
RemCo
ensures
that
the
external
consultant
is
referred
in
the
HoldCo/Bank’s
annual report
of the
year hired
and/or completed
his/her work,
together with
a statement
of any
possible
relationship
between
him/her
and
the
HoldCo/Bank
or
with
members
of
the
HoldCo/Bank’s
Board
individually.
RemCo Membership/Composition
The RemCo members are appointed by the Board.
In
the
event
that
the
Chairperson
of
the
Bank’s
Board
is
a
member
of
the
RemCo,
she/he
cannot
participate
in
the
determination of his/her remuneration.
The tenure
of the
RemCo members
coincides with
the tenure
of the
HoldCo/Bank’s Board,
with the
option to
renew their
appointment, but in any case, the service in RemCos should not be more than nine (9) years in total.
8
HoldCo/Bank’s Remuneration Committees’ Terms
of Reference may be found at the
HoldCo/Bank websites (
www.eurobankholdings.gr
&
www.eurobank.gr
).
9
Key Management Personnel includes: Bank’s Executive and Non-Executive
BoD members, Executive Board (ExBo) members,
General
Managers non-members of the ExBo and the Heads
of Group Internal Audit, Group Compliance,
Group Risk Management.
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The
RemCos
consists
of
four
(4)
non-
executive
Directors
three
(3)
of
whom
are
independent
Directors,
including
the
Chairperson and the Vice-Chairperson. In particular, the HoldCo/Bank RemCo composition is outlined below:
RemCo Chairperson:
Cinzia Basile,
Non-executive Independent Director of the Board
RemCo Vice-Chairperson:
Jawaid Mirza,
Non-Executive Independent Director of the Board
Members:
George Chryssikos,
Non-Executive Director of the Board
Alice Gregoriadi,
Non-Executive Independent Director of the Board
Compared to the previous RemCo’s composition, the number of RemCo members decreased from five (5) to four (4) since
Ms. Efthymia Deli submitted her
resignation on 27 October 2023, effective
as of 7 November 2023,
from the HoldCo/Bank
BoDs, ACs and Remuneration Committees that was member at that time.
RemCo meetings
HoldCo/Bank’s RemCo meets at least twice a year and minutes are kept.
Quorum in RemCo meetings
HoldCo/Bank’s RemCo
is in
quorum and meets
validly when half
of its
members plus one
(1) are
present or
represented
(fractions, if
any,
are not
counted), provided
that no
less than
three (3)
members, including
the Chairperson
or the
Vice
Chairperson
are
present.
Each
member
of
RemCo
may
validly
represent
only
one
of
the
other
RemCo
members.
Representation in RemCo may not be entrusted to persons other than the members thereof.
RemCo Decisions
RemCo’s resolutions are
validly taken by an absolute
majority of the members who
are present or represented.
In case of
a tie, the Chairperson and
in case of his/her absence
the Vice Chairperson of
RemCo shall have the casting
vote. In case
of non-unanimous
decisions, the
views of
the minority
should also
be minuted.
The Board
shall be
informed whenever
a
decision of the Committee is not reached unanimously.
Attendance to the RemCo meetings
During 2023 the attendance details for the Remuneration Committees were as follows:
Company
Meetings
Average ratio of
Directors’ attendance
2023
2022
2023
2022
HoldCo
12
6
97%
100%
Bank
12
8
98%
100%
The Directors’ individual attendance rates at the RemCo meetings in 2023 were the following:
Eurobank Holdings’ RemCo
Eurobank RemCo
Eligible to attend
Attended in person
(# and %)
Eligible to
attend
Attended in person
(# and %)
Cinzia Basile,
RemCo Chairperson
12
12
100%
12
12
100%
Jawaid Mirza,
RemCo Vice-Chairperson
12
12
100%
12
12
100%
George Chryssikos,
RemCo member
12
11
92%
12
11
92%
Alice Gregoriadi,
RemCo member
12
12
100%
12
12
100%
Efthymia Deli,
RemCo member until 7.11.2023
10
9
90%
10
10
100%
It is noted that
in 2023, Mr.
George Chryssikos provided representation
proxies for his missed meetings
in HoldCo/Bank’s
RemCos, leading his overall attendance rate (physical and under representation) at 100% in RemCo.
RemCo Secretary and Minutes
RemCo
appoints
its
Secretary,
who
reports
to
the
Group
Company Secretariat
and
cooperates
with
the
Chairperson of
RemCo and the
Group Human
Resources Deputy
General Manager. The
Secretary is
responsible to
minute the
proceedings
and resolutions of all RemCo’s meetings, including the names of those present and in attendance and the action plans and
follow ups for
assignments, as well
as for issuance
of extracts. Decisions,
actions and follow
ups are disseminated
to the
Bank’s responsible Units, as required.
RemCo Terms of Reference (ToR)
RemCo’s
ToR
are
reviewed
annually
and
revised,
if
necessary,
unless
significant
changes
in
the
role,
responsibilities,
organization and/or regulatory requirements necessitate earlier revision.
The ToR
are approved by the Board.
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RemCo’s Performance Evaluation
RemCo’s performance
is evaluated
annually according
to the
provisions of
the Board
and Board
Committees Evaluation
Policy.
The self-evaluation conducted
by RemCo members
reflects overall satisfaction
with the Committee's
effectiveness
and leadership.
According to the evaluation, RemCo members
believe that the Committee utilizes its
time effectively and has good planning
and scheduling of meetings. The material for
meetings is provided in advance, allowing both
the Chairperson and members
to be well prepared. The discussions within RemCo
are described as open and sufficiently thorough, with
members actively
engaged, possessing high levels of knowledge, and acting independently to ensure an adequate level of challenge.
However, the evaluation also emphasized the need
to maintain a focus
on remuneration matters. While improvements
have
been made in
this area, it
is suggested that
remuneration should continue
to be regularly
assessed against relevant
local
and
international
benchmarking.
This
ongoing
assessment ensures
that
remuneration practices
remain
competitive
and
aligned with industry standards.
RemCos' Activity in 2023
For 2023, RemCo has amongst others:
Eurobank Holdings
Bank
●
proposed to the
BoD for approval the
revised RemCo
Terms
of Reference
●
reviewed and
proposed to
the Non-Executive
Directors
for approval the Remuneration Policy of the HoldCo
●
reviewed and
proposed to
the Board
and the
Annual
General
Meeting
(AGM)
for
approval
the
Remuneration Policy for Directors
●
reviewed and
proposed to
the Non-Executive
Directors
for
approval
the
Remuneration
Framework
of
the
HoldCo
●
reviewed and
proposed to
the Non-Executive
Directors
for
approval
the
Variable
Remuneration
-
Key
Performance Indicators & Key Risk Indicators and
the
Group Variable Remuneration Pool
●
Reviewed and approved the Material Risk Takers’ List
●
discussed
the remuneration
policy
implementation
at
Group level
●
discussed
the Remuneration
Policy
Review
–
Follow
up (for the Year 2021), conducted by
the Internal Audit
Group
●
proposed
to
the
Board
and
Annual
General
Meeting
(AGM) for approval the Board and Board Committees’
Fees
for
Non-Executive
Directors
of
the
HoldCo
(Actual Fees 2022 & Estimated Fees 2023)
●
proposed to the Board for
approval the Remuneration
Report for the financial year 2022
●
proposed to
the Non-Executive
Directors of
the Bank
for
approval
the
CEO’s
Performance
Evaluation
for
2022 & CEO’s Financial and Non-Financial
objectives
for 2023
●
approved the Remuneration Disclosures for 2022
●
reviewed the
implementation of
the Board
and Board
Committees’ attendance policy
●
approved the Remuneration Disclosures for 2022
●
proposed to the
Non-Executive Directors for
approval
a Voluntary Exit Scheme (VES)
●
proposed to the BoD for approval the 8
th
Stock Option
Plan Implementation for 2023
●
depending on
the case,
approved or
proposed to
the
Non-Executive
Directors
for
approval
various
remuneration issues and borrowing requests
●
discussed
the
Supervisory
Review
and
Evaluation
Process (SREP) findings
regarding Human Resources
matters
●
proposed to the
Non-Executive Directors for
approval
the Separation Policy
●
approved the revised benefits Policy
●
approved
the
proposal
to
assign
to
External
Consultants
to
conduct
a
benchmarking
exercise
for
Top
Management Remuneration
●
proposed to the
BoD for approval the
revised RemCo
Terms
of Reference
●
reviewed and
proposed to
the Non-Executive
Directors
for approval the Remuneration Policy of the Bank
●
reviewed and
proposed to
the Non-Executive
Directors
for approval the Remuneration
Framework of the Bank
●
reviewed and
proposed to
the Non-Executive
Directors
for
approval
the
Variable
Remuneration
-
Key
Performance Indicators & Key Risk Indicators and
the
Group Variable Remuneration Pool
●
Reviewed and approved the Material Risk Takers’ List
●
discussed
the remuneration
policy
implementation
at
Bank and Group level
●
discussed
the Remuneration
Policy
Review
–
Follow
up (for the Year 2021), conducted by
the Internal Audit
Group
●
proposed
to
the
Board
and
Annual
General
Meeting
(AGM) for approval the Board and Board Committees’
Fees for Non-Executive
Directors of the
Bank
(Actual
Fees 2022 & Estimated Fees 2023)
●
proposed to
the Non-Executive
Directors of
the Bank
for
approval
the
CEO’s
Performance
Evaluation
for
2022 & CEO’s Financial and Non-Financial
objectives
for 2023
●
reviewed the
implementation of
the Board
and Board
Committees’ attendance policy
●
discussed
and
further
submitted
to
the
Board
for
information
the
implementation
of
the
Group
Subsidiary
Board
Remuneration
Policy
through
the
Group during 2022
●
approved the Remuneration Disclosures for 2022
●
proposed to the
Non-Executive Directors for
approval
aVoluntary Exit Scheme (VES)
●
depending on
the case,
approved or
proposed to
the
Non-Executive
Directors
for
approval
various
remuneration
issues
of
the
international
subsidiaries
(remuneration
framework,
performance
related
variable remuneration, remuneration increases etc)
●
depending on
the case,
approved or
proposed to
the
Non-Executive
Directors
for
approval
various
remuneration
issues,
borrowing
requests
and
incentive schemes
●
received
and
reviewed
the
annual
updates
of
the
RemCo Chairpersons of Group’s banking subsidiaries
●
approved
the appointment
of RemCo
Chairperson
in
Eurobank Direktna Serbia and Eurobank Cyprus
●
.
●
discussed
the
Supervisory
Review
and
Evaluation
Process (SREP) findings
regarding Human Resources
matters
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●
discussed the Annual RemCo Plan for 2024.
●
proposed to the
Non-Executive Directors for
approval
the Separation Policy
●
approved the revised benefits Policy
●
approved
the
proposal
to
assign
to
External
Consultants to conduct
a benchmarking exercise
Top
Management Remuneration
●
discussed the Annual RemCo Plan for 2024.
3.4
Nomination and Corporate Governance Committee
10
Eurobank Holdings
and the
Bank’s Boards
have delegated
to the
NomCos the
responsibilities (a)
to lead
the process
for
Board and Board Committees appointments, including the identification, nomination and recommendation of candidates for
appointment
to
the Board,
(b) to
consider
matters related
to the
Board’s
adequacy,
efficiency
and effectiveness
and (c)
r
eview
the
Group’s
corporate
governance
policies,
procedures
and
arrangements.
The
Committees
were
renamed
Nomination and Corporate Governance Committees in order to accurately reflect their expanded purpose.
The NomCo, in carrying out its duties, is accountable to the Board.
In particular, among others, the NomCo is responsible:
●
at least annually and in accordance with Board and Board
Committees Evaluation Policy, to
assess the structure,
size, composition and performance of the BoD and make recommendations to
the BoD with regard to the need for
its renewal and/or any other changes it considers appropriate,
●
at least annually
and in accordance
with Board and
Board Committees Evaluation
Policy, to assess the knowledge,
skills, experience and contribution of
individual Board members and of
the Board collectively and report
to the BoD
accordingly,
●
in
the
context
of
Board
and
Board
Committees
Evaluation
Policy
implementation,
to
determine
the
evaluation
parameters based
on best
practices and
ensure the
effectiveness
of the
evaluation of
the Board,
the individual
evaluation
of Non-Executive
Directors,
including
the Chair,
the
succession plan
of the
Chief Executive
and the
members of
the Board,
the targeted
composition of
the Board
of Directors
in relation
to the
strategy and
Board
Nomination Policy,
●
to play
a leading
role in
the nomination
process and
the design
of the
succession plan
for the
members of
the
Board and senior management,
●
to review at least once every two years and recommend for the approval of the BoD the BoD Nomination Policy,
●
to
ensure
that
the
nomination
process,
as
this
is
defined
in
the
BoD
Nomination
Policy,
is
clearly
defined
and
applied in a transparent manner and in a way that ensures its effectiveness,
●
to
ensure
that
there
is
adequate,
step-wise
succession
planning
for
Board
members
so
as
to
maintain
an
appropriate level of continuity
and organizational memory
at Board level, especially
when dealing with sudden
or
unexpected absences or departures of Board members,
●
to monitor the Board succession planning
in order to ensure the smooth succession
of the members of the Board
with their gradual replacement in order to avoid the lack of management,
●
to ensure that the succession framework
takes into account the findings of
the evaluation of the Board in order
to
achieve the necessary changes in composition or skills and
to maximise the effectiveness and collective suitability
of the Board,
●
to
review
at
least
annually
and
always
before
the
initiation
of
the
CEO
succession
process
the
qualifications
required for the
position of the CEO,
to ensure that
there is a
viable pool of
internal and external
candidates and
also to ensure that the CEO is involved
in all the areas of CEO Succession Plan, including
the assessment of the
nominees for his/her position, as he deems appropriate,
●
to ensure that the
CEO is involved in the
succession planning process of the
senior executives at the level
of the
CEO minus one, including the assessment of nominees for the said positions.
As
far
as
NomCos
of
subsidiaries
are
concerned,
neither
the
HoldCo
NomCo
nor
the
Eurobank
NomCo
replace
them.
However,
the Eurobank
NomCo has the
overall responsibility to
oversee that
the NomCos
of subsidiaries
comply with
its
standards, modus operandi and governance framework.
NomCo Membership/Composition
NomCo members are appointed by the Board. The tenure of NomCo members coincides with the tenure of the Board, with
the option to renew
their appointment, but in
any case, the service
in NomCo should not
be more than nine
(9) years in total.
10
HoldCo/Bank’s NomCos’ Terms of Reference may be found at the HoldCo/Bank websites
(
www.eurobankholdings.gr
&
www.eurobank.gr
)
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The NomCo
as of
the date
of approval
of the
here-in Statement,
consists of
five (5)
non-executive Directors,
four (4)
of
whom are
independent Directors,
including the
Chairperson who
may not
serve as
the Chairperson
of the
Remuneration
Committee.
The NomCo composition is outlined below:
NomCo Chairperson:
Irene Rouvitha Panou,
Non-Executive Independent Director of the Board
NomCo Vice-Chairperson:
Jawaid Mirza,
Non-Executive Independent Director of the Board
Members:
Burkhard Eckes,
Non-Executive Independent Director of the Board
Rajeev Kakar,
Non-Executive Independent Director of the Board
Bradley Paul L. Martin,
Non-Executive Director of the Board
It is
noted that
during 2023
and following
NomCos’ recommendations
for the
recomposition of
the HoldCo/Bank’s
BoDs
Committees, the HoldCo/Bank’s BoDs decided on 29.09.2023:
●
to appoint Mr. Burkhard Eckes as new NomCo member,
in replacement of Ms. Efthymia Deli Deli (taking also into
consideration that her role as representative of the HFSF would cease after the disposal of
HFSF’s participation).
●
Mr. Jawaid Mirza to swap
his NomCo status with
that of Mr. Bradley Paul
Martin, i.e. Mr. Jawaid Mirza
to undertake
the position of NomCo’s
Vice Chair (previously held
the position of NomCo’s
member) whereas Mr.
Bradley Paul
Martin to undertake the position of NomCo’s member (previously held the position of NomCo’s Vice Chair)
NomCo Meetings
NomCo meets at least twice a year and minutes are kept.
Quorum in the NomCo Meetings
NomCo is in quorum and meets validly
when half of its members plus one
(1) are present or represented (fractions, if any,
are
not counted),
provided
that no
less than
three (3)
members,
including the
Chairperson
or the
Vice
Chairperson are
present.
Each member
of
NomCo may
validly
represent only
one
of
the other
NomCo members.
Representation
in
the
NomCo may not be entrusted to persons other than the members thereof.
NomCo Decisions
NomCo’s resolutions are
validly taken by an absolute
majority of the members who
are present or represented.
In case of
a tie, the Chairperson and
in case of his/her absence
the Vice Chairperson of
NomCo shall have the casting
vote.
In case
of non-unanimous
decisions, the
views of
the minority
should also
be minuted.
The Board
shall be
informed whenever
a
decision of the Committee is not reached unanimously.
Attendance to the NomCo meetings
During 2023 the attendance details for the NomCo were as follows:
Company
Meetings
Average ratio of
Directors’ attendance
2023
2022
2023
20212022
HoldCo
11
6
100%
97%
Bank
11
7
100%
98%
It is noted that in
2022, representation proxies were provided
for all missed meetings in
HoldCo/Bank NomCo, leading the
overall attendance rate (physical and under representation) at 100% in HoldCo/Bank NomCo.
NomCo Secretary and Minutes
NomCo
appoints
its
Secretary,
who
reports
to
the
Group
Company Secretariat
and
cooperates
with
the
Chairperson of
NomCo. The
Secretary is
responsible to
minute the
proceedings and
resolutions of
all NomCo’s
meetings, including
the
names of those present
and in attendance and the
action plans and follow ups
for assignments, as well
as for issuance of
extracts. Decisions, actions and follow ups are disseminated to the responsible parties, as required.
NomCo Terms of Reference (ToR)
NomCo’s
ToR
are
reviewed
annually
and
revised,
if
necessary,
unless
significant
changes
in
the
role,
responsibilities,
organization and/or regulatory requirements necessitate earlier revision. The ToR
are approved by the Board.
NomCo’s Performance Evaluation
NomCo’s performance
is evaluated
annually according
to the
provisions of
the Board
and Board
Committees Evaluation
Policy.
The self-evaluation conducted by
the NomCo indicates overall satisfaction
among its members regarding the
Committee's
effectiveness and leadership.
NomCo members believe that the Committee
utilizes its time effectively and demonstrates good
planning and scheduling of
meetings. The Chairperson of NomCo is reported to
be well prepared for meetings, facilitating effective navigation
through
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the agenda, encouraging critical discussion, and ensuring that all members
can freely express their views. The members of
the
NomCo
are
also
well-prepared,
leading
to
a
high
level
of
participation
in
important
discussions
and
maintaining
an
adequate level of challenge within the Committee.
However,
the
evaluation
also
highlighted
areas
for
improvement,
particularly
focusing
on
succession
planning.
The
Committee
believes that
more attention
should be
given to
succession
planning
efforts, which
should
include
additional
training and career planning
for potential successors. This
emphasis on succession
planning is crucial for
ensuring the long-
term sustainability and effectiveness of leadership within the organization.
NomCo’s Activity in 2023
For 2023, NomCo has amongst others:
Eurobank Holdings
Bank
●
Proposed to
the BoD
for approval
the revised
NomCo
Terms
of Reference
●
reviewed for further update of
the Board, the Board and
Board
Committees
2022
self-evaluation
and
the
Board’s overall effectiveness assessment
●
discussed and
proposed to
the Board
for approval
the
new
composition
of
the
Board
Committees
and
other
Board and Board Committees’ matters
●
proposed
to the
Board and
the AGM
for
approval the
new BoD and AC members
●
reviewed
and
proposed
to
the
Board
for
approval
the
External Engagements Policy and
the Board and Board
Committees
Evaluation
Policy.
In
addition,
reviewed
and
proposed
to
the
BoD
and
AGM
for
approval
the
Board Nomination Policy
●
reviewed
and
proposed
to
the
Board
for
approval
the
revised HoldCo Group Organizational Chart
●
proposed
to
the
Board
for
approval
the
Internal
Governance Control Manual
●
reviewed and proposed to the
Audit Committee and the
Board
for
approval
the
2022
Corporate
Governance
Statement
●
proposed
to
the
Non-Executive
Directors
for
approval
the appointment of a Senior Executive
●
discussed the
handling of potential
conflicts of interest
following the resignation of an Executive BoD member,
effective as of 31.12.2023
●
reviewed and
updated
the Board on
Senior Executives
succession plan
●
approved external engagements for Board members
●
reviewed
the
independence
of
the
Independent
Non-
Executive directors
●
reviewed the attendance
of Directors to
the Board and
Board Committees
●
reviewed
and
proposed
to
the
BoD
for
approval
the
2023 Action
Plan including recommendations
from the
BoD and BoD Committees Self-Assessment 2022
●
discussed the NomCo Annual Plan for 2024
●
discussed
and
submitted
a
proposal
to
the
BoD
regarding the
term of
office of
the Non-Executive
BoD
member/HFSF
representative
following
the
HFSF’s
share buyback.
●
Proposed to
the BoD
for approval
the revised
NomCo
Terms
of Reference
●
reviewed for further update of
the Board, the Board and
Board
Committees
2022
self-evaluation
and
the
Board’s overall effectiveness assessment
●
discussed and
proposed to
the Board
for approval
the
new
composition
of
the
Board
Committees
and
other
Board and Board Committees’ matters
●
proposed
to the
Board and
the AGM
for
approval
the
new BoD and AC members
●
reviewed
and
proposed
to
the
Board
for
approval
the
External
Engagements
Policy,
the
Board
and
Board
Committees
Evaluation
Policy
and
the
Board
Nomination Policy
●
reviewed
and
proposed
to
the
Board
for
approval
the
revised Eurobank Group Organizational Chart
●
proposed
to
the
Board
for
approval
the
Internal
Governance Control Manual
●
approved
the
selection
of
candidates
as
members
of
the
Board
of
Directors
and/or
CEOs
of
Group’s
significant subsidiaries
●
approved the NomCo Chairperson of Eurobank Cyprus
●
proposed
to
the
Non-Executive Directors
for
approval
the appointment of a Senior Executive
●
discussed the
handling of potential
conflicts of interest
following the resignation of an Executive BoD member,
effective as of 31.12.2023
●
received
and
reviewed
the
annual
updates
of
the
NomCo Chairpersons of Group’s banking subsidiaries
●
reviewed and updated the Board
on Senior Executives
succession plan
●
approved
external
engagements
for
Board
Members
and
General
Managers
/
Executive
Board
(ExBo)
members that are not Board Members
●
reviewed
the
independence
of
the
Independent
Non-
Executive directors
●
reviewed the attendance
of Directors to
the Board and
its Committees
●
reviewed
and
proposed
to
the
BoD
for
approval
the
2023 Action
Plan including recommendations
from the
BoD and BoD Committees Self-Assessment 2022
●
discussed
the
talent
development
and
mobilization
practices in Eurobank
●
discussed the NomCo Annual Plan for 2024
●
discussed
and
submitted
a
proposal
to
the
BoD
regarding the
term of
office of
the Non-Executive
BoD
member/HFSF
representative
following
the
HFSF’s
share buyback.
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Board of Directors Diversity Policy
The HoldCo/Bank Board of
Directors Diversity Policy outlines
the organization's commitment
to diversity on the
Board in line
with international best practices and applicable legal requirements.
According
to
the
Policy,
the Board's
diversity
encompasses
various
factors
such
as
skills,
educational
and
professional
background,
geographical
origin,
gender,
age,
and
other
relevant
qualities
of
Directors.
The
NomCo
is
responsible
for
considering diversity when assessing the composition and structure of the Board.
During the review process of the
Board collective suitability, NomCo members discuss and agree on measurable objectives
for
achieving
diversity
on
the
Board.
These
objectives
are
also
considered
during
the
(re)appointment
and
succession
planning of individual Board members, in accordance with the Board and Board Committees Evaluation Policy.
One of the specific targets outlined in the Policy is related to gender diversity.
NomCo aims for at least 25% representation
of the less represented gender
on the Board, calculated based
on the total Board size.
This target is set for
the next three
years, with the
intention to maintain
the actual percentage
above the minimum
target at all
times, considering industry
trends
and best practices.
As of 31.12.2023, the representation of the female gender on the
Board met the provisions of Greek Law, which requires at
least 25% representation. If there is
a fractional result, the percentage is
rounded to the previous integer. This indicates that
the HoldCo/Bank is meeting its diversity objectives, particularly concerning gender representation on the Board.
Senior Management Diversity
The Bank/HoldCo has taken
significant steps to enhance
gender diversity and support
career growth for women
executives.
These
efforts
are
aimed
at
creating
a
pipeline
of
eligible
female
professionals
who
can
potentially
join
the
Executive
Committee and/or Board.
One key
initiative is
the annual Succession
Planning exercise, which
identifies potential
successors and has
seen a 27%
increase
in
the
participation
of
women
successors
in
the
pool.
This
demonstrates
a
commitment
to
promoting
gender
diversity at senior levels within the organization.
Additionally, the Bank is
actively involved
in initiatives like
"the Boardroom" initiative
in Greece, which
supports senior female
leaders aiming to become Board members in
major organizations. By sponsoring such initiatives, the Bank
encourages its
employees and clients to seize opportunities for leadership roles.
In the
long term,
the Bank
has launched
the "Women
In Banking"
program, a
Women Leadership
Acceleration program.
This program focuses on supporting the career growth
of high-potential women in middle management roles, with the goal
of preparing them for transition to top executive roles in the future.
Furthermore,
the
Bank's
Human
Resources department
is continuously
examining additional
actions
to
further
enhance
diversity at the senior and senior management levels within the Bank/HoldCo. These efforts reflect a strong commitment to
promoting gender diversity and supporting the professional growth of women within the organization.
Board Nomination Policy
The HoldCo/Banks’ Board Nomination Policy sets out the guidelines and formal process for the identification, selection and
nomination of candidates for the Board. The Policy ensures that such appointments are made: (a) in accordance with legal
and
regulatory
requirements; (b)
with
due
regard
to
the expectations
of
the major
shareholders
and
(c)
on
the
basis of
individual merit and ability, following a best practice process.
The primary objectives of the Policy are to:
●
define the general
principles which guide the
NomCo as it discharges
its role across
all stages of the
nomination
process,
●
devise the specific criteria and requirements for Board nominees,
●
establish a transparent, efficient and fit-for-purpose nomination process,
●
ensure that the
structure of
the Board (including
the succession
planning) meets
high ethical
standards, has optimal
balance of knowledge, skills and experience and is aligned with the current regulatory requirements.
The Board supported by NomCo shall nominate candidates who meet the following nomination criteria:
●
Reputation along with honesty, integrity and trust
a)
Reputation: Sufficiently
good repute,
high social
esteem and
adherence to
the reputation,
honesty,
and integrity
criteria of the applicable regulatory framework
b)
Honesty,
integrity
and
trust:
Demonstration
of
the
highest
standards
of
ethics,
honesty,
integrity,
fairness,
and
personal discipline, through personal history, professional track record or other public commitments
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●
Knowledge, skills, experience (KSE) and other general suitability requirements
a)
Understanding of the HoldCo/Bank: Sufficient KSE for the development of a
proper and up-to-date understanding
of the
business, culture, group
structure, governance arrangements,
supervisory and
regulatory context, product
and geographic markets of operations, stakeholders and risks of the HoldCo and its subsidiaries
b)
Seniority: Several
years of
experience in a
generally recognised position
of leadership
in the candidate’s
field of
endeavour
c)
Independent mind-set and ability to challenge: Ability of
forming and expressing an independent judgement on all
matters that reach the Board
and candour to challenge
proposals and views on these
matters by management and
other candidates
d)
Collegiality,
team skills
and leadership:
Ability to
contribute constructively
and productively
to Board
discussions
and decision making along with ability of leading such discussions as
chair or vice-chair of specific committees or
the Board as a whole
e)
Additional
criteria
for
the
nomination
of
Executive
Directors:
Proven,
through
current
and
previous
executive
positions,
knowledge,
skills,
experience
and
character
to
lead
the
HoldCo/Bank
and
its
subsidiaries
in
the
achievement of strategic
objectives, along with
willingness to enter
into full time
employment with the
HoldCo/Bank.
●
Conflicts of interest and independence of mind
NomCo
examines
the
personal,
professional,
financial,
political
and
any
other
possible
interests
and
affiliations
of
candidates, ensuring that the candidates do not have actual, potential or perceived conflicts of interest which cannot be
prevented, adequately mitigated
or managed under
the written policies
of the HoldCo/Bank,
that would impair
their ability
to represent the
interests of all
shareholders of the
HoldCo/Bank, fulfil
their responsibilities as
Directors and make
sound,
objective and independent decisions (act with independence of mind).
In
particular,
NomCo
shall
also
examine
relevant
direct
and indirect
monetary
interests
and
non-monetary
interests,
including those arising from affiliations with and membership in other organisations.
●
Time commitment
NomCo ensures that
all nominees are
able to commit
the time
necessary to effectively
discharge their responsibilities
as Directors, including regularly attending and participating in meetings of the Board and its Committees.
●
Collective suitability
The
Board
should
collectively
be
able
to
understand
the
institution's
activities,
including
the
main
risks,
and
to
take
appropriate
decisions
considering
the
business
model,
risk
appetite,
strategy
and
markets
in
which
the
institution
operates, i.e.:
●
the composition of the management body should reflect
the knowledge, skills and experience necessary to fulfil
its
responsibilities. This
includes that
the management
body collectively
has an
appropriate understanding
of those
areas for
which the
members are
collectively accountable,
and the
skills to
effectively manage
and oversee
the
institution, including the following aspects:
●
the business of the institution and main risks related to it,
●
each of the material activities of the HoldCo/Bank,
●
relevant
areas
of
sectoral/financial
competence,
including
financial
and
capital
markets,
solvency
and
models,
environmental, governance and social risks and risk factors,
●
financial accounting and reporting,
●
risk management, compliance, including AML/CFT, and internal audit,
●
information/digital technology and security,
●
local, regional and global markets, where applicable,
●
the legal and regulatory environment,
●
managerial skills and experience,
●
the ability to plan strategically,
●
the management of (inter)national groups and risks related to group structures, where applicable,
●
corporate governance,
●
ESG issues,
●
gender representation, as per the Board of Directors Diversity Policy.
Among others, in overseeing the
nomination process, the NomCo shall
ensure that there is
adequate, step-wise succession
planning for Board members so as to maintain an appropriate level of continuity and organizational memory at Board level,
especially when dealing with sudden or unexpected
absences or departures of Board members.
In this respect, the NomCo
shall:
●
monitor
the
tenures of
Board members
and make
its nomination
proposals in
such
a
manner as
to
encourage
staggered
appointments/retirements
on
the
Board,
wherever
possible.
The
reappointment
of
current
Board
members shall be based on continuing adherence to the criteria established in this Policy,
●
ensure that there is an appropriate level of
presence of relevant KSEs on the Board, without
undue reliance on the
expertise of a few Directors,
●
review whether
there are
sufficient
Board members
who are
capable of
serving as
Board Chair
and Committee
Chairs, if necessary,
●
periodically monitor as required the availability
of candidates who could address the
Board’s succession planning
needs,
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●
take into account account
a) the objectives and targets
defined in the HoldCo/Bank Board
Diversity Policy and b)
the findings of the HoldCo and Bank BoD
evaluations in order to achieve the necessary
changes in composition or
skills and to maximise the effectiveness and collective suitability of the HoldCo and Bank BoD.
The Board Nomination
Policy is reviewed at
least annually by
the NomCo and approved
by the Board/General Meeting
of
Shareholders as necessary, unless material changes, regulatory or other,
necessitate earlier revision.
CEO Succession Planning
The
HoldCo/Bank's
CEO
Succession
Planning
Policy
(Policy)
plays
a
crucial
role
in
ensuring
a
smooth
transition
in
leadership. The key elements of the Policy are outlined below:
●
Qualifications for CEO
Position: The NomCo,
in collaboration with
the current CEO,
defines the
qualifications required
for the position of the CEO. This ensures that the successor
possesses the necessary skills, experience, and attributes
to lead the organization effectively.
●
Viable Pool
of Candidates:
NomCo ensures that
there is a
viable pool of
candidates who meet
the required profile
for
the
CEO
position.
This
may
involve
identifying
internal
candidates
within
the
organization
or
considering
external
candidates as well.
●
Annual
Review:
NomCo reviews
the
qualifications
required for
the
CEO position
and
the pool
of candidates
at
least
annually. This continuous review ensures that the succession planning process remains up-to-date and aligned with the
evolving needs of the organization.
●
Selection
Process:
NomCo
leads
the
selection
process
for
the
CEO
successor.
This
involves
evaluating
candidates
based
on
their qualifications,
experience,
leadership
capabilities,
and
fit
with
the
organization's
culture
and
strategic
goals.
●
Tailored
Induction Program:
Upon the
selection of
the new
CEO, NomCo
approves a
tailored induction
program. This
program
is
designed
to
facilitate
a
smooth
transition
and
ensure
that
the
new
CEO
is
equipped
with
the
necessary
knowledge, resources, and support to succeed in the role.
Overall, the CEO Succession
Planning Policy ensures that
the organization is well-prepared
for leadership transitions and
can maintain continuity and effectiveness in its leadership team.
3.5
Board Digital & Transformation Committee
11
The Bank’s Board
Digital & Transformation
Committee (BDTC) is a consultative
body that reviews proposals
and gives its
strategic advice and
guidance on such
proposals related to
the Group’s digital,
innovation, transformation and
cybersecurity,
in
order
to
contribute
in
achieving
the
vision
and
strategic
goals
of
the
Bank.
The
BDTC,
in
carrying
out
its
duties,
is
accountable to the Bank Board.
BDTC Membership / Chairmanship
The BDTC members are appointed by the Board.
The tenure of the BDTC members coincides with
the tenure of the Bank’s
Board, with
the option to
renew their appointment,
but in any
case the service
in BDTC should
not be more
than nine
(9)
years in total.
The
BDTC
consists
of
five
(5)
Directors
of
whom
one
(1)
executive
and
(4)
independent
non-executives.
The
BDTC
composition is outlined below:
BDTC Chairperson:
Alice Gregoriadi,
Non-Executive Independent Director of the Board
BDTC Vice-Chairperson:
Rajeev Kakar,
Non-executive Independent Director of the Board
Members:
Jawaid Mirza,
Non-executive Independent Director of the Board
John Arthur Hollows,
Non-executive Independent Director of the Board
Stavros Ioannou,
Executive Director of the Board / Deputy Chief Executive Officer, Group
Chief Operating Officer (COO) & International Activities
It is
noted that
during 2023
and following
NomCos’ recommendations
for the
recomposition of
the HoldCo/Bank’s
BoDs
Committees, the HoldCo/Bank’s BoDs decided on
29.09.2023, Mr. John Arthur Hollows to replace
Ms. Efthymia Deli (taking
also into consideration that her role as representative of the HFSF would cease after the disposal of HFSF’s participation).
In addition,
on 31
October 2023,
Mr.
Andreas Athanasopoulos,
Deputy CEO
and Executive
Member of
the HoldCo/Bank
BoD and member of the Bank BDTC submitted his resignation from these roles, with effect from December 31st, 2023.
11
BDTC ToR may be found at the Bank’s website (www.eurobank.gr).
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BDTC Meetings
BDTC meets at least twice a year and as each time required, also considering that the annually held Strategy Away Day is
a
forum
in
which
relevant
digital and
transformation
strategic matters
are
also
discussed,
while minutes
are kept
for
all
meetings.
Quorum in BDTC
BDTC is in
quorum and meets
validly when half
of its members
plus one (1)
are present or
represented (fractions, if
any,
are not counted), provided that no less than three (3) members,
including the Chairperson or the Vice Chairperson and one
non
‐
executive director are present.
At all times, the Chairperson or the Vice
Chairperson are present and the total number
of non
‐
executive (incl. independent nonexecutive) directors should be the majority of the members present or represented.
Each member
may
validly
represent only
one of
the
other BDTC
members
and
representation may
not be
entrusted to
persons other than the Committee members.
BDTC Decisions
BDTC’s resolutions are validly taken by
an absolute majority of the members who
are present or represented. In case of
a
tie, the Chairperson
and in case
of his/her absence
the Vice Chairperson
of BDTC shall
have the casting
vote.
In case of
non-unanimous
decisions,
the
views
of
the
minority
should
also
be
minuted.
The
Board
shall
be
informed
whenever
a
decision of the BDTC is not reached unanimously.
BDTC Attendance Rate
During 2023, BDTC held two (3) meetings and the ratio of attendance was 94% (vs. 100% in 2022).
The Directors’ individual attendance rates at the BDTC meetings in 2023 were the following:
Eurobank ‘s BDTC
Eligible to attend
Attended in person
(# and %)
Alice Gregoriadi,
BDTC Chairperson
3
3
100%
Rajeev Kakar,
BDTC Vice-Chairperson
3
3
100%
Jawaid Mirza,
BDTC member
3
3
100%
John Arthur Hollows,
BDTC member since 20.7.2023
1
1
100%
Stavros Ioannou,
BDTC member
3
3
100%
Efthymia Deli,
BDTC member until 7.11.2023
2
2
100%
Andreas Athanasopoulos, BDTC member until 31.12.2023
3
2
67%
It is noted
that in 2023,
Mr. Andreas Athanasopoulos provided
representation proxy for
his missed meeting
in BDTC, leading
the overall attendance rate (physical and under representation) at 100% in BDTC.
BDTC Secretary and Minutes
BDTC appoints its
Secretary, who reports to the
Group Company Secretariat
and cooperates with
the Chairperson of
BDTC.
The Secretary
is responsible
to minute
the proceedings
and resolutions
of all
BDTC’s meetings,
including the
names of
those present and
in attendance and
the action plans
and follow ups
for assignments, as
well as for
issuance of extracts.
Decisions, actions and follow ups are disseminated to the Bank’s responsible Units, as required.
BDTC Terms of Reference (ToR)
The BDTC ToR
are reviewed at least once
every two (2) years and
revised if necessary,
unless significant changes in
the
role, responsibilities, organization and/or regulatory requirements
necessitate earlier revision. The ToR are approved by the
Board.
BDTC Performance Evaluation
BDTC’s
performance
is
evaluated
annually
according
to
the
provisions
of
the
Board
and
Board
Committees
Evaluation
Policy.
According to
the self-evaluation
conducted by
the BDTC,
its members
expressed satisfaction
with the
effectiveness
and
leadership of
the Committee.
They are
of the
opinion that
the BDTC
utilizes its
time efficiently
and engages
in thorough
planning and scheduling of meetings. The Chairperson of the BDTC is consistently well-prepared for meetings and adeptly
guides the Committee through its agenda, fostering critical discussions and ensuring that all
members have the opportunity
to freely
express their
views. Furthermore,
members are
adequately prepared
for discussions,
leading to
a high
level of
participation, which indicates a satisfactory level of challenge within the Committee.
The
evaluation also
brought
attention
to areas
for potential
improvement
within
the BDTC,
particularly
in enhancing
the
planning and scheduling of future meetings. The suggestion is to incorporate more benchmarking and best practices items
into the agenda, shifting focus away from matters solely related to the current state of the Bank.
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BDTC’s Activity
For 2023 BDTC has discussed updates of the
Eurobank 2030 Transformation and its 2024 big
rocks, including deep dives
in various areas. The Committee reviewed among others the IT Architecture Model and
strategy to support transformation,
the digital maturity
and was also
updated on innovation
benchmarking, walked
through the Eurobank’s
Innovation Center
and noted the progress of innovation initiatives.
4.
Management Committees
Given that there is no relevant regulatory requirement neither a business
need, the CEO has not established committees at
HoldCo level.
As
regards
the
Bank,
the
CEO
establishes
committees
to
assist
him,
as
required,
in
discharging
his
duties
and
responsibilities. The most
important Committees established
by the CEO
are the Executive
Board, the Strategic
Planning
Committee, the Management
Risk Committee, the
Group Asset and
Liability Committee, the
Central Credit Committees (I
&
II),
the
Troubled
Assets
Committee,
the
Products
and
Services
Committee
(PSC)
and
the
Environmental,
Social
&
Governance (ESG) Management Committee.
Executive Board
The Composition of the Executive Board and short biographical details of its members are summarized below:
Fokion Karavias
Chief Executive Officer (CEO)
Year of birth: 1964
Nationality: Hellenic
Number of shares in Eurobank Holdings: 269.495
Mr. Karavias joined Eurobank in 1997 and served, inter alia, as
Senior General
Manager,
Group Corporate
& Investment
Banking, Capital
Markets &
Wealth
Management
(2014-2015)
and
Executive
Committee
Member
(2014-2015),
General
Manager
and
Executive
Committee
Member
(2005-2013),
Deputy
General
Manager
and
Treasurer
(2002-2005),
Head
of
fixed
income
and
derivative product trading (1997).
In the past,
Mr. Karavias
had also the
following significant posts:
Treasurer of
Telesis Investment Bank (2000), Head of
fixed income products
and derivatives
in Greece
of Citibank, Athens
(1994) and has
also worked in
the Market
Risk
Management Division of JPMorgan NY (1991).
He holds a PhD
in Chemical Engineering from the
University of Pennsylvania,
Philadelphia,
USA
and
an
MA
in
Chemical
Engineering
from
the
same
university,
as
well
as
a
Diploma
in
Chemical
Engineering
from
the
National
Technical
University of
Athens. He
has published
articles on
topics related
to
his academic research.
Stavros Ioannou
Deputy Chief Executive Officer (CEO), Group Chief
Operating Officer (COO) & International Activities
Membership in Board Committees:
Board Digital and Transformation Committee - Member
Year of birth: 1961
Nationality: Hellenic
Number of shares in Eurobank Holdings: 133.154
Mr. Ioannou holds several other posts
in the Eurobank Group
as member of the
BoD
of
Eurobank
Bulgaria
AD
(since
October
2015),
Vice-Chairman
in
Eurobank Cyprus Ltd
(since November 2022) and
is also the
Chairman of the
BoD, BE-Business
Exchanges SA
(since January 2014).
Group Private Banking
is also in
the area of
his responsibilities
since 2019 while
he has been
appointed
as
the
responsible
BoD
member
of
Eurobank
Holdings
and
Eurobank
for
climate-related and environmental risks and for the outsourcing
function
He
is
currently
Non-Executive
Board
member
of
Grivalia
Management
Company S.A. (since September 2019).
In the
past, Mr.
Ioannou had
also the
following significant
posts: Chairman
of
the
Executive
Committee
in
the
Hellenic
Banking
Association
(2020-2022)
where he had been member since 2013, Vice Chairman at
Cardlink SA (2013-
2015), Member of
the BoD in
Millennium Bank, responsible
for Retail,
Private
Banking
and
Business
Banking
(2003),
Head
at
Barclays
Bank
PLC,
responsible for Retail Banking, Private Banking and Operations
(1990-1997).
He holds an MA in Banking and Finance from the
University of Wales, UK and
a Bachelor Degree in Business Administration from
the University of Piraeus.
Kostas Vassiliou
Deputy Chief Executive Officer
(CEO), Head of Corporate
& Investment Banking
Year of birth: 1972
Nationality: Hellenic
Mr. Vassiliou
holds several other posts in the Eurobank Group as
Chairman of
the
BoD
of
Eurobank
Factors
Single
Member
SA
(since
December
2018),
Member
of
the
BoD
of
Eurobank
Equities
Single
Member
SA
(since
March
2015), Vice-Chairman of
the BoD of Eurolife
FFH Insurance Group
Holdings SA
(since January 2021), Eurolife
FFH Life Insurance SA
(since December 2020)
and Eurolife FFH General Insurance SA (since December
2020).
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Number of shares in Eurobank Holdings: 131.626
In
the
past,
Mr.
Vassiliou
had
also
the
following
significant
posts:
Country
Manager for Greece, Cyprus and the Balkans,
Mitsubishi UFJ Financial Group,
London
(2000-2005)
and
Senior
Relationship
Manager,
Mitsubishi
UFJ
Financial Group, London (1998-2000).
He
holds
an
MΒΑ
from
Boston
University,
USA
and
a
BA
in
Business
Administration from the Athens University of Economics
and Business.
Christos Adam
General Manager, Group Risk Management, Group
Chief
Risk Officer (Group CRO), Eurobank SA
Year of birth: 1958
Nationality: Hellenic
Number of shares
in Eurobank Holdings: 120.365
Mr. Adam has
been Group
CRO since
November 2013
and he
has served
within
the Eurobank Group as Deputy General Manager (2005-2013), Head of Group
Credit
Control
Sector
(1998-2013)
and
Senior
Account
Officer
&
Senior
Manager, Corporate Division (1990-1997).
In the past Mr. Adam worked
in ANZ
Grindlays
Greek
Branch,
he
had
the
position
of
Account
Manager
in
the
Corporate Division.
He holds an MBA in Finance from the University of Michigan, Ann Arbor, USA,
with full scholarship from the Fulbright Foundation and a Degree in Economics
with Honors
from the
School of
Economics &
Political Sciences,
University of
Athens.
Thanasis Athanasopoulos
General Manager –
Head of Group
Compliance General
Division of Eurobank SA
Year of birth: 1973
Nationality: Hellenic
Number of shares
in Eurobank Holdings: 103.888
In
the
past, Mr.
Athanasopoulos has
served as
Chief Audit
Executive of
the
Alpha
Bank
Group
and
Vice
President
-
Audit
&
Risk
Review
of
the
Mellon
Financial Corporation.
He
holds
a
BSc,
Business
Administration
from
the
Athens
University
of
Economics and
Business, a
MSc, Banking
from the
University of
Reading, a
MSc, Economic
History from
the London
School of
Economics and
he is
certified
as a Fellow
Chartered Accountant of ICAEW
and a Certified Director
(IDP) by
INSEAD.
Iakovos Giannaklis
Deputy Chief
Executive Officer,
Head of
Retail &
Digital
Banking of Eurobank SA
Year of birth: 1971
Nationality: Hellenic
Number of shares
in Eurobank Holdings: 82.421
He is
also the
Vice-President in
the Board
of Directors
of Worldline
Merchant
Acquiring Greece S.A.
In
the
past,
Mr.
Giannaklis
held
BoD
positions
in
the
following
entities
of
Eurobank
Group:
Eurobank
FPS
Loans
and
Credits
Claim
Management
SA
(2018-2019),
Eurobank
Household
Lending
Services
SA
(2016-2018),
Eurobank
Asset
Management
MFMC
(2014-2017)
and
Eurobank
Business
Services (2009-2017).
He also
held the
following posts
in Eurobank:
Head of
Retail Banking General Division
(2016-2023), Head of Branch
Network General
Division
(2014-2016),
Head
of
Branch
Network
Commercial
Development
Sector (2014), and Head of Branch Network Sector (2009-2014).
He
has
also
been
a
member
of
the
BoDs
of
Eurolife
FFH
Group
Holdings,
General Insurance and Life Insurance (2021-2023). Mr
Giannaklis also served
as
Group
Deputy
General
Manager,
Retail
and
Digital,
Growth
and
Transformation in Bank Muscat, Oman (2023)
He holds an
MBA from the
University of Indianapolis,
USA and a
BA in Business
Administration, from the City University of Seattle,
USA.
Tasos Ioannidis
General
Manager
Markets
&
Asset
Management,
Eurobank SA
Year of birth: 1968
Nationality: Hellenic
Number of shares
in Eurobank Holdings: 101.962
In
the
past
Mr.
Ioannidis
has
served
as
General
Manager,
Head
of
Global
Markets & Treasury (April 2015
- July 2019), Deputy
General Manager, Head of
Global
Markets
&
Treasury
(October
2013
-
March
2015),
Deputy
General
Manager,
Group
Treasurer
(April
2009
-
October
2013),
Deputy
General
Manager, Group Head
of Trading (March
2007 -
April 2009).
He has
also served
as
Member
of
the
BoD,
Eurobank
Asset
Management
MFMC
(May
2015
-
September
2017),
Chairman
of
the
BoD,
Eurobank
ERB
MFMC,
former
TT
ELTA
MFMC (February 2014
- September 2015), Member
of the BoD,
Global
Asset Management SA
(June 2006 -
December 2009), and
Member of the
BoD,
Portfolio Investment SA (June 2002 - April 2003).
He holds
a MSc in
Shipping, Trade
and Finance from
Cass Business School,
London, UK
and a
BSc, School
of Mechanical
Engineering from
the National
Technical University of Athens.
Apostolos Kazakos
General Manager, Group Strategy, Eurobank SA
Year of birth: 1972
Nationality: Hellenic
Number of shares
in Eurobank Holdings: 104.417
Mr.
Kazakos
has
also
served
as
Deputy
CEO,
Eurobank
Equities,
the
investment banking and
brokerage arm of
Eurobank Group (May
2010 – August
2013),
Assistant
General
Manager,
Head
of
Group
Strategy
&
Investment
Relations,
National
Bank
of
Greece
(August
2014
–
March
2015),
General
Manager
and
Head
of
the
Investment
Banking,
Restructuring
&
Capital
Investment
Division,
General
Bank,
Piraeus
Group
(September
2013
–
July
2014),
Senior
Executive
and
eventually
Head
of
the
Investment
Banking
Division, Eurobank Equities and Telesis Bank (January 1998 – May 2010).
He
holds
an
MSc
in
International
Securities,
Investment
and
Banking,
International
Securities
Market
Association
(ISMA)
from
the
University
of
Reading, UK and a Degree in Accounting, Faculty of Administration & Finance
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from
the
International
University
of
Greece
(ex-Technological
Educational
Institute of Central Macedonia).
Harris Kokologiannis
General Manager, Group Finance, Group Chief Financial
Officer (Group CFO), Eurobank SA
Year of birth: 1967
Nationality: Hellenic
Number of shares
in Eurobank Holdings: 119.788
Mr. Kokologiannis joined Eurobank in January 2008 as Head of Group
Finance
and Control until his appointment as Group CFO
in July 2013.
He
has
served
as
Audit
Supervisor,
Deloitte
(Tax,
Audit,
Management
Consultant),
Group
CFO
(Lafarge
Cement
-
Heracles
General
Cement
Company), Director
of Finance
and Control
(L’Oreal
Hellas), Group
Financial
Manager (PLIAS Group).
He
is
a
Chartered
Accountant
in
UK,
member
of
the
Chartered
Institute
of
Management Accountant (C.I.M.A.), UK. He holds an MBA from the
University
of Warwick (UK) and a BA in Business
Management and Organization from the
School of Economics and Business Science (ASOEE).
Michalis Louis
Head of International Activities & Group Private
Banking
Year of birth: 1962
Nationality: Cypriot
Number of shares
in Eurobank Holdings: -
Mr. Louis
also serves as CEO,
Eurobank Cyprus Ltd (since
2007), Member of
the
BoD,
Eurobank
Private
Bank
Luxembourg
SA
and
Member
of
the
Supervisory Board (SB) of Eurobank Bulgaria AD.
He holds a MSc in Corporate Finance &
Accounting from the London School of
Economics and Political Sciences, UK and a Degree in Accounting
from Ealing
College, UK.
Natassa Paschali
General
Manager,
Head
of
Group
Human
Resources
General Division, (Group CHRO), Eurobank SA
Year of birth: 1972
Nationality: Greek
Number of shares
in Eurobank Holdings: 47.968
Mrs. Paschali is the Group Chief Resources
Officer (Group CHRO), since June
2018 In the past she has served within
the Eurobank Group as Head of People
Engagement (January 2017 – June
2018), Head of HR, Eurobank
Private Bank
Luxembourg SA
(parallel assignment),
Luxembourg (May
2014 –
May 2017),
Head of HR Line Management, Wholesale Banking
(2008-2016).
She
also held positions in Citigroup-
Citibank International Plc
as Head of HR –
Vice
President, Global Corporate and Investment
Banking Group, (July 2006 – June
2008)
and
Head
of
Training
&
Development
–
Assistant
Vice
President,
Consumer Banking Group, (February 2004 – July 2006)
She holds a
MSc in Industrial
Relations and Personnel Management
from the
London School
of Economics
and Political
Science (1995-1996)
and a
BA in
English
Language
and
Literature
from
the
University
of
Athens,
School
of
Philosophy (1991-1995).
Ioannis Serafeimidis
General
Manager,
Retail
Banking
Channels,
Eurobank
SA
Year of birth: 1973
Nationality: Hellenic
Number of shares in Eurobank Holdings: 44.523
Mr Serafimidis
is also
a Non-Executive
member of
the BoDs
in, Eurolife
FFH
Insurance Group
Holdings SA (since
July 2023),
Eurolife FFH
Life Insurance
SA
(since July 2023) and Eurolife FFH General
Insurance SA (since July 2023).
In
the
past
Mr.
Serafeimidis
has
served
as
General
Manager
and
Head
of
Branch Network, Eurobank, Athens (2019-2023), Executive Director and Head
of
Retail
Banking,
Postbank,
Sofia
(2014-2019),
Head
of
Branch
Network,
Postbank,
Sofia
(2011-2014),
Senior
Executive Manager
and
Head of
Small
Business
Banking,
Bancpost,
Bucharest
(2008-2011),
as
well
as
other
significant posts in Eurobank’s Branch Network,
which he joined in 2002 after
a
4 year incumbency in KPMG Management Consulting
in Athens.
He holds an MSc
in International Relations from London School
of Economics
(UK) and a BSc in Economics from the University
College London (UK).
Mrs. Veronique Karalis, Deputy Group Company Secretary,
serves as the Secretary of the ExBo.
The ExBo
manages the
implementation of
Group’s strategy
in line
with the
Board’s guidance.
The functioning
of ExBo
is
subject to the
provisions of the
TRFA.
The ExBo is
established by the
CEO and its
members are appointed
by the CEO.
The ExBo meets on a weekly basis or ad hoc when necessary. Other executives of the Group, depending on the subject to
be discussed, may be invited to attend.
The ExBo is in quorum and meets validly when half of its members plus one are present or represented. In
determining the
number of
members for
the quorum, fractions,
if any,
shall not
be counted.
The ExBo
resolutions require a
majority vote.
The ExBo appoints
its Secretary,
who reports to
the Group Company
Secretariat and cooperates
with the Chairperson
of
the Committee. The Secretary is responsible to minute the proceedings and resolutions of all ExBo meetings, including the
names of those present
and in attendance and the
action plans and follow ups
for assignments, as well as
for issuance of
extracts. Decisions, actions and follow ups are disseminated to the Bank’s responsible Units, as required.
The ExBo Terms
of Reference (ToR) are
approved by the CEO and revised as appropriate.
The ExBo’s key tasks and responsibilities are to:
●
manage the implementation of the Group’s strategy as developed by the SPC, in line with the BoD’s guidance,
●
draw up the annual budget and the business plan.
The SPC reviews the key objectives and the
goals contained therein,
as well as the major business initiatives, and submits them to the Board for approval,
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●
approve issues concerning the Group’s strategic choices (e.g. partnerships, share capital increase, issuing convertibles
and/or launching debt issuance programs,
mergers, acquisitions or disposals, the
formation of joint ventures,
creation or
dissolution of special purpose vehicles, dividend distribution and all other investments or
non-material disinvestments
12
by the Group etc.), ensuring these being in line with the approved Group’s strategy, if the issue under discussion is less
than or equal to €40 million. In case though:
a)
the issue under discussion exceeds € 40 million,
b)
a decision of the Board is obligatory by Law or by the Bank’s contractual commitments,
c)
it is
deemed necessary
by the
SPC, taking
into account
the complexity
and nature
of the
strategic choices
under
discussion,
the issues concerning the
Group’s strategic choices are
approved by the Board
following a relevant proposal
by the SPC
(as per its Terms of
Reference),
●
monitor the performance of each business unit
and country against budget and
ensure corrective measures are in place
wherever required,
●
decide on all
major Group’s initiatives
aiming at transforming
the business and
operating model, enhancing
the operating
efficiency and cost rationalization, improving organizational and business structure,
●
ensure that adequate systems of internal controls are properly maintained,
●
review and
approve Bank’s Policies
(other than
Credit Policies
that are approved
by Management
Risk Committee
and/or
Troubled
Assets Committee
and/or BRC)
that are
related to
its responsibilities
and/or are of
critical importance
to the
Bank, including but not limited to those requiring BoD approval as per the TRFA,
●
review the
performance of
any Committee
and /or
individuals to
whom it
has delegated
part of
its responsibilities,
as
approved,
●
ensure adequacy of Resolution Planning governance, processes and systems,
●
hire and retain external consulting firms
and approve their compensation and terms of
engagement in accordance with
Bank’s policies and procedures,
●
hire and retain investment banking advisors, and approve their compensation and terms of engagement, in accordance
with Bank’s policies and procedures, where applicable,
●
To
review the quarterly report of
Group Operational Risk Sector
(GORS) before submission to
the BRC since it entails
group wide operational risk issues.
ExBo’s performance
is evaluated
annually according
to the provisions
of Bank’s
Management Committees’
Policy and its
Terms
of Reference. For 2023,
ExBo performed its
self-evaluation. According to this
evaluation, it was determined
that its
overall performance
remained strong
in
all areas
with a
slight
decrease vs.
last year.
Members
of ExBo
discussed the
following considerations: i)
number of items
in the agendas
being excessive, ii)
Meetings’ agenda being
more focused on
regulatory
and
operational
and
less
strategic
and
business
oriented
and
iii)
supporting
material
being
lengthy
and
the
necessity of an executive summary.
Strategic Planning Committee
13
The purpose of the SPC is to:
a)
assist Management in planning, developing and implementing the Bank Group’s Strategy and
b)
recommend to the Board certain initiatives in relation to the Bank Group’s Strategy.
The key tasks and responsibilities of the SPC are:
●
within the framework of which the
Executive Board draws up the annual
budget and the business plan,
to review the key
objectives and goals contained therein and review major business initiatives,
before their submission for approval to the
Board,
●
to
review,
analyze
and deliberate
issues
concerning the
Bank Group’s
strategic choices
(e.g. strategic
partnerships,
share capital increase, issuing convertibles and/or launching debt issuance programs, mergers/demergers,
acquisitions
or disposals, the formation of
joint ventures, creation or dissolution
of special purpose vehicles, dividend
distribution and
all other major
investments or disinvestments
by the Bank
Group etc.), ensuring
these being in
line with the
approved
Bank Group’s strategy.
The SPC shall formulate relevant proposals to the Board, if:
a)
the issue under discussion exceeds € 40 million, while for lower amounts approval will be provided by the Executive
Board,
b)
a decision of the Board is obligatory by Law or by the Bank’s contractual commitments,
c)
it is
deemed necessary
by the
SPC, taking
into account
the complexity
and nature
of the
strategic choices
under
discussion,
●
to submit to
the Board
for approval
proposals relating
to the
strategy and
the budget
of the
Property Portfolio
as described
in the Service Level Agreement between Eurobank and Grivalia Management Company,
●
to submit to the
Board for approval proposals for
the acquisition and disposal of
assets other than repossessed assets
(as these are
defined in the
Service Level Agreement
between Eurobank and
Grivalia Management Company)
with book
value above € 10 million,
●
to submit to the Board
for approval proposals for the disposal of repossessed
assets (as these are defined
in the Service
Level Agreement between Eurobank and Grivalia Management Company) with gross book value above € 20 million,
12
As specified in the Divestment Policy
13
Information
regarding
current
composition
and
short
biographical
details
of
its
members
may
be
found
at
the
Bank’s
website
(www.eurobank.gr).
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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●
to maintain
and take
all necessary
actions on
regulatory and
internal capital
required to
cover all
types of
risks (incl.
strategic and reputational risks, as well as other non-quantifiable risks) and
to ensure that capital requirements are met
at all times,
●
to review and evaluate all major Bank Group’s initiatives aiming at transforming the business and operating model,
●
to monitor on
a regular
basis the
strategic and the
key performance
indicators of the
Bank Group,
including the
segmental
view,
●
to review and, as needed, make proposals to the Board on all other issues of strategic importance to the Bank Group.
The SPC is composed of the following members with voting rights:
- The Chief Executive Officer (CEO)
- The Deputy CEOs
- The Group Chief Risk Officer
- The Group Chief Financial Officer
The Chairman
of the
Board, the
Vice-Chairman of
the Board
and the
General Manager
Group Strategy
participate in
the
SPC as a permanent attendees with no voting rights.
The SPC is chaired by the
CEO and in case of absence
or impediment of the CEO, by the
longest serving Deputy CEO in
attendance.
The SPC meets on a weekly basis or ad hoc, when necessary, and keeps minutes of its meetings.
The SPC is in quorum and meets validly when a) half of its members plus one are present (fractions are excluded from the
computation), provided
that at
least three
members are
present and
b) SPC’s
Chairperson or the
longest serving
Deputy
CEO in attendance, entitled to chair the Committee, is present.
The resolutions
of the
SPC require
a majority
vote. In
case of
a tie
of votes,
SPC’s Chairperson
has the
casting vote.
If
SPC’s Chairperson is
absent, the
longest serving
Deputy CEO
in attendance,
entitled to
chair the
Committee, has
the casting
vote.
In the context
of providing support
to the Chairperson
for ensuring the
smooth and proper
operation of the
SPC, the SPC
appoints
its
Secretary
who
reports
to
the
Group
Company
Secretariat
and
cooperates
with
the
Chairperson
of
the
Committee.
The Secretary is responsible to maintain an annual calendar of the scheduled meetings, which may be revisited depending
on
unforeseen
circumstances, following
the
approval
of
SPC’s
Chairperson.
In
addition,
the
Secretary is
responsible
to
organize meeting details
(including venues), record
the attendance of
members and other
attendees/invitees, ensure that
quorum requirements are
met, minute the
proceedings and resolutions
of all Committee
meetings, issue true
copies/extracts
of the
SPC’s minutes
and notify
the responsible
managers regarding
any issue
discussed by
the SPC
and is
relevant to
them or on which they need to take action.
The SPC Terms
of Reference (ToR) are approved by the
CEO and revised as appropriate.
SPC’s performance
is evaluated annually
according to the
provisions of Bank’s
Managements Committees’ Policy
and its
Terms of Reference. According to SPC’s self-evaluation for 2023, it was determined that its overall performance and all the
specific
areas
of
evaluation
i.e. the
profile
and
composition,
the
organization
and
administration
and
the
key
tasks
and
responsibilities, are strong.
Management Risk Committee
14
The main responsibility of Management Risk Committee (MRC) is to oversee the risk management framework of the Bank.
The MRC ensures that material risks are identified and promptly escalated to the
BRC and that the necessary policies and
procedures are in place to prudently manage risk and to comply with regulatory requirements.
As part of its responsibility, the MRC, facilitates reporting to the BRC on the range of risk-related topics under its purview.
As part of its mandate, the MRC:
●
reviews
the
Group’s
risk
profile
vis-à-vis
its
declared
risk
appetite,
examines
any
proposed
modifications
to
the
risk
appetite,
●
reviews and approves the stress testing programme results,
●
determines
appropriate
management
actions
which
are
discussed
and
presented
to
the
ExBo
for
information
and
submitted to the BRC for approval.
The MRC maintains at all times a pro-active approach to Management.
The MRC understands
and evaluates risks,
addresses escalated issues,
provides oversight
of the Group’s
risk management
framework – including the
implementation of risk policies
– and informs the
BRC of the Group’s
risk profile. The
Group CRO
14
Information
regarding
current
composition
and
short
biographical
details
of
its
members
may
be
found
at
the
Bank’s
website
(www.eurobank.gr).
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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updates the ExBo on material risks and
issues on a periodical basis. Furthermore, the
MRC assists the BRC in defining risk
management
principles
and
methodologies
thereby
ensuring
that
the
Group’s
Risk
Management
Framework
contains
processes for
identifying, measuring,
monitoring, mitigating
and reporting
the current
risk profile
against its
risk appetite,
limits, and performance targets. Specific responsibilities performed by the MRC are described below:
●
revises and presents
to the BRC
for approval the
risk strategy and
the risk appetite,
the risk limits
and the measures
for monitoring both
financial and non-financial
risks, in conjunction
with the Board’s
approval of the
annual business
plan / strategy,
●
monitors :
a) current risk exposures
at a Group level,
b) company-wide compliance with
the risk limits, c)
Bank’s
overall risk assessment processes and d) Bank's capability to identify and manage new risk types as they emerge
●
performs risk escalation and remediation
by reviewing and reporting
on any material breaches
of risk limits and
the
adequacy of proposed specific actions to address them,
●
reviews the Stress Testing
Programme with regards to:
o
its effectiveness and robustness,
o
material risks developed in the risk identification process
and scenarios developed in the scenario design
process,
o
key modelling assumptions and the stress testing results before the submission to the BRC
●
reviews at least on an annual basis the following reports:
o
the Group ICAAP and ILAAP,
o
the Group Recovery Plan
in compliance with the regulatory requirements and guidelines before final submission to the BRC,
●
Regarding the
Resolution Planning,
the MRC
reviews and
approves the
Bank’s resolution
planning initiatives
to
enhance its resolvability material/documents requested by the Resolution Authorities (SRB).
The MRC does not conflict with the GCRO or the Risk Management General Division’s responsibilities for
Risk governance
as prescribed under the Bank of Greece’s
Governor Act no. 2577/2006. They have responsibility to
escalate material risks
and issues to the
BRC and to update ExBo on material risks and issues on a periodical basis.
The MRC which meets on a monthly basis prior
to the BRC meeting or more frequently on
an ad-hoc basis, if required, is in
quorum and meets
validly when
half of
its members, including
the Chairperson
or the
Vice-Chairperson, plus
one are present
or represented. Selected attendees can
be invited to the
MRC meetings, when the
topics for discussion fall
under their remit
or they have the requisite expertise to constructively participate. The finalized minutes are distributed to the BRC, SPC
and
ExBo
members,
as
prepared
by
the
committee’s
secretary
and
approved
by
its
Chairperson.
Abstracts
of
resolutions
reached and actions to be taken are provided to Management, SPC and/or ExBo members, as necessary.
Resolutions of the
MRC are decided
based on
a simple
majority and in
case of a
tie vote,
the Chairman or
the Vice-Chairman
in the
case of
Chairman’s absence,
has the
casting vote.
The opinion
of the
minority is
recorded in
the meeting
minutes
whenever a decision of the MRC is not reached unanimously, and the BRC is informed accordingly.
Changes to
the ToR
of the
MRC are
reviewed by
the MRC
at least
every two
(2) years
and revised
if necessary,
unless
significant changes
in the
composition, role,
responsibilities, organization
and /
or regulatory
requirements necessitate
earlier
revision and are approved by the CEO. The ToR
of MRC are also submitted to the BRC for information purposes.
The MRC’s performance
is evaluated annually according
to the provisions of
Bank’s Management Committees Policy
and
its Terms of Reference. For 2023, it was determined that its overall performance and all the specific areas of evaluation i.e.
the profile and composition,
the organization and
administration and the key
tasks and responsibilities, are
strong. Members
reviewed key points raised by the self-assessment
exercise, noting that the main issues concern
members’ attendance and
participation, the length of the meeting and the
agenda as well as the timely submissions.
Members exchanged opinions on
how to
improve the committee
and agreed
on the
need to
educate the
presenters to
be short and
concise so
as to
allow
more time for questions/discussion.
Group Asset and Liability Committee (G-ALCO)
15
G-ALCO’s primary mandate is to:
a)
formulate, propose, approve, implement
and monitor – as
the case may be
- the Group’s i)
liquidity position and
risk profile
and its
funding strategies
and policies
ii) interest
rate guidelines
and interest
rate risk
profile and
policies
iii) Capital
investments -
as well
as FX
exposure and
hedging -
strategy iv)
Group’s business
initiatives and/or
investments that affect the bank’s capital, market and liquidity risk profile. Further, to approve at a first stage, and
recommend to BRC
for final approval
the respective country
limits and the
relevant policy/methodology (special
attention is given for the approval/monitoring of the limits for countries where Eurobank has a local presence).
15
Information
regarding
current
composition
and
short
biographical
details
of
its
members
may
be
found
at
the
Bank’s
website
(
www.eurobank.gr
).
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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b)
approve or propose – as the case
may be - changes to these policies
that conform to the Bank’s risk appetite and
levels of exposure as determined by
the Board Risk Committee (and BoD
as the case may be) and
Management,
while complying with the framework established by regulatory/supervisory authorities.
G- ALCO
responsibility is
to also
review the
overall liquidity
positions and
developments of
the Group
on a
country-by-
country
level.
In
this
context,
international
subsidiaries’
ALCOs
should
report
on
monthly
basis
material
country
developments and
decisions (reflected
in respective
country ALCO
minutes) to
G-ALCO, based
on the
above principles
and their respective regulatory/supervisory authorities’ instructions and guidelines.
The key tasks and responsibilities of G-ALCO involve the following broad areas:
●
Approval
of
general
policies
and
guidelines,
compliance
with
regulatory
requirements,
review
of
activities/investments, risks & exposures
●
Liquidity Risk
●
Interest Rate Risk in the Banking Book (IRRBB) and Credit Spread Risk in the Banking Book (CSRBB)
Key reports reviewed by G-ALCO:
●
Deposit rates evolution (per business unit) and market share evolution (Greece)
●
LCR & NSFR evolution on a monthly basis (at a Solo and Group level)
●
Liquidity buffer analysis (Solo, Group, and per country).
●
Liquidity stress tests
●
Liquidity risk analysis/sensitivities
●
Market risk analytics reports (PV01 in FVOCI and AC, VaR analysis, historical simulation results and reporting of
the relevant KRIs for MTM exposure in OCI & AC, evolution of RWAs for market risk, reports on the level of KRIs
related to market risk.
●
IRRBB reports: sensitivity of NII and sensitivity of EVE per regulatory framework (EBA IRRBB guideline) & per
internal framework
●
International subsidiaries’ liquidity buffers and regulatory ratios.
G-ALCO convenes once a month and/or whenever required.
Required
quorum for
G-ALCO meetings
to be
effective
is six
members. In
order to
have a
quorum the
presence of
its
Chairperson and
a minimum
of three
(3) SPC members
is required.
Decisions on issues
are to
be taken
by majority; in
case of
a tie
vote, the
issue under
discussion is
escalated to
ExBo
.
Additionally, under exceptional
circumstances, decisions
may be taken
by circulation, which is
equal to a
decision of the
G-ALCO, even if
no meeting has taken
place. A relevant
approval memo is then issued by the Secretary.
G-ALCO’s performance is evaluated annually according
to the provisions of
Management Committees’ Policy and its
Terms
of Reference.
G ALCO’s
self-evaluation for
2023 is
in progress,
while according
to G-ALCO’s
self-evaluation for
2022, it
was determined
that: i)
its members’
engagement is
well appropriate, ii)
the G-ALCO
continues to
function effectively
in
relation to
its mandate
and responsibilities,
with members
engaging in
critical discussions
during meetings
on key
risk issues,
iii)
in
light
of
the
increasing
complexity
and
importance
of
issues
arising,
the
evolution
of the
regulatory
framework and
emergence
of
additional
risk
considerations,
G-ALCO
should
improve
its
organizational
and
operational
efficiency
with
increasing frequency and/or length of meetings as may be required to remain as effective.
Central Credit Committees
Central Credit Committee I
The main objective of Central
Credit Committee I (CCCI) is
to ensure the objective credit
underwriting of relevant exposures
of Greek
corporate performing
and private
banking clients,
in accordance
to the
Risk Appetite
Framework and
the Credit
Policy Manual of the Bank and in a way that balances credit risk and return on equity.
The CCCI is chaired by
an independent to Business
and Risk Professional, convenes
at least once a week
and all meetings
are
minuted.
Decisions
are
taken
unanimously.
If
unanimity
is
not
achieved,
the
credit
request
is
escalated
by
the
Chairperson to the next (higher) approval level
requiring a unanimous decision. In case of non-unanimity
the final decision
lies with the Management Risk Committee (MRC), by majority voting.
The main
duty and
responsibility of
the CCCI is
to assess
and approve
all credit
requests for clients
in the
Greek related
corporate
performing
and
private
banking
portfolio
of
a
total
exposure
above
€50mio
and
unsecured
exposure
above
€35mio.
For
total
exposure
exceeding
€75mio
and
unsecured
exposure
exceeding
€50mio,
additional
approval
by
the
GCRO is
required, while
for total
exposure exceeding
€150mio and
unsecured exposure
exceeding €100mio,
additional
approval by
the CEO
is required.
Furthermore, for
exposures higher
than 10%
(or 20%
for selected
borrowers where
no
single
risk exists)
of
the Bank’s
regulatory capital
the additional
approval
of the
Management Risk
Committee (MRC)
is
required. Subsequently, the final approval is granted by the Board Risk Committee (BRC).
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Central Credit Committee II
The main objective of the Central Credit Committee II (CCCII) is the same as for the CCCI for lower levels of exposure.
The CCCII convenes at least
once a week and all
meetings are minuted. Decisions are
taken unanimously.
If unanimity is
not achieved, the request is escalated by the Chairperson to the next approval level.
The
main
duty
and
responsibility
of
CCCII
is
to
assess
and
approve
all
credit
requests
for
clients
in
the
Greek
related
corporate performing
and private banking
portfolio for total
exposure from
€20mio up to
€50mio and unsecured
exposure
from €10mio up to €35mio and retail exposures for total limits above €3mio.
Central Credit
Committees’ performance
is evaluated
annually according
to the
provisions of
Managements Committees’
Policy and its Terms
of Reference. The Central Credit Committee’s self-evaluation for 2023 is currently in progress.
Troubled Assets Committee
16
The Troubled
Assets Committee (TAC)
is established according
to the regulatory provisions.
The main purpose
of TAC
is
to act
as an
independent oversight
body,
closely monitoring
the Bank’s
troubled assets
portfolio and
the execution
of its
NPE Management Strategy.
The
Committee
meets
at
least
once
per
month
and/or
whenever
required
if
the
majority
of
the
members,
including
the
Chairperson, are present. Decisions are taken by majority, are minuted and circulated as appropriate. The Chairman has a
casting
vote.
TAC
cooperates
with
Group
Risk
Management
Division
to
reach
a
mutual
understanding
and
develop
an
appropriate methodology for the evaluation of the risks inherent in the portfolio management. TAC’s propositions regarding
NPE policy updates are submitted to the Board Risk Committee.
TAC’s main responsibilities:
●
review internal reports regarding troubled assets management under the regulatory provisions,
●
approve
the
available
forbearance,
resolution
and
closure
solutions
by
loan
sub-portfolio,
and
monitor
their
performance through Key Performance Indicators (KPIs),
●
define the criteria to assess the
sustainability of credit and collateral workout
solutions through the design and
use of
“decision trees”,
●
approve, monitor and assess pilot modification programmes and
●
supervise
and
provide
guidance
and
know-how
to
the
respective
troubled
assets
units
of
Eurobank’s
subsidiaries
abroad.
In compliance with the
provisions of the Management
Committees’ Policy and its
Terms of Reference, TAC is in the process
of conducting the self-evaluation for 2023, while for 2022,
the evaluation concluded that the committee operates effectively,
in
the
areas
of
Profile
and
Composition,
Organization
&
Administration
as
well
as
regarding
the
Key
Tasks
and
Responsibilities. However, the
evaluation also identified that while the
overall quality and quantity of information
submitted
related
to
the
proposals
for
assessment
by
the
TAC
members
is
adequate,
there
is
room
for
further
enhancement
on
providing
more
details
on
the quantification
of
the
impact
of
the
proposed
for
approval
actions.
Such enhancement
will
benefit TAC members to make more informed decisions.
Products & Services Committee (PSC)
17
Products
&
Services
Committee
(PSC)
is
responsible
for
creating
and
supervising
the
governance
framework
for
the
products and services offered to Eurobank’s clients in Greece through the physical
and alternative channels, in accordance
with the supervisory and regulatory requirements. A governance framework assessing financial and non-financial risks is in
place. The PSC approves all new products
& services as well as significant modifications in
existing ones. The Committee
also implements a periodic review of all
products and services, according to their risk
profile to determine their continuation,
modification or discontinuation. The products and services of Remedial & Servicing Sector are excluded and are under
the
responsibility of TAC (Troubled Assets Committee).
PSC convenes
once a
month and/or
whenever required.
Other executives
or managers
of the
Group, depending
on the
subject to be discussed, may be invited to attend as required.
The PSC is in quorum and meets validly when half of its members plus one are present (fractions are excluded from the
computation). For quorum, the Chairperson should be also present.
Decisions require, as a minimum, a majority vote of 50%+1 of the members present in the meeting and are recorded in the
meeting’s minutes.
In case of a tie vote, the
Chairperson has the casting vote. All
members of the PSC have equal voting
16
Information
regarding
current
composition
and
short
biographical
details
of
its
members
may
be
found
at
the
Bank’s
website
(www.eurobank.gr).
17
Information
regarding
current
composition
and
short
biographical
details
of
its
members
may
be
found
at
the
Bank’s
website
(www.eurobank.gr).
EUROBANK ERGASIAS SERVICES AND HOLDINGS S.A.
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rights. In case
of no reaching
a decision due
to disagreement of
Members, the issue
under discussion is
escalated to the
Executive Board (ExBo).
Additionally,
decisions may be taken
by circulation, which is
equal to a
decision of the Committee,
even if no meeting
has
preceded.
No resolution
can be
deemed for
high risks
products/services by
circulation. They
will be
submitted to
a PSC
Meeting for discussion and approval or rejection.
The Committee’s performance is evaluated annually according to the provisions of the Management
Committees’ Policy of
the
Group
and its
Terms
of
Reference.
Committee’s
2023
self-evaluation
is
still
in
progress,
while
according
to
the
Committee’s 2022
self-evaluation, its
performance was
assessed as very
strong, it
was determined
that the
Committee’s
operation
is continuously
improving and
that
it
functions very
effectively,
especially
in
the
areas
of
leadership
and
PSC
Chairperson’s contribution in organizing/coordinating meetings and encouraging critical discussions in meetings.
Environmental, Social & Governance (ESG) Management Committee - ESG ManCo
18
The primary mandate of
the ESG ManCo is
to i) provide strategic
direction on ESG initiatives,
ii) review the ESG
Strategy
prior to approval,
iii) integrate the
elements of the
ESG strategy into
the Bank’s business
model & operations,
iv) approve
eligible
assets
of
Green
Bond
Frameworks,
v)
regularly
measure
and
analyze
the
progress
of
the
ESG
goals
and
performance targets, and vi) ensure the proper implementation of ESG related policies and procedures, in accordance with
supervisory requirements and voluntary commitments.
ESG ManCo convenes four times a year and/or ad hoc when necessary. Other Bank employees, depending on the subject
to be discussed, may be invited as deemed appropriate.
Required quorum for ESG ManCo meetings to
be effective is seven members. In order
to have a quorum, the presence of
its Chairperson and
a minimum of six
(6) members is required.
Decisions on issues are
taken by majority.
In case of a
tie
vote, the
Chairperson has
the casting
vote. Whenever
a decision
of the
ESG ManCo
is not
reached unanimously,
this is
recorded in the minutes along with
the opinion of the minority.
All meetings and decisions are minuted
by the Committee’s
Secretary and distributed to ESG ManCo members.
The Terms
of Reference of the ESG
ManCo will be reviewed at
least every two (2) years
and revised if necessary,
unless
significant changes
in the
composition, role,
responsibilities, organization
and /
or regulatory
requirements necessitate
earlier
revision.
ESG ManCo’s
performance is evaluated
annually according to
the provisions of
the Management Committees
Policy and
Its Terms of Reference. According
to the Committee’s
self-evaluation for 2023,
it was determined
that it continues
to function
efficiently and effectively, especially in areas such
as ESG ManCo Chairperson
encouraging critical discussions
in meetings
and ensuring constructive dialogue, reviewing ESG Rating results and Secretary duties.
The evaluation highlighted
the need
to further improve
the level of
awareness in the
Bank as
well as to
increase the
meetings
cadence.
Ethics Co
19
The task of the Ethics Committee is to ensure that the Bank’s Code of Ethics is observed, to
interpret and constantly enrich
it, as
well as
to contribute,
generally,
to the
formulation of
a code
of values
with which
the behaviour
of the
officers and
personnel of the Bank, as well as that of third persons that
regularly collaborate with the Bank, must comply.
Adherence to
the rules
of ethics
contributes, on
the one
hand, to
the protection
of dignity
and personality
of the
personnel, and
on the
other hand, to the good reputation and the protection of the interests of the Bank.
The Ethics
Committee convenes
once a
month, if
there are
issues to
be discussed
or,
exceptionally,
more frequently,
in
case of an
emergency,
in a place
and time that
are stated in
the agenda. The
Ethics Committee may
convene either with
the physical presence of its members, or by electronic means. The Committee shall act unanimously.
The Ethics Committee’s performance is evaluated
annually according to the
provisions of Management Committees’ Policy.
Ethics Committee’s performance was evaluated for the first time in 2022 and it was determined that it continues to function
effectively, especially in the areas of Profile & Composition as well as
Organization & Administration. The Ethics Committee
encourages critical discussion and a healthy challenging culture.
18
Information
regarding
current
composition
and
short
biographical
details
of
its
members
may
be
found
at
the
Bank’s
website
(www.eurobank.gr).
19
Information
regarding
current
composition
and
short
biographical
details
of
its
members
may
be
found
at
the
Bank’s
website
(www.eurobank.gr).
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5.
Key Control Functions
As part
of its
overall system
of internal
controls, HoldCo/Bank
have established
a number
of dedicated
control functions
whose
main
responsibility
is
to
act
as
independent
control
mechanisms
thus
reinforcing
the
control
structure
of
the
HoldCo/Bank. The most important functions and their key responsibilities are described below.
5.1
Internal Audit
Eurobank Holdings
Internal Audit (“IA”) is an independent, objective assurance and consulting function designed to add value and improve the
operations of
Eurobank Holdings.
IA has
adequate organisation structure
and appropriate resources
to ensure
that it can
fulfil its roles and responsibilities.
Eurobank’s
IAG maintains
a quality
assurance and
improvement programme
to ensure
that the
methodology is
applied
consistently and the objectives and responsibilities of IAG
are met. Under the framework of co-operation between
IAU and
IAG, IA assigns the assessment of the effectiveness of internal audit activities and conformance with IIA Standards to IAG.
In order to safeguard its independence, IA reports functionally to the
Audit Committee and administratively to the CEO. The
Board has delegated
the responsibility
for monitoring the
activity of the
IA to
the Audit Committee
of the
HoldCo. IA
is headed
by the Chief
Internal Auditor
(CIA) who
is appointed by
the Audit
Committee. The
latter also
assesses the
CIA’s performance.
The mission of
IA is to
enhance and protect organisational
value by providing
risk-based and objective assurance,
advice
and insight. The key assurance and consulting responsibilities of IA are to:
●
provide
reasonable
assurance,
in
the
form
of
an
independent
opinion,
as
to
the
adequacy
and
effectiveness
of
the
internal control framework of the HoldCo,
●
assist Management
on the
prevention and detection
of fraud or
defalcation or unethical
practices and undertake
such
special projects as required,
●
assist
Management
in
enhancing
the
system
of
internal
control
including
improvement
of
existing
policies
and
procedures.
●
follow-up to ascertain that appropriate action is taken on reported audit findings within agreed deadlines,
●
carry
out
specific
responsibilities
required
by
Regulatory
Authorities
and/or
participate
in
HoldCo’s
projects
in
an
assurance or consulting capacity.
Eurobank
Internal
Audit Group
(“IAG”) is
an
independent,
objective assurance
and consulting
function designed
to add
value
and
improve the
operations of
Eurobank and
its subsidiaries.
IAG has
adequate organisation
structure and
appropriate resources
to ensure that it can fulfil its roles and responsibilities.
IAG comprises the “Internal Audit Sector”, the “Forensic Audit Division”, the “International Audit Division” and
the “Business
Monitoring
and
Organisational
Support
Division”.
IAG
also
has
a
Quality
Assurance
function
(QAF),
to
assess
the
effectiveness
of
the
Group’s
internal
audit
activities
and
conformance
with
IIA
Standards.
QAF
operates
as
Centre
of
Excellence
for
Audit
Standards
&
Methodology,
acting
as
an
advisor
to
IAG
Management
in
topics
related
to
quality
improvement and methodology. In addition, the Data Analytics Centre of Excellence
(DAnCoE) unit of IAG aims to
enhance
people
skills
towards
data
analytics,
enable
the
generation
of
data-driven
insights
and provide
valuable
perspectives
to
Management of the Group.
In order
to safeguard
its independence,
IAG reports
functionally to
the Audit
Committee and
administratively to
the CEO.
The Board has delegated the responsibility for monitoring the activity of the IAG to the Audit Committee of the Bank. IAG is
headed by the Group
Chief Audit Executive (CAE) who
is appointed by the
Audit Committee. The latter
also assesses the
CAE’s performance.
The key assurance and consulting responsibilities of IAG are to:
●
provide
reasonable
assurance,
in
the
form
of
an
independent
opinion,
as
to
the
adequacy
and
effectiveness
of
the
internal control framework of the Bank and its subsidiaries.
In order to form an opinion, IAG establishes and carries out
a programme of audit work (based on the risk assessment of the audit universe),
●
assist
and
advise
Management
on
the
prevention
and
detection
of
fraud
or
defalcation
or
unethical
practices
and
undertake such special projects as required,
●
assist
Management
in
enhancing
the
system
of
internal
control
including
improvement
of
existing
policies
and
procedures,
●
follow-up to ascertain that appropriate action is taken on reported audit findings within agreed deadlines,
●
carry out any other specific duties required by the Regulatory Authorities,
●
participate in Bank projects in an assurance or consulting capacity,
●
assess the performance of the Group’s internal audit functions, which have a direct reporting line to IAG.
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5.2
Risk Management
Eurobank Holdings
As part of its overall system of internal controls HoldCo has engaged in a Service Level Agreement (SLA) with Eurobank in
order to receive supporting
and advisory services in all
areas of risk management
(credit, market, liquidity and operational
risks) undertaken
by the
Group. The
most important
services provided
through the
above-mentioned SLA
are described
below:
●
Provision of advice on:
-
Identification, evaluation and monitoring of credit risk,
-
Ensuring policy and instructions (strategy and products) recommended by business owners and Servicers are
aligned to applicable credit policy manual and regulatory guidelines,
-
Standardization of procedures and guidelines,
-
Update and maintenance of the risk strategic framework master document,
-
Participation in systemic bank consultation committees,
-
Review new remedial products and initiatives prior submission to TAC or approval
●
Coordination of NPE related regulatory reporting,
●
Provision of input for SSM submission and 3-year business plan, monthly MIS actual data (including Greek and
International subsidiaries),
●
Advising on identification, support/advise, recording and evaluation of liquidity risks and financial monitoring,
●
Advising in the identification, assessment, recording and monitoring of operational risks (e.g. RCSA, events capture,
outsourcing etc.),
●
Advising in the identification, assessment, recording and monitoring of climate risk.
Eurobank
The Group Risk Management, which is headed by the Group Chief Risk Officer (GCRO), is independent from the business
units and has full responsibility for monitoring the
material risks, as identified through the Risk Identification and Materiality
Assessment (RIMA)
process and listed
in the relevant
RIMA report. Material
risk types include
financial and non-financial
risks, indicatively credit
risk, market
risk, liquidity risk,
interest rate risk
and credit spread
risk in
the banking book,
operational
risk, climate risk, country risk, reputational risks, conduct risk, risks stemming from strategic projects.
It comprises the Group Credit,
the Group Credit Control, the
Group Credit Risk Capital Adequacy
Control, the Group Market
& Counterparty Risk, the Group
Operational and Non-financial Risks, the Group
Model Validation & Governance, the Group
Risk
Management
Strategy
Planning
Operations
&
Climate
Risk,
the
Risk
Analytics
and
the
Supervisory
Relations
&
Resolution Planning
20
Units.
The GCRO serves
as a pivotal
point for the
risk management functions.
Centralization ensures that
business targets and
related growth are combined with a risk conscious perspective, thus ensuring that the approved risk appetite is adhered to.
The GCRO develops and formalises the Risk Appetite Framework (RAF), defines the Risk Appetite
Statements (RAS), and
submits them to
the Board Risk
Committee for approval.
The GCRO oversees
the implementation of
the frameworks and
policies for the identification, measurement and management of risks.
The
GCRO
reviews
and
approves
the
risk
policies
before
their
submission
for
approval
to
the
BRC
or
to
the
BoD
and
oversees their implementation thereafter. The
GCRO reports to
the BRC deviations from
the risk policies
or potential conflict
with the approved risk strategy and risk appetite.
The GCRO
is responsible
to provide
to the
BRC adequate
information, so
that the
Committee can
properly assess
and
advise the BoD
on the
Group’s risk
exposures / profile
and risk strategy.
The GCRO oversees
compliance with approved
Risk Appetite
Limits and
reports to
the BRC
the compliance
status and
any deviations,
as stipulated
in the
Risk Appetite
Framework (RAF).
Eurobank
has
a
well-established
strategy
and
clear
risk
management
objectives
that
has
to
deliver
through
core
risk
management processes and methodologies. At a strategic level, the risk management objectives are to:
●
Identify the new risks relevant to the Group and assess their materiality,
●
Assess the current and emerging risks as an integral part of the strategic planning process,
●
Provide opinion for the Group Business Plan regarding the risk
perspective on the overall outcome and reliability of the
Plan,
●
Ensure that business plan is consistent with Eurobank’s risk appetite,
●
Participate actively in decision-making processes to ensure that risk considerations are considered appropriately,
●
Optimize
risk/return
decisions
by
taking
them
as
closely
as
possible
to
the
business,
while
establishing
strong
and
independent review,
●
Ensure that business growth plans are properly supported by effective risk infrastructure,
●
Manage risk
profile to
ensure that
specific financial
deliverables remain
possible under
a range
of adverse
business
conditions,
20
The Supervisory Relations & Resolution Planning Unit
has a dual reporting line to both the GCRO
& the Group Chief Financial Officer
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●
Assist senior executives to improve the control and co-ordination of risk taking across their businesses,
●
Cultivate a robust risk
culture throughout the Bank,
encouraging a positive attitude
towards risk management, regulatory
compliance and the internal control framework, through strong
risk awareness and ownership, where all staff members
consider risk management as an integral part of their everyday responsibilities,
●
Provide the framework,
procedures and guidance
to enable all
employees to manage
risk in their
own areas and
improve
the control and co-ordination of risk taking across the Bank,
●
Advise and
support Eurobank
Holdings in
risk management
according to
the agreed
Service Level
Agreement (SLA)
between Eurobank Holdings and Eurobank.
Risk
Management
along
with
Compliance
and
other
Units
are
involved
in
the
assessment
of
all
products
and
services
throughout their lifecycle.
The
Group
applies
the
elements of
the
Three Lines
of
Defence
Model
for
the
management
of
risk.
The
Three Lines
of
Defence Model enhances
risk management and
control by clarifying
roles and responsibilities
within the organization.
Under
the
oversight
and
direction
of
the
Management
Body,
three
separate
lines
of
defence
are
necessary
for
effective
risk
management. In particular:
Line 1 -
Own and manage
risk and controls.
The front-line business
and operations are
accountable for this
responsibility
as they own the rewards and are the primary risk generators.
Line 2 -
Monitor risk and
controls in support
of Executive Management,
providing oversight, challenge,
advice and group-
wide direction. These include the Risk Management and Compliance Units, among others.
Line 3 - Provide independent assurance to the
Board and Executive Management concerning the effectiveness of
risk and
control management. This refers to Internal Audit.
5.3
Compliance
Eurobank Holdings
Eurobank
Holdings
Compliance
is
established
with
the
approval
of
the
Board
of
Directors
and
the
Audit
Committee
of
Eurobank Holdings. It is
a permanent function and
independent from Eurobank Holdings’
business activities so that
conflicts
of interests are avoided. In order to safeguard its independence, Eurobank Holdings Compliance reports functionally to the
Audit Committee
of Eurobank Holdings
and for
administrative purposes to
the CEO.
The Audit Committee
in consultation
with the
NomCo, proposes to
the Board for
approval the appointment,
replacement or dismissal
of the Head
of Eurobank
Holdings Compliance. The performance of the Head of Eurobank Holdings
Compliance is assessed on an annual basis by
the
AC.
The
Head
of
Compliance
attends
all
AC
meetings
and
submits
quarterly
and
annually
reports
(per
regulatory
requirements) summarising Compliance’s activity and highlighting the main compliance issues.
Its
mission
is
to
promote,
within
Eurobank
Holdings,
an
organizational
culture
that
encourages
ethical
conduct,
and
a
commitment to compliance with laws and regulations as well as global governance standards.
The main
objective of
Eurobank Holdings
Compliance is
to ensure
that Eurobank
Holdings has
established an
adequate
system of
internal controls
that allows
it to
operate in
accordance with
the ethical
set of
values contained
in its
"Code of
Conduct
and
Ethics" and
in compliance
with applicable
laws, regulations
and internal
policies. More
specifically,
for
the
regulatory topics within its scope of responsibilities, Eurobank Holdings Compliance is mandated to:
●
raise compliance awareness in Eurobank Holdings,
●
provide advice the Board of Directors and Senior Management on Eurobank Holdings compliance with applicable laws,
rules and standards and keeping them informed of related developments,
●
issue,
as
necessary,
policies
and
other
documents,
in
order
to
provide
guidance
to
staff
on
the
appropriate
implementation
of
applicable
laws,
rules
and
standards
as
well
as
to
assist
the
business to
develop
and implement
regulatory compliant policies and procedures,
●
review new activities and advise on potential compliance risks,
●
ensure that staff is adequately trained about compliance issues,
●
provide support and challenge, if
required, the business line management regarding
the effectiveness of the compliance
risk management activities,
●
monitor
whether
staff
applies
effectively
the
internal
processes
and
procedures
aimed
at
achieving
regulatory
compliance,
●
monitor through appropriate procedures
staff adherence to
internal policies and the "Code
of Conduct and Ethics"
and
identify fraudulent activity,
●
monitor timely submission of reports to Competent Authorities and report any delays
and fines for any alleged breaches
of regulations to the AC,
●
fulfil any statutory responsibilities and liaise with regulators and external bodies on compliance issues.
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Eurobank
Group Compliance is established
with the approval of
the Board of Directors
and the Audit Committee
of Eurobank. It is
a
permanent function and independent
from the Bank’s business
activities so that conflicts of
interests are avoided. In
order
to safeguard its
independence, Group Compliance
reports functionally
to the
the Board
of Directors through
Audit Committee
of the Bank and
for administrative purposes
21
to the CEO.
The Audit Committee in consultation
with the NomCo proposes
to the Board for approval
the appointment, replacement or dismissal of
the Group Chief Compliance Officer
(Group CCO).
The
performance
of
the
Group
CCO
is
assessed
on
an
annual
basis
by
the
AC.
The
Group
CCO
attends
all
Audit
Committee’s
meetings
and
submits
quarterly
and
annual
reports
(per
regulatory
requirements)
summarising
Group
Compliance’s activity and highlighting the main compliance issues.
Its mission is to promote, within Eurobank and its subsidiaries (Eurobank group), an organizational culture that encourages
ethical conduct
through integrity
and a
commitment to
compliance with
laws and
regulations as
well as
the application
of
international governance standards.
The
main objective
of
Group Compliance
is to
ensure
that the
Eurobank group
has established
an
adequate system
of
internal controls that allows it to operate in accordance
with the ethical set of values contained in its “Code of
Conduct and
Ethics” and in compliance
with applicable laws, regulations
and internal policies, as
well as international best
practices. In
brief, for the regulatory topics within its scope of responsibilities, Group Compliance is mandated to:
●
raise compliance awareness throughout the Eurobank group,
●
provide
advice
to
the
Board
of
Directors
and
Senior
Management
on
compliance
with
applicable
laws,
rules
and
standards and keep them informed of related developments,
●
issue policies, procedures
and other documents
such as compliance
manuals, internal codes
of conduct &
ethics and
practice guidelines in order to provide guidance to staff on the appropriate implementation of applicable laws, rules and
standards as well as to assist the business to develop and implement regulatory compliant policies and procedures,
●
review new activities and advise on potential compliance risks,
●
ensure that staff is adequately trained
and frequently updated about compliance issues by designing
training programs
and co-operating with HR for their implementation,
●
ensure
the
development
of
a
robust
compliance
risk
identification
and
assessment
framework,
provide
support
and
challenge, if
required, the business
line management
regarding the
effectiveness of
the compliance
risk management
activities,
●
coordinate compliance risk management actions performed by other business units,
●
monitor and test
whether staff applies
effectively the internal
processes and procedures
aimed at achieving
regulatory
compliance and report
to the relevant
Business Units any
potential breaches in
order for the
latter to proceed
with the
required improvements,
●
monitor staff
adherence to
internal policies
and the
"Code of
Conduct and
Ethics" and
identify potential
breaches or
fraudulent activity,
●
monitor timely submission of reports to Competent Authorities and report any delays
and fines for any alleged breaches
of regulations to the AC,
●
fulfil any statutory responsibilities and liaise with regulators and external bodies on compliance issues,
●
supervise, monitor, coordinate and
evaluate the activities
of the Compliance
Officers of the
Bank’s local and
international
subsidiaries in order to ensure compliance with Eurobank group standards.
The scope of activities of Group Compliance covers the following core regulatory topics:
●
Financial
Crime
including
laws
and
regulations
on
Anti
Money
Laundering
(AML)
and
Countering
the
Financing
of
Terrorism (CFT) and legislation aimed at
combatting Tax evasion such as FATCA and CRS (tax
compliance). The scope
includes the
provision of
timely and
accurate responses
to requests
arising from
regulatory and
judicial authorities
for
the lifting of banking
secrecy or freezing of assets
and co-operation with them.
Financial Crime also includes
anti-bribery
and anti-corruption
legislation. The
Eurobank Audit
Committee in
consultation with
the Eurobank
NomCo proposes
to
the Board
for approval
the appointment,
replacement, or
dismissal of
the Anti-Money
Laundering Reporting
Officer of
Eurobank, who may be the same person as the Group CCO, and his/her Deputy
●
Conduct related regulations, including:
o
market Conduct related regulation regarding the provision of investment products and services to clients including
laws and regulations on Market Manipulation,
Insider Trading, Unlawful disclosure
of inside information and other
financial crimes,
o
internal conduct & Ethics
rules including Conflict of
interest regulatory provisions,
internal codes of conduct,
Insider
Dealing,
o
consumer conduct laws
and regulations (including,
inter alia, dormant accounts
legislation, BoG’s Code of
Conduct
for loans, the Payment Services Directive and the Deposit Guarantee scheme).
Group
Compliance
has
an
overlay
role
over
the
regulatory
framework
concerning
personal
data
protection,
corporate
governance, prudential regulation (credit
market, liquidity and operational
risk), information & IT
security, cyber security risk,
outsourcing
and
ESG.
In
this
context
Group
Compliance
performs
a
high-level
monitoring
through
compliance
risk
assessments of the alignment of the Bank’s activities with regulatory requirements.
21
The administrative reporting line to the CEO does
not entail any form of oversight over
GC. It is rather intended to facilitate the smooth
day to day administrative processes.
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The scope of activities can be expanded with the approval of the AC.
Personal Data Protection
Eurobank Holdings
In the context of Personal Data Protection, Eurobank Holdings has entrusted the following functions to the Bank’s Personal
Data Protection Unit with the support of Legal where needed:
●
consultation
and
advice
regarding
the
drafting
of
privacy
notices
for
the
customers,
employees,
shareholders
of
the
HoldCo and/ or persons with voting rights and their representatives in the HoldCo meetings and committees,
●
provision of drafts of privacy policies, cookies policies and cookies management tool for the HoldCo's website,
●
provision of advice in handling requests and complaints of data subjects,
●
provision of advice for incident and data breach management and notifications to the competent authority, if required,
●
provision of advice on GDPR policies and related guidelines.
Eurobank
Personal Data Protection Unit assists the Data
Protection Officer (DPO) in performing his duties
in an independent manner.
Key tasks include:
●
issues relevant guidelines on GDPR requirements and provides relevant advice to involved Units,
●
provides
advice,
where
requested,
for
the
appropriate
technical
and
organizational
measures
to
be
implemented
to
ensure compliance with the principles of privacy by design and privacy by default,
●
provides advice regarding the content of privacy notices,
●
provides advice on the appropriate handling of the GDPR requests and/or complaints,
●
upon request, provides
advice regarding the
categorization of the
third parties, in
accordance with the
GDPR and any
other applicable data
protection legislation
(controller/ joint
controller/processor/ sub-processor), and
the relevant
privacy
terms to be signed,
●
provides
advice
to
the
Incident
Management
Team
on
whether
the
incident
must
be
reported to
the
data
protection
authority,
●
provides advice, where requested, as regards the performance of Data Protection Impact Assessments,
●
provides advice where requested as regards the maintenance of the Register of Processing Activity.
6.
System of Internal Controls
Principles of Internal Controls
The Group
has established
a robust
System of
Internal Controls
that aligns
with international
best practices
and utilizes
COSO terminology.
This system is
designed to provide
reasonable assurance regarding
the achievement of
objectives in
key categories:
●
Efficient and
Effective Operations:
The Group's
internal controls ensure
that operations are
conducted efficiently
and
effectively, promoting productivity and optimal resource utilization.
●
Reliability and
Completeness of
Financial and
Management Information:
Internal controls
are in
place to
ensure that
financial and management information
is reliable, accurate, and
complete. This helps in
making informed decisions and
maintaining transparency.
●
Compliance
with
Applicable
Laws
and
Regulations:
The
Group
emphasizes
compliance
with
all
relevant
laws,
regulations,
and
industry
standards.
Internal
controls
are
designed
to
ensure
adherence
to
legal
requirements
and
mitigate regulatory risks.
The key principles that underpin the Group’s System of Internal Controls are as follows:
●
Control Environment: The control environment serves as the foundation
for all internal control components. It includes
factors such as
management's integrity and
ethical values, recruitment
and training policies,
organizational structure,
and delegation of authority. These elements contribute to a strong control consciousness among employees.
●
Risk
Management:
The
Group
recognizes
the
importance
of
risk
management
in
its
operations.
It
implements
mechanisms
to
identify,
assess,
and
manage
risks
that
may
impact
the
achievement
of
objectives.
The
risk
management framework is dynamic and evolves to address new and emerging risks.
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●
Control Activities: Internal control activities are
documented in policies and procedures that
ensure safe operations and
accurate record-keeping.
Segregation of duties
is a
crucial organizational
measure to
enhance control
effectiveness,
ensuring that key functions such as approval, dealing, administration, and controlling are separated.
●
Information
and
Communication:
Effective
information
and
communication
channels
are
established
to
ensure
that
relevant information is
identified, captured,
and communicated in
a timely manner. This
includes internal communication
within the organization
and external
communication with
stakeholders such
as regulators,
shareholders, and
customers.
●
Monitoring:
The
Group
conducts
ongoing
monitoring
of
activities
as
part
of
its
operations.
This
includes
regular
management
and supervisory
activities,
internal audits,
and independent
evaluations of
the internal
control system.
Internal control deficiencies are reported and escalated
as necessary,
with major issues reported to top management,
the Audit Committee, and the Board.
Additionally,
the
efficiency
of
the
internal
control
system
is
independently
evaluated
every
three
years
by
a
third-party
auditing firm, in accordance with
regulatory requirements. The evaluation
report is assessed by
competent bodies within the
Group and submitted to regulatory authorities for review and acknowledgment.
Characteristics of the System of Internal Controls (SIC)
HoldCo and Eurobank have
established key characteristics of
their System of Internal
Controls (SIC), which are
indicative
and not restrictive. These characteristics include:
●
Code of Conduct: There is a defined Code of Conduct along with processes for monitoring its implementation to ensure
ethical conduct and adherence to standards.
●
Organizational
Chart:
An
approved
organizational
chart
is
in
place,
depicting
the
hierarchy
and
functions
of
each
sector/department clearly defined to ensure effective management.
●
Audit Committee: The
composition and function
of the Audit
Committee are outlined
to oversee financial
reporting and
compliance.
●
Strategic Planning:
A description
of strategic
planning processes
is provided,
including development,
implementation,
and periodic evaluation of strategic objectives.
●
Action Plans:
Long-term and
short-term action
plans for
important activities
are established,
with periodic
reports and
identification of deviations along with justifications.
●
Articles of Association: The Articles of Association are complete and
up-to-date, reflecting the objectives and operations
of the entity.
●
Directorates and Departments: Tasks
of directorates, departments, and job descriptions are defined
to ensure clarity in
roles and responsibilities.
●
Policies and Procedures:
Policies and procedures for
important operations are documented,
including internal controls
for risk management.
●
Compliance
Processes:
Processes
for
compliance
with
legal
and
regulatory
frameworks
are
established
to
ensure
adherence to laws and regulations.
●
Risk Assessment
and Management:
Processes for
risk assessment
and management
are in
place to
identify and
mitigate
risks effectively.
●
Financial
Information Integrity:
Processes ensure
the integrity
and reliability
of financial
information through
accurate
reporting and controls.
●
Executive Performance Evaluation:
Processes for
recruitment, training,
delegation, targeting,
and evaluation
of executive
performance are outlined.
●
Information
Systems
Security:
Processes
for
the
security,
adequacy,
and
reliability
of
information
systems
are
established to safeguard data.
●
Personnel
and
Asset
Protection:
Processes
are
in
place
to
safeguard
personnel
and
assets,
ensuring
security
and
protection.
●
Reporting and
Communication: Reporting
lines and
communication channels
within and
outside the
organization are
described for effective information flow.
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●
Monitoring and Evaluation:
Mechanisms are established
for monitoring and
evaluating the efficiency
and effectiveness
of processes regularly.
●
Independent
Evaluation: There
is a
process
for
periodic
evaluation of
the
adequacy and
efficiency
of
the
SIC by
an
independent auditor to ensure objectivity.
●
Environmental
Policies:
Policies
for
environmental
management
and
other
ESG
factors
are
recorded
to
address
sustainability and social responsibility.
These policies and procedures are part of
the corporate governance system's assessment and are
regularly reviewed and
updated to align with best practices and regulatory requirements.
Evaluation of the System of Internal Controls
The Bank's AC
is responsible for
annually reviewing and
evaluating the adequacy
of the Internal
Control System (ICS)
of
both the Bank
and its subsidiaries.
This evaluation is
based on data
and information provided
by the Internal
Audit Group
(IAG) of the Bank, external auditors'
findings and remarks, as well as
feedback from supervisory authorities. The AC
utilizes
oversight
and
reporting
mechanisms
established
with
the
Audit
Committees
of
the
Bank's
Subsidiaries
to
ensure
a
comprehensive assessment.
Similarly, the HoldCo's AC is tasked with reviewing and evaluating the adequacy of
the Internal Control System (ICS) of the
HoldCo itself. This
evaluation is conducted
based on relevant
data and information
from the Internal
Audit (IA) of
the HoldCo,
findings
and
remarks
from
external
auditors,
and
feedback
from
supervisory
authorities.
The
AC
ensures
a
thorough
assessment of the HoldCo's ICS to uphold standards of governance and compliance.
Independent Evaluation of the HoldCo/Bank System of Internal Controls
In March 2024, Grant Thornton presented the scope, findings, and methodology of their
Independent triennial Evaluation of
the HoldCo/Bank System of Internal Controls
(SIC) to the AC
members, as per the Bank
of Greece Act 2577/9.3.2006 (BoG
Act).
Based
on
the
procedures
conducted
and
the
evidence
gathered,
there
were
no
indications
that
the
SIC,
at
the
time
of
assessment, was not compliant in all material aspects with the requirements of the BoG Act.
Grant Thornton identified 21 observations during their assessment, categorized as 16
low-risk observations and 5 medium-
risk observation related to
the IT issues in
Eurobank Equities, and 7 recommendations
for improvement. Management will
take appropriate actions in response to these observations.
7.
Sustainability
Sustainability Approach
Eurobank places more
importance on sustainability than
ever before. The
Bank’s approach to
sustainability is attached
to
its ambitious
vision to
reimagine its
business and its
operations in
a transformative
journey to
the next
decade towards a
lower carbon
future, an
innovative
digital environment
that enhances
the potential
of its
clients,
a diverse,
inclusive and
equitable society,
and a
governance environment
that builds
trust in
the market.
The Bank’s
ambition for
sustainability is
expressed through quantified objectives, such as its detailed action plan to align its
operations, portfolio and investments to
become Net Zero by 2050.
Eurobank has expressed
the Environmental, Social,
Governance (ESG) aspect
of its business
through the lens
of Impact
generation. The Sustainability Strategy has been defined in a holistic approach across two pillars of impact:
the operational
impact arising
from its
own activities
and the
financed impact
resulting from
the Bank’s
lending and
investing activities
to
specific sectors
and clients.
These two
pillars of
impact aim
to capture
the essence
of the
Bank’s business
effect on
the
climate, the protection of the natural environment, its contribution
to addressing societal challenges at large, the prosperity
of its
own people,
its contribution
to raising
business capacity
in the
markets where
the Bank
operates, and
the internal
processes that build and secure the confidence of its stakeholders.
Eurobank has designed, approved and currently implements the Sustainability Strategy including targets and commitments
along the two key pillars:
A.
Operational Impact Strategy
The Operational Impact Strategy sets
targets and commitments addressing the impact
arising from the Bank’s
operational
activities
and
footprint
and
are
based
on
three
strategic
axes,
each
of
which
is
supported
by
a
specific
objective,
commitments and targets:
•
Environmental impact: Operational net zero, paperless banking, circular economy.
•
Employer’s impact: Diversity and inclusion, wellbeing culture, innovative environment.
•
Social and business impact: Sustainable procurement, socio-economic effect, transparency.
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B. Financed Impact Strategy
The Bank’s Financed Impact Strategy sets targets and commitments addressing the impact arising from the
Bank’s lending
and investing activities to specific sectors and clients and focuses on:
•
Clients’ engagement and awareness to adapt their business so as to address climate change challenges.
•
Actions for supporting clients in their transition efforts towards a more ESG-friendly economic environment.
•
Enablers and tools such as frameworks and products to underpin Sustainable Financing.
•
The assessment and management of climate-related material exposures.
Sustainability Policies & Frameworks
Eurobank has taken action
towards updating its Sustainability
Policy Framework, to outline
the approach for adherence to
applicable regulatory
requirements and voluntary
initiatives as well
as adopted
standards and guidelines,
thus enabling a
contemporary
and
continuously
updated
approach
to
Sustainability,
in
line
with
international
best
practices.
The
Sustainability
Policy
Framework
sets
the
foundation
towards
integration
of
ESG
into
Eurobank’s
business
model
and
operations.
Focusing
on
the
social
aspect
of
ESG,
Eurobank
has
taken
actions
that
outline
its
corporate
values,
principles
and
commitments by issuing
the Human Rights
Statement, the Diversity, Equity
and Inclusion Policy
as well as
the Policy against
Harassment
and
Violence
in
Workplace.
In
order
to
further
enhance
its
efforts
against
Harassment
and
Violence
in
Workplace,
the Bank
has introduced
a relevant
focused training
program to
all employees.
This approach
outlines zero-
tolerance for various
types of violation
and discrimination as
well as for
the equal opportunities
with fairness and
meritocracy
and
irrespective
of
gender,
nationality,
age
or
other
traits
throughout
the
entire
employee
life cycle
(i.e recruitment
and
selection, learning, performance, talent and career development, reward management).
Moreover,
Eurobank
has
developed
and
implements
three
guiding
frameworks,
defining
the
approach
and
criteria
for
classifying its financing and investing activities as sustainable:
●
its
Sustainable
Finance
Framework
(SFF),
which
supports
the
identification
of
sustainable/green
financing
opportunities (finance the transition of Bank’s clients),
●
its Green Bond Framework. The Framework, which has
been externally reviewed by an established second-party
opinion provider,
facilitates the
financing of
projects that
will deliver
environmental benefits
to the
economy and
support Bank’s business strategy and vision,
●
its Sustainable Investment
Framework, which specifies
the respective criteria
that are utilized
in the Bank’s
banking
books investment strategy, along with the selection process of eligible sustainable investments.
The above-mentioned frameworks enable Bank to pursue economic growth in line with ESG criteria.
These
frameworks
are
complemented
by
the
adopted
Environmental
Policy,
Energy
Management
Policy
and
Water
Management Policy,
aiming to protect the environment in
all aspects of its operations.
In line with these policies,
the Bank
applies certified management systems, in accordance with
international standards, such as an Environmental
Management
System (ISO 14001, EMAS) and an Energy Management System (ISO 50001).
Stakeholders engagement and materiality analysis
An integral
part of
Eurobank's approach
to Sustainability
is to
foster strong
relationships of
trust, cooperation
and mutual
benefit with all stakeholders affected by its activities, directly or indirectly. Eurobank promotes two-way communication and
develops ongoing dialogue with
stakeholders, to be able
to actively meet the expectations,
concerns and issues raised
by
all its stakeholders. A more detailed presentation of the cooperation framework, expectations
and means of communication
and response for each stakeholder group is included in the Annual Report 2021 – Business & Sustainability.
Eurobank’s
materiality
analysis
is
the
key
process
used
to
define
the
Annual
Report
2022
–
Business
&
Sustainability
contents. Adopting
the new
GRI Standards
(2021) methodology,
Eurobank identified,
assessed, prioritised
and validated
the
positive
and
negative
impacts
that
the
Bank
creates
or
may
create
on
the
environment,
people
and
the
economy.
Prioritising
the
identified
impacts
contributed
to
determining
the
Bank’s
sustainable
development
materiality
topics.
The
methodology was carried out along 4 phases, namely i. Understanding the organization’s context, ii. Identifying impacts, iii.
Assessing impacts, and
iv.
Prioritising and validating
impacts. As per
the final stage
of the materiality
analysis process, a
list of topics
was prioritised as
material, which formed
the basis for
determining the contents
of the Annual
Report 2022 –
Business & Sustainability,
as well as
the disclosures of
relevant key performance
indicators. Further details
regarding the
aforementioned process and its results are embedded in the Annual Report 2022 – Business & Sustainability.
Furthermore, as part of
the Financed Impact Strategy,
in order to facilitate the
green transition of its clients,
Eurobank has
developed a dedicated approach to increase clients’ engagement and awareness regarding environmental risks.
Governance
Sustainability at Eurobank
is deployed across
an ESG governance
structure that addresses
both regulatory requirements
and voluntary commitments.
BoD oversight with
respect to Sustainability
Strategy is addressed
through the inclusion
of ESG
items in the Board Meetings agenda, as per international
best practice. The Group has updated its governance
structure by
introducing and
defining the
roles and
responsibilities in
relation to
ESG and
climate related
and environmental
(CR&E)
risks, embedding
regulatory guidelines
and market
practices involving
various key
stakeholders (i.e.
Business functions,
Units and Committees).
The updated governance
structure aims to
further enhance effective
oversight of ESG
matters at
Management / BoD level, support the roll out of its Sustainability Strategy and the
integration of ESG and C&E risks. In that
context,
the
Group
Risk
Management
Strategy
Planning
Operations
and
Climate
Risk
(GRMSPO&CR)
has
the
overall
responsibility for
overseeing, monitoring,
and managing
CR&E risks.
Specifically,
the Unit
operates as
the Project
office
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responsible
for
the implementation
of
the climate
related
and
environmental
risks
roadmap
(“Programme
Field”),
with a
coordinating and supervisory role on all related project
streams to ensure alignment with the Bank’s business
strategy and
the
regulatory
authorities’
expectations.
Moreover,
the
HoldCo/Bank
BoD
has
assigned
an
executive
member
as
the
responsible
BoD member
for climate
-related and
environmental
risks, ensuring
that material
ESG
issues
are
taken
into
account in the decision-making process. As part of
his duties, the member responsible updates the Board Risk
Committee
(BRC) (in alignment with the BRC Terms
of Reference) and the Board of Directors of HoldCo and
Bank on climate change
and environmental related risks at least on a semi - annually basis.
A dedicated ESG
Management Committee complements
the ESG governance
model and is
chaired by the
BoD member
responsible for climate-related and
environmental risks. The purpose of
the ESG Management Committee,
established by
the
Bank
CEO
who
appoints
its
members,
is
to
provide
strategic
direction
on
ESG
initiatives,
review
the
Sustainability
Strategy
prior
to
approval,
integrate
the
elements
of
the
Sustainability
Strategy
into
the
Bank’s
business
model
and
operations, approve
eligible assets
of Green
Bond Frameworks,
regularly measure
and analyze
the progress of
the ESG
goals and performance
targets, ensure the
proper implementation of
ESG related policies and
procedures and to
validate
the prioritized ESG impacts / Material Issues reported in the Annual
Report - Business & Sustainability,
in accordance with
supervisory requirements and voluntary commitments.
A dedicated ESG Unit
is responsible for the
design and monitoring of
the implementation of the
Operational Impact Strategy
(OIS), the
monitoring of
the Operational
ESG performance
and coordination
of ESG
linked operational
activities that
enhance
the Bank’s Impact. The Unit
reports to Deputy CEO,
Group COO and International
Activities and acts as
a custodian of ESG
principles &
culture and
as a
cross functional
coordinator in
order to
ensure alignment
in ESG
issues. The
Head of
ESG
acts as secretary to the ESG Management Committee.
Further
details
regarding
the
Bank’s
ESG
governance
model
are
embedded
in
the
Annual
Report
2022
–
Business
&
Sustainability.
Reporting and Transparency
HoldCo/Bank
issues
its
Annual
Report
–
Business
&
Sustainability
with
a
view
to
fully
inform
its
stakeholders
about
its
performance
in
the
sustainable
development
pillars
(economy,
society,
environment).
The
publication
is
prepared
in
accordance with the
Global Reporting
Initiative (GRI)
Standards (2021),
applying the reporting
principles (accuracy, balance,
clarity,
comparability,
completeness,
sustainability
context,
timeliness,
verifiability).
This
reporting
approach
aims
at
providing comprehensive and transparent information to stakeholders, relates to Eurobank’s response to their expectations
and interests, and
invests in continuously
promoting open dialogue
with them. Through
the Report, Euroban/HoldCo
provide
full
disclosure
on
sustainability
impacts
such
as
environmental
performance,
energy
and
emissions,
social
impact
and
corporate governance, information
regarding the
Bank’s initiatives, while
addressing all
material stakeholder
interests across
the ESG
spectrum. The
Annual Report
- Business
& Sustainability
is accessible
to all
interested parties
through the
corporate
website. Additionally, besides the sustainability reporting frameworks
of the GRI sectoral supplement
on Financial Services,
the SASB Commercial Banks
Standard, as well as
the Athens Stock Exchange
(ATHEX) ESG Reporting Guide (2022) have
been considered. This report also incorporates the 10 Principles of the United Nations Global Compact (UNGC), as well as
the Accountability AA1000 2018 Principles. The sustainability-related disclosures in the report are assured
by a competent
assurance provider
in accordance
with the
AA1000 Assurance
Standard (version
3) and
related Principles
for inclusivity,
materiality,
responsiveness and impact,
as per the
independent auditor’s Limited
Assurance Report which
is disclosed as
part of the
Annual Report – Business
& Sustainability.
In addition, the
Holdco/Bank reports disclosures
as required by the
EU Taxonomy
(Regulation (EU) 2020/852 of the
European Parliament and of the
Council). Specifically,
upon reviewing its
business activities, to align
taxonomy reporting with its
core activities, provides the
key performance indicators (KPIs)
and
other disclosure requirements
related to its dominant
financial undertakings as
laid down in Article
10 of the Art.
8 Delegated
Act. Furthermore,
in the
context of
Pillar III
disclosures on
ESG risks,
Holdco/Bank discloses
ESG risk
information on
a
semi-annual
basis.
Moreover,
the
first
Task
Force
on
Climate-related
Financial
Disclosures
(TCFD)
Climate
-
related &
Environmental
Risk Report
as well
as the
first Climate
- related
& Environmental
Risk Report
were published.
Also, the
Bank's GHG financed emissions for loans, bonds and shares positions, following the PCAF methodology, were disclosed.
Furthermore,
the
Bank’s
environmental
and
energy
management
performance,
with
respect
to
the
improvement
of
its
operational footprint,
is monitored
through specific
indicators and
associated targets
disclosed also
in the
Environmental
Report
(EMAS).
This
constitutes
an
environment
and
energy
monitoring
and
self-improvement
tool,
in
line
with
commitments, regulated
by applicable
standards, audited
& verified
by independent
third party.
Within the
EMAS Report
framework, the Bank
discloses the Green
House Gas emissions
record in line
with the ISO14064 standard,
as verified by
external independent party and in line with the provisions of the national Climate Law.
Moreover,
Holdco/Bank
actively
participates
in
internationally
recognized
ESG
ratings
to
highlight
the
continuous
improvement
in
its
environmental,
social
and
governance
performance,
upgrade
the
relevant
disclosures,
and
further
enhance investor confidence in its practices.
8.
Shareholders’ General Meeting
The
Shareholders’
General
Meeting
(General
Meeting),
serves
as
the
highest
authority
within
the
HoldCo/Bank
and
is
convened by
the respective
Board to
address all
matters concerning
the entity.
It holds
exclusive jurisdiction
over issues
outlined in Article 117
of Company Law 4548/2018, such as amendments to the
Articles of Association. Every shareholder
has the right to participate and vote at the General Meeting either in person or through their
legal representatives, following
the prescribed legal procedures.
For
the
General
Meeting
to
be
considered
in
quorum
and
valid,
shareholders
present
or
represented
must
collectively
represent
at
least
20%
(1/5)
of
the
paid-in
share
capital
associated
with
voting
shares.
Resolutions
are
passed
by
an
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absolute majority and
are binding on
both absent and
dissenting shareholders. However,
for certain significant
decisions,
such as
those related
to share capital
changes or mergers,
a higher quorum
of at least
50.00% (1/2) of
the paid-in share
capital is required, and resolutions must be approved by a two-thirds (2/3) majority.
According to article
119
par. 1
of l. 4548/2018,
the Annual General
Meeting is held
annually no later
than the tenth
(10th)
calendar day
of the
ninth month
after the
end of
the business
year, while an
Extraordinary General
Meeting may
be convened
by the Board as deemed necessary or required by law.
Minutes
of
the
General
Meeting
are
authenticated
by
the
Chairperson
and
the
Secretary
of
the
General
Meeting,
and
standard minority rights outlined in Company Law 4548/2018 are applicable.
Information about the Eurobank Holdings General Meetings
Requirements for calling and convening the General Meetings
All
persons appearing
as shareholders
of ordinary
shares of
the HoldCo
in the
registry of
the Dematerialized
Securities
System (DSS) managed by Hellenic
Central Securities Depository S.A. on the
Record Date, namely at the start
of the fifth
day before the General Meeting,
have the right to participate and vote in the HoldCo General Meeting.
The aforementioned
record date is applicable for the Repeat Meeting as well. The shareholders are informed on time about the agenda of each
General Meeting and new technologies are used to help them participate.
At
least
20
days
before
the
General
Meeting
date,
the
shareholders
are
informed
and
given
access
to
all
necessary
information, in compliance with the Greek Law. The Notice of General Meeting includes:
●
Date, time and place of the Meeting
●
Items on the agenda
●
Participation and voting rights with the relevant procedures
●
Minority shareholder rights
●
Relevant documents available
All resolutions and information about each General Meeting are posted under Investor Relations on the Eurobank Holdings
website.
Participation and proxies
Shareholders are assisted to participate in HoldCo General Meetings. All
Eurobank Holdings shareholders have the right to
participate in person or appoint a proxy. Proxies must be appointed at least 48 hours before the General Meeting date.
To
the extent that shareholders' questions on items
on the agenda are not answered during
General Meeting, HoldCo has
a process for submitting the relevant answers.
Annual General Meeting (AGM) of the shareholders
In the
Annual General
Meeting of
the HoldCo’s
shareholders, held
on July
20, 2023,
remotely via
teleconference in
real
time, participated shareholders representing 2,754,969,489
shares out of 3,710,677,508 shares,
corresponding to 74.24%
of the paid up share capital with voting rights on the items of the agenda. In respect of the
items on the agenda, as referred
to on the invitation dated 27.06.2023, the General Meeting:
1.
Approved,
with
a
majority
exceeding
the
minimum
required
by
the
law,
the
Annual
and
Consolidated
Financial
Statements for the financial year 2022, as well as the Directors’ and Auditors’ Reports.
2.
Approved, with a
majority exceeding the
minimum required by
the law,
the overall management
for the financial
year
2022 as well as the discharge of the Auditors for the financial year 2022.
3.
Approved, with a majority
exceeding the minimum required by
the law: a) the appointment
of the firm KPMG
Certified
Auditors S.A. (KPMG)
as statutory auditor
for the Annual
and Consolidated Financial
Statements of the
Company for
the financial year 2023;
and b) KPMG’s relevant
fees for the audit
of the Annual
and Consolidated Financial Statements
of the Company for the financial year 2023 to amount to €0.2 m.
4.
Approved, with a majority
exceeding the minimum
required by the law, the
acquisition of own
shares in accordance with
article 49 of
Law 4548/2018, and
in particular the
acquisition of all
of the Company’s shares
which the Hellenic
Financial
Stability Fund (“Fund”) owns, under the following conditions: (α)
Maximum number of shares to be acquired: According
to article 49
of Law 4548/2018,
the maximum number
of shares that
the Company may
acquire, added together
with
the
shares
belonging to
the
Company from
time
to
time,
cannot exceed
10%
of the
Company's
paid
share
capital.
Specifically, in
this transaction, the number of shares
to be purchased will be the
total of its issued shares held
by the
Fund, i.e. 52,080,673 shares,
which correspond to approximately
1.4% of its
share capital. (b) The
duration for which
the approval is granted is set at 6 months from the day of
the General Meeting. (c) The maximum purchase price is set
at €1.90 per share
and the minimum purchase
price is set at €1.10
per share. (d) To
authorize the Board of
Directors
to
determine
the
specific
conditions
and
relevant
details
for
the
acquisition,
taking
into
account
the
supervisory
approvals.
5.
Approved with a majority exceeding
the minimum required by the
law, the amendment
of the Remuneration Policy for
Directors of the Company.
6.
Approved, with a
majority exceeding the
minimum required by
the law,
the remuneration paid
for the financial
year 2022
as well as the advance payment
of remuneration for the financial year of
2023 to the non-executive Board members
for
the execution of their duties as Board Members and as members of the Board Committees.
7.
Casted a positive vote on the Remuneration Report for the financial year 2022.
8.
Approved, with a majority exceeding the minimum required by the law, pursuant tο the provisions and following the
procedure of article 86 of l. 4261/2014, a higher than 100% maximum level of the ratio between the fixed and variable
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components of remuneration for the Chief Executive Officer (CEO), the three (3) Deputy CEOs, the Group Chief Risk
Officer, Group Chief Financial Officer and the General Manager Group Strategy.
Approved, with a majority
exceeding the minimum required by the law, the amendment of the Nomination Policy of the Directors of the Board.
9.
Approved, with a majority exceeding the minimum required by the law the appointment of Mr. Burkhard Eckes and Mr.
John Arthur Hollows as new independent non-executive members of the Company’s Board of Directors. The term of
office of the aforementioned new members expires concurrently with the term of office of the other members of the
Board (with a membership of fifteen from now onwards) and more specifically on 23.07.2024, prolonged until the end
of the period the Annual General Meeting for the year 2024 will take place.
10.
Approved, with a
majority exceeding the
minimum required
by the
law: a)
The Audit
Committee to
function as
Committee
of the Board of Directors (“BoD”) consisting of members of the BoD. b) The Audit Committee to consist of five (5) non-
executive members of the BoD of which at least four
(4) shall be independent. c) The term of office
of the members of
the Audit
Committee that
will be
appointed by
the BoD
in accordance
with article
44, par.
1c of
L. 4449/2017,
as in
force, to coincide
with their term
of office as
members of the
BoD, i.e. the
term of office
of the Audit
Committee members
will expire on 23.07.2024, prolonged until the end of the period the Annual General Meeting for the year 2024 will take
place.
12.
Approved, with a majority exceeding the minimum required by
the law, the amendment of Article
11 of the
Company’s
Articles
of
Association
by
updating
paragraph
1
aiming
to
the
option
the
appointment
and
revocation
of
the
representative and the relevant notification to the
Company may take place via electronic
means, and more specifically
via electronic mail
(email) at the
email address referred
to in the
Invitation of the
General Meeting and/or
other electronic
means referred to therein.
13.
Was informed
on the Annual Activity Report of the Audit Committee for the financial year 2022.
14.
Was informed on the Independent Non-Executive Directors’ Report.
All
information
on
the
AGM
can
be
found
at
Eurobank
Holding’s
website
(https://www.eurobankholdings.gr/en/investor-
relations/shareholders/general-meetings-pages/annual-general-meeting-of-shareholders-on-20-07-23).
Information about the Eurobank General Meetings
The HoldCo, following
the demerger, constitutes the Eurobank’s
sole shareholder, who represents
100% of its
share capital.
According to
article 121
par. 5
of Law
4548/2018, an
invitation to
convene a
general meeting is
not required
in the
event
that the meeting is attended or represented
by shareholders representing the entire capital and none
of them objects to its
holding and decision-making. In this context the following general meetings of Eurobank were held.
Annual General Meeting (AGM) of the shareholders
In the
Annual General
Meeting of
Eurobank’s shareholders,
held on
July 20,
2023 in
Athens, at
“Bodossakis Foundation
Building”
(“John
S. Latsis”
Hall), 20
Amalias
Avenue,
participated
the sole
shareholder Eurobank
Holdings representing
3,683,244,830 shares, corresponding to 100% of the paid up share capital with voting rights on the items of the agenda. In
respect of the items on the agenda, the General Meeting:
1. Approved
the Annual
and Consolidated
Financial Statements
for the
financial year
2022 as
well as
the Directors’
and
Auditors’ Reports. Profit sharing.
2. Approved the overall management for the financial year 2022 and discharge of the Auditors for the financial year 2022.
3. Appointed “KPMG Certified Auditors S.A.” as Auditors for the financial year 2023.
4. Approved
the remuneration
for the
financial year
2022 and
of the
advance payment
of the
remuneration for
the
non-
executive Board Directors for the financial year 2023.
5. Approved,
pursuant tο
the provisions
and following
the procedure
of article
86 of
Law 4261/2014,
a higher
than 100%
maximum level of the ratio between the fixed and variable components of remuneration for seven (7) executives.
6. Approved the appointment of Messrs. Burkhard Eckes and John Arthur Hollows
as new members of the Bank’s BoD and
their designation as Independent Non-Executive Directors, whose term of office expires concurrently with the term of office
of the
other members
of the
BoD (with
a membership
of fifteen
from now
onwards) and
more specifically
on 23.07.2024,
prolonged until the end of the period the Annual General Meeting for the year 2024 will take place.
7. Approved the recomposition of the Audit Committee.
8
.
Approved the
Amendment of article 11 of the Bank’s Articles of Association aiming to its update.
6. Approved the Annual Activity Report of the Audit Committee for the financial year 2022.
Extraordinary General Meeting of the Shareholders
In
the
Extraordinary
General
Meeting
of
Eurobank’s
shareholders,
held
on
July
31,
2023,
in
Athens,
at
“Bodossakis
Foundation
Building”
(“John
S.
Latsis”
Hall),
20
Amalias
Avenue,
participated
the
sole
shareholder
Eurobank
Holdings
representing 3,683,244,830
shares, corresponding to
100% of
the paid up
share capital with
voting rights on
the items of
the agenda. In respect of the sole item on the agenda, the General Meeting
resolved on the:
Approval of subscribing the bonds of the issuance of
a common bond loan (the “Loan”) which Eurobank Holdings will
issue,
for
partially financing
the buy
back
from the
Hellenic Financial
Stability Fund
of 52,080,673
registered shares
issued
by
Eurobank Holdings.
9.
Other information required by Directive 2004/25/EU
The elements
c), d),
f), h),
i) of
paragraph 1
of article
10 of
Directive 2004/25/EC
of the
European Parliament
and of
the
Council, are incorporated into elements c), d), e), g), h) of article 4 par.
7 of Law 3556/2007, and are referred to the Report
of the Directors, part of which is the present Corporate Governance Statement.
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APPENDIX AUDIT COMMITTEE ACTIVITY REPORT FOR THE YEAR 2023
Purpose
1.
In
accordance
with
the
Law
4449/2017
as
amended,
the
Audit
Committee
(AC)
of
Eurobank
Ergasias
Services and Holdings S.A. (Eurobank Holdings or HoldCo or Company) should submit an annual report to
the Shareholders’ Annual General
Meeting on the issues
dealt with by
the AC during the
previous year, also
including therein a description of the sustainability policy
followed by the entity.
2.
The current 2023 AC Activity
Report of Eurobank Holdings which
is also part of the 2023 Annual
Financial
Report, refers to
the AC activity
during 2023 and
the issues addressed.
In addition, it
describes Eurobank
Holdings’ sustainability policy.
3.
No deviations from the AC’s Terms
of Reference (ToR)
have been identified.
AC Composition / Membership
4.
It
is
noted
that
in
line
with
the
provisions
of
article
44
of
law
4449/2017,
as
in
force,
and
further
to
the
decision
of
the
HoldCo’s
Annual
General
Meeting
of
Shareholders
as
of
20.7.2023
regarding
the
recomposition
of
the
Audit
Committee
and
more
specifically
regarding
its
type,
composition
and
term
of
office; and
the BoD’s
decision of
23.06.2023 (in
combination
with 27.06.2023)
and 20.07.2023
regarding
the nomination and appointment of a new member to the AC respectively, and in particular of Mr. Burkhard
Eckes,
following
relevant
recommendations
by
the
NomCos
of
22.06.2023,
the
AC
decided
on
its
constitution and on the appointment of its Chairman.
5.
In addition, following the
Hellenic Financial Stability Fund’s (HFSF)
divestment from HoldCo, and
taking into
consideration
that
HoldCo
is
no
longer
subject
to
law
3864/2010
and
to
the
special
rights
of
the
HFSF
provided for in such
law, including HFSF’s right to appoint its
representative in the HoldCo Board
and Board
Committees,
the
HFSF
representative
Mrs.
Efthymia
Deli
in
the
HoldCo
Board
and
Board
Committees,
submitted her resignation from HoldCo’s BoD and
HoldCo’s Audit and Remuneration Committees (that was
present at that time) on 26 October 2023, effective
as of 7 November 2023.
6.
Following
the
above,
the
AC
consists
exclusively
of
BoD
members,
four
(4)
in
total,
all
of
which
are
independent non-executive Directors, according to the
provisions of article 9 of L. 4706/2020. In particular,
the
AC
consists
of
the
following
members:
1.
Jawaid
Mirza
(Chairperson
of
the
Audit
Committee,
independent
non-executive
BoD
member),
2.
Burkhard
Eckes
(Vice-Chairperson
of
the
Audit
Committee,
independent
non-executive
BoD
member),
3. Irene
Rouvitha-Panou
(Audit
Committee
member, independent non-executive BoD member), and 4. Rajeev Kakar
(Audit Committee member,
independent non-executive BoD member).
7.
All AC
members
have sufficient
knowledge
in the
field
of HoldCo
activities
and
the necessary
skills and
experience to carry out their
duties and meet the requirement
of established knowledge and
experience in
auditing and/or accounting.
8.
Information regarding current
AC composition and short
biographical details of its
members may be found
at the HoldCo’s website (www.eurobankholdings.gr).
Meetings Held During the Period & Attendance
9.
During 2023, the Audit Committee held seventeen (17) meetings, including
four (4) meetings by circulation,
while during 2022, the Audit Committee held fourteen (14)
meetings.
10.
The average ratio of attendance at the meetings by the
AC members stood at 100% (2022: 100%).
11.
The quarterly meetings were attended
in person and the rest
were held via conference
calls. This practice
is allowed by the AC ToR
and is consistent across all HoldCo’s BoD
Committees.
12.
The
submissions
for
the
AC
meetings
have
become
available
to
all
BoD
members
through
the
Diligent
platform.
13.
The
BoD
Chair
has
regularly
attended
the
AC
meetings.
In
addition,
all
meetings
were
attended
by
the
Internal Audit (IA), while
the General Manager of
Group Compliance was attending the
meetings depending
on the subject under discussion.
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14.
The External Auditor of 2023
financial statements (i.e.
KPMG) has been invited and
attended meetings as
required.
15.
The AC Chair updated the Board members, at the quarterly meetings of the Board, on the material matters
covered during the AC meetings.
16.
In 2023,
the members
of the
AC have
been invited
and participated
in the
Board Risk
Committee (BRC)
meetings and similarly the members of the BRC have been invited and participated in the Audit Committee
meetings (joint Audit Committee
and Board Risk
Committee meetings) for the
discussion / approval of
items
that fall under the responsibility of both Committees.
Highlights of Issues of Importance during 2023
Internal Controls System and Risk Management
17.
The AC, in accordance with its Terms
of Reference
, reviews the adequacy of the Internal Control and Risk
Management systems and the compliance with rules
and regulations of the monitoring process.
18.
Throughout the year 2023:
●
the AC Members
received update by
IA and Compliance,
covering matters of
the System of
Internal
Controls, Risk Management, Compliance with rules and
regulations and legal issues.
●
significant weaknesses in internal
controls and the progress of
actions taken to address them,
were
presented
in
the
Internal
Audit
Activity
Report
and
several
pending
issues
(including
External
Auditors’ Management Letter) were discussed with Management and the AC ensured that the time
plans and deadlines will be followed up.
●
the
AC
acknowledged
the
annual
Internal
Audit
Evaluation
Report
of
the
System
of
Internal
Controls, a
requirement of
the Bank
of Greece
Act 2577/9.3.2006.
The said
report along
with the
AC’s own assessment of the evaluation was
further submitted to the BoD and
subsequently to BoG
in June 2023.
●
in the context
of the independent
triennial Evaluation
of the System
of Internal
Controls (SIC)
per
BoG
Act
2577/9.3.2006,
the
AC
approved
the
proposed
scope
of
the
assignment
and
the
appointment of the firm.
●
in accordance with the provisions of Law 2533/1997,
the AC reviewed reports on substantial stock
transactions performed by the Company’s Directors and General Managers in listed securities and
notified the Board.
Internal Audit (IA)
19.
The Internal
Audit (IA)
function of
HoldCo is
independent (Internal
Audit has
a functional
reporting line
to
the
AC
and
a
dotted
reporting
line
for
administrative
matters
to
the
CEO),
adequately
organized,
has
unrestricted access to any
pertinent information and operates
efficiently and effectively
in compliance with
the Standards of the Institute of Internal Auditors.
20.
During 2023, the AC:
●
approved the revised Internal Audit Mandate and Terms
of Reference (ToR).
●
received confirmation from the Chief Internal Auditor (CIA)
regarding IA’s
independence for 2022.
●
discussed the performance of the IA Annual Plan for 2022.
●
approved and further submitted to the BoD for information
the IA Annual Plan for 2024.
●
monitored the progress of the IA Audit Plan for 2023 through the
Activity Reports.
●
at the Quarterly AC meetings, discussed the key highlights of the IA
Activity Reports (including the
follow-up of the external auditors’ Management Letter
points).
●
discussed
the
progress
of
the
actions
for
resolution
of
a
Very
High
risk
finding
identified
in
the
beginning of 2022 (doValue
Suspense Accounts).
●
Carried out the assessment of the Internal Auditor’s performance for 2022.
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Compliance
21.
The
Compliance
of
HoldCo
is
a
permanent
and
independent
function
(the
Head
of
Compliance
reports
functionally to the
AC and for administrative
purposes to the
CEO of Holdings)
adequately organized, has
unrestricted access to any pertinent information and operates efficiently
and effectively.
22.
During 2023, the AC:
●
approved the revised Compliance Mandate.
●
approved and further submitted to the BoD for information the
2024 Compliance Annual Plan.
●
at the Quarterly AC meetings, discussed the key highlights
of the Compliance Activity Reports.
●
reviewed and depending
on the case,
approved or approved
and further submitted
to the BoD
for
approval /
information a)
the revised
Code of
Conduct and Ethics,
b) the
revised Policy for
Reporting
Illegal
or
Unethical
Conduct
and
the
appointment
of
Report
Receiving
&
Monitoring
Officer
in
Greece, c) the revised Group Antitrust Compliance Policy, d) the revised Compliance Policy, e) the
revised Conflict of Interest
Group Policy, f) the revised Anti-bribery and
Corruption Policy and g)
the
revised Insider Dealing Guideline.
●
In line with the BoG requirements,
received the Annual Group
Compliance Report as per
BoG Act
2577/9.3.2006 (including MiFID report) for acknowledgement.
The said report along with the AC’s
assessment was further submitted to the BoD and subsequently
to the BoG in June 2022.
●
Carried out the assessment of the performance of the Head of Compliance
for 2022.
Financial reporting
23.
The AC, in
accordance with
its Terms
of Reference,
monitors the financial
reporting process
and submits
recommendations and proposals to ensure its integrity. In addition, it supervises and assesses whether the
internal
controls
related
to
financial
reporting
are
adequate
and
effective
and
that
these
controls
are
adjusted to reflect any major changes in the risk profile
of Holdings.
24.
During the AC meetings in 2023:
●
the
AC,
among
others,
reviewed
and
approved
the
quarterly
results,
semi-annual
and
annual
Accounts
and
Financial
Statements,
Annual
General
Meeting
(AGM)
matters
and
matters
of the
External
auditors.
In
addition,
the
AC
reviewed
and
proposed
to
the
BoD
for
approval
the
Consolidated Pillar III report.
●
Group
Finance
made
presentations
on
issues
such
as
accounting
policies,
critical
accounting
estimates, significant
one-off items
impacting the
Financial Statements,
major variations
between
periods,
important
disclosures,
significant
issues
with
tax
authorities,
as
well
as
Group
Control
issues.
●
IA performed a
high level review
of material submitted
to the AC
for the clearance
of the financial
results and reported significant items to the AC Chairman for
his attention.
●
with regards
to the monitoring
of the Actual
vs Budget
Report, the AC
received quarterly
updates
by Group Finance which were subsequently presented to the
BoD.
External Auditors
25.
The
AC,
in
accordance
with
its
Terms
of
Reference,
is
responsible
for
the
selection,
performance
and
independence
of the
External
Auditors,
KPMG.
In
addition,
the
AC reviews
the
scope
of
audit
work
and
audit approach
and assesses
the process
for identifying
and responding
to key
audit and
internal control
risks.
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26.
During the AC meetings in 2023:
●
KPMG presented its 2023 Audit Plan to the AC. The AC has also, in line with its ToR, reviewed the
Engagement letter for the 2023 Statutory Audit of the
Company.
●
KPMG
presented
and
discussed
with
the
AC
members
a
summary
of
audit
work
done,
major
findings, including a summary of unadjusted differences,
and other issues of importance.
27.
The AC has
received the 2022
KPMG Management
Letter (ML) and
has discussed the
issues raised with
KPMG and Management.
28.
The annual assessment of the External Auditors for the 2022 audit was discussed by the AC members and
Management. At the same
AC meeting, the AC
decided to propose to
the BoD for approval
and subsequent
recommendation to the Annual General Meeting of shareholders
for approval, the reappointment of KPMG
as statutory auditors for
the separate and consolidated
Financial Statements of Eurobank
Holdings for the
financial year of 2023.
29.
The AC has discussed and approved the Global Group Audit
and assurance Fees of 2023.
30.
The
AC
has
received
the
External
Auditors’
Independence
written
confirmation,
while
it
monitored
the
independence
of
the
External
Auditors
through
the
Auditors
independence
monitoring
tool
submitted
quarterly by
Group Finance,
depicting the
value of
non-audit services
provided as
compared to
the limits
set by
the Group
External Auditor’s
Independence Policy
that was
also updated
during 2023.
In line
with
the Group
External
Auditor’s Independence
Policy,
the AC
in 2023
reviewed
and approved
all non-audit
services including the audit assurance
related work re Fairfax Financial
Holdings (FFH) annual requirement
on the reconciliation of IFRS consolidated Total Equity and Profit & Loss to U.S. GAAP,
for the year ending
31.12.2022, ensuring that the independence limits are
complied with.
31.
The AC met with the External Auditors (with and without Management present) to discuss issues related to
the audit, in addition to any significant issues related to
the External Auditors’ audit plan.
32.
The AC reviewed the External Auditor’s Report and the Report on
Key Audit Issues.
33.
The AC approved the updated External Auditors Tendering
Policy and Procedure, as well as the Key Audit
Partner (KAP) selection/rotation policy as an addendum
to it, based on market practices.
34.
The AC discussed a 5-yr
(2024-28) plan on the
eligibility of audit firms for
the statutory audit of
the Group,
including potential conflict
of interest situations
with eligible audit
firms, based on
Greek Law 4449/17
and
EU Reg 537/14,
and requirements
of the
International Code
of Ethics for
Professional Accountants
of the
International Ethics Standards Board for Accountants (IESBA)
AC’s Evaluation
35.
The
AC’s
performance
is
evaluated
annually
according
to
the
provisions
of
HoldCo’s
Board
and
Board
Committees
Evaluation
Policy.
According
to
the
AC’s
2023
self-evaluation,
the
AC
members
expressed
satisfaction with
the committee’s
effectiveness and
leadership. They
commented the
AC’s efficient
use of
time, well-planned
meetings, and
timely scheduling. The
Chairperson of
the AC was
noted for being
well-
prepared and skilled in guiding discussions through the agenda, fostering critical dialogue, and ensuring all
members could express their views
freely. Participants were also acknowledged for their preparedness and
active engagement in vital discussions, demonstrating a commendable
level of challenge.
36.
However,
the
evaluation
identified
areas
for
improvement,
notably
the
need
for
enhanced
oversight
on
critical
audit
and
compliance
issues
within
major
subsidiaries.
There
was
also
a
call
for
strengthening
cybersecurity
mechanisms
and
Anti-Money
Laundering
(AML)
controls
and
measures.
Additionally,
the
evaluation emphasized the
importance of providing
training in new
areas to enhance
the skills of
the Internal
Audit
Team.
These
areas
of
improvement
were
highlighted
to
further
enhance
the
effectiveness
and
capabilities of the AC in fulfilling its responsibilities.
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128
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Other AC Matters
37.
The AC
has
approved
and
notified the
Board
for further
submission
to the
Annual
General
Meeting,
the
annual Activity Report for 2022.
38.
The AC has discussed its annual Plan for 2024.
Sustainability Overview
39.
The
Group
supports
the
sustainable
transition
of
the
economy
and
considers
sustainability
and
climate
change
as an
opportunity.
A key
strategic objective
is
to adapt
its
business
and
operation
in
a way
that
addresses climate change
challenges, accommodate social
needs within its banking
business model, and
safeguard
prudent
governance
for itself
and
its counterparties,
in accordance
with
supervisory
initiatives
and following international standards/ best practices.
40.
Committed
to
actively
contributing
to
the
achievement
of
the
United
Nations
Sustainable
Development
Goals (SDGs) and the 2030 Agenda goals, Eurobank is a signatory of the UN Global Compact since 2008.
In September 2019
Eurobank signed the
UNEP FI Principles
for Responsible Banking
(PRB), affirming
its
commitment to play an active role in implementing the SDGs and
the Paris Agreement on Climate Change.
In full
compliance with
its obligations
relating to
implementing the
Principles, Eurobank
has issued
its 3
rd
PRB Progress Report as part of the Annual Report 2022
– Business & Sustainability.
41.
Eurobank has expressed the Environmental, Social, Governance
(ESG) aspect of its business through the
lens of
Impact generation.
The Sustainability
Strategy has
been defined
across two
pillars of
impact: the
operational impact arising from its own activities
and the financed impact resulting from the
Bank’s lending
and investing activities.
42.
Eurobank has
designed, approved
and currently
implements the
Sustainability
Strategy including
targets
and commitments along the two key pillars.
43.
The Operational Impact Strategy comprises of 3 strategic
pillars, namely:
i. Environmental
impact
with
the objective
to
minimize
negative impact
across
the Bank’s
value
chain
to
promote environmental stewardship. The aim is to
minimize Scope 1 and 2
emissions, become a paperless
banking network and extend circular economy practices.
ii. Employer’s
impact
with
the
objective
to
empower
people
to
perform
at their
best
through
an
inclusive
environment,
promoting
ethics
and
integrity.
The
aim
is
to
embed
a
diverse
and
inclusive
environment,
encompass a wellbeing culture, along with stimulating
an innovative environment.
iii.
Social
and
business
impact
with
the
objective
to
drive
positive
change
for
entrepreneurs
and
wider
communities
to
foster
sustainable
development
and
ensure
social
prosperity.
The
aim
is
to
intensify
sustainability in
procurement practices,
rationalize Socio
-Economic Impact
as well
as boost
transparency
and ESG capacity.
44.
The Financed Impact Strategy,
applicable to lending and
investment portfolios, leverages
on the identified
ESG
and
climate
related
opportunities
and
by
assessing
relevant
risks
aims
to
mitigate
ESG
&
climate
related risks for the Group’s portfolios.
45.
The
Financed
Impact
Strategy
is
also
directed
on
clients’
engagement
and
awareness
to
adapt
their
business in a
way to address climate
change challenges, actions for supporting
customers in their transition
efforts towards
a more
ESG-friendly economic
environment, enablers
and tools
such as
frameworks and
products to underpin Sustainable
Financing, as well as
the assessment and management
of climate-related
material exposures.
46.
Climate Risk –
The Group has
recognized climate change
as a material
risk and based
on its supervisory
guidelines, is
adapting
its policies
and methodologies
for identifying
and monitoring
the relevant
risks. In
this context,
a dedicated
Climate-Related
&
Environmental
Risks
Materiality
Assessment
document
was
created,
outlining
the
Climate-Related
and
Environmental
(CR&E)
Risks’
Materiality
Assessment
of
Eurobank Group.
47.
Adopting a strategic approach for the management of risks and the identification of opportunities in relation
to sustainability and climate change, the Bank follows,
and accelerates where possible, a detailed roadmap
prioritizing
actions
for
the
effective
management
of
climate-related
&
environmental
(CR&E)
risk
in
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ATTACHMENT
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129
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alignment
with
the
supervisory
expectations
included
at
the
ECB
Guide
on
Climate
-Related
and
Environmental Risks.
Also, the IA
is informed and
follows up
the Climate
Risk Roadmap,
which has
been
agreed with the
supervisor.
The respective developments
are considered in
IA risk-based audit
approach.
With regard to the
banking activity of
HoldCo (i.e. Eurobank
S.A. or the Bank),
the Internal Audit
Group of
the Bank issued in 2023 one consulting report in the area (Pillar
III disclosures on ESG risk).
48.
The Group has updated
its governance structure
by introducing and
defining the roles and
responsibilities
in relation to
ESG and climate
related and environmental
risks, embedding regulatory guidelines
and market
practices
(both
for
transition
risk
and
physical
risk)
within
the
3
Lines
of
Defense.
Moreover,
the
HoldCo/Bank BoD has assigned an executive member as the responsible
BoD member for climate-related
and
environmental
risks.
The
same
member
chairs
the
Eurobank
ESG
Management
Committee,
established by
the Eurobank
CEO.As part
of his
duties, the
member responsible
updates the
Board Risk
Committee (BRC)
(in alignment
with the
BRC Terms
of Reference)
and the
Board of
Directors of
HoldCo
and Bank on climate change and environmental related risks
at least on a semi-annually basis.
49.
Committed
to
being
transparent
and
further
enhancing
its
ESG
approach
as
well
as
to
ensure
that
the
decision-making
is
in
line
with
environmental
protection
and
sustainability,
Eurobank
has
established
a
monitoring dashboard with appropriate
CR&E risks KPIs/ KRIs
that are reported
to the Senior
Management,
Management Body, as well as at Board level on a periodic basis, in order to
safeguard efficient oversight of
CR&E risks.
The Group also
developed and
approved its
CR&E Risks
Management Policy
which aims
at
fostering a
holistic understanding
of the
effects
of CR&E
risks
on its
business
model, as
well as
support
decision-making
regarding
these
matters
and
provide
a
robust
governance
under
its
Risk
Management
Framework.
Moreover,
the
ESG
Risk
Assessment
supports
Eurobank’s
business
strategy
and
ESG
risk
awareness and ensures adherence to the Group’s
risk appetite and credit policies.
Jawaid Mirza
AC Chairman
March 20, 2024
KPMG Certified Auditors S.A.
44 Syngrou Avenue
117 42 Athens, Greece
Telephone:
+30 210 60 62 100
Fax:
+30 210 60 62 111
Email:
info@kpmg.gr
KPMG Certified Auditors S.A., a Greek Societe Anonyme and a member
firm of the KPMG global organization of independent member firms affiliated
with KPMG International Limited, a private English company limited by
guarantee.All rights reserved.
Certified Auditors
GCR 001352601000
Independent Auditors’
Report
To
the Shareholders of
Eurobank Ergasias Services and Holdings S.A.
Report on the Audit of the Separate and Consolidated Financial Statements
Opinion
We
have
audited
the
accompanying
Separate
and
Consolidated
Financial
Statements
of
Eurobank
Ergasias
Services
and
Holdings
S.A.
(the
“Company”)
which
comprise
the
Separate
and
Consolidated
Balance
Sheet
as
at
31 December
2023,
the
Consolidated
Income
Statement,
the
Separate
and
Consolidated Statements of Comprehensive Income,
Changes in Equity and Cash Flow for the year
then
ended, and notes, comprising material accounting policies
and other explanatory information.
In our
opinion, the
accompanying
Separate and
Consolidated
Financial
Statements present
fairly,
in all
material
respects,
the
separate
and
consolidated
financial
position
of
Eurobank
Ergasias
Services
and
Holdings S.A.
and its
subsidiaries (the
“Group”) as
at 31 December
2023, its
separate and
consolidated
financial performance and
its separate and
consolidated cash flows
for the
year then ended,
in accordance
with International Financial Reporting Standards as adopted
by the European Union.
Basis for Opinion
We conducted our
audit in accordance with
International Standards on Auditing
(ISA), as incorporated in
Greek
legislation.
Our
responsibilities
under
those
standards
are
further
described
in
the
Auditors’
Responsibilities for the Audit of
the Separate and Consolidated Financial
Statements section of our
report.
We are independent of the
Company and the Group in
accordance with the International Ethics
Standards
Board for Accountants
International Code of Ethics
for Professional Accountants, as
incorporated in Greek
legislation, and with
the ethical requirements
that are relevant
to the audit
of the separate
and consolidated
financial statements
in Greece
and we
have fulfilled
our other
ethical responsibilities
in accordance
with
the
requirements
of
the
applicable
legislation.
We
believe
that
the
audit
evidence
we
have
obtained
is
sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit
matters are
those matters,
that, in
our professional
judgment, were
of most
significance
in our audit of the Separate
and Consolidated Financial
Statements of the current period.
These
matters and the relevant significant assessed risks of material misstatement were addressed in
the context of our audit of the
Separate and Consolidated Financial
Statements as a whole, and
in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Impairment allowance on loans and advances at amortised cost
See
Notes 2.2.13
,
3.1
,
20
and
21
to the Consolidated Financial Statements.
The key audit matter
How the matter was addressed in our audit
Loans
and
advances
to
customers
at
amortized
cost
for
the
Group
amounted
to
EUR 42
773 million
as at
31 December 2023
(2022:
EUR
43
450
million)
and
impairment
allowance
for
expected
credit
losses
(“ECL”)
for the Group amounted to
EUR 1 258 million
as at 31
December 2023
(2022: 1 626
million).
The
estimation
of
expected
credit
losses
on
loans
and
advances
at
amortised
cost
involves
significant
judgment
and
estimates.
The
key
areas
where
we
identified
greater
levels
of
management
judgement
and
therefore, increased
levels of
audit focus
in the
Group’s estimation of ECL are:
●
Significant Increase
in Credit Risk
(“SICR”)
– The identification of qualitative
indicators
for
identifying
a
significant
increase
in
credit
risk
for
staging
classification
is
judgmental
taking
also
into
account
the
current
macroeconomic
and
geopolitical
uncertainty.
●
Model estimations – Inherently judgmental
modelling
and
assumptions
are
used
to
estimate
ECL
which
involves
determining
Probabilities of Default
(“PD”), Loss Given
Default (“LGD”), and Exposures
at Default
(“EAD”).
ECL
may
be
inappropriate
if
certain models or underlying assumptions,
Our audit procedures included, among others:
Controls testing:
We
tested
relevant
manual,
general
IT
and
automated
controls
over
key
systems
used
in
the ECL process.
Main
aspects
of
our
controls
testing
involved
evaluating the design and testing the operating
effectiveness of the key controls over the:
●
Completeness
and
accuracy
of
the
key
inputs into the IFRS 9 impairment models.
●
Application of the staging criteria.
●
Model validation.
●
Management adjustments.
Test
of details:
Key
aspects
of
our
testing
included,
among
others:
●
We performed substantive procedures
on a
sample
basis
in
order
to
assess the
SICR
assessment
for
both
corporate
and
retail
portfolios.
●
We
assessed
the
appropriateness
of
management
adjustments
to
the
model
driven
ECL
results,
by
considering
the
assumptions,
reviewing
calculations
and
their
application
or
data
used
do
not
accurately
predict
defaults
or
recoveries
over
time
or
fail
to
reflect
the
estimated
credit
losses
of
loans
and
advances
to
customers.
As
a
result,
certain
IFRS
9
models, model assumptions and
data, are
the
key
drivers
of
complexity
and
subjectivity in
the Group’s
calculation of
the
ECL estimate.
●
Management
adjustments
–
Adjustments
to the model-driven ECL results are raised
by
management
to
address
any
known
limitations
or
emerging
trends
as
well
as
risks
not
captured
by
models.
These
adjustments
are
inherently
uncertain
and
significant
management
judgement
is
involved especially
in relation
to the
current
macroeconomic
and
geopolitical
environment.
●
Macroeconomic
Forward
Looking
Information
scenarios
–
IFRS
9
requires
the Group
to measure
ECL on
an unbiased
forward-looking basis reflecting a
range of
future
economic
conditions.
Significant
management
judgement
is
applied
in
determining the
forward-looking economic
scenarios used,
the probability
weightings
associated
with
the
scenarios
and
the
complexity
of
models
used
to
derive
the
probability
weightings
applied
to
them,
especially
when
considering
the
current
macroeconomic
and
geopolitical
environment.
●
Individually
assessed
loans
–The
estimation of
future cash
flows, valuation
of
collateral
and
probability
weighting
of
scenarios constitute
assumptions with
high
estimation uncertainty.
Disclosures
in
the
Consolidated
Financial
Statements.
The
disclosures
regarding
the
Group’s
application
of
IFRS
9
are
key
for
the
understanding
of
the
significant
judgements
and material inputs to the
IFRS 9 ECL results,
as
well
as,
to
provide
transparency
of
the
credit risk exposures of the Group.
data
used
and
inspecting
the
governance
around these adjustments.
●
We
assessed
the
reasonableness
and
appropriateness
of
the
macroeconomic
variables’
forecasts,
scenarios,
weights,
and models
applied, with
the support
from
our
specialists.
Our
testing
included
benchmarking against external sources.
●
We
performed
substantive
procedures
to
assess
the
completeness and
accuracy of
critical data input used in the ECL models.
●
We
reperformed
ECL
calculations
for
lending
exposures
in
all
stages,
with
the
support
from
our
financial
risk
specialists
and on a sample basis.
●
We
performed
substantive
procedures
to
assess
the
reasonableness
of
significant
assumptions
used
in
the
measurement
of
impairment
of
individually
assessed
credit
impaired
exposures,
including
the
assumptions
used
to
estimate
discounted
future
cash
flows
and
the
valuation
of
collaterals for
which we
have engaged
our
real estate valuation specialists.
Our financial risk specialists assisted with the:
●
Assessment
of
the
Group’s
impairment
methodologies conceptual soundness.
●
Assessment
of
the
Group’s
impairment
methodologies
implementation
by
evaluating the risk
parameter models used
as
well
as,
reperforming the
calculation
of
certain risk parameters, on a sample basis.
Assessing disclosures:
●
We
evaluated
the
adequacy
and
appropriateness
of
the
disclosures
in
the
Financial
Statements
that
address
the
uncertainty which
exists when
determining
the ECL. In addition, we assessed whether
the
disclosure
of
the
key
judgements
and
assumptions
was
sufficiently
clear
and
explanatory.
Recognition of deferred tax assets
See
Notes 2.2.16
,
3.5
and
13
to the Consolidated Financial Statements.
The key audit matter
How the matter was addressed in our audit
The
Group
has
recognized
deferred
tax
assets
of
EUR
3
991
million
as
at
31 December 2023 (2022: 4 161 million).
The
recognition
and
measurement
of
deferred
tax
assets
is
considered
a
key
audit matter as
it depends on
estimates of
future
profitability,
which
requires
significant
judgement
and
includes
the
risk of management bias.
Significant
judgement
and
especially
complex assumptions
and method,
due to
inherent
uncertainties
relate
to
the
following:
●
The
extent
that
there
are
probable
future taxable profits that will
allow the
deferred
tax
asset
amount
to
be
recovered in the foreseeable future.
●
Forecast of future taxable
profit, which
is mainly impacted by macroeconomic
forward-looking information.
Disclosures in the Consolidated Financial
Statements
The
disclosures
regarding
the
Group’s
application
of
the
Standards
in
this
area
are
key for
the
understanding of
the
key
judgements
surrounding
the
recoverability of deferred tax assets.
Our
audit
procedures,
included,
among
others
the
following:
●
We assessed the design and implementation of
controls
relevant
to
the
recognition
and
recoverability
of
deferred
tax
assets
including
the
approval
of
three-year
business
plan
and
monitoring of actual results against budgeted.
●
We
evaluated
the
appropriateness
of
the
assumptions
used
by
management
in
the
approved
three-year
business
plan
by
comparing the
revenue and
growth projections
to industry
trends and
ensuring consistency
with
strategic
plans.
We
also
evaluated
the
appropriateness
of
the
assumptions
used
and
the reasonableness of projections
for the period
that
lies
beyond
the
approved
three-year
business plan.
●
We assessed the accuracy of
forecasted future
taxable
profits
by
evaluating
the
accuracy
of
management’s
projections
of
prior
year
by
comparing them to actual results.
●
We
tested
the
accuracy
of
the
relevant
underlying
data
of
the
estimate,
including
the
conversion
of
future
accounting
profits
to
taxable profits.
●
Our
tax
specialists
assisted
to
confirm
the
completeness and
accuracy of
the relevant
tax
adjustments that produce the taxable results.
Assessing disclosures:
We evaluated the adequacy
and appropriateness of
the
disclosures
in
the
Consolidated
Financial
Statements
that
address
the
deferred
tax
asset
recoverability. In addition, we assessed whether the
disclosures of
the key
judgements and
assumption
were sufficiently clear and explanatory.
Use of IT systems relevant to the financial information
The key audit matter
How the matter was addressed in our audit
The Group’s
financial reporting
processes
are
dependent
to
a
large
extent
on
information
produced
by
the
Group’s
Information
Technology
(IT)
systems,
and/or automated processes
and controls
(i.e.
calculations,
reconciliations)
implemented in these systems.
The
above
is
a
key
audit
matter
as
the
Group’s
financial
reporting
systems
rely
heavily
on
complex
information
systems
that
process
very
large
number
of
transactions.
These
IT
systems
function
based
on
the
operating
effectiveness
of
internal
controls
in
place
to
assure
the
completeness
and
accuracy
as
well
as
the
security
of
the
information
of
the
Group
that
produce
eventually
the
financial information to be included
in the
Consolidated Financial Statements.
We have evaluated
in collaboration
with our IT
Audit
specialists the general controls
over the IT systems,
databases
and
applications
that
support
the
financial reporting process of the Group.
For
this
purpose,
we
performed
procedures
as
follows:
●
We
evaluated
the
information
security
resilience of
the Group
by evaluating
the design
of key IT processes and
controls over financial
reporting.
●
We
evaluated
the
design
of
the
relevant
preventative and
detective general
IT
controls
over administration of
access to programs
and
data for the systems in
scope of our audit and,
we tested
the operating
effectiveness of
these
relevant controls.
●
We evaluated
the design
of the
relevant general
IT
controls
of
the
Group
over
program
development,
program
change
management
and
computer
operations
for
the
systems
in
scope of our audit and, we
tested the operating
effectiveness of these relevant controls.
Other Information
The Board of Directors is responsible
for the other information. The other
information comprises
the
information included
in the
Board of
Directors’ Report,
for
which reference
is made
in the
“Report on Other Legal and Regulatory Requirements” and the Declarations of the Members of
the Board of
Directors but
does not
include the
Separate and
Consolidated Financial
Statements
and our Auditors’ Report thereon.
Our opinion
on the
Separate and
Consolidated Financial Statements
does not
cover the
other
information and we do not express any form of assurance
conclusion thereon.
In
connection
with
our
audit
of
the
Separate
and
Consolidated
Financial
Statements,
our
responsibility
is
to
read
the
other
information
and,
in
doing
so,
consider
whether
the
other
information is materially inconsistent with
the Separate and Consolidated Financial
Statements
or our
knowledge obtained
in the
audit, or
otherwise appears
to be
materially misstated.
If, based
on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in
this regard.
Responsibilities
of
the
Board
of
Directors
and
Those
Charged
with
Governance
for the Separate and Consolidated Financial Statements
The Board
of Directors is
responsible for the
preparation and fair
presentation of the
Separate
and
Consolidated
Financial
Statements
in
accordance
with
International
Financial
Reporting
Standards
as
adopted
by
the
European
Union,
and
for
such
internal
control
as
the
Board
of
Directors
determines
is
necessary
to
enable
the
preparation
of
separate
and
consolidated
financial statements that are free from material misstatement,
whether due to fraud or error.
In
preparing
the
Separate
and
Consolidated
Financial
Statements,
the
Board
of
Directors
is
responsible for assessing
the Company’s and
the 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 Company and
the Group
or to cease operations, or has no realistic alternative but to do
so.
The
Audit
Committee
of
the
Company
is
responsible
for
overseeing
the
Company’s
and
the
Group’s financial reporting process.
Auditor’s
Responsibilities
for
the
Audit
of
the
Separate
and
Consolidated
Financial Statements
Our
objectives
are
to
obtain
reasonable
assurance
about
whether
the
Separate
and
Consolidated Financial
Statements as
a whole
are free
from material
misstatement, whether
due
to fraud
or error,
and to
issue an
auditors’ 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
which
have
been
incorporated
in
Greek
legislation
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 Separate and
Consolidated Financial
Statements.
As part of an audit in accordance with ISAs, which have
been incorporated in Greek legislation,
we exercise
professional judgment
and maintain professional
skepticism throughout the
audit.
We also:
●
Identify
and
assess
the
risks
of
material
misstatement
of
the
separate
and
consolidated
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 Company’s and the 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 the 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 Company’s and
the 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 auditors’ report to the related disclosures in
the Separate
and Consolidated
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 auditors’ report. However,
future events or conditions may cause the Company
or the Group to cease to continue as a going concern.
●
Evaluate the overall presentation, structure, and content of the Separate and Consolidated
Financial Statements,
including the
disclosures, and
whether the
separate and
consolidated
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
these
Consolidated
Financial Statements.
We are
responsible for
the direction,
supervision, and
performance
of the 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
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
Separate and Consolidated
Financial
Statements
of
the
current
period
and
are
therefore the
key
audit
matters. We
describe
these
matters
in
our
auditors’
report
unless
law
or
regulation
precludes
public
disclosure
about
the
matter
or
when,
in
extremely
rare
circumstances,
we
determine
that
a
matter
should
not
be
communicated in our report
because the adverse consequences of
doing so would reasonably
be expected to outweigh the public interest benefits of such
communication.
Report on Other Legal and Regulatory Requirements
1
Board of Directors’ Report
The Board of Directors is responsible for the preparation of the Board of Directors’ Report and
the Corporate
Governance Statement
that is
included in
this report.
Our opinion
on the
financial
statements
does
not
cover
the
Board
of
Directors’
Report
and
we
do
not
express
an
audit
opinion thereon. Our
responsibility is to
read the
Board of
Directors’ Report and,
in doing
so,
consider
whether,
based
on
our
financial
statements
audit
work,
the
information
therein
is
materially misstated
or inconsistent
with the
financial statements
or our
audit knowledge.
Based
solely
on
that
work
pursuant
to
the
provisions
of
paragraph 5
of
Article 2
of
L. 4336/2015
(part B), we note that:
a)
The
Board
of
Directors’
Report
includes
a
Corporate
Governance
Statement
which
provides the information set by Article 152 of L. 4548/2018.
b)
In our
opinion, the Board
of Directors’ Report
has been prepared
in accordance with
the
applicable legal requirements of Articles 150-151 and 153-154 and of paragraph
1 (cases
c and d) of
article 152 of L. 4548/2018
and its contents
correspond with the
accompanying
Separate and Consolidated Financial Statements for the year ended
31 December 2023.
c)
Based on
the knowledge
acquired during
our audit,
relating to
Eurobank Ergasias
Services
and Holdings S.A. and
its environment, we have
not identified any material
misstatements
in the Board of Directors’ Report.
2
Additional Report to the audit Committee
Our audit
opinion on
the Separate
and Consolidated
Financial Statements
is consistent
with
the Additional Report to the Audit Committee of the Company dated 29
March 2024, pursuant
to the requirements of article 11 of the Regulation 537/2014 of the European Union (EU).
3
Provision of non Audit Services
We have
not provided to
the Company and
its subsidiaries any
prohibited non-audit services
referred to in article 5 of Regulation (EU) 537/2014.
The permissible non-audit services that
we have provided to the Company
and its subsidiaries
during
the
year
ended
31 December
2023
are
disclosed
in
Notes
20
and
46
of
the
accompanying Separate and Consolidated Financial Statements,
respectively.
4
Appointment of Auditors
We were
appointed for
the first
time as
Certified Auditors
of the
Company based
on the
decision
of
the
Annual
General
Shareholders’
Meeting
dated
10
July
2018.
From
then
onwards
our
appointment
has
been
renewed
uninterruptedly
for
a
total
period
of
six
years
based
on
the
annual decisions of the General Shareholders’ Meeting.
5
Operations Regulation
The Company
has an
Operations Regulation
in accordance
with the
content provided
by the
provisions of the article 14 of L. 4706/2020.
6
Assurance Report on the European Single Electronic Reporting Format
We examined the
digital files of
the company Eurobank Ergasias
Services and Holdings
S.A.
(the Company
or/and Group),
which were
prepared in
accordance with
the European
Single
Electronic
Format
(ESEF)
that
is
determined
by
the
Commission
Delegated
Regulation
(EU) 2019/815,
as
amended
by
the
Regulation (EU) 2020/1989
(the
ESEF
Regulation)
that
include the
Separate and Consolidated
Financial Statements of
the Company and
the Group
for the year ended as at 31 December 2023 in XHTML format (JEUVK5RWVJEN8W0C9M24-
2023-12-31-en.xhtml),
and
also
the
file
XBRL
(JEUVK5RWVJEN8W0C9M24-2023-12-31-
en.zip) with the
appropriate mark-up of
the those consolidated
financial statements, including
of the Notes to the Consolidated Financial Statements.
Regulatory framework
The digital files of the European Single Electronic Format are prepared in accordance with the
ESEF Regulation and the 2020/C
379/01 Commission Interpretative Communication
issued on
10 November 2020,
as required
by the
L. 3556/2007 and
the relevant
announcements of
the
Hellenic Capital Markets Commission and the
Athens Stock Exchange (the “ESEF Regulatory
Framework”).
This Framework includes in summary, among others, the following requirements:
●
All the annual financial reports must be prepared in XHTML format.
●
With
respects
to
the
consolidated
financial
statements
based
on
International Financial
Reporting Standards (IFRS), the financial information that is included in the Consolidated
Balance
Sheet,
Consolidated
Statements
of
Income
and
Comprehensive
Income,
Changes in Equity
and Cash Flow,
as well as
in the Notes
to the Consolidated
Financial
Statements, must be
marked up with
XBRL tags, in
accordance with
the ESEF Taxonomy,
as in force.
The technical
requirements for the
ESEF, including the relevant taxonomy, are
included
in
the
ESEF
Regulatory
Technical
Standards,
including
of
the
Notes
to
the
Consolidated Financial Statements.
The requirements
as defined
in the
ESEF Regulatory
Framework as
in force
are appropriate
criteria in order to express a reasonable assurance conclusion.
Responsibilities of the Board of Directors and those charged with governance
The
Board
of
Directors
is
responsible
for
the
preparation
and
filing
of
the
Separate
and
Consolidated Financial
Statements of
the Company
and the
Group, for
the year
ended as
at
31 December 2023, in accordance with the requirements determined by
the ESEF Regulatory
Framework, and for such internal control as the Board
of Directors determines is necessary to
enable the preparation of
digital files that are
free from material misstatement, whether
due to
fraud or error.
Auditors’ Responsibilities
Our
responsibility
is
the
planning
and
the
execution
of
this
assurance
engagement
in
accordance
with
the
214/4/11-02-2022
Decision
of
the
Hellenic
Accounting
and
Auditing
Standards Oversight
Board and
the
Guidelines for
the
assurance engagement
and report
of
Certified Auditors on the
European Single Electronic Reporting Format
(ESEF) of issuers with
shares listed in a
regulated market in
Greece”, as these
were issued by
the Institute of
Certified
Public Accountants of Greece on 14 February 2022 (the
“ESEF Guidelines”), in order to obtain
reasonable
assurance
that
the
Separate
and
Consolidated
Financial
Statements
of
the
Company and
the Group
that are
prepared by
the the
Board of
Directors of
the Company
in
accordance with
the ESEF
comply in
all material
respects with
the ESEF
Regulatory Framework
as in force.
Our
work
was
performed
in
accordance
with
the
International
Ethics
Standards
Board
for
Accountants’
Code
of
Ethics
for
Professional
Accountants,
as
it
has
been
incorporated
into
Greek legislation
and we
have also
fulfilled our
independence requirements,
in accordance
with
the L. 4449/2017 and the Regulation (EU) 537/2014.
The
assurance work
that
we
carried out
refers exclusively
to
the
ESEF Guidelines
and
was
conducted in
accordance with
the 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
is
not
a
guarantee
that
such
an
assurance engagement 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
express the
conclusion
that the
Separate and Consolidated
Financial Statements of
the Company and
the Group
for
the
year
ended
as
of
31 December
2023
in
XHTML
format
(JEUVK5RWVJEN8W0C9M24-
2023-12-31-en.xhtml),
and
the
XBRL
file
(JEUVK5RWVJEN8W0C9M24-2023-12-31-en.zip)
marked up with respects to
the Consolidated Financial Statements, including the Notes to
the
Consolidated Financial
Statements, have
been prepared,
in all
material respects,
in accordance
with the requirements of the ESEF Regulatory Framework.
Athens, 29 March 2024
KPMG Certified Auditors S.A.
AM SOEL 114
Harry Sirounis, Certified Auditor
AM SOEL 19071
CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2023
8 Othonos Str, Athens
105 57,
Greece
eurobankholdings.gr,
Tel.: (+30) 214 40 61000
General Commercial
Registry No: 000223001000
.
.
Index to the Consolidated Financial Statements ................................................................................................
................................ Page
Consolidated Balance Sheet ................................................................................................................................
.....................................
1
Consolidated Income Statement ................................................................................................
..............................................................
2
Consolidated Statement of Comprehensive
Income ................................................................................................................................
3
Consolidated Statement of Changes in Equity ..........................................................................................................................................
4
Consolidated Cash Flow Statement .......................................................................................................................................................... 5
Notes to the Consolidated Financial Statements
1.
General information ................................................................................................
........................................................................
6
2.
Basis of preparation and material accounting
policies
.................................................................................................................... 6
2.1
Basis of preparation .........................................................................................................................................................................
6
2.2
Material accounting policies ..........................................................................................................................................................
11
2.3
Impact of IFRS 17 adoption by a Group’s
associate
....................................................................................................................... 39
3.
Critical accounting estimates and judgments
in applying accounting policies ..............................................................................
40
4.
Capital Management ................................................................................................................................
.....................................
49
5.
Financial risk management and fair value ................................................................................................
.....................................
52
5.2.1 Credit Risk ......................................................................................................................................................................................
54
5.2.2 Market risk
................................................................................................................................................................
.....................
87
5.2.3 Liquidity risk
................................................................................................................................................................
...................
92
5.2.4 Interest Rate Benchmark reform
-IBOR reform ..............................................................................................................................
95
5.2.5 Climate-related and environmental
risks ...................................................................................................................................... 95
5.3
Fair value of financial assets and liabilities ....................................................................................................................................
96
6.
Net interest income ..................................................................................................................................................................... 100
7.
Net banking fee and commission income ....................................................................................................................................
101
8.
Income from non banking services ..............................................................................................................................................
102
9.
Net trading income and gains less losses from investment
securities ........................................................................................ 102
10.
Other income/ (expenses) ........................................................................................................................................................... 103
11.
Operating expenses ..................................................................................................................................................................... 103
12.
Other impairments, risk provisions and restructuring costs ........................................................................................................
105
13.
Income tax ................................................................................................................................................................................... 105
14.
Earnings per share ................................................................................................................................................................
.......
109
15.
Cash and balances with central banks .........................................................................................................................................
110
16.
Cash and cash equivalents and other information
on cash flow statement
................................................................................
111
17.
Due from credit institutions
......................................................................................................................................................... 111
18.
Securities held for trading................................................................
............................................................................................
112
19.
Derivative financial instruments and hedge
accounting.............................................................................................................. 112
20.
Loans and advances to customers ............................................................................................................................................... 116
.
.
21.
Impairment allowance for loans and advances to
customers .....................................................................................................
120
22.
Investment securities
................................................................................................................................................................
...
122
23.
Group composition ......................................................................................................................................................................
125
23.1. Shares in subsidiaries
................................................................................................................................................................
...
125
23.2. Acquisition of BNP Paribas Personal Finance Bulgaria
by Eurobank Bulgaria A.D. ......................................................................
129
24.
Investments in associates and joint
ventures
.............................................................................................................................. 130
25.
Structured Entities .......................................................................................................................................................................
134
26.
Property and equipment ................................................................................................
.............................................................
137
27.
Investment property ....................................................................................................................................................................
138
28.
Intangible assets .......................................................................................................................................................................... 140
29.
Other assets
................................................................................................................................................................
.................
140
30.
Disposal groups classified as held for sale and discontinued
operations ....................................................................................
141
31.
Due to central banks ....................................................................................................................................................................
143
32.
Due to credit institutions .............................................................................................................................................................
143
33.
Due to customers
................................................................................................................................................................
.........
143
34.
Debt securities in issue ................................................................................................................................................................
143
35.
Other liabilities ................................................................................................................................
............................................
145
36.
Standard legal staff retirement
indemnity obligations and termination benefits .......................................................................
146
37.
Share capital, share premium and treasury shares ................................
.....................................................................................
148
38.
Reserves and retained earnings
................................................................................................................................................... 149
39.
Share options
................................................................................................................................................................
...............
150
40.
Transfers
of financial assets
......................................................................................................................................................... 151
41.
Leases ................................................................................................................................................................
..........................
152
42.
Contingent liabilities and other commitments ............................................................................................................................ 154
43.
Operating segment information .................................................................................................................................................. 155
44.
Post balance sheet events ................................................................................................................................
...........................
159
45.
Related parties
................................................................................................................................................................
.............
159
46.
External Auditors ................................................................................................................................................................
.........
161
47.
Board of Directors
................................................................................................................................................................
........
162
APPENDIX – Disclosures under Law 4261/2014 ................................................................
...................................................................
163
Consolidated Balance Sheet
.
1
|
Page
31 December 2023 Consolidated Financial Statements
31 December
2023
2022
Restated ⁽¹⁾
Note
€ million
€ million
ASSETS
Cash and balances with central banks
15
10,943
14,994
Due from credit institutions
17
2,354
1,329
Securities held for trading
18
379
134
Derivative financial instruments
19
881
1,185
Loans and advances to customers
20
41,545
41,677
Investment securities
22
14,710
13,261
Investments in associates and joint ventures
24
541
187
Property and equipment
26
773
775
Investment property
27
1,357
1,410
Intangible assets
28
334
297
Deferred tax assets
13
3,991
4,161
Other assets
29
1,767
1,980
Assets of disposal groups classified as held for sale
30
206
84
Total assets
79,781
81,474
LIABILITIES
Due to central banks
31
3,771
8,774
Due to credit institutions
32
3,078
1,814
Derivative financial instruments
19
1,450
1,661
Due to customers
33
57,442
57,239
Debt securities in issue
34
4,756
3,552
Other liabilities
35
1,385
1,702
Total liabilities
71,882
74,742
EQUITY
Share capital
37
818
816
Share premium
37
1,161
1,161
Reserves and retained earnings
38
5,920
4,660
Equity attributable to shareholders of the Company
7,899
6,637
Non controlling interests
0
95
Total equity
7,899
6,732
Total equity and liabilities
79,781
81,474
(1)
The comparative
information has
been restated
due to
the retrospective
application of
IFRS 17
by the
Group's associate
Eurolife FFH
Insurance
Group Holdings S.A. (note 2.3).
Notes on pages
6
to
162
form an integral part of these consolidated financial statements.
Consolidated Income Statement
.
2
|
Page
31 December 2023 Consolidated Financial Statements
Year ended 31 December
2023
2022
Restated⁽¹⁾
Note
€ million
€ million
Interest income
4,454
2,226
Interest expense
(2,280)
(746)
Net interest income
6
2,174
1,480
Banking fee and commission income
570
554
Banking fee and commission expense
(123)
(127)
Net banking fee and commission income
7
447
427
Income from non banking services
8
97
95
Net trading income/(loss)
9
71
725
Gains less losses from investment securities
9
57
(9)
Other income/(expenses)
10
68
323
Operating income
2,914
3,041
Operating expenses
11
(915)
(857)
Profit from operations before impairments,
risk provisions and restructuring costs
1,999
2,184
Impairment losses relating to loans and
advances to customers
21
(412)
(276)
Other impairments, risk provisions and related costs
12
(96)
(103)
Restructuring costs
12
(37)
(89)
Share of results of associates and joint ventures
24
88
35
Profit before tax from continuing operations
1,542
1,751
Income tax
13
(261)
(406)
Net profit from continuing operations
1,281
1,345
Net profit/(loss) from discontinued operations
30
(153)
2
Net profit
1,128
1,347
Net profit/(loss) attributable to non controlling interests
(12)
0
Net profit attributable to shareholders
1,140
1,347
€
€
Earnings per share
-Basic and diluted earnings per share
14
0.31
0.36
Earnings per share from continuing operations
-Basic and diluted earnings per share
14
0.34
0.36
(1)
The comparative information has been adjusted
due to a) the retrospective application
of IFRS 17 by the Group’s
associate Eurolife FFH Insurance
Group Holdings S.A. (note 2.3) and b) the presentation of operations of Eurobank Direktna a.d. disposal group as discontinued (note 30).
Notes on pages
6
to
162
form an integral part of these consolidated financial statements.
Consolidated Statement of Comprehensive Income
.
3
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31 December 2023 Consolidated Financial Statements
Year ended 31 December
2023
2022
Restated⁽¹⁾
€ million
€ million
Net profit
1,128
1,347
Other comprehensive income:
Items that are or may be reclassified subsequently to
profit or loss:
Cash flow hedges
- changes in fair value, net of tax
19
5
- transfer to net profit, net of tax
(21)
(2)
(5)
(0)
Debt securities at FVOCI
- changes in fair value, net of tax (note 22)
188
(547)
- transfer to net profit, net of tax (note 22)
(104)
84
222
(325)
Foreign currency translation
- foreign operations' translation differences
1
1
- transfer to net profit on the sale/liquidation of
foreign subsidiaries (note 23.1)
122
123
76
77
Associates and joint ventures
- changes in the share of other comprehensive
income, net of tax (note 24)
(4)
(4)
(2)
(2)
201
(250)
Items that will not be reclassified to profit or loss:
- Gains/(losses) from equity securities at
FVOCI, net of tax
18
24
- Actuarial gains/(losses) on post employment
benefit obligations, net of tax
(2)
4
16
28
Other comprehensive income
217
(222)
Total comprehensive
income attributable to:
Shareholders
- from continuing operations
1,371
1,127
- from discontinued operations
(15)
(1)
Non controlling interests
- from continuing operations
0
0
- from discontinued operations
(11)
(1)
1,345
1,125
(1)
The comparative information has been adjusted
due to a) the retrospective application of IFRS
17 by the Group’s
associate Eurolife FFH Insurance
Group Holdings S.A. (note 2.3) and b) the presentation of operations of Eurobank Direktna a.d. disposal group as discontinued (note 30).
Notes on pages
6
to
162
form an integral part of these consolidated financial statements
Consolidated Statement of Changes in Equity
.
4
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31 December 2023 Consolidated Financial Statements
Share
capital
Share
premium
Reserves and
retained
earnings
Non
controlling
interests
Total
€ million
€ million
€ million
€ million
€ million
Balance at 1 January 2022
816
8,056
(3,333)
96
5,635
Restatement due to adoption of IFRS 17 by a Group's associate
(note 2.3)
-
-
(33)
-
(33)
Balance at 1 January 2022, as restated
816
8,056
(3,366)
96
5,602
Net profit (restated, note 2.3)
-
-
1,347
0
1,347
Other comprehensive income (restated note 2.3)
-
-
(221)
(1)
(222)
Total comprehensive income for
the
year ended 31 December 2022
-
-
1,126
(1)
1,125
Offsetting of equity accounts
-
(6,895)
6,895
-
-
Share options plan
0
0
4
-
4
Purchase/sale of treasury shares
-
-
1
-
1
0
(6,895)
6,900
-
5
Balance at 31 December 2022 (as restated)
816
1,161
4,660
95
6,732
Balance at 1 January 2023
816
1,161
4,660
95
6,732
Net profit
-
-
1,140
(12)
1,128
Other comprehensive income
-
-
216
1
217
Total comprehensive income for
the year ended 31 December 2023
-
-
1,356
(11)
1,345
Changes in participating interests in subsidiary undertakings
-
-
-
(83)
(83)
Share options plan (note 39)
1
0
7
-
8
Purchase/sale of treasury
shares (notes 37 and 38)
-
-
(100)
-
(100)
Other
-
-
(3)
-
(3)
1
0
(96)
(83)
(178)
Balance at 31 December 2023⁽¹⁾
818
1,161
5,920
0
7,899
Note 37
Note 37
Note 38
(1)
The changes in equity for the year ended 31 December 2023 do not sum to the totals provided due to rounding.
Notes on pages
6
to
162
form an integral part of these consolidated financial statements.
Consolidated
Cash Flow Statement
.
5
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31 December 2023 Consolidated Financial Statements
Year ended 31 December
2023
2022
restated⁽¹⁾
Note
€ million
€ million
Cash flows from continuing operating activities
Profit before income tax from continuing operations
1,542
1,751
Adjustments for :
Impairment losses relating to loans and advances to customers
21
412
276
Other impairments, risk provisions and restructuring costs
12
133
192
Depreciation and amortisation
11
120
117
Other (income)/losses οn investment securities
16
(70)
(15)
Valuation of investment property
10
(6)
(34)
Other adjustments
16
(153)
(260)
1,978
2,027
Changes in operating assets and liabilities
Net (increase)/decrease in cash and balances with central banks
104
(246)
Net (increase)/decrease in securities held for trading
(260)
0
Net (increase)/decrease in due from credit institutions
(447)
1,048
Net (increase)/decrease in loans and advances to customers
(1,517)
(3,124)
Net (increase)/decrease in derivative financial instruments
(62)
868
Net (increase)/decrease in other assets
158
247
Net increase/(decrease) in due to central banks and
credit institutions
(3,637)
(2,073)
Net increase/(decrease) in due to customers
1,730
3,925
Net increase/(decrease) in other liabilities
(313)
155
(4,244)
800
Income tax paid
(64)
(45)
Net cash from/(used in) continuing operating activities
(2,330)
2,782
Cash flows from continuing investing activities
Acquisition of fixed and intangible assets
26,27,28
(140)
(153)
Proceeds from sale of fixed and intangible assets
26,27
33
121
(Purchases)/sales and redemptions of investment securities
(1,287)
(2,950)
Acquisition of subsidiaries, net of cash acquired
23
(440)
-
Acquisition of holdings in associates and joint ventures, participations in capital increases
24
(73)
-
Disposal of subsidiaries and merchant acquiring business, net of cash disposed
10,23,30
(425)
281
Disposal/liquidation of holdings in associates and joint ventures
24
3
26
Dividends from investment securities, associates and
joint ventures
16,24
15
21
Net cash from/(used in) continuing investing activities
(2,314)
(2,654)
Cash flows from continuing financing activities
(Repayments)/proceeds from debt securities in issue
16
1,048
1,059
Repayment of lease liabilities
41
(40)
(37)
(Purchase)/sale of treasury shares
and exercise of share options
37
(99)
1
Net cash from/(used in) continuing financing activities
909
1,023
Net increase/(decrease) in cash and cash equivalents from continuing operations
(3,735)
1,151
Net cash flows from discontinued operating activities
148
93
Net cash flows from discontinued investing activities
44
(3)
Net cash flows from discontinued financing activities
(1)
(3)
Effect of exchange rate
changes on cash and cash equivalents
1
1
Net increase/(decrease) in cash and cash equivalents from discontinued operations
192
88
Cash and cash equivalents at beginning of year
16
14,388
13,149
Cash and cash equivalents at end of year
16
10,845
14,388
(1)
The comparative information has been adjusted
due to a) the retrospective application of IFRS
17 by the Group’s
associate Eurolife FFH Insurance
Group Holdings S.A. (note 2.3) and b) the presentation of operations of Eurobank Direktna a.d. disposal group as discontinued (note 30).
Notes on pages
6
to
162
form an integral part of these consolidated financial statements.
Notes to the Consolidated Financial Statements
.
6
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31 December 2023 Consolidated Financial Statements
1.
General information
Eurobank Ergasias Services and Holdings S.A.
(the Company
or Eurobank
Holdings), which
is the
parent
company of
Eurobank S.A.
(the
Bank)
and
its
subsidiaries
(the
Group),
consisting
mainly
of
Eurobank
S.A.
Group,
are active in retail, corporate and private
banking, asset management, treasury, capital markets and other services.
The Group operates mainly in Greece and in Central and
Southeastern Europe.
The Company is incorporated in Greece
, with
its registered
office at
Othonos Street, Athens 105 57
and its
shares are listed on the Athens Stock Exchange.
These consolidated
financial statements,
which include the
Appendix, were
approved by
the Board
of Directors
on 28 March
2024.
The Independent Auditor’s Report of the Financial Statements
is included in the section B.I of the Annual Financial Report.
The website
address,
where the
annual
financial statements
of the
consolidated
non-listed
Company’s
subsidiaries are
uploaded,
along with the independent Auditors’ reports and the Board
of Directors’ Reports for these entities
is: www.eurobankholdings.gr.
2.
Basis of preparation and material accounting policies
The consolidated financial statements of the Group have been prepared on a
going concern basis and in
accordance with the material
accounting policies set out below:
2.1
Basis of preparation
The
consolidated
financial
statements
of
the
Group
have
been
prepared
in
accordance
with
International
Financial
Reporting
Standards
(IFRS) issued
by the
International
Accounting
Standards
Board
(IASB), as
endorsed by
the European
Union (EU),
and in
particular with those standards and interpretations, issued and
effective or issued and early adopted as
at the time of
preparing these
consolidated financial statements.
The consolidated
financial statements
are 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
and investment property measured
at fair value.
The accounting policies for
the preparation of
the consolidated financial
statements of the
Group have been
consistently applied to
the years
2023 and
2022, after
taking into
account the
amendments in
IFRSs as
described in
section 2.1.1
(a) “New
and amended
standards
adopted
by
the
Group
as
of
1
January
2023”.
In
addition,
as
presented
in
notes
2.1.1
(a)
and
2.3,
the
comparative
information has
been restated
due to
the retrospective
application of
IFRS 17- Insurance
Contracts.
Where necessary,
comparative
figures have been adjusted to conform
to changes in presentation in the current year.
The preparation of financial
statements in accordance with IFRS
requires the use of
estimates and judgements that affect the
reported
amounts of assets
and liabilities and
disclosure of
contingent liabilities
at the date
of the consolidated
financial statements,
as well
as
the
reported
amounts
of
revenues
and
expenses
during
the
reporting
period.
Although
these
estimates
are
based
on
management's best knowledge of current events
and conditions, actual results ultimately may differ
from those 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. The figures
presented in the notes may not sum precisely to
the totals provided due to rounding.
Going concern considerations
The annual financial
statements have been prepared on
a going
concern basis, as
the Board of
the Directors considered as
appropriate,
taking into consideration the following:
Despite the
fragile international
environment,
the economies of
Greece, Bulgaria
and Cyprus remained
in expansionary
territory in
2023, overperforming
their European
Union (EU)
peers.
More specifically,
according
to provisional
data by
the Hellenic
Statistical
Authority (ELSTAT),
the Greek economy
expanded by
2% on an
annual basis in
2023 (2022: 5.6%),
driven by
increases in exports
of
goods and services, household
consumption, and fixed
investment. According
to its Winter
Economic Forecast
(February 2024), the
European Commission (EC) expects a GDP growth rate
of 2.3% in 2024 and 2025.
Amid strong base effects and easing energy prices,
the inflation rate, as measured by the annual change in the Harmonized Index of Consumer Prices (HICP) decelerated to 4.2% in 2023
from 9.3% in
2022 according to
ELSTAT,
with the EC forecasting
further de-escalation to
2.7% in 2024, and
2% in 2025. The
average
Notes to the Consolidated Financial Statements
.
7
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31 December 2023 Consolidated Financial Statements
quarterly unemployment rate decreased to
11.1% from 12.4% in 2022, with the International Monetary
Fund forecasts for 2024 and
2025 standing
at 9.2%
and 8.5%
in 2024
and 2025
respectively,
according to
its January
2024 Art.
IV Country
Report. On
the fiscal
front, according
to the
2024 State
Budget, the
general government
primary balance
is expected
to post
primary surpluses
of 1.1%
and 2.1%
of GDP in
2023 and 2024
respectively,
up from
0.1% of GDP
in 2022. The
gross public debt
-to-GDP ratio,
having declined
significantly to 172.6% in 2022 due to the strong
economic recovery and the effect
of the high inflation on nominal GDP,
is expected
to decline further to 160.3% in 2023 and 152.3% in 2024.
According to EC’s winter
economic forecasts (February 2024), the real
GDP in Bulgaria is expected to grow
by 1.9% and 2.5% in 2024
and 2025, respectively
(2023: 2%), while
the HICP is forecast
to decrease to
3.4% in 2024 and
2.9% in 2025 (2023:
8.6%). In Cyprus,
the real GDP
growth is forecast
at 2.8% and
3% in 2024
and 2025, respectively
(2023: 2.5%), while
the HICP is
estimated at
2.4% in
2024 and 2.1% in 2025 (2023: 3.9%).
Growth in Greece as well as in Bulgaria and Cyprus is expected to receive a significant boost from EU-funded investment projects and
reforms.
Greece shall
receive €
36 billion
(€ 18.2
billion in
grants and
€ 17.7
billion in
loans) up
to 2026
through the
Recovery and
Resilience Facility (RRF), Next Generation
EU (NGEU)’s largest instrument,
out of which € 14.7 billion (€ 7.4 billion in grants and € 7.3
billion in loans) has already been disbursed by the EU. A further € 40
billion is due through EU’s long-term budget (MFF), out of which
€20.9 billion
is to
fund the
National Strategic
Reference
Frameworks
(ESPA
2021–2027). Moreover,
following the
September 2023
floods in the Thessaly region, Greece could benefit from
EU support of up to € 2.65 billion, according to the EC President.
On the
monetary policy
front, the
Governing Council
of the
ECB, in
line with
its strong
commitment to
its price
stability
mandate,
proceeded with ten rounds of interest rate
hikes in 2022 and in 2023 (the most recent one in September 2023), raising
the three key
ECB
interest
rates
by
450
basis
points
on
aggregate.
Furthermore,
although
net
bond
purchases
under
the
temporary
Pandemic
Emergency Purchase Programme (PEPP) ended in
March 2022, as scheduled,
the ECB will continue
to reinvest principal from maturing
securities
at
least
until
the
end
of
2024,
including
purchases
of
Greek
Government
Bonds
(GGBs)
over
and
above
rollovers
of
redemptions.
In 2023, the Greek government issued or re
-opened twelve bonds of various maturities (from
5 to 19 years) through the Public Debt
Management Agency (PDMA), raising
a total of € 11.45 billion
from the international financial
markets. In February
2024, the PDMA
raised
an
additional
€
4.4
billion
through
a
new
10-year
bond
issue
and
the
reopening
of
two
past
issues.
Following
a
series
of
sovereign
rating
upgrades
in the
second
half of
2023, Greek
government’s
long-term
debt securities
were
considered
investment
grade by four
out of the five
Eurosystem-approved
External Credit Assessment
Institutions (Fitch, Scope,
S&P: BBB-, stable
outlook;
DBRS: BBB(low), stable outlook),
and one notch below investment
grade by the fifth one, Moody’s
(Βa1, stable outlook) as of March
2024.
Regarding
the
outlook
for
the
next
12
months,
the
major
macroeconomic
risks
and
uncertainties
in
Greece
and
our
region
are
associated with: (a) the open war fronts in Ukraine and the Middle East,
their implications regarding regional and global sta
bility and
security,
and their
repercussions on
the global
and the
European economy,
including the
disruption in
global trade
caused by
the
recent
attacks
on trading
vessels in
the
Red
Sea, (b)
a potential
prolongation
of the
ongoing inflationary
wave
and its
impact
on
economic growth, employment, public finances, household budgets, firms’ production
costs, external trade and banks’ asset quality,
as well as any potential
social and/or political ramifications
these may entail, (c)
the timeline of the anticipated
interest rate
cuts by
the ECB and
the Federal Reserve
Bank, as persistence
on high rates
for longer may
keep exerting
pressure on sovereign
and private
borrowing costs
and certain financial institutions’
balance sheets, but early
rate cuts entail
the risk of a
rebound in inflation,
(d) the
prospect of
Greece’s
and Bulgaria’s
major trade
partners, primarily
the euro
area, remaining
stagnant
or even
facing a
temporary
downturn, (e) the persistently large current account deficits that have started to become once again a structural feature of the Greek
economy, (f) the absorption capacity of the NGEU and MFF funds and the attraction of new investments in the countries of presence,
especially in
Greece,
(g) the
effective
and timely
implementation
of the
reform
agenda required
to meet
the RRF
milestones
and
targets
and to
boost productivity,
competitiveness,
and resilience
and (h)
the exacerbation
of natural
disasters
due to
the climate
change and their effect on GDP,
employment, fiscal balance and sustainable development
in the long run.
Materialization of the above risks, would
have potentially adverse effects
on the fiscal planning of the Greek government, as
it could
decelerate the pace of
expected growth
and on the liquidity,
asset quality,
solvency and profitability of
the Greek banking sector.
In
this context,
the Group’s
Management and
Board are
continuously monitoring
the developments
on the macroeconomic,
financial
and
geopolitical
fronts
as
well
as
the
evolution
of
the
Group’s
asset
quality
and
liquidity
KPIs
and
have
increased
their
level
of
readiness, so as to accommodate decisions, initiatives
and policies to protect the Group’s
capital, asset quality and liquidity standing
Notes to the Consolidated Financial Statements
.
8
|
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31 December 2023 Consolidated Financial Statements
as well as the fulfilment, to the maximum possible degree, of its strategic and business goals in accordance with the business plan for
2024 - 2026.
For the year ended
31 December 2023,
the net profit attributable to shareholders amounted
to € 1,140
million (2022: €
1,347 million).
The adjusted
net profit,
excluding
the €
111 million
gain
arising from
the acquisition
of the
29.2% shareholding
of Hellenic
Bank,
accounted for as an associate (note
24), € 141
million net loss from
discontinued operations (note 30), € 48
million net loss on
projects
‘Solar’ and
‘Leon' related
to the
NPE reduction
plan (note
20), €
10 million
provision
(after tax)
for
the Bank’s
contribution to
the
restoration initiatives
after natural disasters
(note 11), and € 29 million restructuring costs
(after tax) (note 12) amounted
to € 1,256
million (2022: € 1,178 million), of which € 468 million profit was related
to the international operations (2022: € 211 million profit).
As at 31
December 2023, the
Group’s
Total
Adequacy Ratio (total
CAD) and Common
Equity Tier 1
(CET1) ratios
stood at 19.4%
(31
December 2022: 19.2%) and 16.9%
(31 December 2022: 16%)
respectively and carried the effect of the ending
of the 5-year transition
period for the recognition of the
IFRS 9 impact on the
regulatory capital and the reversion to the standardized approach as of 1
March
2023. Pro
-forma
with the
completion of
projects
“Solar” and
“Leon” and
the issuance
of Subordinated
Tier II
debt instruments
in
January 2024,
the total
CAD and CET1
ratios would
be 20.2% and
17% respectively
(note 4). The
Group completed
successfully the
2023 EU-wide stress test
(ST), which was coordinated
by the European Banking Authority (EBA)
in cooperation with the ECB
and the
European Systemic
Risk Board
(ESRB (note
4). On
9 October
2023, the
Company completed
the buy
back of
all of
its issued
shares
held
by
HFSF.
Accordingly,
the Company
and the
Bank
are
no longer
subject to
Law
3864/2010 and
to the
special rights
of
HFSF
provided for in the law (note 37).
With regard
to asset
quality,
the Group’s
NPE formation
was positive
by €
138 million
during the
year,
out of
which €
119 million
referring to
a single corporate
customer,
(fourth quarter
2023: € 29 million
negative), (2022: €
40 million positive
excluding
Serbian
operations). In total, the Group’s
NPE stock stood at € 1.5 billion, following the
classification of the loan portfolio of project ‘Leon’ as
held for sale, the sale of Eurobank Direktna
a.d. disposal group, and the write-offs during
the year (31 December 2022: € 2.3 billion),
driving the NPE ratio
to 3.5% (31
December 2022: 5.2%), while
the NPE coverage ratio improved to 86.4%
(31 December 2022:
74.6%).
Net NPEs, i.e. gross NPEs minus accumulated stock of loan provisions,
amounted to € 0.2 billion.
In terms
of liquidity,
as at
31 December
2023, following
the completion
of the
sale of
Eurobank Direktna
a.d. disposal
group, the
Group deposits
stood at
€ 57.4 billion
(31 December 2022:
€ 57.2 billion),
leading the Group’s
(net) loans
to deposits
(L/D) ratio
to
72.3% (31 December
2022: 73.1%), while
the funding from
the ECB refinancing
operations amounted
to € 3.8
billion (31 December
2022: € 8.8 billion)
(note 31). During
the year,
the Bank proceeded
with the issuance
of two preferred
senior notes of
€ 500 million
each (note
4). More
recently,
in January
2024, the
Company
completed
the issuance
of a
€ 300
million Subordinated
Tier II
debt
instrument (note
34). As at
31 December 2023,
the Bank’s
MREL ratio
at consolidated
level stands
at 24.91% of
RWAs, higher
than
the interim non-binding MREL target
of 23.23% from 1 January 2024.
The Group Liquidity Coverage
ratio (LCR) has
been maintained
at high level reaching
178.6% (31 December 2022: 173%).
In the context of
the 2024 ILAAP (Internal
Liquidity Adequacy Assessment
Process), the
liquidity stress
tests results
indicate that
the Bank
has adequate
liquidity buffer
to cover
the potential
outflows
that
could occur in all scenarios regarding
the short term (1 month), the
3-month and the medium-term horizon
(1 year). Information on
the interest rate
and liquidity risk exposures of the Group is included in notes 5.2.2 and 5.2.3.
Going concern assessment
The Board of
Directors, acknowledging
the geopolitical, macroeconomic
and financial risks
to the economy
and the banking
system
and taking into account the above
factors relating to
(a) the idiosyncratic growth
opportunities in Greece and the region for
this and
the next years, also underpinned by the mobilisation of the
already approved EU funding mainly through the RRF, and (b) the Group’s
pre-provision income
generating capacity,
asset quality,
capital adequacy and liquidity
position, has been satisfied
that the financial
statements of the Group can be prepared
on a going concern basis.
Notes to the Consolidated Financial Statements
.
9
|
Page
31 December 2023 Consolidated Financial Statements
2.1.1
New and amended standards and interpretations
(a) New and amended standards adopted by the Group as of
1 January 2023
The following standards
and amendments to existing
standards as issued
by the IASB and endorsed
by the EU, apply as
of 1 January
2023:
IFRS 17, Insurance Contracts
IFRS 17,
which supersedes
IFRS 4
“Insurance Contracts”
provides a
comprehensive
and consistent
accounting model
for insurance
contracts.
It applies
to
all types
of
insurance
contracts
as
well as
certain
guarantees
and financial
instruments
with discre
tionary
participating features. Financial guarantee contracts are allowed to
be within the
scope of IFRS
17, if the
entity has previously asserted
that it regarded them as insurance contracts.
According to
IFRS 17 core
general model,
the groups
of insurance contracts
which are managed
together and
are subject to
similar
risks, are
measured based
on building
blocks of
discounted, probability
-weighted estimates
of future
cash flows,
a risk
adjustment
and
a
contractual
service
margin
(“CSM”)
representing
the
unearned
profit
of
the
contracts.
Under
the
model,
estimates
are
remeasured at
each reporting period.
A simplified measurement
approach may
be used if
it is expected
that doing
so a reasonable
approximation of the general model is produced,
or if the contracts are of short duration.
Revenue is allocated
to periods in
proportion to the
value of expected
coverage and
other services that
the insurer provides
during
the period,
claims are
presented
when incurred
and any
investment
components
i.e. amounts
repaid to
policyholders
even if
the
insured event
does not occur,
are not included
in revenue
and claims. Insurance
services results are
presented separately
from the
insurance finance income or expense.
In June 2020, the IASB issued Amendments to IFRS 17 to
assist entities in its implementation.
The amendments aim to assist entities
to transition in order
to implement the
standard more easily, while they deferred the
effective date, so that entities
would be required
to apply IFRS 17 for annual periods beginning on or after
1 January 2023.
In December 2021, the IASB issued a narrow
-scope amendment to the transition requirements
of IFRS 17 for entities that
first apply
IFRS 17 and IFRS 9 “Financial Instruments” at the same time.
The
Group
has
not
issued
contracts
within
the
scope
of
IFRS
17;
therefore,
the
adoption
of
the
standard
had
no
impact
to
the
consolidated financial statements, other than through the Group’s share on the results of its associate ‘’Eurolife FFH Insurance Group
Holdings S.A.’’
(note2.3).
IAS 8, Amendments, Definition of Accounting Estimates
The amendments in IAS 8 “Accounting
Policies, Changes in Accounting Estimates
and Errors” introduced the definition
of accounting
estimates and
include other
amendments to
IAS 8 which
are intended
to help
entities distinguish
changes in
accounting estimat
es
from changes in accounting policies.
The
amendments
clarify how
accounting
policies and
accounting
estimates
relate
to
each other
by
(i) explaining
that
accounting
estimates are developed
if the application of
accounting policies requires
items in the financial statements
to be measured in
a way
that involves
a measurement uncertainty
and (ii) replacing
the definition of
a change in
accounting estimates
with the definition
of
accounting
estimates,
where
accounting
estimates
are
defined
as
“monetary
amounts
in
financial statements
that
are
subject to
measurement uncertainty”. In addition, the amendments clarify that selecting an estimation or valuation technique and choosing
the
inputs to be used constitutes
development of an accounting
estimate and that the effects
of a change in an input
or technique used
to
develop
an accounting
estimate
are
changes in
accounting
estimates,
if they
do not
result
from
the
correction
of prior
period
errors.
The adoption of the amendments had no impact on the consolidated financial statements.
Notes to the Consolidated Financial Statements
.
10
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31 December 2023 Consolidated Financial Statements
Amendments to IAS 1 Presentation of Financial Statements
and IFRS Practice Statement 2: Disclosure
of Accounting policies
IASB issued
amendments to
IAS 1 “Presentation
of Financial Statements”
that require
entities to
disclose their
material accounting
policies rather than their significant accounting policies.
According
to
IASB,
accounting
policy
information
is
material
if,
when
considered
together
with
other
information
included
in
an
entity’s financial statements, it can reasonably be expected to influence decisions that the primary users
of general purpose financial
statements make on the
basis of those financial statements.
Furthermore,
the amendments
clarify how
an entity
can identify
material
accounting policy
information
and provide
examples
of
when accounting policy
information is
likely to
be material. The
amendments to
IAS 1 also clarify
that immaterial
accounting policy
information does not
need to be disclosed.
However,
if it is disclosed,
it should not obscure
material accounting policy
information.
To support the IAS 1 amendments, the Board
has also developed guidance and examples to explain and demonstrate
the application
of
the
“four-step
materiality
process”,
as
described
in
IFRS
Practice
Statement
2 “Making
Materiality
Judgements”
to
accounting
policy disclosures.
The
adoption
of
the
amendments
had
no
impact
on
the
consolidated
financial
statements.
The
Group
took
into
account
the
amendments in disclosing its material accounting policies (note 2.2).
IAS 12, Amendments, Deferred Tax
related to Assets and Liabilities arising from a Single Transaction
The amendments
clarify that
the exemption
on initial
recognition set
out in
IAS 12
‘Income Taxes’
does not
apply for
transactions
such
as
leases and
decommissioning
obligations
that,
on initial
recognition,
give
rise to
equal amounts
of taxable
and deductible
temporary differences. Accordingly, for such transactions an entity is required to recognise the
related deferred tax asset and liability,
with
the
recognition
of
any
deferred
tax
asset
being
subject
to
the
recoverability
criteria
in
IAS
12.
The
amendments
apply
to
transactions that occur on or after the beginning of the earliest
comparative period presented.
The adoption of the amendments had no impact on the consolidated financial statements.
IAS 12, Amendment, International Tax
Reform – Pillar Two Model Rules
The amendments introduce
a mandatory temporary
exception (
relief
) from the
recognition and
disclosure of deferred
taxes arising
from
the implementation
of the
Organisation
for
Economic
Co-operation
and Development’s
(OECD)
Pillar Two
model rules
(“the
Pillar Two Income taxes”)
that are applicable as of 1 January 2024.
Additionally, the amendments require an entity to disclose that it has applied the above
exception related to Pillar Two income taxes,
while in the periods in which the legislation is (substantively) enacted but not yet effective, an entity is required
to disclose of known
or reasonably estimable information that helps users of financial statements understand the entity’s exposure arising from Pillar Two
income taxes. Subsequently, in the periods when the legislation is effective it is
required to separately disclose its current tax expense
(income) related to Pillar Two
income taxes.
The
Group
has
adopted
the
amendments
and
the
temporary
exception
retrospectively,
upon
their
endorsement
by
the
EU
in
November 2023. The adoption of the amendments
had no impact on the consolidated financial statements.
Detailed information in respect of the
Group’s exposure
to Pillar Two income taxes
is provided in note 13.
(b) New and amended standards not yet adopted by the Group
A number of amendments
to existing standards
are effective
after 2023, as
they have not
yet been endorsed
by the EU or
have not
been early applied by the Group. Those that may be relevant
to the Group are set out below:
IAS 1, Amendments, Classification of Liabilities as Current or Non-Current
(effective 1 January 2024)
The
amendments,
published
in
January
2020,
introduce
a
definition
of
settlement
of
a
liability,
while
they
make
clear
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.
In addition, it is clarified that the
assessment for liabilities classification made at the end of the reporting period is
not affected by the
expectations
about
whether
an
entity
will
exercise
its
right
to
defer
settlement
of
a
liability.
The
Board
also
clarified
that
when
classifying liabilities as current or non-current, an entity can
ignore only those conversion options that
are classified as equity.
In October 2022,
the IASB issued
Non-current Liabilities with
Covenants (Amendments to
IAS 1)
with respect to
liabilities for which
an
entity’s
right to
defer
settlement
for
at
least
12 months
is subject
to
the entity
complying with
conditions
after
the reporting
Notes to the Consolidated Financial Statements
.
11
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31 December 2023 Consolidated Financial Statements
period. The amendments specify that
covenants to be complied
with after the reporting
date do not affect
the classification of debt
as current
or non-current
at the
reporting
date. Instead,
the amendments
require
a company
to disclose
information
about these
covenants in the notes to the financial statements.
The adoption of the amendments is not expected to impact the consolidated
financial statements.
IFRS 16, Amendment, Lease Liability in a Sale and Leaseback (effective 1 January 2024 )
The amendment requires a seller-lessee
to subsequently measure lease liabilities arising in a sale and
leaseback transaction in a way
that it does not recognise any amount of the gain or loss that relates to the right of use it retains. Any
gains and losses relating to the
full or partial termination of a lease continue to be recognised when they occur. The amendment does not change the accounting for
leases unrelated to sale and leaseback transactions.
The adoption of the amendment is not expected to impact the consolidated
financial statements.
IAS 21, Amendments, Lack of Exchangeability (effective
1 January 2025, not yet endorsed by EU)
The
amendments
to
IAS 21”
The
Effects
of
Changes
in
Foreign
Exchange
Rates”,
specify how
an
entity
can
determine
whether
a
currency
is
exchangeable
into
another
currency
at
the
measurement
date,
and
the
spot
exchange
rate
to
use
when
it
is
not.
In
addition,
when
a
currency
is
not
exchangeable
an
entity
should
disclose
information
that
would
enable
users
of
its
financial
statements to understand
the related effects and risks as well as the
estimated rates and techniques used.
The adoption of the amendments is not expected to impact the consolidated
financial statements.
.
2.2
Material accounting policies
2.2.1
Consolidation
(i) Subsidiaries
Subsidiaries are all entities controlled by the Group. The Group controls an entity when it is exposed, or
has rights to, variable returns
from
its
involvement
with
the
entity,
and
has
the
ability
to
affect
those
returns
through
its
power
over
the
entity.
The
Group
consolidates an entity only when all the above three elements
of control are present.
Power over
the entity may
arise from voting rights
granted by equity
instruments such as shares
or,
in other cases, may
result from
contractual arrangements.
Where voting
rights are
relevant,
the Group
is deemed
to have
control
where it
holds, directly
or indirectly,
more than
half of
the
voting rights over
an entity,
unless there is evidence
that another investor
has the practical
ability to unilaterally
direct the relevant
activities.
The
Group
may
have
power,
even
when
it
holds
less
than
a
majority
of
the
voting
rights
of
the
entity,
through
a
contractual
arrangement
with
other
vote
holders,
rights
arising
from
other
contractual
arrangements,
substantive
potential
voting
rights,
ownership of the largest
block of voting rights in a situation
where the remaining rights are
widely dispersed (‘de
facto power’), or a
combination
of
the
above.
In assessing
whether
the
Group
has
de
facto
power,
it
considers
all
relevant
facts
and
circumstances
including
the
relative
size
of
the
Group’s
holding
of
voting
rights
and dispersions
of
holdings of
other
vote
holders
to
determine
whether the Group has the practical ability to direct
the relevant activities.
In assessing whether the
Group has the ability
to use its power
to affect
the amount of returns
from its involvement
with an entity,
the Group determines whether in
exercising its decision-making rights,
it is acting as an agent or
as a principal. The Group acts as
an
agent when it is engaged
to act on behalf and for
the benefit of another party,
and as a result does not
control an entity.
Therefore,
in
such
cases,
the
Group
does not
consolidate
the
entity.
In making
the
above
assessment,
the
Group
considers
the scope
of
its
decision-making authority over the
entity, the
rights held by other
parties, the remuneration
to which the Group
is entitled from its
involvement, and its exposure to
variability of returns from other interests
in that entity.
The Group
has interests
in certain
entities which
are structured
so that
voting rights
are not
the dominant
factor
in deciding
who
controls the entity, such as when any voting rights
relate to administrative tasks only and the relevant activities are
directed by means
of contractual rights. In determining whether the Group
has control over such structured entities, it considers
the following factors:
Notes to the Consolidated Financial Statements
.
12
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31 December 2023 Consolidated Financial Statements
-
The purpose and design of the entity;
-
Whether the Group has certain rights that
give it the ability to direct the relevant
activities of the entity unilaterally,
as a result
of existing contractual arrangements
that give it the power to govern the entity
and direct its activities;
-
In case another
entity is granted
decision making rights,
the Group assesses
whether this entity
acts as an agent
of the Group
or another investor;
-
The existence of any special relationships
with the entity; and
-
The extent
of the Group’s
exposure to
variability of returns
from its involvement
with the entity,
including its exposure
in the
most subordinated securitized
notes issued by the entity as well as subordinated
loans or other credit enhancements that may
be granted to the entity,
and if the Group has the power to affect such variability.
Information about the Group’s
structured entities is set out in note 25.
The Group reassesses whether it
controls an entity if facts
and circumstances indicate that there are
changes to one or
more elements
of
control.
This
includes
circumstances
in
which
the
rights
held
by
the
Group
and
intended
to
be
protective
in
nature
become
substantive upon
a breach of
a covenant
or default on
payments in a
borrowing arrangement,
and lead to
the Group having
power
over the investee.
Subsidiaries are
fully consolidated
from the
date on
which control
is transferred
to the Group
and are
no longer consolidated
from
the
date
that
control
ceases.
Total
comprehensive
income
is
attributed
to
the
owners
of
the
parent
and
to
the
non-controlling
interests even if this results
in the non-controlling interests having
a deficit balance.
In determining the proportion of profit or loss and changes in equity allocated
to the Group and non-controlling interests,
the Group
takes
into
account
current
ownership
interests,
also
including
in-substance
current
ownership
interests,
after
considering
the
eventual exercise
of any potential
voting rights
and other derivatives
that currently
give the Group
access to the returns
associated
with an ownership interest.
Changes in the
Group's ownership
interest in
subsidiaries that do
not result in
a loss of control
are recorded
as equity transactions.
Any difference between the consideration
and the share of the new net assets acquired is recorded directly in equity. Gains or losses
arising from disposals of
ownership interests that
do not result in a
loss of control
by the Group are
also recorded directly
in equity.
For disposals of ownership interests
that result in a loss of control, the Group derecognizes
the assets and liabilities of the subsidiary
and any related
non-controlling interest
and other components
of equity and
recognizes gains
and losses in
the income statement.
When
the
Group
ceases to
have
control,
any
retained
interest
in
the former
subsidiary
is re-measured
to
its
fair
value,
with
any
changes in
the carrying
amount recognized
in the
income statement.
The Group
considers
the eventual
exercise
of any
potential
voting
rights
and
other
derivatives
and
whether
they
currently
give
the
Group
access
to
the
returns
associated
with
a
retained
ownership interest, in determining
whether that ownership interest should
be derecognised or not.
Intercompany transactions,
balances and intragroup
gains on transactions between
Group entities are eliminated;
intragroup losses
are also eliminated unless the transaction provides
evidence of impairment of the asset transferred.
(ii) Business combinations
The purchase method of accounting is used to account for the acquisition of subsidiaries by the
Group. The consideration transferred
for an acquisition is measured at the fair value of the assets given, equity instruments
issued or exchanged and liabilities undertaken
at
the
date
of
acquisition,
including
the
fair
value
of
assets
or
liabilities
resulting
from
a
contingent
consideration
arrangement.
Acquisition related
costs are expensed
as incurred. Identifiable
assets acquired and
liabilities and contingent
liabilities assumed in a
business combination are measured initially at
their fair values at the
acquisition date irrespective of the
extent of any non-controlling
interest. Any previously held interest in
the acquiree is
remeasured to fair value
at the acquisition
date with any gain
or loss recognized
in the
income statement.
The Group
recognizes
on an
acquisition-by-acquisition basis
any non-controlling
interest
in the
acquiree
either at fair value or at the non-controlling
interest's proportionate share
of the acquiree's net assets.
The excess of the consideration
transferred, the
amount of any non-controlling
interest in the acquiree and
the acquisition-date fair
value of
any previous
equity interest
in the
acquiree over
the fair
value of
the identifiable
net assets
of the
subsidiary acquired,
is
recorded as
goodwill. If
this is
less than
the fair
value of
the net
assets of
the acquiree,
the difference
is recognized
directly in
the
income statement.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
If the
initial accounting
for a
business combination
is incomplete
by the
end of
the reporting
period in
which it
occurs, the
Group
reports
provisional
amounts
for
the
items
for
which
the
accounting
is
incomplete.
Those
provisional
amounts
are
adjusted
retrospectively
during
the
measurement
period
to
reflect
the
new
information
obtained
about
the
facts
and
circumstances
that
existed at
the acquisition
date that,
if known,
would have
affected the
amounts recognized
at that
date. The
measurement period
adjustments, as
mentioned above,
affect accordingly
the amount
of goodwill
that was
initially recognized,
while the
measurement
period cannot exceed one year from
the acquisition date.
Commitments to
purchase non-controlling
interests
through derivative
financial instruments
with the
non-controlling
interests,
as
part of
a business
combination
are
accounted
for
as a
financial liability,
with no
non-controlling
interest
recognized
for
reporting
purposes.
The
financial
liability
is
measured
at
fair
value,
using
valuation
techniques
based
on
best
estimates
available
to
Management. Any difference between
the fair value of the financial liability upon initial recognition and the nominal non-controlling
interest's share of net assets is recognized as part of goodwill. Subsequent revisions to the valuation of the
derivatives are recognized
in the income statement.
Forward contracts
to buy/sell an entity
that will result in a business
combination at a future date,
which do not exceed the
normally
necessary period
to
complete the
transaction,
including obtaining
the required
approvals,
are not
accounted
for
by the
Group
as
derivatives but as executory
contracts.
For
acquisitions
of
subsidiaries
not
meeting
the
definition
of
a
business,
the
Group
allocates
the
consideration
to
the
individual
identifiable assets and liabilities based
on their relative fair
values at the date of
acquisition. Such transactions or events
do not give
rise to goodwill.
A listing of the Bank’s subsidiaries is set
out in note 23.
(iii) Business combinations involving entities under common control
Pursuant to
IAS 8 ‘Accounting
Policies, Changes
in Accounting
Estimates and
Errors’,
since business
combinations between
entities
under common
control
are excluded
from the
scope of
IFRS 3
‘Business Combinations’,
such transactions
are accounted
for in
the
Group’s financial statements by using the pooling of interests method (also known as merger accounting), with reference to the most
recent pronouncements of other standard-setting bodies that use a similar conceptual framework and comply with the IFRSs general
principles, as well as accepted industry practices.
Under the
pooling
of interests
method, the
Group
incorporates
the assets
and liabilities
of the
acquiree
at their
pre-combination
carrying amounts from the highest level of
common control, without any
fair value adjustments. Any difference
between the cost
of
the transaction and the carrying amount of the net assets acquired
is recorded in Group's equity.
The Group accounts for the cost of such business combinations at the fair value of the consideration
given, being the amount of cash
or shares issued or if that cannot be reliably measured, the consideration
received.
Formation of a new Group entity to effect a business combination
Common control transactions that involve the formation of a new Group entity to effect a business combination by bringing together
two or more previously uncombined
businesses under the new Group entity
are also accounted for
by using the pooling of interests
method.
Other common control
transactions that involve
the acquisition of a single existing
Group entity or a single
group of businesses by
a
new entity formed
for this purpose
are accounted
for as capital
reorganizations,
on the basis that
there is no business
combination
and no substantive
economic change in
the Group. Under
a capital reorganization,
the acquiring entity
incorporates the
assets and
liabilities of the acquired
entity at their carrying
amounts, as presented
in the books of
that acquired entity,
rather than those
from
the highest level
of common control.
Any difference
between the cost
of the transaction
and the carrying amount
of the net assets
acquired is
recognized
in the
equity of
the new
entity.
Capital reorganization
transactions do
not have
any impact
on the
Group’s
consolidated financial statements.
(iv) Associates
Investments
in associates are
accounted for
using the equity
method of
accounting in the
consolidated financial
statements. These
are undertakings over which the Group exercises
significant influence but which are not controlled.
Notes to the Consolidated Financial Statements
.
14
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31 December 2023 Consolidated Financial Statements
Equity accounting
involves recognizing
in the income
statement
the Group's
share of
the associate's profit
or loss for
the year.
The
Group's interest in the associate is carried
on the balance sheet at an amount that reflects its share of the net assets of the associate
and any
goodwill identified
on acquisition
net of any
accumulated impairment
losses. If the
Group's share
of losses of
an associate
equals or
exceeds its
interest
in the associate,
the Group
discontinues recognizing
its share
of further
losses, unless
it has incurred
obligations or made payments on behalf of the associate.
When the Group obtains
or ceases to have
significant influence, any
previously held or retained
interest in the
entity is remeasured
to its fair value, with any change in the carrying amount recognized in the income statement,
except in cases where an investment in
associate becomes
an investment
in a joint
venture where
no remeasurement
of the interest
retained is
performed and
use of the
equity method continues to apply.
(v) Joint arrangements
A
joint
arrangement
is
an
arrangement
under
which
the
Group
has
joint
control
with
one
or
more
parties.
Joint
control
is
the
contractually agreed sharing of control and exists only when decisions about relevant activities require the unanimous consent of the
parties sharing control. The Group evaluates
the contractual terms of joint arrangements
to determine whether a joint arrangement
is a joint operation or a joint venture.
All joint arrangements in which the Group has an interest
are joint ventures.
As
investments
in
associates,
the
Group's
interest
in
joint
ventures
is
accounted
for
by
using
the
equity
method
of
accounting.
Therefore, the accounting policy described
in note 2.2.1 (iv) applies also for joint ventures.
A listing of the Group's associates and joint ventures
is set out in note 24.
2.2.2 Foreign currencies
(i) Translation of foreign subsidiaries
Assets and liabilities of foreign
subsidiaries are translated
into the Group’s
presentation currency at
the exchange rates
prevailing at
each reporting
date whereas
income and expenses
are translated
at the average
exchange rates
for the
period reported.
Exchange
differences
arising from
the translation
of the
net investment
in a
foreign
subsidiary,
including exchange
differences
of monetary
items receivable or payable to the foreign
subsidiary for which settlement is neither planned nor likely
to occur that form part of the
net investment in the foreign
subsidiaries, are recognized in other comprehensive
income.
Exchange
differences
from
the
Group’s
foreign
subsidiaries
are
released
to
the
income
statement
on
the
disposal
of
the
foreign
subsidiary while for monetary items that form part of the net investment in the foreign subsidiary, on repayment or when settlement
is expected to occur.
(ii) Transactions in foreign currency
Foreign
currency
transactions
are
translated
into
the
functional
currency
using
the
exchange
rates
prevailing
at
the
dates
of
the
transactions.
Foreign
exchange
gains
and
losses
resulting
from
the
settlement
of
such
transactions
are
recognized
in
the
income
statement.
Monetary assets
and liabilities denominated
in foreign
currencies are translated
into the
functional currency
at the
exchange rates
prevailing at each reporting
date and exchange
differences are recognized
in the income statement,
except when deferred
in equity
as qualifying cash flow or net investment hedges.
Non-monetary assets and liabilities are
translated into the
functional currency at the exchange
rates prevailing
at initial recognition,
except for non-monetary items denominated
in foreign currencies that are measured at fair value
which are translated at the rate of
exchange at the date the fair value
is determined. The exchange differences
relating to these items are treated
as part of the change
in fair
value and
are recognized
in the
income statement
or recorded
directly in
equity depending
on the
classification of
the non-
monetary item.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
2.2.3 Derivative financial instruments and hedging
Derivative financial instruments that mainly include foreign exchange
contracts, forward currency agreements, currency
and interest
rate options (both written and purchased), as well as currency and interest
rate swaps are initially recognized in the balance
sheet at
fair value,
on the date
on which the
derivative contracts
are entered
into, and
subsequently are
re-measured at
their fair value.
All
derivatives are carried as assets when fair
value is positive and as liabilities when fair value is negative.
The principles
for the
fair value
measurement
of financial
instruments,
including derivative
financial instruments,
are described
in
notes 3.2 and 5.3.
Embedded derivatives
Embedded derivatives
are components
of hybrid
contracts
that also
include non-derivative
hosts with
the effect
that some
of the
cash flows of the combined instruments vary
in a way similar to stand-alone derivatives.
Financial
assets
that
contain
embedded
derivatives
are
recognised
in
the
balance
sheet
in
their
entirety
in
the
appropriate
classification category,
following the instruments’
assessment of their contractual
cash flows and
their business model as
described
in note 2.2.9.
On the other
hand, derivatives embedded in
financial liabilities, such
as bonds issued
by the Group, are
treated as separate derivatives
when their risks
and characteristics are
assessed not to
be closely related
to those of
the host contract
and the host
contract is not
carried at
fair value
through profit
or loss. These
embedded derivatives
are separated
in the balance
sheet and
treated similarly
to
stand-alone derivatives measured at fair
value with changes in fair value recognized
in the income statement.
Derivatives held for hedge accounting
The use of derivative financial instruments is inherent
in the Group’s activities and aims principally at
managing risks effectively.
Accordingly,
the Group,
as part of
its risk management
strategy,
may enter
into transactions
with external
counterparties to
hedge
partially or fully exposure to interest rates,
foreign currency rates, equity prices and other market
factors that are generated
from its
activities.
The objectives of hedging with derivative financial instruments
include:
•
Reduce interest rate
exposure that is in excess of the Group’s
appetite;
•
Manage efficiently interest
rate risk and achieve optimization
and normalization of the evolution of
net interest margin and
net
interest income by tracking the evolution of
interest rates and spreads and hedging the
changes to movements of the
benchmark
interest rates represented
by the prevailing reference rates;
●
Reduce variability arising from the fair value
changes of derivatives embedded in financial assets;
•
Manage future variable cash flows;
•
Reduce foreign currency risk or inflation
risk;
•
Reduce variability in the Group’s
equity arising from translating a foreign net
investment at different
exchange rates.
Hedge accounting
The Group has elected,
as a policy choice permitted
under IFRS 9, to
continue to apply
hedge accounting in accordance
with IAS 39,
as endorsed by the European Union (IAS 39 “carve out'’). In 2023,
the Group introduced a new risk management strategy which is the
fair value hedging
of the core
deposits held in Greece
and Cyprus from
both retail and
wholesale portfolios. Accordingly,
the Group
applied for
the first
time the
provisions
of IAS
39 carve-out
that
enables entities
to designate
core
deposits as
hedged
items in
a
portfolio
hedge of
interest
rate
risk, as
further described
in the
sections below.
Under the
EU carve-out
version
of IAS
39, certain
requirements related
to hedge accounting
were removed,
in order to
facilitate (a)
the application of
fair value hedge
accounting to
the macro-hedges
used for
structural hedges
including demand deposits
and (b) the
hedge effectiveness
assessment by
permitting
the use of bottom layer approach for
the determination of the fair value of hedged item,
attributable to interest rate
risk.
For
hedge
accounting
purposes,
the
Group
forms
a
hedging
relationship
between
a
hedging
instrument
or
group
of
hedging
instruments and a
related item or
group of items
to be hedged.
A hedging instrument
is a
designated derivative or group
of derivatives,
or a designated non-derivative financial asset or financial liability whose fair value or cash flows are expected to offset changes in the
fair value
or cash flows
of a designated
hedged item
or group of
items. Specifically,
the Group designates
certain derivatives
as: (a)
hedges of the
exposure to
changes in fair
value of recognized
assets or liabilities
on a single
or portfolio
basis or unrecognized
firm
Notes to the Consolidated Financial Statements
.
16
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31 December 2023 Consolidated Financial Statements
commitments (fair
value hedging),
(b) hedges of
the exposure to
variability in
cash flows of
recognized assets
or liabilities or
highly
probable forecasted
transactions (cash flow
hedging) or,
(c) hedges of the exposure
to variability in the
value of a net
investment in
a foreign
operation
which is
associated with
the translation
of the
investment's
net assets
in the
Group's functional
currency (net
investment hedging).
In
order
to
apply
hedge
accounting,
specified
criteria
should
be
met.
Accordingly,
at
the
inception
of
the
hedge
accounting
relationship, the Group documents the
relationship between hedging instruments
and hedged items, as well as its risk management
objective
and
strategy
for
undertaking
various
hedge
transactions,
together
with
the
method
that
will
be
used
to
assess
the
effectiveness of the hedging
relationship. The Group also
documents its assessment, both
at inception of
the hedge and
on an ongoing
basis, of whether the
derivatives that
are used in the
hedging transactions are
highly effective in
offsetting changes
in fair values
or
cash flows
of hedged
items and
whether the actual
results of
each hedge
are within
a range
of 80-125%.
If a relationship
does not
meet
the
abovementioned
hedge
effectiveness
criteria,
the
Group
discontinues
hedge
accounting
prospectively.
Similarly,
if
the
hedging
derivative
expires
or
is
sold,
terminated
or
exercised,
or
the
hedge
designation
is
revoked,
then
hedge
accounting
is
discontinued prospectively. In addition, the Group uses other
derivatives, not designated in qualifying
hedge relationships, to manage
its exposure
primarily to
interest
rate
and foreign
currency risks.
Non qualifying
hedges are
derivatives
entered
into
as economic
hedges of
assets and
liabilities for
which hedge
accounting is
not applied.
The said
derivative instruments
are classified
along with
those held for trading purposes.
Furthermore, the Group may
designate groups of items
as hedged items
by aggregating recognized assets
or liabilities or
unrecognized
but highly probable transactions of
similar risk characteristics that share the
exposure for which they are hedged.
Although the overall
risk exposures may be different for
the individual items in the group, the specific risk being hedged is inherent in each of the items in
the group.
The Group applied
the Phase 1 and
Phase 2 IBOR reform
amendments to IFRS
9, IAS 39 and
IFRS 7, that
provided temporary
reliefs
on hedging relationships during the period before the replacement of the existing interest rate
benchmarks with alternative risk-free
rates
(RFRs), assumed
no change
at
its hedging
relationship
as a
result
of the
IBOR reform,
and amended
accordingly
its hedging
documentation .
The
Group
has
implemented
its IBOR
reform
transition
program,
on
the
outstanding
exposures
that
referenced
the
above
rates,
mainly referring to loans to customers
and derivatives and therefore,
the relative reliefs ceased to
apply.
(i) Fair value hedging
The Group applies
fair value hedging
to hedge exposures
primarily to changes
in the fair value
attributable to
interest rate
risk with
respect to the applicable benchmark rate
and currency risk.
Hedged items
The items that qualify for fair value hedge accounting
include financial assets and liabilities such as:
•
fixed rate investment
securities measured at AC or FVOCI,
•
fixed rate term deposits and debt
securities in issue measured at amortized cost;
•
portfolios of floating-rate
loans and investment securities with embedded interest
rate options (such as purchased interest
rate floors) measured at AC;
•
portfolios of fixed rate amortizing loans (macro hedging) including securitized notes issued and held by
the Group measured
at AC.
●
portfolios of liabilities (macro hedging) and more specifically demand deposits with interest
rates determined by the Group
and
announced
on
its
pricing
list
(sight/savings
deposit
rate)
that
are
identified
as
interest
rate-insensitive
liabilities
measured at
AC. More
specifically,
demand deposits
(sight or
savings) are
liabilities with
no contractual
maturity that
the
customers have the flexibility
to withdraw at any time. Despite their
contractual terms, and due to their
nature, part of the
demand
deposits
behaves
as
a
portfolio
of
longer-term
fixed
rate
liabilities,
as
they
remain
insensitive
to
interest
rate
movements. This part of demand deposits represents the core
deposits.
Hedge effectiveness assessment
The
Group
uses
the
dollar-offset
method
at
inception
(prospective
measurement)
and
on
an
ongoing
basis
(retrospective
measurement), in
order to
assess the effectiveness
of fair
value hedges
on a single
or portfolio
basis. This is
a quantitative
method
Notes to the Consolidated Financial Statements
.
17
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31 December 2023 Consolidated Financial Statements
that involves the comparison of the change in the fair value of
the hedging instrument with the change in the fair value of
the hedged
item attributable to the hedged risk. The above comparison constitutes
the dollar-offset ratio and
should be within the range of 80%
-125% for the hedge to be highly effective.
The Group
may also
use the
hypothetical
derivative
method, an
approach to
the dollar
offset method,
mainly applied
in portfolio
hedges that
carry embedded
derivatives,
where the
hedged risk
is modelled
through hypothetical
derivatives,
which replicate
the
embedded derivative.
The fair value
of the hypothetical
derivative is used
as a proxy
for the net present
value of the hedged
future
cash
flows
against
which
changes
in
value
of
the
actual
hedging
instrument
are
compared
to
assess
effectiveness
and
measure
ineffectiveness.
Hedge ineffectiveness
may arise in
case of potential
differences in
the critical
terms between
the hedged
item and
the hedging instrument such as maturity,
interest rate reset
frequency and discount curves as well as differences
between expected
and actual cash flows.
In addition, for hedging relationships
where the critical terms
of the hedged item match
the ones of the hedging instrument
such as
coupon, maturity,
and payment frequency,
it is presumed that by construction, effectiveness
is expected to be highly effective.
The Group has identified the following sources of ineffectiveness:
•
Differences in the repricing frequency
of the hedged items and hedging instruments
•
The use of different interest
rate curves applied to discount the hedged items
and hedging instruments.
Fair value hedging adjustments and discontinuation of hedge
accounting
Changes in the fair value of derivatives that are designated and qualify as
fair value hedges are recorded in the income statement line
“net trading income/(loss)”
together with the changes
in the fair value
of the hedged assets
or liabilities that are
attributable to the
hedged risk
(fair value
hedging adjustments).
Fair value
hedging adjustments
to the
hedged items
measured at
amortised cost
are
recorded as
part of their
carrying value in
the balance sheet,
with the exception
of hedging adjustments
for portfolios
of fixed
rate
assets in the context of macro-hedging (see below).
The Group
discontinues hedge
accounting prospectively
in case the
hedging instrument
expires or
is sold, terminated
or exercised,
the hedge no
longer meets the
qualifying criteria for
hedge accounting, or
designation is revoked.
In such cases,
any adjustment
to
the carrying amount of
the hedged item, for which
the effective interest method is applied, is
amortized to profit or loss in
the income
statement
line
“interest
income”
over
the
remaining
period
to
maturity
with
amortization
commencing
no
later
than
when
the
hedged
item
ceases
to
be
adjusted
for
changes
in
its
fair
value
attributable
to
the
risk
being
hedged.
If
the
hedged
item
is
derecognised, the unamortised fair value adjustment
is recognised immediately in the income statement
.
Portfolio hedging of interest rate risk (macro
-hedging)
With
reference
to
portfolio
hedging
of
interest
rate
risk,
a
dynamic
hedging
strategy
is
applied
according
to
which
the
Group
voluntarily designates and de-designates
the hedge relationship on a monthly basis.
For portfolios of financial assets, the Group determines the designated hedged amount by
identifying portfolios of homogenous fixed
rate assets based on their contractual interest rates, maturity and other risk characteristics. Assets within the identified portfolios are
allocated into
repricing time periods
based on their
repricing/maturity dates or
interest payment
dates with assumptions
made for
expected prepayments
and capital repayments.
The hedging instruments
are groups
of interest
rate swaps
replicating in
aggregate
the amortization
profile of
the assets
and designated
appropriately to
their repricing
time periods.
Following the
above allocation
into time buckets, the designated
hedged principal and the resulting percentage
of the asset portfolio hedged (hedge ratio)
for each
time bucket are determined.
For
the core
deposits’ portfolios,
the Group
determines
their aggregated
balances and
allocation
into
time buckets
by applying
a
modelled approach that is based
on regulatory standards.
More specifically, the portfolio of core deposits to be
hedged is determined
by an internal
designated behavioral
model that utilizes
a number of
assumptions regarding
the behavior and
evolution of demand
deposits balances, which are assessed,
monitored and documented in accordance with the
Group’s risk management framework. The
approach
involves
the
allocation
of
demand
deposits
in
sub-categories
considering
their
nature,
i.e.
retail
and
wholesale,
their
idiosyncratic behavioral analysis per portfolio,
their sensitivity on interest rates and their withdrawal patterns
and expected maturity
profile
analyzed
in time
buckets
for
a maximum
period of
ten years.
Furthermore, the
model performs
a capacity
check per
time
bucket to ensure that there is sufficient hedge capacity on the hedged item amortizing profile, compared to the
hedging instruments’
profile in order to ensure that there is no
over hedge.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Against
this
modelled
interest
rate
exposure,
the
Group
then
uses
groups
of
interest
rate
swaps
with
maturity
up
to
ten
years,
designated as hedging
instruments, that receive fixed
interest rate and pay floating
interest rate based on
the benchmark rate
hedged.
The groups
of swaps
are staggered
to cover
different
periods in time
replicating in
aggregate the
estimated amortization
profile of
the hedged core deposits
per time bucket. Additionally, their volume is
re-assessed on a monthly
basis. Following the above
allocation
into time buckets,
the designated hedged principal
and the resulting percentage
of the portfolio hedged
(hedge ratio) for
each time
bucket are determined.
For
hedge
effectiveness
assessment
purposes,
the dollar-offset
method
also applies
to
portfolio
hedging
of interest
rate
risk and
hedge effectiveness
is measured on
a monthly basis. For
prospective effectiveness
measurement, the dollar-offset
method involves
a comparison of the sensitivity of
fair value to a change of 1
basis point in interest rates (Dollar Value of a basis point - DV01)
between
the hedging instruments
and the hedged assets
or liabilities. A
DV01 offset
within the threshold
of 80% to
125% demonstrates
that
the
hedge
is
expected
to
be
highly
effective.
Retrospective
effectiveness
is
measured
by
comparing
fair
value
changes
of
the
designated portion of the portfolio of assets or liabilities attributable to the hedged risk, estimated as the present value of the future
cash flows
using discount
factors based
on the
applicable benchmark
interest rate
at the
inception and
reporting date,
against the
fair value changes of the derivatives,
to ensure that they are within an 80% to 125% range.
Fair
Value
hedging
adjustments
do
not
affect
the
carrying
amount
of
the
hedged
assets
or
liabilities
pool,
but
instead
they
are
presented
as a
separate
line item
within balance
sheet lines
loans and
advances to
customers
and due
to customers
respectively.
Considering the designation and de-designation process
for a portfolio hedging of interest
rate risk is performed on a monthly basis,
the hedging adjustments are recorded in the income
statement line “net trading income/(loss)” and begin amortization on the
month
they occur over the expiration of the designate
d
time periods on a straight line basis.
Furthermore, the pool of hedging instruments is managed
dynamically and therefore when
new derivatives are added in the pool
of
hedging instruments, they are included in the
next period’s hedge assessment and consequently the change in
fair value in the month
of their inception affects the P&L. Similarly,
when existing swaps are de-designated,
either to improve expected hedge
effectiveness
or to be liquidated, the respective change in fair value from de-designation up to the next designation
or liquidation date, affects the
P&L.
(ii) Cash flow hedging
The Group applies cash flow hedging to hedge exposures to variability in cash flows primarily attributable to the interest rate risk and
currency risk associated with a recognized asset
or liability or a highly probable forecast transaction.
The items that qualify for cash flow hedging include recognized assets and liabilities such as variable rate deposits
or loans measured
at amortized cost, variable rate debt
securities in issue and foreign currency variable rate loans. The interest
rate risk with respect to
the applicable benchmark rate may
be hedged using interest
rate swaps and cross
currency swaps. The foreign
currency risk may be
hedged using currency forwards and currency
swaps.
Furthermore, cash
flow hedging is
used for
hedging highly probable
forecast transactions
such as the
anticipated future
rollover of
short-term
deposits
or
repos
measured
at
amortized
cost.
Specifically,
the
forecast
variable
interest
payments
of
a
series
of
anticipated
rollovers
of these
financial liabilities
are aggregated
and hedged
as a
group with
respect to
changes in
the benchmark
interest rates, eliminating cash flow variability.
In addition, cash flow hedging applies to
hedges of currency risk arising from probable
forecasted sales of financial assets or
settlement of financial liabilities in foreign currency.
If the
hedged item
is documented
as a
forecast
transaction, the
Group
assesses and
verifies that
there is
a high
probability of
the
transaction occurring.
In order to assess the effectiveness
of cash flow hedges of interest
rate risk, the Group
uses regression analysis which demonstrates
that there is high
historical and expected future correlation between
the interest rate risk designated as
being hedged and the
interest
rate risk
of the hedging
instrument. For
assessing the effectiveness
of cash flow
hedges of currency
risk, the Group
uses the dollar-
offset method as it is described in section (i) above.
The effective
portion of changes
in the fair
value of derivatives
that are designated
and qualify as cash
flow hedges is recognized
in
other comprehensive income whereas the ineffective portion is recognized in the income statement
line “net trading income/(loss)”.
Amounts accumulated
in equity
are recycled
to the
income statement
in the
periods in which
the hedged
item will
affect profit
or
loss (for example, when the forecast
sale that is hedged takes place).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
When a
hedging instrument
expires or
is sold,
or when
a hedge no
longer meets
the criteria
for hedge
accounting, the
cumulative
gain or loss existing in equity at that time remains
in equity until the hedged cash flows affect
the income statement.
When a forecast
transaction is
no longer
expected to
occur,
the cumulative
gain or
loss that was
reported in
equity is immediately
transferred to the income
statement.
(iii) Net investment hedging
The Group
applies net
investment
hedging to
hedge exposures
to variability
in the
value of
a net
investment
in foreign
operation
(including monetary items that form part of the net investment),
such as foreign subsidiaries, associates or other foreign
operations,
associated
with
the
translation
of
the
net
investment’s
carrying
amount
into
the
Group’s
presentation
currency.
Any
exchange
differences deriving from the translation
are deferred in OCI until the net investment
is disposed of or liquidated, at which time they
are recognized in the profit or loss.
The
foreign
currency
exposure
that
arises
from
the
fluctuation
in
spot
exchange
rates
between
the
net
investment’s
functional
currency and the Group’s presentation currency may be
hedged using currency swaps, currency
forward contracts and their economic
equivalents, as well as cash instruments.
The effectiveness of net investment
hedges is assessed with the Dollar-Offset Method
as described above for fair value hedge.
Hedges of
net investments
in foreign
operations
are accounted
for
similarly to
cash flow
hedges. Any
gain or
loss on
the hedging
instrument relating to
the effective portion of the
hedge is recognized in equity;
the gain or loss relating
to the ineffective portion
is
recognized in the income statement.
Gains and losses accumulated in equity are included in the income statement
when the foreign
operation is disposed of as part of the gain or loss on the disposal.
(iv) Derivatives not designated as hedging instruments for hedge accounting
purposes
Changes
in the
fair
value
of derivative
financial instruments
that
are
entered
into
for
trading purposes
or as
economic hedges
of
assets, liabilities or
net positions in
accordance with the Group’s hedging
objectives and risk
management policies that may
not qualify
for hedge accounting are recognized
in the income statement.
The fair
values of
derivative instruments
held for
trading, including
those entered
into as
economic hedges,
and hedge
accounting
purposes are disclosed in note 19.
2.2.4 Offsetting financial instruments
Financial
assets
and
liabilities
are
offset
and
the net
amount
is presented
in
the balance
sheet when,
and only
when,
the Group
currently
has a
legally enforceable
right to
set off
the recognized
amounts
and intends
either to
settle them
on a
net basis,
or to
realize the asset and settle the liability simultaneously.
2.2.5 Income statement
(i) Interest income and expense
Interest income and expense are recognized in the
income statement for all interest bearing financial instruments on an
accrual basis,
using
the effective
interest
rate
(EIR)
method. The
effective
interest
rate
is the
rate
that
exactly
discounts
estimated
future
cash
payments or receipts through the
expected life of the financial
instrument or, when appropriate, a shorter period to
the gross carrying
amount of the financial asset or to the amortized
cost of a financial liability. When
calculating the EIR for financial instruments
other
than purchased or originated credit-impaired, the Group estimates future cash flows considering all contractual terms of the financial
instrument
but does
not
consider
expected
credit
losses.
For
purchased
or originated
credit
impaired
(POCI) financial
assets,
the
Group
calculates
the
credit-adjusted
EIR,
which
is
the
interest
rate
that
upon
the
original
recognition
of
the
POCI
financial
asset
discounts the estimated future cash flows
(including expected credit losses) to the fair
value of the POCI asset.
The
amortized
cost
of
a
financial asset
or
liability
is
the
amount
at
which
it
is
measured
upon
initial
recognition
minus
principal
repayments, plus
or minus cumulative
amortization using
the EIR (as
described above)
and for
financial assets it
is adjusted
for the
expected credit loss allowance. The gross carrying amount of a
financial asset is its amortized cost before adjusting for ECL allowance.
The EIR calculation includes fees and points paid
or received that are an integral part
of the effective interest rate,
transaction costs,
and other premiums or discounts. Transaction costs include incremental costs that are directly attributable to the acquisition or issue
of a financial asset or liability.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The Group calculates interest
income and expense by applying the EIR to
the gross carrying amount of non
-impaired financial assets
(exposures in Stage 1 and 2) and to the amortized
cost of financial liabilities respectively.
For financial assets
that have
become credit-impaired
subsequent to
initial recognition (exposures
in Stage 3),
the Group calculates
interest income by applying the effective interest rate to the amortized cost of the financial asset (i.e. gross carrying amount adjusted
for the
expected credit
loss allowance).
If the
asset is no
longer credit-impaired,
then the EIR
is applied
again to
the gross
carrying
amount with the exception of POCI assets for
which interest income does not revert
to gross basis calculation.
For inflation-linked
instruments the
Group recognizes
interest
income and
expense by
adjusting the
effective interest
rate on
each
reporting period due
to changes in
expected future cash
flows, incorporating
changes in inflation
expectations over
the term of the
instruments.
The adjusted
effective
interest
rate
is applied
in order
to calculate
the new
gross carrying
amount on
each reporting
period.
The changes to
the basis for
determining the
financial instruments’
contractual cash
flows, required
in the context
of IBOR reform,
are accounted for as an update to
the instruments’ EIR.
Interest income
and expense are
presented separately
in the income statement
for all interest
bearing financial instruments
within
net interest income.
(ii) Fees and commissions
Fee and commission received
or paid that are
integral to the effective interest rate on a
financial asset or
financial liability are included
in the effective interest
rate.
Other
fee
and
commission
income
such
as
account
servicing
and
asset
management
fees
(including
performance
based
fees)
is
recognised
over
time
as
the
related
services
are
being
provided
to
the
customer,
to
the
extent
that
it
is
highly
probable
that
a
significant reversal
of the revenue
amount recognized
will not occur.
Transaction-based
fees such as
foreign exchange
transactions,
imports-exports, remittances,
bank charges and
brokerage
activities are recognised
at the point
in time when the
transaction takes
place. Other
fee
and
commission
expenses
relate
mainly
to
transaction
and service
fees,
which
are
expensed
as
the
services are
received.
In the case of a contract
with a customer that results
in the recognition of a financial
instrument in the Group’s
financial statements
which may
be partially
in the
scope of
IFRS 9
and partially
in the
scope of
IFRS 15,
the Group
first
applies IFRS
9 to
separate
and
measure the part of the contract that is in the scope of
IFRS 9 and subsequently applies IFRS 15 to the residual part.
2.2.6 Property, equipment and Investment
property
(i) Property and equipment
Property and equipment are measured at cost
less accumulated depreciation and any accumulated impairment
losses. Cost includes
expenditure that
is directly attributable
to the acquisition
of the asset. Subsequent
expenditure is recognized
in the asset's
carrying
amount only
when it
is probable
that
future economic
benefits will
flow to
the Group
and the
cost of
the asset
can be
measured
reliably. All other repair
and maintenance costs are recognized in
the income statement as incurred.
Depreciation is calculated
using the straight-line method
to write down the cost
of property and equipment,
to their residual values
over their estimated useful life as follows:
-
Land: no depreciation;
-
Freehold buildings: 40-50 years and up to 70 years
(for specific strategic properties constructed
or heavily renovated according
to the best practices and guidelines of sustainable construction
and renovation, using resilient materials
and designs);
-
Leasehold improvements: over the lease term or
the useful life of the asset if shorter;
-
Computer hardware and related
integral software: 4-10 years;
-
Other furniture and equipment: 4-20 years; and
-
Motor vehicles: 5-7 years.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
(ii) Investment property
Property
held
for
rental
yields and/or
capital
appreciation
that
is not
occupied by
the
Group’s
entities
is classified
as
investment
property.
Investment
property
is
measured
initially
at
its
cost,
including
related
transaction
costs,
and
subsequently
at
fair
value
with
any
change therein recognized
in income statement
line ‘’other
income / (expenses)’’.
Subsequent expenditure
is charged to the asset’s
carrying amount only when it is probable that
future economic benefits associated with the
item will flow to the Group and the cost
of the
item can
be measured
reliably.
Such expenditure
includes enhancements
that increase
the value
of the
asset and
its future
income-earning
potential,
as well
as costs
to
comply with
environmental
and other
legal requirements.
Repairs
and maintenance
costs are recognized to
the income statement during the financial period in which they are
incurred.
Any gain
or loss
on disposal
(calculated as
the difference
between the
net proceeds
from disposal
and the
carrying amount
of the
asset) is recognized in income statement.
If an
investment
property
becomes
owner-occupied,
it is
reclassified
as
property
and equipment
and its
fair
value
at
the date
of
reclassification becomes its deemed cost. If an item of property and equipment becomes an investment property because its use has
changed, any resulting
decrease between the
carrying amount and the
fair value of this
item at the date
of transfer
is recognized in
income statement
while any resulting
increase, to the extent
that the increase
reverses previous
impairment loss for
that property,
is
recognized
in
income
statement
while
any
remaining
part
of
the
increase
is
recognized
in
other
comprehensive
income
and
increases the revaluation surplus within equity.
If a
repossessed asset
becomes investment
property,
any difference
between the
fair value
of the
property at
the date
of transfer
and its previous carrying amount is recognized
in income statement.
Reclassifications among own used, repossessed assets and
investment properties may occur when there is
a change in the
use of such
properties. Additionally,
an investment property
may be reclassified to ‘non-current
assets held for sale’ category
to the extent that
the criteria described in note 2.2.25 are met.
2.2.7 Intangible assets
(i) Goodwill
Goodwill
arising on
business
combinations
is included
in ‘intangible
assets’
and is
measured at
cost less
accumulated
impairment
losses.
Goodwill arising on acquisitions of associates and jointly controlled entities is neither disclosed nor tested separately for impairment,
but instead is included in ‘investments
in associates’ and ‘investments in jointly
controlled entities’.
(ii) Computer software
Costs
associated
with
the
maintenance
of
existing
computer
software
programs
are
expensed
as
incurred.
Development
costs
associated
with
the
production
of
identifiable
assets
controlled
by
the
Group
are
recognized
as
intangible
assets
when
they
are
expected to generate economic benefits and can be measured reliably. Internally
generated computer software assets are amortized
using the straight-line method over 4 years,
except for core systems
whose useful life may extend up to
20 years.
(iii) Other intangible assets
Other
intangible
assets
are
assets that
are
separable
or arise
from
contractual
or other
legal
rights
and are
amortized
over their
estimated useful lives. These include intangible
assets acquired in business combinations.
Intangible assets that have an indefinite
useful life are not subject to amortization
and are tested annually for impairment.
2.2.8 Impairment of non-financial assets
(i) Goodwill
Goodwill is tested
for impairment annually
or more frequently
if there are
any indications that
impairment may have
occurred. The
Group considers
external information
such as prevailing
economic conditions, persistent
slowdown in financial markets,
volatility in
markets and changes in levels of market and exchange risk, an unexpected decline in an asset’s market value or market capitalization
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
being below the book value of equity, together
with a deterioration in internal performance
indicators, in assessing whether there is
any indication of impairment.
For the purpose of impairment testing,
goodwill acquired in a business combination
is allocated to each Cash
Generating Unit (CGU)
or groups
of CGUs
that are
expected to
benefit from
the synergies
of the
combination. The
Group monitors
goodwill either
at the
separate legal entity level or
group of legal entities consistent with the
internal monitoring of operating segments.
The Group impairment model compares the carrying
value of a CGU or
group of CGUs with its
recoverable amount. The carrying value
of a CGU
is based on
the assets and
liabilities of each
CGU. The
recoverable
amount is
determined on
the basis of
the value-in-use
which is the present value of the future cash flows expected to be derived from the
CGU or group of CGUs. The estimated future cash
flows are discounted
to their present
value using a pre
-tax discount
rate that reflects
current market
assessments of the time
value
of money and the risks specific to the asset or CGU and the countries where
the CGUs operate.
An impairment loss arises if the carrying amount of an asset or CGU
exceeds its recoverable
amount and is recognized in the
income
statement.
Impairment
losses
are
not
subsequently
reversed.
Gains
and
losses
on
the
disposal
of
an
entity
include
the
carrying
amount of goodwill relating to the entity sold.
Goodwill arising in a business combination is not tested for impairment during the one-year period from the acquisition date allowed
for the
completion of
the purchase
accounting and
allocation of
goodwill, unless
there has
been a triggering
event suggesting
that
the acquired goodwill might be impaired, even if the
allocation process is not complete.
(ii) Other non-financial assets
Other non-financial assets, including property and equipment and other intangible assets, are assessed for indications of impairment
at each reporting date
by considering both external
and internal sources of information
such as a significant reduction
in the asset’s
value
and
evidence
that
the
economic
performance
of
the
asset
is
or
will
be
worse
than
expected.
When
events
or
changes
in
circumstances indicate
that the carrying amount may
not be recoverable,
an impairment loss is recognized
for the amount by which
the asset’s carrying
amount exceeds its recoverable
amount. The recoverable
amount is the higher of
an asset’s fair
value less costs
to
sell
and
value
in
use.
For
the
purposes
of
assessing
impairment,
assets
are
grouped
at
the
lowest
levels
for
which
there
are
separately
identifiable
cash
flows,
where
applicable.
Non-financial
assets,
other than
goodwill, for
which an
impairment
loss was
recognized in prior reporting periods, are reviewed
for possible reversal of such impairment at
each reporting date.
Impairment losses arising from the Group’s
associates and joint ventures are determined
in accordance with this accounting policy.
2.2.9 Financial assets
Financial assets - Classification and measurement
The
Group
classifies
financial
assets
based
on
the
business
model
for
managing
those
assets
and
their
contractual
cash
flow
characteristics.
Accordingly,
financial assets
on initial
recognition
are classified
into one
of the
following
measurement categories:
amortized cost, fair value
through other comprehensive income or fair value
through profit or loss.
Purchases and
sales of
financial assets
are recognized
on trade
date, which
is the
date the
Group commits
to purchase
or sell
the
assets. Loans originated by the Group are recognized
when cash is advanced to the borrowers.
Financial Assets measured at Amortized Cost (‘AC’)
The Group classifies and measures
a financial asset at AC only
if both of the following conditions
are met and is not designated
as at
FVTPL:
(a) The
financial asset
is held within
a business model
whose objective
is to
collect contractual
cash flows
(hold-to-collect business
model) and
(b) The
contractual
terms of
the financial
asset give
rise on
specified dates
to cash
flows that
are solely
payments of
principal and
interest on the principal amount outstanding
(SPPI).
These financial
assets are
recognized initially
at fair
value plus
or minus direct
and incremental
transaction costs
and fees
received
that are attributable to the acquisition of these assets, and are subsequently measured at amortized cost, using the effective interest
rate (EIR) method (as described in note 2.2.5 above).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Interest
income, realized
gains and
losses on derecognition,
and changes
in expected
credit losses
from assets
classified at
AC, are
included in the income statement.
Financial Assets measured at Fair Value through Other
Comprehensive Income (‘FVOCI’)
The Group classifies and measures a financial asset at FVOCI only if both of the following conditions are
met and is not designated as
at FVTPL:
(a) The financial asset
is held within a
business model whose objective
is achieved by both collecting
contractual cash flows and selling
financial assets (hold-to-collect-and-sell business
model) and
(b) The contractual terms of the financial asset give rise on specified dates
to cash flows that are SPPI.
Financial
assets
that
meet
these
criteria
are
debt
instruments
and
are
measured
initially
at
fair
value,
plus
or
minus
direct
and
incremental transaction costs that
are attributable to the acquisition of these assets.
Subsequent
to
initial recognition,
FVOCI
debt
instruments
are
re-measured
at
fair
value
through
OCI, except
for
interest
income,
related foreign exchange gains
or losses and expected credit losses, which are recognized in the income statement.
Cumulative gains
and losses previously recognized in OCI are transferred from OCI to the income statement when the debt instrument is
derecognised.
Equity Instruments designated at FVOCI
The Group may make an irrevocable election to
designate an equity instrument at FVOCI.
This designation, if elected, is
made at initial
recognition
and on
an
instrument
by
instrument
basis.
Gains and
losses
on these
instruments,
including when
derecognized,
are
recorded
in
OCI
and
are
not
subsequently
reclassified
to
the
income
statement.
Dividends
received
are
recorded
in
the
income
statement.
Financial Assets measured at Fair Value through Profit
and Loss (“FVTPL”)
The
Group
classifies
and
measures
all
other
financial
assets
that
are
not
classified
at
AC
or
FVOCI,
at
FVTPL.
Derivative
financial
instruments
are measured
at FVTPL
with changes
in fair
value recognized
in the
income statement,
unless they
are designated
as
effective hedging instruments, where
hedge accounting requirements under IAS 39 apply (as described
in note 2.2.3 above).
Furthermore, a financial asset that meets the above conditions
to be classified at AC or FVOCI, may be irrevocably
designated by the
Group at
FVTPL at
initial recognition,
if doing
so eliminates,
or significantly
reduces an
accounting mismatch
that would
otherwise
arise.
Financial assets measured at FVTPL are initially recorded at fair value
and any unrealized gains or losses arising due to changes in fair
value are included in the income statement.
Business model and contractual characteristics assessment
The business model assessment
determines how the
Group manages a
group of assets
to generate cash
flows. That is,
whether the
Group's objective
is solely
to collect
contractual
cash flows
from the
asset, to
realize cash
flows from
the sale
of assets,
or both to
collect contractual cash flows and cash flows
from the sale of assets. In addition, the business model is determined after aggregating
the financial assets into groups (business lines) which are managed
similarly rather than at an individual instrument’s
level.
The business
model is
determined
by the
Group’s
key
management personnel
consistently
with the
operating
model, considering
how financial assets are managed
in order to generate cash flows, the objectives
and how performance of each
portfolio is monitored
and reported and any available information
on past sales and on future sales’ strategy,
where applicable.
Accordingly,
in making
the above
assessment, the
Group
will consider
a number
of factors
including the
risks associated
with the
performance of
the business model
and how those
risks are evaluated
and managed, the
related personnel
compensation, and the
frequency, volume
and reasons of past sales, as well as expectations about future
sales activity.
Types of business models
The Group’s business
models fall into three categories, which
are indicative of the key strategies
used to generate returns.
The
hold-to-collect
(HTC)
business model
has the
objective
to
hold
the financial
assets in
order
to
collect contractual
cash flows.
Financial
assets
classified
within
this
business
model
include
investment
securities,
due
from
banks
and
loans
and
advances
to
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
customers including securitized notes issued by special purpose entities established by
the Group and recognized in its balance sheet,
which are
measured at
amortized cost.
Sales within
this model
are monitored
per financial
asset class
and may
be performed
for
reasons which are not inconsistent with this business model. More specifically, sales of financial assets due to credit deterioration, as
well as sales close to the maturity are considered consistent with the objective of hold-to-collect contractual
cash flows regardless of
value and frequency. Sales for other reasons may be consistent with the HTC model such as liquidity needs in
any stress case scenario
or sales made to manage high concentration
level of credit risk. Such sales are monitored and assessed depending
on frequency and
value to conclude whether they are consistent
with the HTC model.
The
hold-to-collect-and-sell
business
model
(HTC&S)
has
the
objective
both
to
collect
contractual
cash
flows
and
sell
the
assets.
Activities such as liquidity management, interest
yield and duration are consistent with this
business model, while sales of assets are
integral to
achieving the objectives
of this business
model. Financial assets
classified within this
business model include
investment
securities which are measured at FVOCI, subject to meeting the SPPI assessment
criteria.
Other business models
include financial assets
which are managed
and evaluated
on a fair
value basis as
well as portfolios
that are
held for trading. This is a residual category for financial assets not meeting the criteria of the business models of
HTC or HTC&S, while
the collection of contractual cash flows may
be incidental to achieving the business models’ objective.
The Group’s
business models
are
reassessed
at
least
annually or
earlier,
if there
is a
sales’ assessment
trigger or
if there
are
any
changes in the Bank’s strategy
and main activities, as evidenced by the Bank’s
business plan, budget and NPE strategy.
Cash flow characteristics assessment
For a
financial asset
to be
measured at
AC or
FVOCI, its
contractual
terms must
give rise
on specified
dates to
cash flows
that
are
solely payments of principal
and interest (SPPI)
on the principal amount outstanding.
For the purpose of this
assessment principal is
defined as the
fair value of
the asset at
initial recognition and
interest as
the consideration
for the time
value of money,
credit risk,
other basic lending risks and a profit margin.
More
specifically,
at
initial
recognition
of
a financial
asset,
an
assessment
is performed
of whether
the
financial
asset
contains
a
contractual term that
could change the amount or timing
of contractual cash flows
in a way that it would
not be consistent with the
above
condition.
The
Group
considers
the
existence
of
various
features,
including
among
others,
contractually
linked
terms,
prepayment
terms,
deferred
interest-free
payments,
extension
and
equity
conversion
options,
terms
that
introduce
leverage
including index linked payments, as well
as environmental, social and governance linked features (ESG)
where the contractual interest
rate
is
adjusted
if
the
borrower
meets,
or
fail
to
meet
specific
sustainability
performance
targets.
Where
the
contractual
terms
introduce exposure to risk or volatility that are
inconsistent with a basic lending
arrangement, the related financial asset is considered
to have failed the SPPI assessment and will be measured
at FVTPL.
In addition, if a contractual feature could have an effect that is de-minimis on the contractual cash flows of the financial asset, it does
not affect
its classification. Moreover,
a contractual
feature is considered
as not genuine by
the Group, if
it affects the
instrument’s
contractual cash flows
only on the occurrence of an event
that is extremely rare,
highly abnormal and very unlikely
to occur.
In such
a case, it does not affect the instrument’s
classification.
Moreover,
for the
securitized
notes issued
by special
purpose entities
and held
by the
Group, the
cash flow
characteristics
of the
notes and the
underlying pool of financial
assets as well
as the credit
risk inherent in
each securitization’s
tranche compared
to the
credit risk of all of the underlying pool of financial assets, are considered.
In case of
special lending arrangements such
as non-recourse loans,
in its assessment
of the SPPI
criterion, the Group considers
various
factors
such
as
the
nature
of
the
borrower
and
its
business,
the
pricing
of
the
loans,
whether
it
participates
in
the
economic
performance of the
underlying asset and
the extent to
which the collateral
represents all
or a substantial
portion of the borrower’s
assets. Moreover,
for non-recourse
loans, the Group
takes into
consideration the
borrower’s adequacy
of loss absorbing
capital by
assessing jointly the criteria of equity
sufficiency, Loan to
Value ratio (LTV),
the Average Debt Service Coverage
ratio (ADSCR) as well
as the existence of corporate
and personal guarantees.
In certain cases when
the time value of
money element is modified
in that the financial
asset’s interest
rate is periodically
reset but
the reset frequency
does not match
the tenor of
the interest
rate or when
a financial asset’s
interest rate
is periodically reset
to an
average of particular short-term and long-term
interest rates, a quantitative assessment is
performed (the “Benchmark Test”) in order
to determine whether the contractual cash
flows are SPPI.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
In particular,
the Group
assesses the contractual
cash flows
of the “real
instrument”,
whose interest
rate is
reset with
a frequency
that does not match
the tenor of the
interest rate, and those of
the “benchmark instrument”, which are identical in
all respects except
that the tenor of the
interest rate
matches exactly the
interest period.
If the undiscounted cash
flows of the former
are significantly
different
from the
benchmark cash
flows due
to the
modified time value
of money
element, the
financial asset
does not
meet the
SPPI criterion. In its assessment, the Group considers
both the effect of the modified time value of money element
in each reporting
period
and
cumulatively
over
the
life
of
the
instrument.
This
is
done,
as
far
as
the
lifetime
of
the
instrument
is
concerned,
by
comparing
the
cumulative
projected
undiscounted
cash
flows
of
the
real
and the
benchmark
instrument,
and
for
each
quarterly
reporting period,
by comparing
the projected
undiscounted
cash flows
of the
two instruments
for that
quarterly reporting
period,
based on predefined thresholds.
The Group performs the SPPI assessment for its
lending exposures on a product basis for the
retail and part of the wholesale portfolio
where contracts are of standardized form, whereas for the remaining wholesale portfolio, securitized notes issued by special purpose
entities, either established by the Group or third parties,
and held by the Group, and debt securities the assessment is performed
on
an individual basis.
Derecognition of financial assets
The
Group
derecognizes
a
financial
asset
when
its
contractual
cash
flows
expire,
or
the
rights
to
receive
those
cash
flows
are
transferred in an outright sale in which substantially all risks and rewards of ownership have
been transferred. In addition, a financial
asset is derecognized
even if rights
to receive cash
flows are retained
but at the same
time the Group
assumes an obligation
to pay
the received cash flows without a material delay (pass through agreement) or when substantially all
the risks and rewards are neither
transferred
nor retained
but the Group
has transferred
control of
the asset. Control
is transferred
if, and
only if,
the transferee
has
the practical ability to sell
the asset in its entirety to
unrelated third party and is able to
exercise that ability unilaterally
and without
imposing additional restrictions on the transfer.
The main transactions that are subject to the above de-recognition
rules are securitization transactions, repurchase
agreements and
stock lending
transactions. In
the case of
securitization transactions,
in order
to assess the
application of
the above
mentioned de-
recognition
principles,
the
Group
considers
the
structure
of
each
securitization
transaction
including
its
exposure
to
the
more
subordinated
tranches
of
the
notes
issued
and/or
credit
enhancements
provided
to
the
special
purpose
entities,
as
well
as
the
securitization’s contractual
terms that may indicate that the Group retains control of the underlying assets. In the case of repurchase
transactions and stock lending, the assets transferred
are not derecognised since the terms of the transaction
entail the retention of
all their risks and rewards.
On derecognition of
a financial asset,
the difference
between the carrying
amount of the
asset and the sum
of (i) the consideration
received
(including
any
new
asset
obtained
less
any
new
liability
assumed)
and
(ii)
any
cumulative
gain
or
loss
that
had
been
recognized
in OCI
for
financial assets
at FVOCI,
is recognized
in income
statement,
except
for
cumulative
gains or
losses of
FVOCI
equity instruments which are not reclassified from OCI to
income statement at the date of
derecognition.
Modification of financial assets that may result in derecognition
In addition,
derecognition of
financial asset
arises when
its contractual
cash flows
are modified
and the
modification is
considered
substantial
enough
so
that
the
original
asset
is derecognized
and
a new
one
is
recognised.
Substantial
modifications
resulting
in
derecognition
may include
among others
change in
borrower,
change in
the asset’s
denomination
currency,
debt consolidation
of
unsecured exposure into a single new secured asset. The Group records the modified asset as a ‘new’ financial asset at fair value plus
any eligible transaction costs and the difference
with the carrying amount of the existing one is recorded in the income statement
as
derecognition gain or loss.
The Group may
modify the contractual
terms of a lending exposure
either as a concession granted
to a client facing
or that is about
to
face
financial
difficulties
or
due
to
other
commercial
reasons
such
as
changes
in
market
conditions,
competition
or
customer
retention.
In addition,
the Group
may occasionally
enter,
in the
context
of loans’
modifications, into
debt-for-equity
transactions.
These are
transactions where the terms of a lending exposure
are renegotiated and as a result,
the borrower issues equity instruments (voting
or no
voting) in
order to
extinguish part
or all
of its
financial liability
to the
Group. Such
transactions
may include
also exercise
of
conversion rights embedded into
convertible or exchangeable bonds
and enforcement of shares held as collateral.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
In debt-for-equity transactions, the
modified loan is derecognized while the
equity instruments received in
exchange are recognized
at their fair value, with any resulting gain
or loss recognized in the Group’s
income statement.
2.2.10 Reclassifications of financial assets
The Group reclassifies a financial
asset only when it changes its business
model for managing financial assets. Generally,
a change in
the business model is expected to be rare and occurs when the Group either begins or ceases to perform an activity that is significant
to its operations; for
example, when a business
line is acquired, disposed of or
terminated. In the rare
event when there is
a change
to the existing business
models, the updated assessment
is approved by the Group’s
competent Committees and
the amendment is
reflected appropriately in the Group’s
budget and business plan.
Changes
in intention
related
to particular
financial assets
(even in
circumstances
of significant
changes in
market
conditions), the
temporary disappearance of
a particular market for
financial assets or a transfer
of financial assets between parts of the
Group with
different business models, are not
considered by the Group changes in business model.
The reclassification
is applied
prospectively
from the
reclassification
date,
therefore
previously
recognized
gains,
losses (including
impairment losses) or interest are not restated.
2.2.11 Financial liabilities
Financial liabilities - Classification and measurement
The Group
classifies its
financial liabilities
in the
following
categories: financial
liabilities measured
at amortized
cost and
financial
liabilities measured at fair-value-through
-profit-or-loss (FVTPL).
Financial liabilities at FVTPL comprise two sub categories: financial
liabilities held for trading and financial liabilities designated at fair-
value-through-profit-or-loss upon
initial recognition.
Financial liabilities
held for
trading, which
include short positions
of debt
securities (sold but
not yet
purchased), are
liabilities that
the Group
incurs principally
for
the purpose
of repurchasing
in the
near term
for
short term
profit
or in
the context
of economic
hedging strategies of groups of assets
and/or liabilities or net positions for which hedge accounting
is not applied.
The Group
may,
at initial
recognition,
irrevocably
designate financial
liabilities at
fair-value-through-profit-or-loss
when one
of the
following criteria is met:
●
the designation eliminates or significantly
reduces an accounting mismatch
which would otherwise arise from measuring assets
or
liabilities or recognising the gains and losses on them on different
bases; or
●
a group of financial liabilities
or financial assets and financial liabilities
is managed and its performance
is evaluated on
a fair value
basis in accordance with a documented risk management or
investment strategy; or
●
the financial liability contains one or more embedded derivatives as components of a
hybrid contract which significantly modify the
cash flows that otherwise would be required by the
contract.
Financial liabilities held for trading or designated at FVTPL are initially recognized at fair value. Changes in fair value are recognized
in
the income statement, except
for changes in the fair value of liabilities designated
at fair-value-through-profit
-or-loss attributable to
changes in the
Group’s
own credit risk,
which are recognised
in OCI and
are not subsequently
reclassified to
the income statement
upon derecognition of the
liabilities. However, if such treatment creates or
enlarges an accounting mismatch
in the income
statement,
all gains or losses of this financial liability,
including the effects of changes in the credit risk, are recognized
in the income statement.
Derecognition of financial liabilities
A
financial
liability
is
derecognized
when
the
obligation
under
the
liability
is
discharged,
cancelled
or
expires.
When
an
existing
financial liability of the Group is replaced by another from the same counterparty on substantially different
terms, or the terms of an
existing liability are
substantially modified,
such an exchange
or modification is
treated as
an extinguishment of
the original liability
and the recognition of a new liability and any difference
arising is recognized in the income statement.
The Group considers
the terms to be
substantially different,
if the discounted present
value of the cash
flows under the new
terms,
including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from
the discounted present value of the remaining
cash flows of the original financial liability.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
If an
exchange
of debt
instruments
or modification
of terms
is accounted
for as
an extinguishment,
any costs
or fees
incurred are
recognized as part of
the gain or
loss on
the extinguishment. If
the exchange or modification
is not
accounted for as an
extinguishment,
any
costs
or fees
incurred
adjust the
carrying amount
of the
liability and
are amortized
over the
remaining
term
of the
modified
liability.
Similarly,
when
the
Group
repurchases
any
debt
instruments
issued
by
the
Group,
it
accounts
for
such
transactions
as
an
extinguishment of debt.
2.2.12 Fair value measurement of financial instruments
Fair
value
of
financial
instruments
is the
price
that
would
be received
to
sell
an
asset
or paid
to
transfer
a liability
in
an
orderly
transaction between market participants at the measurement date under
current market conditions in the principal
or, in its absence,
the most advantageous
market to
which the Group
has access at
that date.
The fair value
of a liability
reflects its non-performance
risk.
When available, the
Group measures the fair
value of an instrument
using the quoted price
in an active market
for that instrument.
A market
is regarded
as active
if transactions
for
the asset
or liability
take
place with
sufficient
frequency and
volume to
provide
pricing
information
on
an
ongoing
basis.
If
there
is
no
quoted
price
in
an
active
market,
then
the
Group
uses
other
valuation
techniques that maximize
the use of relevant
observable inputs and minimize
the use of unobservable
inputs. The chosen valuation
technique incorporates all of the factors
that market participants would take
into account in pricing a transaction.
The Group has elected to use mid-market pricing as
a practical expedient for fair
value measurements within a bid-ask spread.
The best evidence
of the fair value
of a financial instrument
at initial recognition
is normally the transaction
price, i.e. the fair
value
of the consideration given
or received unless
the Group determines
that the fair
value at initial
recognition differs from the transaction
price. In this case,
if the fair value is evidenced
by a quoted price in
an active market for an identical asset or
liability (i.e. Level 1 input)
or based on
a valuation
technique that
uses only data
from observable
markets, a
day one
gain or
loss is recognized
in the
income
statement.
On the
other hand,
if the
fair value
is evidenced
by a
valuation
technique that
uses unobservable
inputs, the
financial
instrument
is initially
measured at
fair value,
adjusted to
defer the
difference
between the
fair value
at initial
recognition and
the
transaction price (day
one gain or
loss). Subsequently the
deferred gain
or loss is amortized
on an appropriate
basis over the
life of
the instrument or released
earlier if a quoted
price in an active market
or observable market
data become available
or the financial
instrument is closed out.
All assets and liabilities for
which fair value is measured
or disclosed in the financial statements
are categorized
within the fair value
hierarchy based on the lowest level
input that is significant to the fair value
measurement as a whole.
For assets and
liabilities that are
measured at fair
value on a
recurring basis, the
Group recognizes
transfers
into and out
of the fair
value hierarchy levels at
the beginning of the quarter in which a financial instrument's transfer
was effected.
2.2.13 Impairment of financial assets
The
Group
recognizes
allowance
for
expected
credit
losses
(ECL)
that
reflect
changes
in
credit
quality
since initial
recognition
to
financial assets that
are measured at
AC and FVOCI, including
loans, securitized notes
issued by special purpose
entities established
by the Group, lease
receivables, debt securities, as well
as
financial guarantee contracts and loan
commitments. ECL are a probability-
weighted average estimate of credit losses that reflects the time value of money. Upon initial recognition of the financial instruments
in scope of the impairment policy,
the Group records a
loss allowance equal to 12-month ECL,
being the ECL that result from default
events
that
are
possible
within
the
next
twelve
months.
Subsequently,
for
those
financial
instruments
that
have
experienced
a
significant
increase
in
credit
risk
(SICR) since
initial
recognition,
a loss
allowance
equal
to
lifetime
ECL
is recognized,
arising
from
default
events
that are
possible over
the expected
life
of the
instrument.
If upon
initial recognition,
the financial
asset meets
the
definition of purchased or originated credit
impaired (POCI), the loss allowance is based on the change in
the ECL over the life of the
asset.
Loss allowances for
trade receivables
are always
measured at an
amount equal to
lifetime ECL. For
all other financial assets
subject
to impairment, the general three-stage
approach applies.
Notes to the Consolidated Financial Statements
.
28
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31 December 2023 Consolidated Financial Statements
Accordingly,
ECL are recognized using a three-stage
approach based on the extent of credit deterioration
since origination:
•
Stage 1 – When
there is no
significant increase in
credit risk since initial
recognition of a
financial instrument, an amount
equal
to 12-month ECL is recorded.
The 12 – month ECL represent
a portion of lifetime losses, that result from
default events that are
possible
within the
next
12 months
after
the reporting
date
and
is equal
to
the
expected
cash
shortfalls
over
the
life
of
the
instrument or group of instruments, due to loss events probable within the next 12 months.
Not credit-impaired financial assets
that are either newly originated or purchased, as well as assets recognized following
a substantial modification accounted for as
a derecognition, are classified initially in Stage 1.
•
Stage 2 –
When a financial
instrument experiences a
SICR subsequent to
origination but is
not considered to
be in default,
it is
included
in
Stage
2.
Lifetime
ECL
represent
the
expected
credit
losses
that
result
from
all
possible
default
events
over
the
expected life of the financial instrument.
•
Stage 3 – Financial
instruments that
are considered to
be in default
are included in this
stage. Similar to
Stage 2, the allowance
for credit losses captures the lifetime expected
credit losses.
•
POCI - Purchased
or originated
credit impaired
(POCI) assets are
financial assets that
are credit impaired
on initial recognition.
They are
not subject
to stage
allocation and
are always
measured on
the basis
of lifetime
expected credit
losses. Accordingly,
ECL
are
only
recognized
to
the
extent
that
there
is
a
subsequent
change
in
the
assets’
lifetime
expected
credit
losses.
Any
subsequent favorable change to
their expected cash flows is recognized as impairment gain
in the income statement even if the
resulting expected
cash flows exceed
the estimated
cash flows at
initial recognition. Apart
from purchased assets
directly from
the
market
or
through
a business
combination,
POCI
assets
may
also
include
financial
instruments
that
are
considered
new
assets, following a substantial modification
accounted for as a derecognition (see section
2.2.9).
Definition of default
To determine the risk of default, the
Group applies a
default definition for accounting purposes, which
is consistent with the
European
Banking Authority
(EBA) definition
for non-performing
exposure
and regulatory
definition of
default
as applied
by the
Group on
1
January 2021 (refer
to note
5.2.1.2 (a)). The
accounting definition
of default
is also consistent
with the
one used for
internal credit
risk management purposes.
A financial asset
is credit-impaired
when one or
more events
that have
a detrimental
impact on the
estimated future
cash flows
of
that exposure have occurred:
•
The borrower faces a significant difficulty
in meeting his financial obligations.
•
There has been a breach of contract, such as a default or unpaid amounts, above specified materiality thresholds, for
more than
90 consecutive days.
•
The Group,
for
economic or
contractual
reasons
relating
to the
borrower’s
financial difficulty,
has granted
to the
borrower
a
concession(s) that the Group would not otherwise consider.
•
There is a probability that the borrower
will enter bankruptcy or other financial re-organization.
•
For
POCI
financial
assets,
a
purchase
or
origination
at
a
deep
discount
that
reflects
incurred
credit
losses
is
considered
a
detrimental
event.
The
Group
assesses
the
deep
discount
criterion
following
a
principle
-based
approach
with
the
aim
to
incorporate all reasonable and supportable
information which reflects market conditions that
exist at the
time of the
assessment.
For debt securities, the Group determines the risk of default using an internal credit rating scale. The Group considers debt securities
as credit impaired if the internal rating of the issuer/counterparty
corresponds to a rating equivalent to "C" (Moody's
rating scale) or
the external rating of the issuer/counterparty at
the reporting date is equivalent to “C” (Moody’s rating scale) and the internal rating
is not available.
Significant increase in credit risk (SICR) and staging allocation
Determining whether a loss
allowance should be based
on 12-month expected credit losses
or lifetime expected credit losses
depends
on whether
there has been
a significant
increase in credit
risk (SICR) of
the financial assets,
issued loan commitments
and financial
guarantee contracts,
since initial recognition.
At each reporting date, the Group performs an assessment as to whether
the risk of a default occurring over the remaining expected
lifetime of the exposure has increased significantly from the expected
risk of a default estimated at origination for
that point in time.
The
assessment
for
SICR
is
performed
using
both
qualitative
and
quantitative
criteria
based
on
reasonable
and
supportable
information
that is
available
without undue
cost or
effort
including forward
looking information
and macroeconomic
scenarios as
Notes to the Consolidated Financial Statements
.
29
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31 December 2023 Consolidated Financial Statements
well as historical experience. Furthermore, regardless
of the outcome of the SICR assessment based on the above triggers, the credit
risk of a financial asset is deemed to have increased significantly
when contractual payments are more
than 30 days past due.
As a primary criterion
for SICR assessment, the Group compares
the residual lifetime probability of default (PD) at
each reporting date
to the residual lifetime PD for the same point
in time which was expected at the origination.
The Group
may also consider
as a SICR
trigger when the
residual lifetime
PD at each
reporting date
exceeds certain
predetermined
values. The criterion may be applied in order to
capture cases where the relative
PD comparison does not result to the identification
of SICR although the absolute value of PD is at levels which
are considered high based on the Group’s
risk appetite framework.
Internal credit risk rating
(on a borrower basis) is also used
as a basis for the identification
of SICR with regards to
lending exposures
of the
Wholesale portfolio.
Specifically,
the Group
takes
into consideration
the changes
of internal
ratings
by a
certain number
of
notches. In
addition, a watchlist
status is
also considered
by the Group
as a trigger
for SICR
identification. Internal
credit risk rating
models include borrower specific
information as well as, forward-looking information regarding the prospects
of the industry in
which
it operates.
For securitized
notes issued by
special purpose entities
established by
the Group, the
SICR assessment is
performed by
considering
the
performance
of
the
underlying
assets,
where
the
level
of
their
expected
cash
flows
is
compared
to
the
carrying
amount of the securitized notes.
In addition, the assessment of SICR for
debt securities is performed on an individual
basis based on
the number of notches downgrade in the internal
credit rating scale since the origination date.
Forbearance measures as monitored by the
Group are considered as a SICR trigger and thus the exposures are
allocated into Stage 2
upon
forbearance,
unless
they
are
considered
credit-impaired
or
the
net
present
value
of
their
cash
flows
before
and
after
the
restructuring exceed the threshold of 1%, in which cases they are classified
as Stage 3. Furthermore, regardless of the outcome of the
SICR
assessment
based
on
the
above
triggers,
the
credit
risk
of
a
financial
asset
is
deemed
to
have
increased
significantly
when
contractual payments are
more than 30 days past due.
Furthermore,
Management
may
apply
temporary
collective
adjustments
when
determining
whether
credit
risk
has
increased
significantly since initial
recognition on exposures
that share the same
credit risk characteristics
to reflect macro-economic
or other
factors which are
not adequately addressed by the
current credit risk models. These factors
may depend on information
such as the
type of the
exposure, counterparty’s
specific information
and the characteristics
of the financial instrument,
while their application
requires the application of significant judgment.
Transfers from Stage
2 to Stage 1
A financial asset,
which is classified to
Stage 2 due
to Significant
Increase in Credit
Risk (SICR), is reclassified
to Stage 1,
as long as
it
does not meet anymore any of the Stage 2 Criteria.
Where forbearance measures have been applied, the Group uses a probation period of two years,
in order to fulfill the requirements
for
a transfer
back to
Stage
1. If
at
the end
of that
period
the borrowers
have
made regular
payments
of
a significant
aggregate
amount, there are
no past due amounts
over 30 days and
the loans are neither credit
impaired, nor any other
SICR criteria are met,
they exit forborne status and are
classified as stage 1.
Transfers from Stage
3 to Stage 2
A financial
asset is
transferred
from Stage
3 to
Stage 2,
when the
criteria based
on which
the financial
asset was
characterized
as
credit impaired
are no
longer valid
and the
applicable probation
period for
the assets’
return in
non impaired
status, ranging
from
three to twelve months, has passed.
Criteria for grouping of exposures based on shared credit risk characteristics
The assessment
of loss allowance
is performed
either on an
individual basis or
on a collective
basis for
groups of similar
items with
homogeneous
credit
risk
characteristics.
The
Group
applies
the
same
principles
for
assessing
SICR
since
initial
recognition
when
estimating ECL on a collective or on an individual basis.
The
Group
segments
its
lending
exposures
on
the
basis
of
shared
credit
risk
characteristics
for
the
purposes
of
both
assessing
significant
increase
in
credit
risk
and
measuring
loan
loss
allowance
on
a collective
basis.
The
different
segments
aim to
capture
differences in PDs and in the rates
of recovery in the event of default.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The
shared
credit
risk
characteristics
used
for
the segmentation
of
exposures
include
several
elements
such
as: instrument
type,
portfolio
type,
asset
class,
product
type,
industry,
originating
entity,
credit
risk
rating,
remaining
term
to
maturity,
geographical
location of the borrower,
value of collateral to the financial asset, forbearance
status and days in arrears.
The Group
identifies individually
significant exposures
and performs
the ECL measurement
based on borrower
specific information
for both
retail and
wholesale portfolios.
This measurement
is performed
at a
borrower level,
hence the
criteria are
defined at
this
level, while both qualitative and quantitative
factors are taken
into consideration including forward
looking information.
For
the
remaining
retail
and
wholesale
exposures,
ECL
are
measured
on
a
collective
basis.
This
incorporates
borrower
specific
information,
collective
historical
experience
of
losses
and
forward-looking
information.
For
debt
securities
and
securitized
notes
issued by
special purpose
entities established
by the
Group, the
measurement of
impairment losses
is performed
on an
individual
basis.
Measurement of Expected Credit Losses
The measurement of ECL is an unbiased probability-weighted average estimate of credit losses that reflects the time value of money,
determined by
evaluating a
range of
possible outcomes.
A credit
loss is
the difference
between the
cash flows
that are
due to
the
Group in
accordance with
the contractual
terms of
the instrument
and the
cash flows
that the
Group
expects to
receive (i.e.
cash
shortfalls)
discounted
at
the
original
effective
interest
rate
(EIR)
of
the
same
instrument,
or
the
credit-adjusted
EIR
in
case
of
purchased
or
originated
credit
impaired
assets
(POCI).
In
measuring
ECL,
information
about
past
events,
current
conditions
and
reasonable
and
supportable
forecasts
of
future
conditions
are
considered.
For
undrawn
commitments,
ECL
are
calculated
as
the
present value of
the difference between
the contractual cash
flows due if the
commitment was drawn
and the cash flows
expected
to be received, while for financial guarantees ECL are measured
as the expected payments to reimburse the holder less any amounts
that the Group expects to receive.
The Group
estimates expected
cash shortfalls,
which reflect
the cash
flows expected
from all
possible sources,
including collateral,
guarantees
and other
credit enhancements
that are
part of
the contractual
terms and
are not
recognized
separately.
In case
of a
collateralized financial instrument,
the estimated expected cash flows related
to the collateral reflect the amount
and timing of cash
flows
that
are
expected
from
liquidation
less the
discounted
costs
of obtaining
and selling
the collateral,
irrespective
of
whether
liquidation is probable.
ECL are calculated
over the maximum contractual
period over which the
Group is exposed
to credit risk,
which is determined based
on the
substantive
terms of
the instrument,
or in
case of
revolving credit
facilities, by
taking into
consideration factors
such as
the
Group’s expected
credit risk management actions to mitigate
credit risk and past practice.
Receivables from customers arising from the Group’s activities other than lending, are presented under Other
Assets and are typically
short term. Therefore, considering that usually
there is no
significant financing component, the
loss allowance for such
financial assets
is measured at an amount equal to the lifetime expected
credit losses under the simplified approach.
ECL Key Inputs
The ECL calculations are based on the term structures
of the probability of default (PD), the loss given default
(LGD), the exposure at
default (EAD) and
other input parameters
such as the credit conversion
factor (CCF) and the
prepayment rate.
Generally,
the Group
derives these parameters from internally
developed statistical models and observed point
-in-time and historical data, leveraging the
existing infrastructure development
for the regulatory framework
and risk management practices.
The PD
represents the
likelihood of
default 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, over a given time horizon.
The Group uses Point in Time (PiT) PDs in order to remove any bias towards historical data thus aiming to reflect management’s
view
of the future as at the reporting date, incorporating
relevant forward looking information
including macroeconomic scenarios.
Two types of PD are used for
calculating ECL:
•
12-month PD, which is the estimated probability of default occurring within the
next 12 months (or over the remaining life of
the
financial asset if this is less than 12 months). It is used to calculate 12-month ECL
for Stage 1 exposures.
•
Lifetime PD,
which is the
estimated probability
of a default
occurring over the
remaining life
of the financial
asset. It is
used to
calculate lifetime ECL for Stage
2, Stage 3 and POCI exposures.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
For debt securities,
PDs are obtained
by an international
rating agency using
risk methodologies that
maximize the use
of objective
non-judgmental variables and market data. The Group assigns internal credit ratings to each issuer/counterparty based on these PDs.
In case of counterparties for which no information
is available, the Group assigns PDs which are derived from
internal models.
The Exposure
at default
(EAD) 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.
The EAD includes both on and off balance sheet exposures. The on balance sheet exposure corresponds
to the total amount that has
been withdrawn and is due to be paid, which includes the outstanding
principal, accrued interest and any past
due amounts. The off
balance sheet exposure represents the credit
that is available to be withdrawn,
in excess of the on balance sheet exposure.
Furthermore, the CCF factor is used to
convert the amount of a credit facility and
other off-balance sheet amounts to an
EAD amount.
It is a modelled assumption
which represents a proportion
of any undrawn
exposure that is expected
to be drawn
prior to a default
event occurring.
In
addition,
the
prepayment
rate
is
an
estimate
of
early
prepayments
on
loan
exposure
in
excess
of
the
contractual
repayment
according to the repayment schedule and is expressed as a percentage applied to the EAD at each period, reducing the latter amount
accordingly.
LGD represents the Group's expectation of the extent of loss on a
defaulted exposure and it is the difference between the contractual
cash flows due and
those that the Group
expects to receive including
any amounts from
collateral liquidation.
LGD varies by type
of
counterparty,
type and seniority of claim, availability of collateral or other credit support, and is usually expressed as a percentage of
EAD. The Group distinguishes
its loan portfolios into two
broad categories i.e. secured
and unsecured. The Group estimates
the LGD
component
using
cure
rates
that
reflect
cash
recoveries,
estimated
proceeds
from
collateral
liquidation,
estimates
for
timing
realization,
realization
costs,
etc.
Where
the
LGD’s
component
values
are
dependent
on
macro
–
economic
data,
such
types
of
dependencies are reflected by incorporating forward looking information, such as
forecasted price indices into the respective models.
The
estimation
of
the
aforementioned
component
values
within
LGD
reflects
available
historical
data
which
cover
a
reasonable
period, i.e. a full economic cycle.
For
debt
securities,
the
LGD
is
typically
based
on
historical
data
derived
mainly
from
rating
agencies’
studies
but
may
also
be
determined considering the existing and expected
liabilities structure of the obligor and macroeconomic environment.
Furthermore, the
seniority of
the debt
security,
any potential
collaterals
by the
obligor or
any other
type of
coverage is
taken
into
account for the calculation.
Forward-looking information
The
measurement
of
expected
credit
losses
for
each
stage
and
the
assessment
of
significant
increases
in
credit
risk
consider
information
about
reasonable
and
supportable
forecasts
of
future
events
and
macroeconomic
conditions.
The
estimation
and
application of forward-looking information
requires significant judgment.
The Group uses three macroeconomic scenarios (i.e. base, adverse and optimistic) to achieve the objective of
measuring ECL in a way
that reflects an unbiased and probability weighted outcome.
The baseline scenario represents the most likely scenario and is aligned
with the information used by the Group for
strategic planning and budgeting purposes.
The scenarios
are reflected
in the
risk parameters,
and, namely
12-month PD,
Lifetime PD
and LGD,
hence 3
sets of
each of
these
parameters are used, in line with the scenarios developed.
The Group then
proceeds to the
calculation of weights
for each scenario,
which represent
the probability of
occurrence for each
of
these
scenarios.
These
weights
are
applied
on
the
3 sets
of
calculations
of
the
parameters
in order
to
produce
a single
scenario
weighted
risk
parameter
value
which
is
subsequently
used
in
both
SICR
assessment
and
ECL
measurement.
ECL
calculation
incorporates
forward-looking
macroeconomic
variables,
including
GDP
growth
rates,
house
price
indices,
unemployment
rates,
interest
rates,
inflation,
etc.
In order
to
capture
material
non –
linearities
in the
ECL model,
in the
case of
individually
significant
exposures, the
Group considers
the relevance
of forward
looking information
to each
specific group
of borrowers
primarily on
the
basis of the business sector they belong and other drivers of credit risk
(if any).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Modified Financial Assets
In
cases
where
the
contractual
cash
flows
of
a financial
asset have
been
modified
and the
modification
is considered
substantial
enough (for the
triggers of derecognition,
refer to
Derecognition of Financial
assets in section 2.2.9
above), the modificati
on date is
considered
to
be
the
date
of
initial
recognition
for
impairment
calculation
purposes,
including
for
the
purposes
of
determining
whether a significant increase in credit risk has occurred. Such a modified asset is typically classified as Stage
1 for ECL measurement
purposes. However,
in some circumstances following a modification that results in derecognition of the original financial asset, there
may be evidence that the new financial asset is credit-impaired
at initial recognition, and thus, the financial asset is recognized
as an
originated credit-impaired financial asset (POCI).
In cases where the contractual
cash flows of a financial asset
have been modified and the
modification is not considered
substantial
enough, the Group recalculates the
gross carrying amount of the financial asset and
recognizes the difference
as a modification gain
or loss in the
income statement
and determines if
the financial asset’s
credit risk has
increased significantly
since initial recognition
by comparing the risk
of a default occurring
at initial recognition based
on the original unmodified contractual
terms and the risk
of
a default occurring at the reporting date, based
on the modified contractual terms.
Presentation of impairment allowance
For financial assets measured
at amortized cost, impairment
allowance is recognized as
a loss allowance reducing the
gross carrying
amount of the financial assets in the balance sheet. For debt instruments measured at
FVOCI, impairment allowance is recognized in
other comprehensive income and does not reduce the carrying amount of the debt instruments in the balance sheet. For off-balance
sheet financial items arising from lending activities, impairment allowance is presented in Other Liabilities. The respective ECL for the
above financial items is recognised within impairment
losses.
Write-off of financial assets
Where the
Group
has no
reasonable
expectations
of recovering
a financial
asset either
in its
entirety
or a
portion of
it, the
gross
carrying amount of that instrument is reduced directly,
partially or in full, against the impairment allowance. The amount written-off
is considered
as derecognized.
Subsequent
recoveries
of amounts
previously
written
off decrease
the amount
of the
impairment
losses in the income statement.
Financial assets that
are written
off could
still be subject
to enforcement
activities in order
to comply with
the Group’s
procedures
for recovery of amounts due.
2.2.14 Sale and repurchase agreements, securities lending and borrowing
(i) Sale and repurchase agreements
Securities sold subject to repurchase
agreements (repos) continue
to be recorded in the
Group's Balance Sheet as the Group
retains
substantially all risks
and rewards of
ownership, while the
liability to the counterparty
is included in amounts
due to other banks
or
due to customers, as
appropriate, and measured at
amortized cost. Securities purchased
under agreements to resell (reverse
repos)
are recorded
as loans
and advances
to other
banks or
customers, as
appropriate,
and measured
at amortized
cost. The
difference
between the
sale and repurchase
price in case
of repos
and the purchase
and resale
price in case
of reverse
repos is
recognized
as
interest and accrued over the period of the repo
or reverse repo agreements using the effective
interest method.
.
(ii) Securities lending and borrowing
Securities lent to
counterparties against the receipt of
a fee continue to
be recognized in the
financial statements. Securities borrowed
are
recognized
as trading
liabilities when
sold to
third parties
and measured
at fair
value with
any
gains or
losses included
in the
income statement.
2.2.15 Leases
T
he Group enters into leases either
as a lessee or as a lessor.
At inception of a contract, the Group
assesses whether a contract is, or
contains, a lease.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
(i) Accounting for leases as lessee
When the
Group
becomes the
lessee in
a lease
arrangement,
it recognizes
a lease
liability and
a corresponding
right-of-use
(RoU)
asset at the commencement of the lease term when the Group acquires
control of the physical use of the asset.
Lease liabilities are presented within Other liabilities and RoU assets within Property
and equipment and investment property.
Lease
liabilities are measured based on
the present value of
the future lease
payments over the lease term,
discounted using an incremental
borrowing rate. The interest
expense on lease liabilities is presented within net interest
income.
The lease liability is remeasured when there is a
change in future lease payments
arising from a change in an index or
rate, a change
in the Group’s estimate of
the amount 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
right-of-use
asset, or
is recorded
in profit
or loss
if the
carrying
amount of the right-of-use asset has been reduced to zero.
The RoU asset
is initially recorded
at an amount
equal to the lease liability
and is adjusted
for rent prepayments,
initial direct costs,
or lease incentives
received. Subsequently,
the RoU
asset is depreciated
over the
shorter of
the lease term
or the useful
life of
the
underlying asset, with the depreciation presented
within operating expenses.
When a lease
contains extension
or termination
options that the
Group considers
reasonably certain
to be exercised,
the expected
future lease payments or costs of early termination
are included within the lease payments used to calculate
the lease liability.
The Group has
elected not to
recognise right-of-use
assets and lease
liabilities for
leases of low-value
assets and short-term
leases.
The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis
over the lease term.
(ii) Accounting for leases as lessor
At inception date of the lease, the Group, acting as a lessor, classifies each of its leases as either an operating
lease or a finance lease
based on whether the lease transfers
substantially all of the risks and
rewards incidental to the
ownership of the underlying asset. If
this is the case, then the
lease is a finance lease; if not,
then it is an operating
lease. As part of this assessment,
the Group considers
certain indicators such as whether the
lease is for the major part of the economic life of the asset.
Finance leases
At commencement date,
the Group derecognizes
the carrying amount
of the underlying assets held under
finance lease, recognizes
a receivable at
an amount equal to
the net investment
in the lease and recognizes,
in income statement,
any profit or
loss from the
derecognition
of the
asset and
the recognition
of the
net investment.
The net
investment
in the
lease is
calculated as
the present
value of the future lease payments in the same way
as for the lessee.
After
commencement
date,
the
Group
recognizes
finance
income
over
the
lease
term,
based
on
a
pattern
reflecting
a
constant
periodic rate of return on the lessor’s net investment in the lease. The
Group also recognizes income from variable payments that are
not included in the net
investment in the
lease. After lease commencement,
the net investment
in a lease is not remeasured
unless
the lease is modified or the lease term is revised.
Operating leases
The Group continues to recognize
the underlying asset and does not recognize a net
investment in the lease on the balance sheet or
initial profit (if any) on the income statement.
The Group recognizes
lease payments
from the lessees as
income on a
straight-line basis
or another systematic
basis considered as
appropriate.
Also it
recognizes
costs,
including depreciation,
incurred in
earning the
lease income
as an
expense. The
Group
adds
initial direct costs incurred in obtaining an operating
lease to the carrying amount of the underlying asset and recognizes those costs
as an expense over the lease term on the same basis as the lease income.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Subleases
The Group, acting as a
lessee, may enter into arrangements to sublease a
leased asset to a third
party while the original
lease contract
is in effect. The Group acts as both the lessee and lessor of the same underlying asset. The sublease is a separate lease agreement, in
which the intermediate lessor classifies the sublease as a finance lease or an operating
lease as follows:
-
if the head lease is a short-term lease, the sublease is classified as an operating
lease; or
-
otherwise,
the
sublease
is
classified
by
reference
to
the
right-of-use
asset
arising
from
the
head
lease,
rather
than
by
reference to the underlying asset.
2.2.16 Income tax
Income tax consists of current and
deferred tax.
(i) Current income tax
Income tax payable
on profits, based on
the applicable tax
law in each jurisdiction and
the tax rate
enacted at the reporting
date, is
recognized as an expense in the period in which profits
arise.
(ii) Deferred tax
Deferred
tax
is
provided
in
full,
using
the
liability
method,
on
temporary
differences
arising
between
the
tax
base
of
assets
and
liabilities and their carrying amounts in the consolidated
financial statements. Deferred
tax assets and liabilities are measured
at the
tax rates that are expected to apply to the period when the asset is realized or the liability is
settled, based on tax rates (and tax laws)
that
have
been
enacted
or
substantively
enacted
by
the
balance
sheet
date.
The
principal
temporary
differences
arise
from
impairment/valuation
and
accounting
write-offs
relating
to
loans,
Private
Sector
Initiative
(PSI+)
tax
related
losses,
losses
from
disposals and crystallized write-offs
of loans, depreciation of property and equipment, fair value adjustment
of investment property,
pension
and
other
retirement
benefit
obligations,
and
revaluation
of
certain
financial
assets
and
liabilities,
including
derivative
financial instruments.
Deferred
tax
assets
are
recognized
where
it
is
probable
that
future
taxable
profit
will
be
available
against
which
the
temporary
differences can be utilized.
The carrying amount of deferred
tax assets is reviewed at
each reporting date 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.
Any such
reduction is
reversed to
the extent
that it becomes
probable that
sufficient taxable
profit will be
available. The
Group recognises
a
previously unrecognised deferred tax asset to the extent that it
has become probable that future taxable profit will
allow the deferred
tax asset to be recovered.
Deferred
tax
related
to
debt
securities
at
FVOCI
and
cash
flow
hedges
is
recognized
to
other
comprehensive
income,
and
is
subsequently recognized in the income statement
together with the deferred gain
or loss.
The deferred
tax asset on
income tax losses
carried forward
is recognized as
an asset when it
is probable that
future taxable
profits
will be available against which these losses can be utilized.
The Group has
applied the mandatory
temporary exception
(relief) to the requirement
of IAS 12 and
does not recognise or
disclose
information about deferred
taxes arising from the Pillar Two
Income taxes.
(iii) Uncertain tax positions
The Group determines and assesses all material tax positions taken, including all, if
any, significant uncertain positions, in all tax years
that are
still subject
to assessment
(or when
the litigation
is in
progress)
by relevant
tax authorities.
In evaluating
tax positions
in
various states,
local, and foreign
jurisdictions, the
Group examines
all supporting
evidence (Ministry of
Finance circulars,
individual
rulings,
case
law,
past
administrative
practices,
ad
hoc
tax/legal
opinions
etc.)
to
the
extent
they
are
applicable
to
the
facts
and
circumstances of the particular Group’s
case/ transaction.
In addition, judgments concerning
the recognition of a provision
against the possibility of
losing some of the tax
positions are highly
dependent on
advice received
from internal/
external legal
counselors. For
uncertain tax
positions with a
high level of
uncertainty,
the Group recognizes, on a transaction by transaction basis, or together as a group, depending
on which approach better predicts the
resolution of the uncertainty using an expected value (probability
-weighted average) approach: (a)
a provision against tax receivable
which has been booked for the amount of
income tax already paid but further
pursued in courts or (b) a
liability for the amount which
Notes to the Consolidated Financial Statements
.
35
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31 December 2023 Consolidated Financial Statements
is expected to be paid to the tax authorities. The Group presents in its balance sheet all uncertain tax balances as current or deferred
tax assets or liabilities.
The Group as a general
rule has opted to obtain
for the Group’s
Greek companies an ‘Annual
Tax
Certificate’,
which is issued after a
tax audit is performed by the same statutory auditor or audit firm that audits the annual financial statements. Further
information in
respect of the Annual
Tax
Certificate and the
related tax
legislation, as well as
the unaudited tax
years for
the Group’s
companies is
provided in note 13.
2.2.17 Employee benefits
(i) Short term benefits
Short term employee
benefits are
those expected
to be settled
wholly before
twelve months
after the
end of the
annual reporting
period in which the employees render the related
services and are expensed as these services are provided.
(ii) Pension obligations
The Group provides a number
of defined contribution pension
plans where annual contributions are invested and
allocated to specific
asset
categories.
Eligible
employees
are
entitled
to
the
overall
performance
of
the
investment.
The
Group's
contributions
are
recognized as employee benefit expense
in the year in which they are paid.
(iii) Standard legal staff retirement indemnity obligations (SLSRI) and termination
benefits
The
Group
operates
unfunded
defined
benefit
plans
in
Greece
and
Bulgaria,
under
broadly
similar
regulatory
frameworks.
In
accordance
with the
local labor
legislation, the
Group
provides for
staff
retirement
indemnity obligation
for
employees which
are
entitled to
a lump
sum payment
based on
a) the
number of
years
of service,
as of
the date
when employee
service first
leads to
benefits under the plan until the date
when further employee service will lead to
no material amount of further
benefits, and b) the
level
of
remuneration
at
the
date
of
retirement,
if they
remain
in
the
employment
of
the Group
until
normal
retirement
age. In
addition,
the
Group
provides
termination
benefits
mainly
in
respect
of
the
Voluntary
Exit
Schemes
(VES),
which
have
been
implemented through
either lump-sum payments or
long-term leaves during
which the employees will be
receiving a percentage
of
a monthly salary,
or a combination thereof.
Provision has been made for
the actuarial value of the
lump sum payable on
retirement
(SLSRI)
and
termination
benefits
using
the
projected
unit
credit
method.
Under
this
method
the
cost
of
providing
retirement
indemnities and termination
benefits is charged
to the income
statement
so as to
spread the cost
over the period
of service of
the
employees, in accordance with the respective actuarial
valuations, which are performed every year.
The SLSRI and termination benefits
obligation is calculated
as the present value
of the estimated future
cash outflows using interest
rates of high quality corporate bonds. In countries where there is no deep market in such bonds, the yields on government bonds are
used. The currency
and term to
maturity of the
bonds used are
consistent with
the currency and
estimated term
of the retirement
and termination
benefit obligations.
Actuarial gains
and losses
that arise
in calculating
the Group’s
SLSRI and
termination
benefits
obligations are
recognized directly
in other comprehensive
income in the
period in which
they occur and
are not reclassified
to the
income statement in subsequent
periods.
Interest
cost on
the staff
retirement
indemnity and
termination
benefits
obligations,
as well
as service
cost,
consisting
of current
service cost, past service cost and gains or losses on settlement
are recognized in the income statement.
Termination
benefits are payable when employment is terminated by the Group before
the normal retirement date, or whenever an
employee accepts
voluntary redundancy
in exchange
for these
benefits (including
those in
the context
of the VES
implemented by
the
Group).
The
Group
recognizes
termination
benefits
at
the
earlier
of
the
following
dates:
(a)
when
the
Group
can
no
longer
withdraw
the
offer
of
those
benefits;
and
(b)
when
the
Group
recognizes
costs
for
a
restructuring
that
involves
the
payment
of
termination benefits. Any
reversals of the
SLRSI obligation arising
from employees that
are included in the long-term
leaves scheme
are accounted
for as
a curtailment
gain recognized
in the
income statement.
In the
case of
an offer
made to
encourage voluntary
redundancy,
the termination
benefits are measured
based on the
number of employees
expected to
accept the
offer.
Termination
benefits falling due more than 12 months after
the end of the reporting period are discounted to their present
value.
(iv) Performance-based cash payments
The Group's Management awards high performing employees with bonuses in cash, from time to time, on a discretionary basis. Cash
payments
requiring only
Management approval
are recognized
as employee
benefit expenses
on an
accrual basis.
Cash payments
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
requiring General
Meeting approval
as distribution of
profits to staff
are recognized
as employee benefit
expense in the
accounting
period that they are approved by the Group’s
shareholders.
(v) Share-based payments
The Group’s Management awards
employees with bonuses in the form of shares and share options on a discretionary basis and after
taking into account the current
legal framework. Non-performance
related shares vest in the
period granted. Share based payments
that are contingent upon the achievement
of a performance and service condition, vest only if both conditions are
satisfied.
The fair value of the share options
granted is recognized as an employee benefit expense over the
vesting period, with an equal credit
in equity,
i.e.no impact on
the Group’s
equity.
The amount
ultimately recognised
as an expense
is based on
the number
of awards
that meet the related service and non-market
performance conditions at the vesting date.
The fair
value of the
share options
at grant
date is determined
by using an
adjusted option
pricing model which
takes into
account
the
exercise
price,
the
exercise
dates,
the
term
of
the
option,
the
share
price
at
grant
date
and
expected
price
volatility
of
the
underlying share,
the expected
dividend yield
and the
risk-free
interest
rate
for the
term of
the options.
The expected
volatility is
measured at the grant date of the options
and is based on the historical volatility of the share price.
For share-based
payment awards
with non-vesting
conditions, the fair
value of the
share-based payment
at grant
date also reflects
such conditions and there is no true-up for differences
between expected and actual outcomes.
When the options
are exercised
and new shares
are issued, the
proceeds received
net of any
directly attributable
transaction costs
are credited to share capital
(par value) and share premium.
2.2.18 Repossessed properties
Land and buildings repossessed
through an auction
process to recover
impaired loans are,
except where otherwise
stated, included
in ‘Other Assets’. Assets acquired from an auction process are held temporarily for liquidation and are valued at the lower of cost and
net realizable value, which is the estimated
selling price, in the ordinary course of business, less costs necessary to
make the sale.
In cases where the Group makes use of repossessed
properties as part of its operations, they may be reclassified to
own occupied or
investment properties, as appropriate.
Any gains or losses on liquidation are included in the income statement.
2.2.19 Related party transactions
Related parties of the Group include:
(a) an entity that has control over the Group and
entities controlled, jointly controlled or significantly influenced by this entity, as well
as members of its key management personnel
and their close family members;
(b) an entity that has significant influence over the Group
and entities controlled by this entity,
(c) members of key
management personnel of the Group,
their close family members and
entities controlled or jointly
controlled by
the abovementioned persons;
(d) associates and joint ventures of the Group;
(e) fellow subsidiaries;
(f) post-employment benefit plans established for the benefit
of the Group’s employees.
Transactions
of similar
nature are
disclosed on
an aggregate
basis. All
banking transactions
entered into
with related
parties are
in
the normal course of business and are conducted on an arm's length
basis.
2.2.20 Provisions and contingent liabilities
Provisions are recognized 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 reliable estimates
of the amount
of the obligation can be made.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The amount recognized as a provision is the best
estimate of the expenditure required to settle a present obligation at each reporting
date, taking into account the risks and
uncertainties surrounding the amount of such expenditure.
Provisions
are reviewed
at
each reporting
date
and adjusted
to
reflect
the current
best
estimate.
If,
subsequently,
it is
no longer
probable that an outflow
of resources embodying economic
benefits will be
required to settle the
obligation, the provision is
reversed.
A provision is not
recognized and a contingent liability
is disclosed when
it is not
probable that an outflow
of resources will be
required
to settle the
obligation, when the
amount of the obligation
cannot be measured reliably
or in case that
the obligation
is considered
possible and is subject to the occurrence or non -occurrence of one or more uncertain
future events.
2.2.21 Operating segment
An operating
segment is
a component
of the
Group that
engages in
business activities
from which
it may
earn revenue
and incur
expenses within
a particular
economic environment.
Operating segments
are identified
on the
basis of
internal reports,
regarding
operating results, of components of the
Group that are regularly reviewed
by the chief operating decision maker
in order to allocate
resources
to the
segment
and to
assess its
performance.
The chief
operating
decision maker
has been
identified
as the
Strategic
Planning Committee that is
responsible for strategic decision making.
Segment revenue, segment expenses
and segment performance
include
transfers
between
business
segments.
Such
transfers
are
accounted
for
at
competitive
prices
in
line
with
charges
to
unaffiliated customers
for similar services.
2.2.22 Share capital
Ordinary shares and preference
shares are classified as equity.
Incremental
costs directly
attributable
to the
issue of
new shares
or
options are shown in equity as a deduction from the proceeds, net
of tax.
Dividend
distribution
on
shares
is
recognized
as
a
deduction
in
the
Group’s
equity
when
approved
by
the
General
Meeting
of
shareholders
and the
required
regulatory
approvals,
if any,
are
obtained.
Interim
dividends are
recognized
as
a deduction
in
the
Group's equity when approved by the Board of
Directors.
Intercompany
non-cash
distributions
that
constitute
transactions
between
entities
under
common
control
are
recorded
in
the
Group’s equity by reference
to the book value of the assets distributed.
Where any Group entity purchases the Company’s equity share capital (treasury shares), the consideration paid including
any directly
attributable incremental
costs (net
of income taxes),
is deducted
from shareholders’
equity until the
shares are
cancelled, reissued
or disposed of. Where such
shares are subsequently sold or reissued, any consideration
received is included in shareholders’ equity.
2.2.23 Preferred securities
Preferred securities issued by the
Group are classified as equity when there
is no contractual obligation to
deliver to the holder cash
or another financial asset.
Incremental costs directly attributable to the issue of new preferred securities are shown in equity as a deduction from the proceeds,
net of tax.
Dividend distribution on preferred securities
is recognized as a deduction in the Group’s
equity on the date it is due.
Where
preferred
securities,
issued
by
the
Group,
are
repurchased,
the
consideration
paid
including
any
directly
attributable
incremental costs (net of income
taxes), is deducted from shareholders’ equity. Where such securities
are subsequently called or sold,
any consideration received is included
in shareholders’ equity.
2.2.24 Financial guarantees and commitments to extend
credit
Financial guarantees
Financial guarantee
contracts are
contracts that
require the issuer
to make
specified payments to
reimburse the
holder for a
loss it
incurs because
a specified
debtor fails
to make
payments when
due, in
accordance with
the terms
of a
debt instrument.
Financial
guarantees
granted
by the
Group to
financial institutions
and other
bodies on
behalf of
customers to
secure loans,
overdrafts
and
other
banking
facilities,
are
initially
recognized
at
fair
value,
being
the
premium
received.
Subsequent
to
initial recognition,
such
guarantees are measured
at the higher of the amount of
the ECL allowance, and the
amount initially recognised less any
cumulative
amortization of the fee earned, where appropriate.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Financial guarantees purchased
by the Group that
are considered as integral
to the contractual
terms of the guaranteed
instrument
are not accounted for separately and
the cash flows from
the guarantee are taken into account
in the measurement of
the guaranteed
instrument’s expected credit losses, whereas any fees paid or transaction costs incurred for the acquisition of the financial guarantee
are considered as part of the guaranteed
asset’s effective interest
rate.
On the
other hand,
financial guarantees
purchased that
are not
considered as
integral to
the contractual
terms of
the guaranteed
instruments are accounted for separately where a reimbursement asset is recognized and included in Other
Assets once is its
virtually
certain that, under the terms and conditions of the guarantee, the Group will be reimbursed for the credit loss incurred.
The changes
in the carrying
amount of the
above reimbursement
asset arising from
financial guarantees,
entered into
to mitigate
the credit risk
of lending exposures measured at amortized
cost, are recognized under ‘Impairment
losses’ in the Group’s income
statement.
Commitments to extend credit
Commitments represent
off-balance sheet items
where the
Group commits,
over the
duration of
the agreement,
to provide
a loan
with
pre-specified
terms
to
the
customer.
Such
contractual
commitments
represent
commitments
to
extend
credit
and
standby
letters and they are part of the normal lending
activities of the Group, for which an ECL allowance is recognised
under IFRS 9.
ECL allowance for off-balance sheet exposures
(financial guarantees granted and
commitments) is included within Other Liabilities.
2.2.25 Non-current assets classified as held for sale and discontinued
operations
Non-current
assets are
classified as
held for
sale if
their carrying
amount will
be recovered
through a
sale transaction
rather than
through
continuing
use.
For
a non
-
current
asset
to
be classified
as
held
for
sale, it
is available
for
immediate
sale
in
its
present
condition, subject to terms that are usual and
customary for sales of such assets, and the sale is considered
to be highly probable. In
such cases, management
is committed to
the sale and actively markets
the property for
sale at a price that
is reasonable in relation
to the
current
fair value.
The sale
is also
expected to
qualify for
recognition
as a
completed sale
within one
year from
the date
of
classification.
Before
their
classification
as
held
for
sale,
such
assets
or
disposal
groups
are
remeasured
in
accordance
with
the
respective accounting standard.
Assets held for sale are subsequently remeasured at the lower of their carrying amount and
fair value less cost to sell. Any loss arising
from the above measurement is recorded in
profit or loss and can
be reversed in the future. When
the loss relates to a disposal
group,
it is allocated to the assets within that disposal group.
The Group presents discontinued
operations in a
separate line in
the consolidated income statement. if
a Group entity
or a
component
of a Group entity has been disposed of or is classified as held for sale and:
(a) Represents a separate
major line of business or geographical area of operations;
(b) Is part of a single coordinated plan to dispose of a separate
major line of business or geographical area of operations;
or
(c) Is a subsidiary acquired exclusively with a view
to resale.
Profit or
loss from
discontinued operations
includes the
profit or
loss before
tax from
discontinued operations,
the gain
or loss
on
disposal
before
tax
or
measurement
to
fair
value
less
costs
to
sell
and
discontinued
operations
tax
expense.
Intercompany
transactions
between
continuing
and
discontinued
operations
are
presented
on
a
gross
basis
in
the
income
statement.
Upon
classification of a Group entity as a discontinued operation,
the Group restates prior periods in
the consolidated income statement.
2.2.26 Cash and cash equivalents
Cash and
cash equivalents
include cash
in hand,
unrestricted
deposits with
central
banks,
due from
credit
institutions
that are
all
carried at amortised cost and other short-term highly liquid investments with original maturities of three months or
less that are held
for trading.
2.2.27 Government grants
Government grants are recognized when there is reasonable assurance that the grant will
be received and the Group will
comply with
the conditions
attached to
it. The
grants
are recognized
in the
income statement
on a
systematic
basis to
match the
way that
the
Group
recognizes
the
expenses
for
which
the
grants
are
intended
to
compensate.
In
case
of
subsequent
changes
in
the Group’s
expectations
of
meeting
the
conditions
attached
to
the
government
grants,
the
effect
of
such
changes
is
recognised
in
income
statement.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
2.2.28 Fiduciary activities
The Group provides
custody,
trustee, corporate
administration, investment
management and advisory
services to third
parties that
result in the
holding or investing
of assets on behalf
of its clients. Those
assets that are
held in a fiduciary
capacity are not
assets of
the Group and are not recognized
in the financial statements. In addition,
the Group does not guarantee these investments
and as a
result it is not exposed to any credit risk in relation
to them.
2.3 Impact of IFRS 17 adoption by a Group’s associate
As of
1 January
2023, the
Group’s
associate Eurolife
FFH Insurance
Group
Holdings S.A.
(Eurolife)
has adopted
IFRS 17
“Insurance
Contracts” with
retrospective
application as
of 1
January 2022.
Following the
finalization of
Eurolife transition
impact to
IFRS 17
in
the
fourth
quarter
of
2023,
the
Group
has
adjusted
the
carrying
amount
of
its
investment
in
the
associate
accordingly.
The
comparative
information
as
restated
for
the
line
items
of
the
Group’s
balance
sheet,
income
statement
and
the
statement
of
comprehensive income that are affected,
is set out below.
31 December 2022
1 January 2022
Consolidated Balance Sheet
As
published
Restatement
Restated
As
published
Restatement
Restated
€ million
€ million
€ million
€ million
€ million
€ million
ASSETS
Investments in associates and joint ventures
173
14
187
267
(33)
234
Total assets
81,460
14
81,474
77,852
(33)
77,819
EQUITY
Reserves and retained earnings
4,646
14
4,660
(3,333)
(33)
(3,366)
Equity attributable to
shareholders of the Company
6,623
14
6,637
5,539
(33)
5,506
Total equity
6,718
14
6,732
5,635
(33)
5,602
Total equity and liabilities
81,460
14
81,474
77,852
(33)
77,819
Υear ended 31 December 2022
Consolidated Income Statement
As published
Restatement
Restated
€ million
€ million
€ million
Share of results of
associates
and joint ventures
18
17
35
Profit before tax⁽¹⁾
1,734
17
1,751
Net profit
1,330
17
1,347
Net profit attributable to shareholders
1,330
17
1,347
€
€
€
Earnings per share
-Basic and diluted earnings per share
0.36
0.00
0.36
(1)
The amount of
€1,735 million as published , was adjusted to € 1,734
million, following the presentation in the year ended 31 December 2023
of operations
of Eurobank Direktna a.d.disposal group as discontinued.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Year ended 31 December 2022
Consolidated Statement of
Comprehensive Income
As
published
Restatement
Restated
€ million
€ million
€ million
Net profit
1,330
17
1,347
Associates and joint ventures
- changes in the share of other comprehensive
income, net of tax
(32)
30
(2)
Other comprehensive income
(252)
30
(222)
Total comprehensive income
1,078
47
1,125
Total comprehensive income attributable to
shareholders
1,079
47
1,126
Furthermore, following the above, the amount of “profit before tax from continuing operations” presented
in the comparative
information of the consolidated cash flow statement
(CFS) has been adjusted accordingly against
the line “other adjustments”
that is also included within “cash
flows from continuing operating
activities”.
3.
Critical accounting estimates and judgments in applying accounting policies
In the process
of applying the Group’s
accounting policies, Management
makes various
judgments, estimates and
assumptions that
may affect
the reported
amounts of
assets and
liabilities, revenues
and expenses
recognized in
the financial
statements within
the
next financial year
and the accompanying
disclosures. Estimates and
judgments are continually
evaluated and
are based on current
conditions, historical experience
and other factors, including
expectations of future
events that are believed to
be reasonable under
the
circumstances.
Revisions
to
estimates
are
recognized
prospectively.
The
most
significant
areas
in
which
the
Group
makes
judgments, estimates and assumptions in applying its accounting
policies are set out below:
3.1
Impairment losses on loans and advances to customers
On the back of the international economic environment, that remains volatile, the economies in which the Group operates remained
in
expansionary
territory
in
2023.
More
specifically,
Greek
economy
expansion
is
mainly
driven
by
the
increase
in
household
consumption, export of goods and services, as well as
its strong performance in tourism (note 2). Moreover, the Group's asset quality
continued to
strengthen
in 2023,
as evidenced
by the
level of
its credit
quality indicators
at year
end 2023
that outperformed
the
expected levels
in terms
of NPE
ratio and
NPE coverage
that maintained
their improving
trend, standing
at 3.5%
(2022: 5.2%)
and
86.4% (2022: 75.5%), respectively.
The Group, remains cautious for any developments
in the macroeconomic trends and geopolitical front
and closely monitors all loan
portfolios, so as to revise, if needed, the respective estimates
and assumptions.
Expected Credit Loss (ECL) measurement
The ECL measurement requires Management to apply judgment, in
particular, the estimation of the amount and timing
of future cash
flows
and collateral
values
when determining
impairment losses
and the
assessment of
a significant
increase in
credit risk.
These
estimates are driven by a number of factors, changes in
which can result in significant changes to the
timing and amount of allowance
for credit loss to be recognized.
The Group’s ECL calculations are
outputs of complex
models with a
number of underlying
assumptions regarding the choice
of variable
inputs
and
their
interdependencies.
In
addition,
temporary
adjustments
may
be
required
to
capture
new
developments
and
information available, which are not
reflected yet in the ECL calculation through
the risk models.
The elements of the ECL models that are considered
significant accounting judgments and estimates include:
Determination of a significant increase of credit risk
IFRS 9
does not
include a definition
of what
constitutes a
significant increase
in credit
risk (SICR). An
assessment of
whether credit
risk has increased
significantly since initial
recognition is performed
at each reporting
period by considering
primarily the change
in
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
the risk of default occurring over the
remaining life of the financial instrument. The Group assesses
whether a SICR has occurred since
initial
recognition
based
on
qualitative
and
quantitative
reasonable
and
supportable
forward-looking
information
that
includes
significant
management
judgment
(note
2.2.13).
More
stringent
criteria
could
significantly
increase
the
number
of
instruments
migrating to stage 2.
Retail lending
For retail
lending exposures
the primary criterion
is the change in
the residual cumulative
lifetime Probability
of Default
(PD) above
specified thresholds.
These thresholds
are set
and vary
per portfolio,
origination year,
, product
type as
well as
per origination
PD
level. In
2023, the
Group, recalibrated
its SICR
thresholds, by
segregating
further its
retail exposures
based on
their disbursement
year, with
a view to aligning the comparison between the origination and residual lifetime PD to the remaining maturity of the loans.
Accordingly,
performing lending exposures
close to maturity
exhibit lower origination
PDs and therefore
are associated with
higher
SICR
thresholds,
while
higher
origination
PDs
corresponding
to
exposures
of
longer
maturity
are
associated
with
lower
SICR
thresholds. The impact in ECL and SICR assessment, resulting from
the above recalibration of SICR thresholds,
was insignificant.
As at 31 December 2023 and
2022, the upper PD thresholds based
on the above segmentation,
that trigger the allocation to stage
2
for Greece’s retail
exposures are set out below:
.
Retail exposures
31 December 2023
31 December 2022
Upper SICR threshold
Mortgage
170%
50%
Home Equity
80%
80%
SBB
130%
65%
Consumer
100%
100%
Wholesale lending
For wholesale lending exposures, the origination PD curves and the residual lifetime PD curves at each reporting date
are mapped to
credit rating
bands. Accordingly,
SICR thresholds
are based
on the
comparison of
the origination
and reporting
date credit
ratings,
whereby rating downgrades represent changes in residual lifetime PD. Similar to retail
exposures, the Group segments the wholesale
lending exposures based
on asset class, loan
type and credit rating
at origination.
In addition, for securitized
notes issued by special
purpose entities established by
the Group, the
SICR assessment is
performed by considering the
performance of the
underlying assets.
As
at
31
December
2023
and
2022,
the
credit
rating
deterioration
thresholds
per
rating
bands
for
Greece’s
wholesale
lending
exposures that trigger
allocation to stage
2 are set out
below. In
particular,
as per the Group’s
SICR policy,
any downgrade
to rating
band 6 or high-risk rating bands (7,8 or 9) is considered as SICR event
to all corporate lending portfolios:
.
Wholesale internal rating bands
Minimum SICR threshold range
1
Five notches
2
Four notches
3
Three notches
4
Two notches
5-8
One notch
Determination of scenarios, scenario weights and macroeconomic factors
To achieve
the objective of measuring ECL, the Group evaluates a
range of possible outcomes in line with the requirements
of IFRS 9
through the
application of
three macroeconomic
scenarios, i.e. baseline,
adverse and
optimistic, in a
way that
reflects an
unbiased
and probability weighted outcome. Each of the scenarios is based
on Management’s assumptions around future economic conditions
in the form
of macroeconomic, market
and other factors.
As at 31
December 2023 and
2022, the probability
weights for
the above
mentioned scenarios
applied by the
Group in the
ECL measurement
calculations are
50% for the
baseline scenario and
25% for the
adverse and optimistic scenarios.
The baseline scenario assumes no escalation of the open
war fronts, no change in EU sanctions
against Russia, continuation of
ECB’s
monetary policy trajectory
as well as Greek government’s
fiscal support measures. Core
inflation for Greece is assumed
to gradually
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
de-escalate suggesting a moderate economic growth path, employment is assumed to contribute to lower unemployment path given
the
capacity
constraints
stemming
from
demographic
factors,
real
estate
prices
show
signs
of
slowing
down
for
2023
and
2024
compared
to 2022 but will remain on a positive range and inflation rate is forecasted
to decrease slightly implying stable price levels.
Additionally,
the
economies’
short-term
prospects
are
supported
by
the:
(a)
strong
tourist
season
expected,
(b)
Recovery
and
Resilience
Facility,
Multiannual Financial
Framework
and European
Investment
Bank funds,
(c) ample
liquidity
(deposits and
state
cash buffer) and (d) fiscal measures implemented
to mitigate the impact of energy costs.
The optimistic and
adverse scenarios originate
from forecasts
that are, respectively,
more positive, or
more negative
regarding real
GDP growth,
inflation,
and unemployment
rates,
in comparison
to
the baseline
scenario. The
forecasts
for
these macroeconomic
variables
in
the
adverse/optimistic
scenarios
of
the
IFRS9
probability-weighted
framework
are
produced
using
a
Vector
Auto
Regression
(VAR)
model.
This
model
uses
historical
data
on
real
GDP
growth,
inflation,
and unemployment
rates
to
generate
its
forecasts. In more detail
regarding the adverse and optimistic
forecasted scenarios:
●
The adverse scenario paints a more challenging picture compared to the baseline scenario. The
real GDP growth from a low start
of
0.6%
in
2024,
contracts
to
-0.5%
in
2025,
and
improves
slightly
in
2026
and
2027
reaching
0.2%
and
0.5%,
respectively.
Unemployment is
anticipated
to remain
high, while
the inflation
rate
remains relatively
higher than
in the
base line
scenario,
although it shows a slight downward trend.
●
In contrast, the
optimistic scenario suggests a buoyant
economic outlook, with real GDP
growth from 4.0% in
2024 to 3.7% and
3.1% in
2026 and
2027 respectively.
The unemployment
rate
is forecasted
to
fall
significantly
indicating
a robust
job market
compared to the baseline scenario. The inflation rate is expected to be lower compared to the baseline scenario, signifying well-
contained price increases.
Forward-looking information
The Group
ensures that
impairment estimates
and macroeconomic
forecasts,
as provided
by Economic
Analysis
& Research
Unit,
applicable
for
business
and regulatory
purposes
are
fully
consistent.
Accordingly,
the
IFRS
9
baseline
scenario
applied
in
the
ECL
calculation coincides with
the one used for
ICAAP and business planning
purposes. In addition, relevant
experience gained from
the
stress tests imposed by the regulator, has been taken into account in the process of developing the macroeconomic scenarios, as
well
as impairments for stress testing purposes
have been forecasted in
line with IFRS 9 ECL methodology.
In
terms
of
macroeconomic
assumptions,
the
Group
assesses
a
number
of
indicators
in
projecting
the
risk
parameters,
namely
Residential and
Commercial Property
Price Indices, unemployment,
Gross Domestic
Product (GDP), Greek
Government Bond
(GGB)
spread over Euribor and inflation as well as
interest and FX rates. The arithmetic averages of the annual forecasts per macroeconomic
scenario for the next four year
period following the reporting date,
used in the ECL measurement of Greek lending
portfolios for the
year ended 31 December 2023 and 2022, are set in the following table:
Key macroconomic
indicators
31 December 2023
Average (2024-2027) annual forecast
31 December 2022
Average (2023-2026) annual forecast
Optimistic
Base
Adverse
Optimistic
Base
Adverse
Gross Domestic Product growth
3.91%
2.05%
0.19%
3.67%
2.42%
-0.10%
Unemployment Rate
7.60%
9.09%
10.60%
9.21%
10.50%
12.84%
Residential property prices' index
6.14%
3.90%
1.66%
5.23%
4.06%
1.50%
Commercial property prices' index
5.37%
1.47%
-2.42%
4.75%
3.67%
1.73%
Inflation rate
1.75%
2.10%
2.44%
2.40%
2.98%
4.03%
Changes in the
scenarios and weights,
the corresponding
set of macroeconomic
variables and
the assumptions made
around those
variables for
the forecast
horizon would
have a significant
effect on
the ECL amount.
The Group independently
validates all models
and
underlying
methodologies
used
in
the
ECL
measurement
through
competent
resources,
who are
independent
of
the
model
development process.
Development of ECL models, including the various formulas, choice
of inputs and interdependencies
For the purposes
of ECL measurement
the Group performs
the necessary model parameterization
based on observed point
-in-time
data on
a granularity
of monthly intervals.
The ECL calculations
are based
on input parameters,
i.e. exposure
at default
(EAD), PDs,
loss
given
default
(LGD),
credit
conversion
factors
(CCFs)
etc.
incorporating
Management’s
view
of
the
future.
The
Group
also
determines the
links between
macroeconomic scenarios
and, economic inputs,
such as unemployment
levels and collateral
values,
and the effect on PDs, EADs and LGDs.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Furthermore,
the
PDs
are
unbiased
rather
than
conservative
and
incorporate
relevant
forward
looking
information
including
macroeconomic scenarios. The forecasting
risk parameters models incorporate
a number of macroeconomic variables,
such as GDP,
unemployment etc. and
portfolio specific variables
such as seasonal flag etc.,
which are used as independent
variables for optimum
predictive
capability.
Additionally,
the PD
models involve
industry specific
macro
variables
in corporate
borrowers,
as well
as
the
application of interest
rate and inflation
scalars in the
estimation of retail
customers’ debt
to income ratio.
More specifically,
in the
latter case, the borrowers’ instalments are estimated with the use of the projected interest rates,
while the income model, also takes
into account the projected inflation
on top of the projected GDP and unemployment ratio.
The ECL
models are
based on
logistic regressions
and run
under the
different
macroeconomic scenarios
and relevant
changes and
shocks in the macro environment reflected
accordingly in a non-linear manner.
Segmentation of financial assets when their ECL is assessed on a collective
basis
The Group segments
its exposures on the
basis of shared credit
risk characteristics
upon initial recognition
for the purposes
of both
assessing significant
increase in
credit risk
and measuring
loan loss
allowance on
a collective
basis. The
different
segments aim
to
capture differences
in PDs
and in the
rates of
recovery in
the event
of default.
On subsequent
periods, the
Group re-evaluates
the
grouping
of
its
exposures
at
least
on
an
annual basis,
in
order
to
ensure
that
the groups
remain
homogeneous
in
terms
of
their
response
to the
identified
shared credit
risk characteristics.
Re-segmentation
reflects
management’s
perception
in respect
to
the
change of credit risk associated with the particular exposures
compared to initial recognition.
Modeling and Management overlays / adjustments
A number
of sophisticated
models have
been developed
or modified
to
calculate ECL,
while temporary
management
adjustments
may be required to
capture new developments and information
available, which are not yet
reflected in the ECL calculation
through
the risk models.
Such adjustments are governed
by the Group’s IFRS9
ECL Model Adjustments’ framework which
aims to ensure
timely
identification of non-modeled risks, if
any, that
may have an impact on
lending portfolios, as well as sufficient
quantification of such
risks based
on sound
methodologies and
processes. For
2023, the
Group reassessed
the need
for overlay,
considering the
current
geopolitical
developments
and
taking
into
account
the
macroeconomic
uncertainty
resulting
this
time
mainly
from
persistent
inflationary pressures,
high interest
rates
and open
war fronts,
Management incorporated
in the
ECL calculations
as a
post model
adjustment, an estimation for potentially
non modeled risks of € 31 million (2022: € 66 million), focusing now on both corporate and
retail borrowers that
are considered more sensitive to any negative
macro environment developments
in the foreseeable future.
The risk
models are
governed
by the
Group’s
validation
framework
which aims
to
ensure their
independent
verification.
The risk
models as well as the management adjustments, if any, are approved by the Board Risk Committee (BRC) as per the internal approval
processes.
Sensitivity analysis on lending portfolios
The sensitivity analysis when performed on certain key parameters can provide meaningful information only for portfolios
where the
risk parameters have a significant
impact on the overall credit risk of a lending portfolio, particularly where such sensitivities are also
used for internal credit risk management purposes. Otherwise, a sensitivity analysis on certain combinations of some
risk parameters
may not produce
meaningful results, as
in reality there
are interdependencies
between the various
economic inputs, rendering
any
changes in the parameters, changes correlated
in other factors.
The sensitivity analysis presented
in the tables below
is applied in the modeled ECL
output and assumes a favorable
and an adverse
shift
in
the
scenario
weighting,
compared
to
the
one
applied
in
the
ECL
measurement.
As
at
31
December
2022
and
2023,
the
favorable shift assumes an increase in the weighting of the optimistic scenario at 50% and a stable weighting of the baseline scenario
at 50%,
while the
adverse shift
assumes an
increase in
the weighting
of the
adverse scenario
at 50%
and a
stable weighting
of the
baseline scenario at 50%.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The tables below
present the estimated
effect in the
Group’s
ECL measurement (including
off-balance sheet items)
per stage,
upon
potential reasonable
combined changes
of forecasts
in key
macroeconomic indicators
over the
next 5
years (2024-2028
and 2023-
2027, respectively):
As at 31 December 2023
As at 31 December 2022
Sensitivity scenario
Sensitivity scenario
Key
macroeconomic
indicators
Combined change %
Key
macroeconomic
indicators
Combined change %
Positive
change
Adverse
change
Positive
change
Adverse
change
GDP growth
42%
-42%
change of annual forecasts
GDP growth
41%
-41%
change of annual forecasts
Unemployment
rate
-11%
11%
change of annual forecasts
Unemployment
rate
-11%
11%
change of annual forecasts
Inflation rate
-1%
1%
change of annual forecasts
Inflation rate
-2%
2%
change of annual forecasts
Residential
property prices'
index
4%
-4%
change of
index adjusted
real estate collateral market
values
Residential
property prices'
index
4%
-4%
change of
index adjusted
real estate collateral market
values
Commercial
property prices'
index
9%
-9%
change of
index adjusted
real estate collateral market
values
Commercial
property prices'
index
4%
-4%
change of
index adjusted
real estate collateral market
values
Estimated effect per stage as at 31 December 2023
Positive change
Adverse change
12-month
ECL - Stage 1
Lifetime ECL
- Stage 2
Lifetime ECL
credit-impaired
31 December
2023
12-month
ECL - Stage 1
Lifetime ECL
- Stage 2
Lifetime ECL
credit-impaired
31 December
2023
Ιmpact in
€ million
(16)
(27)
(21)
(64)
16
33
21
70
Ιmpact in
% allowance
-8.53
-8.27
-2.63
-4.92
8.26
9.81
2.74
5.34
Estimated effect per stage as at 31 December 2022
Positive change
Adverse change
12-month
ECL - Stage 1
Lifetime ECL
- Stage 2
Lifetime ECL
credit-impaired
31 December
2022
12-month
ECL - Stage 1
Lifetime ECL
- Stage 2
Lifetime ECL
credit-impaired
31 December
2022
Ιmpact in
€ million
(12)
(36)
(34)
(82)
10
43
35
88
Ιmpact in
% allowance
-7.08
-9.96
-2.93
-4.86
5.73
11.99
3.03
5.24
The
Group
updates
and
reviews
the
reasonability
and
performs
back-testing
of
the
main
assumptions
used
in
its
methodology
assessment for SICR
and ECL measurement,
at least on an
annual basis or earlier,
based on facts and
circumstances. In this
context,
experienced and dedicated staff within the
Group’s Risk Management function monitor the
risk parameters applied for the
estimation
of ECL. Furthermore, as part of the well-defined governance framework,
any revisions to the methodology used are approved by the
Group competent committees and
ultimately the Board Risk Committee (BRC).
3.2
Fair value of financial instruments
The fair
value of financial
instruments is
the price that
would be received
to sell an
asset or paid
to transfer
a liability in
an orderly
transaction
between market
participants in
the principal
(or most
advantageous)
market
at the
measurement
date
under current
market
conditions
(i.e. an
exit price)
regardless
of whether
that
price is
directly
observable
or estimated
using another
valuation
technique.
The fair
value of financial
instruments that
are not quoted
in an active
market are
determined by
using other
valuation techniques
that
include
the
use
of
valuation
models.
In
addition,
for
financial
instruments
that
trade
infrequently
and
have
little
price
transparency,
fair value is less objective and requires varying degrees of judgment depending on liquidity, concentration, uncertainty
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
of market factors,
pricing assumptions and other risks
affecting the specific instrument.
In these cases, the fair values
are estimated
from observable data in respect of similar financial instruments
or using other valuation techniques.
The valuation models used include
present value methods and other models based
mainly on observable inputs and
to a lesser extent
to non-observable inputs, in order to maintain
the reliability of the fair value measurement.
Where valuation
techniques are used
to determine the
fair values
of financial instruments
that are not
quoted in an
active market,
they are validated
and periodically reviewed by
qualified personnel independent of the
personnel that created
them. All models are
certified before they are used, and are calibrated to ensure that outputs reflect actual data and comparative market
prices. The main
assumptions and estimates, considered by
management when applying a valuation model include:
●
the likelihood and expected timing of future
cash flows;
●
the selection of the appropriate discount rate, which is based on an assessment of what a market participant would regard as an
appropriate spread of the rate
over the risk-free rate;
and
●
judgment to determine what model to use in order
to calculate fair value.
To the extent practicable, models use only observable
data, however areas such as
credit risk (both own
and counterparty), volatilities
and correlations require
the Management to
make estimates
to reflect uncertainties
in fair values
resulting from the
lack of market
data inputs. Inputs
into valuations based
on unobservable data
are inherently uncertain
because there is little
or no current market
data available. However, in most cases there will be
some historical data on
which to base
a fair value measurement and
consequently
even when unobservable inputs are used, fair values
will use some market observable inputs.
Information in respect of the fair valuation
of the Group’s financial assets and liabilities
is provided in note 5.3.
3.3
Classification of financial instruments
The Group applies significant judgment in assessing the classification
of its financial instruments and especially, in
the below areas:
Business model assessment
Judgment is exercised
in order
to determine
the appropriate
level at which
to assess the
business model. In
assessing the business
model of financial instruments, these are aggregated into groups (business lines) based on their characteristics, and the way they are
managed in order
to achieve the Group’s
business objectives. In
general, the assessment
is performed at
the business unit level
for
lending
exposures
including
securitized
notes
issued
by
special
purpose
entities
established
by
the
Group
and
based
on
the
measurement category for debt securities.
However,
further disaggregation may be performed by business
strategy
or region.
In assessing the business model for financial
instruments, the Group performs a past sales evaluation of the
financial instruments and
assesses their expected evolution in the future. Judgment is
exercised in determining the effect of sales to a “hold
to collect” business
model depending on their objective and their acceptable level and frequency.
Contractual cash flow characteristics test
(SPPI test)
The
Group
performs
the
SPPI
assessment
of
lending
exposures
and
debt
securities
by
considering
all
the
features
which
might
potentially lead to SPPI failure. The above assessment may be
particularly challenging for more complex instruments with contractual
terms including leverage, prepayment
or extension options, securitizations
where the cash flows are linked
to the underlying assets,
non-recourse
arrangements,
as
well
as
environmental,
social
and
governance
linked
features
(sustainability
linked).
Judgment
is
applied by the responsible business
units when considering whether
certain contractual features significantly affect future cash flows,
are de-minimis or not genuine.
Accordingly, for
non-recourse financial assets, the Group assesses jointly criteria such as the adequacy of equity,
LTV (Loan-to-Value)
and DSCR
(Debt-Service-Coverage-Ratio)
ratios
as well
as the
existence
of corporate
and personal
guarantees.
For
the securitized
notes
issued
by
special
purpose
entities,
either
established
by
the
Group
or
third
parties,
and
held
by
the
Group,
the
cash
flow
characteristics of the notes
and the underlying
pool of financial
assets as well
as the credit
risk inherent in
each securitization’s tranche
compared to
the credit
risk of all
of the underlying
pool of
financial assets,
are assessed.
Furthermore, in
order to
assess whether
any
variability
in
the
cash
flows
is
introduced
by
the
modified
time
value
of
money
element,
the
Group
performs
a
quantitative
assessment (as described
in note 2.2.9). For
the SPPI assessment
of sustainability linked
instruments that include
features that
may
change the contractual
cash flows, by
reducing or increasing
the interest rate
depending on whether the
borrower meets or
fails to
meet predetermined
ESG targets,
the Group
considers
whether such
targets
are specific
to
the borrower,
as well
as whether
the
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
related contractual cash flows’ change introduces compensation for non-basic lending risks (information
about the Group’s exposure
in sustainability linked instruments is provided in note 20). Moreover,
the Group evaluates certain cases on whether the existence of
performance-related terms exposes
the Group to asset risk rather to the borrower's
credit risk.
The Group has established a robust framework to perform the necessary assessments in accordance with Group’s
policies in order to
ensure
appropriate
classification
of
financial
instruments,
including
reviews
by
experienced
staff
for
lending
exposures
and
debt
securities.
3.4
Assess control over investees
Management exercises
judgment in
order to
assess if the
Group has control
over another
entity based on
the control
elements set
out in note 2.2.1 (i).
In particular, as part of its
funding activity and
non-performing loans’ management strategy, the Group sponsors certain securitization
vehicles, the relevant
activities of which have
been predetermined as part of
their initial design by the Group.
The Group is exposed
to variability of returns
from these vehicles
through the holding of
debt securities issued
by them or
by providing credit enhancements
in accordance with the respective contractual terms. In assessing whether it
has control, the Group considers whether it manages the
substantive decisions that could
affect these vehicles’ returns. Accordingly,
the Group assesses on a case-by-case basis the structure
of securitization transaction, including the respective
contractual arrangements, in order
to conclude if it controls these vehicles.
In
addition,
the
Group
is
involved
in
the
initial
design
of
various
mutual
funds
in
order
to
provide
customers
with
investment
opportunities. The
Group primarily
acts as
an agent
in exercising
its decision
making authority
as it
is predefined
by the
applicable
regulated framework.
As a result, the Group has concluded that it does not control
these funds.
Further information in respect of the structured
entities the Group is involved, either consolidated
or not, is provided in note 25.
3.5
Income tax
The Group is subject to income taxes
in various jurisdictions and estimates are required
in determining the liability for income taxes.
The Group
recognizes
liabilities
for
anticipated
tax
audit issues
based on
estimates
of whether
additional taxes
will be
due or
for
anticipated
tax disputes.
Where the
final tax
outcome of
these matters
is different
from the
amounts that
were initially
recorded,
such differences will impact the income tax and deferred
tax in the period in which such determination is made. Further information
in relation to the above is provided in
note 13.
In addition,
the Group
recognizes deferred
tax assets
to the
extent that
it is probable
that sufficient
taxable profit
will be
available
against
which
unused
tax
losses
and
deductible
temporary
differences
can
be
utilized.
Recognition
therefore
involves
judgment
regarding the
future financial performance
of the particular Group
legal entity in which
the deferred tax
asset has been recognized.
Particularly,
in order to determine the amount of deferred
tax assets that can be recognized,
significant management judgments are
required regarding the likely timing
and level of
future taxable profits. In
making this evaluation,
the Group has
considered all available
evidence, including management’s projections
of future taxable income and the tax legislation
in each jurisdiction.
The most significant judgment exercised by Management relates to the recognition of deferred tax assets in respect of losses realized
in Greece. In the event that, the Group assesses that it
would not be able to recover any portion of
the recognized deferred tax assets
in the future, the unrecoverable portion
would impact the deferred tax balances in the period in which
such judgment is made.
Further
information
in
respect
of
the
deferred
tax
assets
recognized
by
the
Group
and the
assessment
for
their recoverability
is
provided in note 13.
3.6
Retirement benefit obligations
The present
value of
the retirement
benefit obligations
depends on
a number
of factors
that are
determined on
an actuarial
basis
using a number of assumptions,
such as the discount rate
and future salary increases. Any
change in these assumptions impacts the
carrying amount of the pension obligations.
The Group determines
the appropriate discount
rate used to
calculate the present
value of the estimated
retirement obligations,
at
the end
of each
year based
on interest
rates
of high-quality
corporate
bonds. In
countries where
there is
no deep
market
in such
bonds,
the
yields
on
government
bonds
are
used.
The
currency
and term
to
maturity
of
the
bonds
used
are
consistent
with
the
currency and estimated average
term to maturity of the retirement benefit obligations.
The salary rate increase assumption is based
on future inflation estimates reflecting also
the Group's reward structure
and expected market conditions.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Other
assumptions
for
pension obligations,
such as
future
inflation
estimates,
are
based
in part
on current
and expected
market
conditions.
For information in respect of the sensitivity analysis of the Group’s
retirement benefit obligations to reasonably
possible, at the time
of preparation of these financial statements,
changes in the abovementioned key actuarial assumptions, refer
to note 36.
3.7
Investment properties
Investment
property is
carried at
fair value,
as determined
by external,
independent and
certified valuators
on an
annual basis,
or
more frequently
if deemed
appropriate
upon assessment
of any
relevant
circumstances.
The primary
valuation method
applied in
determining the fair
value of the Group’s
investment properties
is the Discounted
Cash Flow (DCF) method
which is considered
the
most appropriate
in cases of income generating
assets. This method is
based on discounting the
net future cash flows
generated by
a property over the assumed holding period, by using an appropriate
market derived discount rate.
Accordingly,
the main factors underlying the determination
of fair value under the DCF method, are related
with rental income from
current leases and assumptions
about its future
growth in the light
of current market conditions, including
CPI indexation that is based
on CPI predictions
for the next
10 years, as
well as exit
yields that are
determined based on
each property’s characteristics/use
and
future
prospects
of
the
economy
and
property
market
in
general
as
forecasted
by
the
IMF
or
other
internationally
recognized
institutions. In addition,
potential legal or other
restrictions on the
aforementioned rental income levels are
taken into account, where
applicable.
To
the above
projected
net cash
flows series,
an appropriate,
market-derived
discount
rate
is applied
to
establish the
present
value
of
each
property.
Such
discount
rate
is
calculated
by
taking
into
consideration
the
initial
yield
of
the
investment
property, the
expected return, the real rental growth
and annual obsolescence of the property.
Other assumptions incorporated in the valuations include
future vacancy rates and periods, the
level of future maintenance and
other
operating costs, as well as sustainability
issues, where applicable.
Where
the
fair
value
is
determined
based
on
market
prices
of
comparable
transactions
those
prices
are
subject
to
appropriate
adjustments,
in
order
to
reflect
current
economic
conditions
and
Management’s
best
estimate
regarding
the
future
trend
of
properties market based on advice received from
its independent external valuers.
Further information in respect of the fair valuation
of the Group’s investment
properties is provided in note 27.
3.8
Provisions and contingent liabilities
Considering the
subjectivity and
uncertainty
inherent
in the
determination
of the
probability and
amount of
the abovementioned
outflows, the Group takes into account
a number of factors including primarily legal advice, the progress
of the matter and historical
evidence from
similar cases.
In the
case of
an offer
made within
the context
of the
Group’s
voluntary
exit scheme,
the number
of
employees expected to accept the
abovementioned offer along with their
age cluster is a
significant factor affecting the measurement
of the outflow for the termination benefits.
Further information in relation to
the Group’s provisions
and contingent liabilities is provided in notes 35 and 42.
3.9
Share-based payments
The Group
grants shares
and share
options to
its employees
as a
common feature
of employee
remuneration.
IFRS 2
requires the
recognition of
an expense for
those shares
and share options
at their
fair value
on the grant
date (equity-settled
plans). For shares
granted to employees, the fair value is measured directly
at the market price of the entity’s shares, adjusted
to take into account
the
terms and conditions upon which the shares were granted. For share options
granted to employees, in many cases market
prices are
not available because the options granted
are subject to terms and conditions that do not apply to traded
options. If this is the case,
the Group estimates
the fair value of the
equity instruments granted
using a valuation technique,
which is consistent
with generally
accepted valuation methodologies.
The valuation
method and the
inputs used to
measure the share
options granted
to employees of
the Group are
presented in
note
39.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
3.10
Leases
The Group, as a lessee, determines the lease term as the non-cancellable term of the
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
renew or
terminate the
lease, by
considering all
relevant
factors
and economic
aspects that
create an
economic incentive.
The Group
reassesses the
lease
term if
there is
a significant
event or
change in
circumstances
that is
within its
control
that affects
its ability
to exercise
or not
to
exercise the
option to
renew or to
terminate, such
as significant leasehold
improvements or
significant customization
of the leased
asset.
In measuring
lease liabilities,
the Group
uses the
lessees’ incremental
borrowing
rate
(‘IBR’) when
it cannot
readily determine
the
interest rate implicit in the
lease. 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
right-of-use
asset
in
a
similar
economic
environment.
Therefore,
estimation is
required when
no observable
rates are
available (such
as for
subsidiaries that
do not
enter into
financing
transactions) or when
they need to
be adjusted to
reflect the terms
and conditions of
the lease. The Group
estimates the IBR
using
observable inputs (such as government bond yields)
as a starting point when available, and
performs certain additional entity-specific
adjustments,
such as
credit spread
adjustments
or adjustments
to reflect
the lease
terms and
conditions. For
the Bank
and Greek
subsidiaries,
the
IBR
is
derived
from
the
estimated
covered
bonds
yield
curve,
which
is
constructed
based
on
observable
Greek
Government
Bond
yields,
while
for
international
subsidiaries
the
IBR
is
determined
on
a
country
basis,
taking
into
consideration
specific local conditions.
3.11
Other accounting estimates and judgments
Information in respect of other estimates
and judgments that are made by the Group is provided
in notes 20, 24 and 30.
.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
4.
Capital Management
The Group’s capital
adequacy position is presented in the following table:
2023
2022⁽²⁾
€ million
€ million
Equity attributable to shareholders
of the Company
7,899
6,623
Add: Adjustment due to IFRS 9 transitional arrangements
-
279
Add: Regulatory non-controlling interests
-
68
Less: Goodwill
(44)
(2)
Less: Other regulatory adjustments
(507)
(253)
Common Equity Tier 1 Capital
7,348
6,715
Total Tier 1 Capital
7,348
6,715
Tier 2 capital-subordinated debt
1,074
1,250
Add: Other regulatory adjustments
-
61
Total Regulatory
Capital
8,422
8,026
Risk Weighted Assets
43,395
41,899
Ratios:
%
%
Common Equity Tier 1
16.9
16.0
Pro-forma Common Equity Tier 1⁽¹⁾
17.0
16.0
Total
Capital Adequacy Ratio
19.4
19.2
Pro-forma Total
Capital Adequacy Ratio⁽¹⁾
20.2
19.0
(1)
Pro-forma with the completion of the projects “Solar”
(for 31/12/2022 and 31/12/2023 ratios) and “Leon” (for 31/12/2023) (note 30), as well as accounting
for the impact
from the completion of the issuance of Subordinated Tier 2 debt instruments in January 2024 (see below).
(2)
The capital adequacy ratios for the year ended 31 December 2022 have not been adjusted
with:
a) the restatement due
to the retrospective application
of IFRS 17 by the Group’s associate Eurolife FFH Insurance Group Holdings S.A. (note 2.3) and b) the presentation of operations of Eurobank Direktna
a.d. disposal group as discontinued (note 30).
Notes:
a) The profit of €
1,140 million attributable to
the shareholders of the Company
for the year ended
31 December 2023 (31
December 2022: profit of €
1,330
million) has been included in the calculation of the above capital ratios.
b) As of 31 December 2023, the increase in CET1 ratio, compared to
31 December 2022, is mainly attributed to the organic profitability
for the year ended 31
December 2023 and
Wave IV securitization (note 20),
partly offset by i)
the increase of the
RWAs due to the reversion from
the Internal Ratings Based
Approach
(IRB) to
the Standardized
Approach (STD)
(see below)
and the
new production
of loans,
loan commitments
and letters
of guarantee
and ii)
the impact
on
regulatory capital from the ending on 1 January 2023 of
the 5-year period of the IFRS 9 transitional adjustments
according to the Regulation (EU) 2017/2395
and the FVOCI prudential treatment specified in Article 468 of the CRR, amended by the
Regulation (EU) 2020/873
On 1 March
2023, the Group
received approval
from ECB to
revert to the
Standardized approach
(STD) for
all credit risk
exposures.
The Group’s
decision to
move to
a less
sophisticated
method for
capital
requirements
calculation
was
based on
the fact
that the
historical
data
and
performance
on
which
Internal
Ratings
Based
(IRB)
models
are
calibrated
is
considered
to
be
of
limited
representativeness
taking into account
the recent
economic developments.
The Bank intends
to continue
utilizing its advanced
risk
management capabilities for internal purposes
such as credit approvals, risk adjusted pricing, IFRS 9 provisions
and risk monitoring.
The Group
has sought
to
maintain
an actively
managed
capital
base to
cover
risks
inherent
in the
business.
The adequacy
of the
Group's
capital
is
monitored
using, among
other
measures,
the
rules
and
ratios
established
by
the
Basel
Committee
on
Banking
Supervision (BIS rules/ratios) which have been incorporated in the European Union (EU)
legislation through the Directive 2013/36/EU
(known as
CRD IV)
along with
the Regulation
No 575/2013/EU
(known as
CRR), as
they are
in force.
The above
Directive has
been
transposed into Greek legislation by Law 4261/2014, as in force. Furthermore, the CRR as amended by the Regulation 2020/873 (CRR
quick fix) provides, among others, for the extension by two years of the ability of the
banks to add back to their regulatory capital any
increase in provisions
for (stage
1 and stage
2) expected losses
compared to those
that they have
recognized on
1 January 2020 for
their financial assets,
which have not
been defaulted. The relief
which is applicable
for 2023 and
for 2024 is
50% and 25%,
respectively.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Supplementary to the above, in the context of Internal Capital Adequacy Assessment Process (ICAAP), the Group considers a broader
range of risk types
and the Group’s risk management capabilities.
ICAAP aims ultimately to
ensure that the Group
has sufficient capital
to cover all material risks that it is exposed
to, over a three-year horizon.
Based on Council Regulation No 1024/2013, the European Central Bank (ECB) conducts annually a Supervisory Review and
Evaluation
Process (SREP) in order
to define the prudential
requirements of the
institutions under its supervision.
The key purpose
of the SREP
is
to
ensure
that
institutions
have
adequate
arrangements,
strategies,
processes
and
mechanisms
as
well
as
capital
and
liquidity
to ensure a sound management and coverage of their risks, to which they are
or might be exposed, including those revealed by stress
testing and risks the institution may pose to
the financial system.
According to the 2022 SREP
decision, from January 2023 the P2R for
the Group stands at
2.75% in terms of total capital
(or at 1.55%
in
terms
of
CET1
capital),
reflecting
the
improved
Group’s
financial
position
particularly
in
terms
of
asset
quality.
Thus,
as
of
31
December 2023, the Group
was required
to meet a
Common Equity Tier
1 Ratio of
at least 12.20%
(including AT1
and Tier 2 capital
shortfall)
and a
Total
Capital
Adequacy
Ratio
of
at
least
14.68% (Overall
Capital
Requirement
or OCR)
including Combined
Buffer
Requirement of 3.93%, which is covered with
CET1 capital and sits on top of the Total
SREP Capital Requirement (TSCR).
The breakdown of the Group’s
CET1 and Total
Capital requirements is presented
below.
31 December 2023
CET1 Capital
Requirements
Total Capital
Requirements
Minimum regulatory requirement
4.50%
8.00%
Pillar 2 Requirement (P2R)
1.55%
2.75%
Total SREP Capital Requirement
(TSCR)
6.05%
10.75%
Combined Buffer Requirement (CBR)
Capital conservation buffer
(CCoB)
2.50%
2.50%
Countercyclical capital buffer
(CCyB)
0.43%
0.43%
Other systemic institutions buffer
(O-SII)
1.00%
1.00%
Overall Capital Requirement (OCR), excluding
shortfall
9.98%
14.68%
AT1 and Tier 2 capital
shortfall
2.22%
-
Overall Capital Requirement (OCR), including shortfall
12.20%
14.68%
The above CET1 capital requirement of 12.20% takes into account that the Group had no AT1
capital, while the Tier 2 capital stood at
2.48% as at
31 December 2023, compared
to the portion of
2.02% for AT1
and 2.69% for
Tier 2 capital allowed
by the legislation
to
cover part of Total SREP Capital Requirement
(TSCR). Assuming that the Group had fully utilized the AT1 and Tier 2 capital capacity as
at 31 December 2023, the CET1 requirement would stand
at 9.98%.
From
1
January
2024,
the
O-SII
buffer
for
the
Group
increased
to
1.25%
(from
1%
in
2023),
in
accordance
with
the
Executive
Committee Act 221/1/17.10.2023 of the Bank of Greece, following a change in the methodology applied for the determination of the
O-SII buffer rate. The countercyclical capital buffer is
updated on a quarterly
basis in accordance
with the countercyclical capital buffer
rates applicable in each country to
which the Group has exposures.
Further disclosures regarding capital
adequacy in accordance with the Regulation
575/2013 are provided in the Consolidated Pillar 3
Report on the Company’s website.
Minimum Requirements for Eligible Own Funds and Eligible Liabilities (MREL)
Under the Directive
2014/59 (Bank
Recovery and
Resolution Directive)
as in force,
which was
transposed into
the Greek legislation
pursuant to Law
4335/2015 as in force,
European banks are
required to
meet the minimum requirement
for own funds
and eligible
liabilities (MREL). The Single Resolution Board (SRB) has determined Eurobank S.A. as the Group’s resolution entity and a Single Point
of Entry (SPE)
strategy for
resolution purposes. Based
on the latest
SRB’s communication,
the fully calibrated
MREL (final target)
to
be met
by
Eurobank
S.A. on
a consolidated
basis
until
the
end of
2025 is
set
at
27.82%
of
its
total
risk
weighted
assets
(RWAs),
including a fully-loaded combined buffer requirement (CBR) of 4.25%. The final
MREL target is updated by the SRB on
an annual basis.
The 2024 interim non-binding MREL target, applicable
from January 2024, stands at 23.23% of RWAs,
including a CBR of 4.18%.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
In the
year ended
31 December
2023, in
the context
of the
implementation
of its
strategy
to ensure
ongoing compliance
with its
MREL requirements,
the Bank successfully
completed the
issue of two
€500 million MREL-eligible
senior preferred
notes in January
and in November 2023, respectively (note 34). As at 31
December 2023, the Bank’s MREL ratio at consolidated level stands at 24.91%
of RWAs including profit for
the year ended
31 December 2023
(31 December 2022:
23.07%), which is
higher than the
aforementioned
interim non-binding MREL target of 23.23%.
Post balance sheet event
On 19 January
2024, Eurobank Holdings
announced that
it successfully completed
the issuance of
€300 million Subordinated
Tier 2
debt instruments. The proceeds
from the issue will
support the Group’s
strategy to
ensure ongoing compliance
with its total capital
adequacy and MREL requirements, while it will be used also for
the Bank’s general funding
purposes (note 34).
2023 EU – wide EBA Stress Test
.
In January 2023,
the European Banking
Authority (EBA) launched
the 2023 EU-wide
Stress Test exercise which was designed to
provide
valuable
input for
assessing the
resilience
of the
European
banking sector
in the
current
uncertain
and changing
macroeconomic
environment.
This
exercise
was
coordinated
by
the
EBA
in
cooperation
with
the
ECB
and
national
supervisory
authorities
and
was
conducted
according to
the EBA’s
methodology and scenarios
provided by
the European
Systemic Risk
Board (ESRB).
It was carried
out on the
basis of
year-end 2022
figures and
assessed the
performance of
EU banks
under a
baseline and
adverse macroeconomic
scenario,
covering a
three-year period
from 2023
to 2025.
The baseline
scenario for
EU countries
was based
on the projections
from the
EU
national
central
banks of
December 2022.
The adverse
scenario,
although unlikely
to unfold,
was
used to
assess the
resilience of
banks to a hypothetical severe
scenario of a significant deterioration
in the overall outlook for the economy
and financial markets in
the next
three years.
The narrative
depicted an
adverse scenario
related to
a hypothetical
worsening of
geopolitical developments
leading to a severe decline in GDP
with persistent inflation and high interest rates. In terms of GDP decline,
the 2023 adverse scenario
was the most severe used
in the EU
wide stress up to
now. Eurobank Holdings Group participated in
the EBA-led stress test.
In parallel,
the ECB conducted
its own stress test
for a number of
medium sized-
banks that it
supervises directly and that
were not included in
the EBA-led stress test sample.
2023 Stress Test
Results
On 28 July 2023, the
Company announced that
Eurobank Holdings Group
successfully completed the
2023 EU-wide Stress Test
(ST),
which
was
coordinated
by
the
European
Banking
Authority
(EBA)
in
cooperation
with
the
European
Central
Bank
(ECB)
and
the
European Systemic Risk Board (ESRB). The Group significantly improved its results and resilience to stress under the adverse scenario
compared to the ST 2021 exercise.
The starting
point of the
exercise is
the financial and
capital position
of the Group
as at 31
December 2022, as
calculated based
on
the Standardised Approach (STD). On that
date, the Fully Loaded (FL) CET 1 ratio
(based on the full implementation of Basel III
rules)
amounted to 14.4%. Under the Baseline scenario, the FL
CET1 ratio increases by 360bps over the 3-year ST horizon, reaching the level
of 18%
at the
end of 2025.
Under the
Adverse scenario,
the FL CET1
ratio decreases
by 220bps
at the
end of 2025
and it
stands at
12.2%, while at the end of the first year (2023) the Group
registered its highest FL CET 1 ratio depletion,
at 316bps.
.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
5.
Financial risk management and fair value
5.1
Use of financial instruments
By
their
nature
the
Group's
activities
are
principally
related
to
the
use
of
financial
instruments
including
derivatives.
The
Group
accepts deposits from
customers, at both
fixed and floating
rates, and
for various periods
and seeks to
earn above average
interest
margins by investing these funds in high quality assets. The Group seeks to increase these margins by consolidating
short-term funds
and lending for longer periods at higher rates,
while maintaining sufficient liquidity to meet all claims that might
fall due.
The
Group
also
seeks
to
raise
its
interest
margins
by
obtaining
above
average
margins,
net
of
provisions,
through
lending
to
commercial and retail borrowers within a range of credit standing. Such exposures include both on-balance sheet loans and advances
and off-balance sheet guarantees and other commitments
such as letters of credit.
The Group also trades in financial instruments where it
takes positions in traded and over the counter financial
instruments, including
derivatives, to take
advantage of short-term
market movements in the equity and bond markets
and in currency and interest
rates.
5.2 Financial risk factors
Due to its
activities, the Group is
exposed to several
financial risks, such as
credit risk, market
risk (including currency,
interest rate,
spread, equity
and volatility
risk), liquidity,
operational and
other non-financial
risks, as
well as
to climate
risk. The
Group's overall
risk management
strategy
seeks to
minimize any
potential adverse
effects on
its financial performance,
financial position
and cash
flows.
Risk Management objectives and policies
The Group
acknowledges that
taking risks
is an integral
part of its
operations in
order to
achieve its business
objectives. Therefore,
the Group’s
management sets adequate
mechanisms to identify those
risks at an
early stage and
assesses their potential impact
on
the achievement of these objectives.
Due to the fact that
economic, industry,
regulatory and operating conditions
will continue to change,
risk management mechanisms
are set
in a
manner that
enable the
Group to
identify and
deal with
the risks
associated with
those changes.
The Bank’s
structure,
internal processes and existing control mechanisms
ensure both the
independence principle and
the exercise of sufficient supervision.
The Group's
Management considers
effective risk
management as
a top priority,
as well as
a major
competitive advantage,
for the
organization. As such, the Group has allocated significant resources for upgrading its policies, methods and infrastructure,
in order to
ensure compliance with the requirements of
the European Central Bank (ECB)
and of the
Single Resolution Board (SRB), the
guidelines
of
the
European
Banking
Authority
(EBA)
and
the
Basel
Committee
for
Banking
Supervision
and
the
best
international
banking
practices.
The
Group
implements
a
well-structured
credit
approval
process,
independent
credit
reviews
and
effective
risk
management policies for all material risks it is exposed to, both in Greece and in each country of its international operations. The risk
management policies implemented by the Group are
reviewed mainly annually.
The maximum amount
of risk which the
Group is willing
to assume in the
pursuit of its strategic
objectives is articulated
via a set of
quantitative
and
qualitative
statements
for
specific risk
types,
including
specific tolerance
levels
as
described
in
the
Group’s
Risk
Appetite Framework. The objectives are to support the
Group’s business growth, balance a strong capital position with higher
returns
on equity and to ensure the Group’s
adherence to regulatory requirements.
The
risk
appetite
that
is
clearly
communicated
throughout
the
Group,
determines
risk
culture
and
forms
the
basis
on
which
risk
policies and
risk limits
are established
at Group
and regional
level.
Aiming to
identify its
material risks,,
the Bank
maintains a
well-
defined
Risk Identification and Materiality Assessment
(RIMA) Framework.
The identification and the
assessment of all risks is the
cornerstone for
the effective Risk Management.
The Group aiming to
ensure
a
collective
view
on
the
risks
linked
to
the
execution
of
its
strategy,
acknowledges
the
new
developments
at
an
early
stage
and
assesses the potential impact.
Board Risk Committee (BRC)
The Board Risk Committee (BRC)
is a committee of
the BoD and its
task is to assist the
BoD to ensure that
the Group has a
well-defined
risk and capital
strategy in line
with its business
plan and in
line with
regulatory requirements and an
adequate and robust risk
appetite
framework.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Τhe BRC assesses the Group’s risk profile, monitors
compliance with the approved risk appetite and risk tolerance levels and ensures
that the Group has developed a risk management framework
with appropriate methodologies, modelling tools, and data
sources, as
well as sufficient and competent staff to
identify, assess, monitor and mitigate risks.
Moreover, BRC is conferred with certain approval
authorities.
The BRC consists of five (5) non-executive directors, meets at least on a monthly basis
and reports to the BoD on a
quarterly basis and
on ad hoc instances if it is needed.
Management Risk Committee
The Management Risk Committee (MRC) is a management committee established by the
CEO and its main responsibility is to
oversee
the risk management framework of the Group. As part of its responsibilities, the MRC facilitates
reporting to the BRC on the range of
risk-related
topics under its
purview. The
MRC supports the
Group Chief Risk
Officer to identify
material risks,
to promptly
escalate
them to the BRC and to ensure that the necessary policies and procedures are in place to prudently manage risks and to comply with
regulatory requirements.
Group Risk Management
The
Group’s
Risk
Management
Unit
which
is
headed
by
the
Group
Chief
Risk
Officer
(GCRO),
operates
independently
from
the
business units and is responsible for the identification, assessment,
monitoring, measurement and management of the risks that the
Group is exposed
to. It comprises of
the Group Credit
(GC), the Group
Credit Control (GCC),
the Group Credit
Risk Capital Adequacy
Control
(GCRCAC), the Group
Market and
Counterparty Risk
(GMCR), the Group
Operational and Non-Financial
Risks (GONFR), the
Group
Model
Validation
and
Governance
(GMVG),
the
Group
Risk
Management
Strategy
Planning
Operations
&
Climate
Risk
(GRMSPO&CR), the Supervisory Relations and Resolution Planning (SRRP), and the Risk Analytics (RA) Units.
Non-Performing Exposures (NPEs) management
The Group, following
the strategic partnership
with doValue S.p.A. and
the successful transition to
the new operating model
for the
management of
NPEs, realizes
the NPE
Strategy Plan
through its
implementation by
doValue Greece
for the
assigned portfolio
and
the successful securitization transactions.
Troubled Assets Committee
The
Troubled
Assets
Committee
(TAC)
is
established
according
to
the
regulatory
provisions
and
its
main
purpose
is
to
act
as
an
independent body,
closely monitoring the Bank’s troubled
assets portfolio and the execution of its NPE Management
Strategy.
Remedial and Servicing Strategy (RSS)
Eurobank
established
Remedial
Servicing
&
Strategy
Sector
(RSS)
with
the
mandate
to
devise
the
NPE
reduction
plan,
to
closely
monitor
the overall
performance of
the NPE
portfolio
as well
as the
relationship
of the
Bank with
doValue
Greece.
Furthermore,
following Eurobank’s commitments against the significant risk transfer (SRT) monitoring regulatory requirements pertaining to Bank’s
concluded transactions,
RSS has a
pivotal role
in ensuring that
relevant process
is performed smoothly
and in a
timely manner and
that any
shortcomings are
appropriately resolved,
while providing
any required
clarifications or additional
material required
by the
regulatory authorities.
The Head of
RSS reports to the
General Manager of Group Strategy.
In this context, RSS
has been assigned
inter alia with
the following
responsibilities:
●
Develop and actively monitor the NPE targets
and reduction plan
●
Set the strategic principles, priorities, policy framework
and KPIs under which doValue Greece is servicing the portfolio
●
Closely monitor the execution of the
approved strategies, as well as all
contractual provisions under the relevant contractual
agreements for Eurobank’s
portfolio assigned to doValue Greece
including the securitized portfolio of ERB Recovery
DAC
●
Monitoring of
the performance
of the
senior notes
of the securitizations
in collaboration
with Group
Risk so
as to
ensure
compliance to significant risk transfer
(SRT) and to the Hellenic Asset Protection Scheme (HAPS)
●
Budget and monitor the Bank’s expenses
and revenues associated with the assigned portfolio
●
Cooperate closely with doValue
Greece on a daily basis in achieving the Group’s
objectives
●
Maintain supervisory dialogue
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
NPE Operational targets
Ιn line with the regulatory framework and Single Supervisory Mechanism’s (SSM) requirements
for Non-Performing Exposures’ (NPE)
management, the Group’s
new NPE Management Strategy
for 2024-2026, along with the annual NPE
stock targets at both
Bank and
Group level envisages the decrease of the Group’s
NPE ratio at 3.2% in 2026.
5.2.1 Credit Risk
Credit risk
is the risk
that a
counterparty will
be unable
to fulfill
its payment
obligations in
full when due.
Credit risk
is also
related
with country risk and settlement risk, specified below:
a)
Country risk
is the
risk of
losses arising
from cross
-border lending
and investment
activities and
refers
to the
uncertainty
associated
with exposure
in a
particular country.
This uncertainty
may relate
to a
number of
factors
including the
risk of
losses following nationalization, expropriation,
debt restructuring and foreign exchange
rates’ movement.
b)
Settlement
risk
is
the
risk
arising
when
payments
are
settled,
for
example
for
trades
in
financial
instruments,
including
derivatives
and
currency
transactions.
The
risk
arises
when
the
Group
remits
payments
before
it
can
ascertain
that
the
counterparties’ payments have
been received.
Credit
risk
arises
principally
from
the
wholesale
and
retail
lending
activities
of
the
Group,
as
well
as
from
credit
enhancements
provided, such as financial guarantees and
letters of credit. The Group
is also exposed to credit risk arising from other activities
such
as investments in debt securities, trading, capital markets and settlement activities. Taking
into account that credit risk is the primary
risk the Group is exposed to, it is very closely managed and
monitored by specialised risk units, reporting to the GCRO.
(a) Credit approval process
The credit approval
and credit review
processes are centralized
both in Greece and
in the International operations.
The segregation
of
duties
ensures
independence
among
executives
responsible
for
the
customer
relationship,
the
approval
process
and
the
loan
disbursement, as well as monitoring of the loan during its lifecycle.
Credit Committees
The credit
approval process
in Corporate
Banking is centralized
through establishment
of Credit
Committees with
escalating Credit
Approval Levels. Main Committees of the Bank
are considered to be the following:
●
Credit
Committees
(Central
and Local)
authorized
to
approve
new
financing, renewals
or
amendments
mainly
for
domestic
groups in
the existing
credit limits,
in accordance
with their credit
approval authority,
depending on total
limit amount of
the
customer/group and risk category
(i.e. high, medium or low), as well as the value and type of security;
●
Special Handling Credit Committees authorized to
approve credit requests and take
actions for distressed clients;
●
International Credit
Committees (Regional
and Country)
established for
the wholesale borrowers
of the Group’s
international
bank subsidiaries, authorized to approve new limits, renewals
or amendments to existing limits, in accordance with their credit
approval authority,
depending on total customer exposure and risk category (i.e. high, medium or low), as well as the value and
type of security; and
●
International Special Handling Committees established for
handling distressed wholesale borrowers of the
Group’s international
bank subsidiaries.
The Credit Committees meet on a weekly basis or more frequently,
if needed.
Group Credit (GC)
Within an environment of increased risk
requirements, Group Credit (GC) mission is
to safeguard the Group’s asset side, by evaluating
credit risk
and making
recommendations,
so that
borrower’s
credit exposure
is acceptable
and within
the approved
Risk Appetite
Framework. GC is headed by the Group Chief Credit
Officer (GCCO) with direct reporting to the Group
Chief Risk Officer (GCRO).
GC operations
are comprised
of two
functions, i.e.
the Corporate
Credit, including
both the domestic
and the
foreign underwriting
activities (the latter only
for material exposures of
International Subsidiaries), and
Retail Credit respectively, covering the underwriting
needs of the SBB portfolio and the Individuals Lending (mortgage, consumer
loans, auto-moto loans and credit cards).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
1.
Corporate Credit
(a) Domestic and Greek related portfolio: the underwriting function includes the review of
credit requests originating from Corporate
Units handling
large and
medium scale
corporate
entities of
every risk
category and
specialised lending
units such
as Shipping
and
Structured Finance (Commercial
Real Estate,
Hotels & Leisure,
Project Finance, M&A
Financing) and Private
Banking. Major tasks
of
the respective workstream and involved
credit units pertain to the following:
●
Evaluation of credit applications and
issuance of an independent Risk Opinion when required according to
internal procedures,
which includes:
(i)
assessment
of
the
customer
credit
profile
based
on
the
qualitative
and
quantitative
risk
factors
identified
(market,
operational, structural and financial)
(ii)
recommendations for the formulation
of bankable, well-secured and well-controlled
transactions (credit facility), as well as
(iii) review and confirmation of the ratings
of each separate borrower to reflect
the risks acknowledged.
●
Participation with voting right in all credit committees
as per the Credit Approval procedures.
●
Active participation in
the regulatory audits
and major internal projects
of the Bank, providing
at the same
time credit related
knowledge, expertise and support to other Units.
●
Preparation
of
specialised
reports
to
Management
on
a
regular
basis,
with
regards
to
the
Top
25
largest,
in
terms
of
total
exposure, borrower Groups,
statistics on the new approved
financings and leveraged transactions.
(b)
International
Subsidiaries’
portfolio:
The
GC
through
its
specialized
International
Corporate
Credit
Unit
(IC)
is
responsible
to
actively participate
in the design,
implementation and
review of the
credit underwriting
function for
the wholesale portfolio
of the
International
Subsidiaries covering
Bulgaria,
Cyprus, and
portion of
the loan
portfolio
of Luxemburg
(and London).
Moreover,
the
respective unit’s tasks and responsibilities
are highlighted below:
●
Participation
with voting
right in
all International
Committees
(Regional
and Special
Handling) and
Country Risk
Committees
(CRCs);
●
Participation in the sessions of Special Handling Monitoring
Committees for Bulgaria which monitor
and decide on the strategy
of problematic corporate relationships with
loan outstanding exceeding a certain threshold, that is jointly set by IC and Country
TAG;
●
Advice on best practices to the Credit Risk Units of International
Subsidiaries
GC is also responsible for the preparation
of all credit committees’ agendas, distribution of the respective
material and maintenance
of the respective Credit Committees’ minutes.
2.
Retail Credit
The scope of the Retail
Credit is the assessment of credit
applications submitted by Retail
Business Units, in relation to Borrowers
of
the retail credit portfolio (SBB loans and Individual
Banking).
The main tasks of Retail Credit function are
outlined below:
●
Assess credit
requests in
alignment with
the credit
risk assessment
criteria and
methodology provided
in the
appropriate
Credit Policy Manual.
●
Analyze and evaluate risk factors
depending on the type of credit request.
●
Prepare an independent Credit Opinion ensuring that the risks
identified are dully reflected in the Borrower’s
Rating.
●
Participate with
voting rights in the
credit committees
as per the credit
approval process, according
to the Approval
Levels
defined in the CPM.
●
Active participation in
the regulatory audits and
major internal projects of
the Bank, providing at
the same time
credit related
knowledge, expertise and support to other units.
(b)
Credit risk monitoring
Group Credit Control
The Group
Credit Control
(GCC) monitors
and assesses the
quality of all of
the Group’s
loan portfolios and
operates independently
from the business units of the Bank. The GCC reports directly to the GCRO.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The main responsibilities of the GCC are to:
●
supervise, support and maintain the credit rating and
impairment systems used to assess the wholesale lending customers;
●
monitor and review the performance of all of the Group’s
loan portfolios;
●
supervise and control the foreign subsidiaries’ credit
risk management units;
●
monitor on a
regular basis and
report on a
quarterly basis to
the Board of
Directors and
the BRC of
risk exposures,
along with
accompanying analyses;
●
monitor
and evaluate
the efficiency
of
adopted
strategies
and
proposed
solutions
in
terms
of
dealing
with
Non-Performing
Exposures
(NPEs)
and
the
achievement
of
targets
for
NPEs
reduction,
as
communicated
and
agreed
with
the
Supervisory
Authorities;
●
conduct field reviews
and prepare written
reports to the
Management on the
quality of all
of the Group’s
loan portfolios and
adherence with EBA prevailing regulations;
●
monitor the proper EBA classifications in accordance
with the relevant provisions and guidelines;
●
participate in the approval of new credit policies and
new loan products;
●
participate in the Troubled
Asset Committee;
●
attend meetings of Credit Committees and
Special Handling Committees, without voting right;
●
formulate the Group’s credit impairment policy and measure the provisions of the Greek loan portfolios along with the relevant
reporting to Management;
●
regularly review the adequacy of provisions of all of the Group’s
loan portfolios;
●
formulate, in collaboration
with the responsible lending Units the credit policy manuals for performing
borrowers;
●
provide guidance and monitor the process of designing and reviewing
credit policies before approved
by Management.
●
Through field /
thematic reviews
on a sample
basis monitor the
proper application
of Real Estate
collaterals’ valuation,
as per
the Banks’ Collateral Valuation
policy and procedures;
●
monitor
the
supervisory,
regulatory
developments,
emerging
trends
and
best
practices
within
its
purview
in
order
to
keep
Management abreast and propose required
actions;
Group Credit Risk Capital Adequacy Control
The Group Credit
Risk Capital Adequacy Control
develops and maintains
the credit risk assessment
models for the loans
portfolio of
the Group, performs capital
adequacy calculations and assessment for
the loan portfolios of the group,
conducts internal & external
stress test exercises
as well as well as forecasting of risk parameters.
The Sector reports directly to the GCRO.
Specifically, the main responsibilities
of the Group Credit Risk Capital Adequacy Control
are to:
●
control, measure and monitor the capital requirements arising
from the Group’s loan portfolio along with the relevant reporting
to Management and regulators (ECB/SSM);
●
manage the models
development, implementation, monitoring of the
internal risk based
models and IFRS9
models of Probability
of Default (PD), Loss Given Default (LGD)
and Exposure at Default (EAD) for evaluating
credit risk
●
measure and monitor the
risk parameters (PD,
LGD, EAD) for
the purposes of internal capital
adequacy assessment, as well as,
the estimation
of risk
related
parameters
(such as
forecast
12-m PD,
forecast
lifetime
PD) for
IFRS 9
impairment calculation
purposes;
●
review
the
grouping
of
lending
exposures
and
ensuring
their homogeneity
in
accordance
with
the
Group’s
IFRS
accounting
policies
●
re-development and monitoring of the significant
increase in credit risk (SICR) thresholds under IFRS9 standard;
●
prepare monthly capital adequacy calculations (Pillar
1) and relevant management, as
well as, regulatory reports
(COREPs, SREP)
on a quarterly basis;
●
projection of
asset quality and capital requirements for the loan book (projected impairments and RWAs), in the context of the
business plan, ICAAP and recovery plan and participation in the relevant
committees;
●
perform stress tests, both internal
and external (EBA/SSM), and maintain the credit risk
stress testing infrastructure;
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
●
coordinate the stress testing
exercises for the loan portfolios at
Group Level;
●
prepare the credit risk analyses for Internal
Capital Adequacy Assessment (ICAAP)/ Pillar 2 purposes;
●
prepare the Basel Pillar 3 disclosures for credit
risk;
●
regularly
report
to
the
GCRO,
to
the
Management
Risk
Committee
and
to
the
Board
Risk
Committee
on:
risk
models
performance, risk parameters (PD, LGD, EAD), forbearance reporting, vintage analysis and
default / redefault statistics portfolios
forward looking analysis and new disbursements
quality.
●
guide, monitor and supervise the Credit Risk divisions of the subsidiaries on modelling, credit stress testing and other credit risk
related regulatory issues.
●
monitor and guide Group’s
international subsidiaries on credit risk related
ICAAP,
stress testing and other regulatory credit risk
related issues, based on Group standards.
Review of local credit risk stress test
exercises;
●
support the
business units
in the
use of
credit risk
models in
business decisions,
for
funding purposes,
in the
capital
impact
assessment
of
strategic
initiatives
and the
development
and usage
of
risk related
metrics such
as risk
adjusted
pricing, Risk
Adjusted Return on Capital (RAROC) etc.; and
●
assist Remedial Servicing Strategy
in the risk assessment and risk impact of various programs and products.
Group Model Validation and Governance
The Group Model Validation
and Governance
was established in September 2018, with key
mandates:
●
the establishment of a comprehensive model governance
and validation framework, and
●
the independent validation of
the technical and
operational completeness of all
models used by
the Group and
their parameters,
as well as their compliance with the provisions of the regulatory
framework.
In more detail, the tasks of the Unit are
outlined as follows:
●
Prepare and update the Group’s Models Framework (to include model definition, roles involved per model, model classification
principles and methodology, model validation principles, materiality classifications and
thresholds, models’ registry governance,
etc.);
●
Establish and update the Group’s
Models Registry;
●
Review models’ classification, in accordance with the
methodology provided in the Group Models Framework;
●
Prepare
and
update
the
Group
Models
Validation
Framework,
while
providing
support
to
Group’s
subsidiaries
in
its
implementation;
●
Monitor changes in ECB guidelines on models’ validation;
●
Propose and escalate for approval
the quantitative thresholds, in order to
assess the results of the validation tests;
●
Conduct model validation tests in alignment with the Group
Model Validation Framework
and regulatory requirements;
●
Prepare detailed
reports of
the model valuation
results according
to the
specific requirements
of the
model validated,
if any,
which are communicated to BRC on an annual basis
along with any related proposed remediation
plan;
●
Disseminate models’ validation test results
within the Group’s BRC or MRC
following reporting to Group CRO,
as appropriate;
●
Prepare action plan for remediation actions, if any,
as a result of the model validation tests implemented, and escalate the plan
for its approval by the appropriate
Management Authority;
●
Participate in the approval process
of new models for assessing ratings’ system
accuracy and suitability; and
●
Monitor industry practices on the development
and use of models as well as related ECB guidelines and restrictions.
Group Market and Counterparty Risk
Group Market
and Counterparty Risk (GMCR) is responsible
for the measurement,
monitoring and periodic reporting
of the Group’s
exposure to counterparty
risk (issuer risk and market driven counterparty
risk), which is the risk of loss due to the custome
r’s failure
to
meet
its contractual
obligations
in the
context
of treasury
positions,
such as
debt
securities, derivatives,
repos,
reverse
repos,
interbank placings, etc.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
In addition, GMCR monitors, controls and regularly reports country limits, exposures and escalates breaches to the Management and
to Committees.
GMCR uses a
comprehensive methodology
approved by
the BRC, for
determining the
acceptable country
risk level,
including the countries in which the Group has a strategic
presence.
The
Group
sets
limits on
the level
of
counterparty
risk
that
are
based
mainly
on
the counterparty’s
credit
rating,
as
provided
by
international rating agencies, the product type and
the maturity of the
transaction (e.g. control limits on net
open derivative positions
by both amount and term, sovereign bonds exposure,
corporate securities, asset backed securities etc.).
GMCR maintains and updates
the limits’ monitoring systems
and ensures the correctness and
compliance of all financial institutions
limits with the Bank’s policies as approved
by the Group’s relevant
bodies.
The utilization of the abovementioned limits, any excess of them, as well as the aggregate
exposure per Group’s
entity, counterparty
and product type are monitored by
GMCR on a daily basis. Risk mitigation contracts
are taken into account
for the calculation of the
final exposure.
Also, GMCR ensures that the
exposure arising from counterparties complies
with the approved country limits
framework. The GMCR’s
exposure
measurement
and
reporting
tool
is
also
available
to
the
Group’s
subsidiaries
treasury
divisions,
thus
enabling
them
to
monitor each counterparty’s exposure
and the limit availability.
Additionally,
for
the
Banks’
corporate
bond
portfolio,
GMCR
measures
and
monitors
daily
the
total
notional
limits,
the
sectoral
concentration
and the
maximum size
per issuer.
It uses
a measurement
tool for
monitoring any
downgrades and
any idiosyncratic
spread widening from purchase and any breach
is communicated to the Management and to
the relevant Committees.
GMCR implements the
market’s best practices and safeguards the compliance
of all involved parties
to limits’ policies
and procedures.
To
this direction,
for various
units and
International
subsidiaries, GMCR
provides
support and
guidance for
implementation
of the
limits’ guidelines and policies.
Furthermore,
GMCR prepares
specialized
reports for
the Management/Committees
along with
regular reporting
that includes
the
exposure
to the
Hellenic Republic
and a
report
that
is based
on the
calculation
of the
Lifetime
Expected
Losses for
the exposure
towards the Hellenic Republic (HR).
(c) Credit related commitments
The primary purpose of credit
related commitments is to ensure that funds are available to a
customer as agreed. Financial guarantee
contracts carry
the same credit
risk as loans
since they represent
irrevocable assurances
that the
Group will
make payments
in the
event that a customer
cannot meet its obligations
to third parties. Documentary
and commercial letters
of credit, which are written
undertakings by the Group
on behalf of a customer
authorizing a third party
to draw drafts
on the Group up to
a stipulated amount
under specific terms
and conditions,
are secured by
the underlying shipment
of goods to
which they relate
and therefore
carry less
risk than a loan. Commitments to extend credit
represent contractual commitments
to provide credit under pre-specified terms
and
conditions (note 42) in the form of loans, guarantees or letters of credit for which the
Group usually receives a commitment fee. Such
commitments are irrevocable over the
life of the facility or revocable only in response
to a material adverse effect.
(d) Concentration risk
The Group
structures the
levels of
credit risk
it undertakes
by placing
exposure limits
by borrower,
or groups
of borrowers,
and by
industry segments.
The exposure
to each
borrower is
further restricted
by sub-limits
covering on
and off-balance
sheet exposures,
and daily delivery risk limits in relation to trading items
such as forward foreign exchange
contracts.
Such risks are
monitored on a
revolving basis and are
subject to an
annual or more
frequent review. Risk concentrations are monitored
regularly
and
reported
to
the
BRC.
Such
reports
include
the
25
largest
exposures,
major
watch
list
and
problematic
customers,
industry analysis, analysis by rating/risk class, by delinquency bucket,
and loan portfolios by country.
(e) Rating systems
Rating of wholesale lending exposures
The Group has decided upon the differentiation of rating models for wholesale lending activities, in order to reflect appropriately the
risks
arising
from
customers
with
different
characteristics.
Accordingly,
the
Group
employs
the
following
rating
models
for
the
wholesale portfolio:
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
●
Moody’s
Risk
Analyst
model
(“MRA”
or
“Fundamental
Analysis”-“FA”)
is
used
to
assess
the
risk
of
borrowers
for
Corporate
Lending.
●
Internal Credit Rating model (“ICR”) is used for
those customers that cannot be rated
by MRA.
●
Slotting
rating
models
are
employed
in
view
of
assessing
the
risk
of
specialized
exposures,
which
are
part
of
the
Specialized
Lending corporate portfolio.
●
Transactional
Rating model (“TR”) has
been developed
in order to
assess the risk
of transactions taking
into consideration
their
collaterals/guarantees.
●
Finally, an assessment of the borrowers’ viability and the identification of impairment triggers is performed using the “Unlikely to
Pay” (“UTP”) / impairment test.
MRA, ICR, Slotting and ”UTP” functions are supported by the CreditLens (“CL”)
computing platform provided
by an external provider
(Moody’s Analytics), while the TR is internally developed
and is being supported by the core applications of the Bank.
MRA follows
the Moody’s
fundamental analysis
(FA)
approach. The
FA
models belong
to a
family of
models defined
as Knowledge
Based Systems and rely on a
probabilistic reasoning approach. They use quantitative and qualitative information of
individual obligors
in
order
to
assess
their
creditworthiness
and
determine
their
credit
rating.
In
particular,
MRA
takes
into
account
the
company's
balance sheets, profit & loss accounts and cash flow statements to calculate key ratios. Its ratio analysis includes assessments of each
ratio’s
trend across multiple periods, both in terms of the slope
and volatility of the trend. It also compares
the value of the ratio for
the most recent period
with the quartile values for
a comparable peer group.
Moreover,
MRA is supplied with a commonly
used set
of qualitative
factors
relating to
the quality
of the company’s
management, the
standing of
the company,
including the
company’s
transaction behavior towards the Bank, and the
perceived riskiness of the
industry. MRA is used for the assessment
of all legal entities
with full accountancy tax books irrespective
of their legal form, and is calibrated
on the Greek corporate environment.
The MRA is
not employed
for certain
types of entities
that use different
accounting methods
to prepare
their financial statements,
such as Insurance companies and brokerage firms. Moreover,
entities such as start-ups that have not produced financial information
for at least
two annual accounting periods
are not rated
with MRA. In such cases, the
Internal Credit Rating
(“ICR”) is utilized, which
is
a
scorecard
consisting
of
a
set
of
factors
grouped
into
3
main
sections
corresponding
to
particular
areas
of
analysis:
Financial
Information,
Qualitative
Criteria,
and
Behavior
Analysis.
In
addition,
the
Group
performs
an
overall
assessment
of
wholesale
customers, based both on their rating
(MRA or ICR) and the collaterals and guarantees
regularly at every credit assessment. In 2021,
in
combination
with
the
application
of
the
new
Definition
of
Default,
the
Bank
calibrated
its
MRA
and
ICR
models,
which
were
approved by the regulatory authorities.
With reference to Specialized Lending portfolio (for which the Bank is using Slotting rating models) and in line with European Banking
Authority (EBA) definitions, it comprises types of
exposures towards entities specifically created to finance or operate physical assets,
where the primary source of
income and repayment
of the obligation lies directly
with the assets being financed. Accordingly,
three
of its
product lines
that are
included in
the Specialized
Lending exposure
class: Project
Finance (assessed
with the
Project Finance
Scorecard), Commercial Real Estate
(assessed with the CRE investor & CRE Developer
Scorecards) and Object Finance (assessed with
the Object Finance Scorecard tailored for
the Shipping portfolio).
In addition, the
Group has developed
an Unlikely to Pay/Impairment test. Unlikeliness
to pay refers to circumstances when
a Borrower
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 days past due (i.e. to exposures less than 90 dpd). The impairment test , which is performed to all borrowers during
every credit assessment is implemented in the CL platform
and includes clearly defined indicators of unlikeliness to
pay (UTP). These
indicators are separated
in “Hard” and “Soft” UTP triggers.
●
Hard
UTP
indicators
lead
directly
to
a
recognition
of
non-performing
(automatic
NPE
classification),
as
in
most
cases
these
events, by their very nature, directly fulfil the definition
of UTP and there is little room for interpretation.
●
Soft UTP triggers when applied, do
not automatically mean that an exposure is non-performing,
but that a thorough assessment
should be performed (assessment prior to NPE classification).
The Group has further enhanced
its wholesale credit risk assessment
models linking risk parameters estimation with macro-economic
factors allowing the forecasting
of rating transitions under different
macroeconomic scenarios (base, adverse and optimistic).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The rating systems described
above are an integral part of the wholesale banking decision-making
and risk management processes:
●
the credit approval or rejection, both at the origination
and review process;
●
the allocation of competence levels for
credit approval;
●
risk-adjusted pricing;
●
the calculation of Economic Value
Added (EVA) and internal capital
allocation; and
●
the impairment calculation (staging criteria and
subsequent ECL estimation of forecasted
risk parameters).
Rating of retail lending exposures
The Group
assigns credit
scores to
its retail
customers
using a
number of
statistically-based
models both
at the
origination and
on
ongoing basis
through behavioral
scorecards.
These models have
been developed
to predict,
on the
basis of available
information,
the probability of default, the loss given default and the exposure at default. They cover the entire spectrum of retail products (credit
cards, consumer lending, unsecured revolving credits,
car loans, personal loans, mortgages and small business loans).
The
Bank’s
models
were
developed
based
on
historical
data
and
credit
bureau
data.
Behavioral
scorecards
are
calculated
automatically on a monthly basis, thus ensuring that the credit risk
assessment is up to date.
The
models
are
applied
in
the
credit
approval
process,
the
credit
limits
management,
as
well
as
the
collection
process
for
the
prioritization of the accounts in
terms of handling. Furthermore,
the models are often
used for the risk
segmentation of the customers
and the
risk based
pricing of
particular segments
or new
products
introduced
as well
as in
the calculation
of the
Economic
Value
Added (EVA) and Risk Adjusted Return
on Capital (RaRoC) measures.
In the context of IFRS9 implementation, the Bank
has further enhanced its retail credit
risk assessment models linking risk
parameters
estimation with macro-economic factors allowing their
forecasting over one year and
lifetime horizon under different macroeconomic
scenarios (base, adverse and optimistic) and supporting the staging analysis and allocation to risk classes under homogeneous pools.
The Group
Credit Risk
Capital Adequacy
Control
monitors the
capacity of
rating
models and
scoring systems
to classify
customers
according to
risk, as well as
to predict the
probability of default
and loss given
default and exposure
at default on
an ongoing basis.
The
Group
Models
Validation
and
Governance
implements
the
Bank's
validation
policy
which
complies
with
international
best
practices and regulatory requirements. The Bank verifies the validity of the rating models and scoring systems on an annual basis and
the validation includes both quantitative and qualitative aspects. The validation procedures
are documented, and regularly reviewed
and reported to the BRC.
The Group’s Internal
Audit also independently reviews the validation
process in wholesale and retail rating systems
annually.
(f) Credit risk mitigation
A key component of the Group's business strategy is to reduce risk by utilizing various risk mitigating techniques. The most important
risk mitigating means are collaterals'
pledges, guarantees and master
netting arrangements.
Types of collateral commonly accepted
by the Group
The Group has internal
policies in place
which set out
the following types of
collateral that are usually accepted
in a credit
relationship:
●
residential real estate,
commercial real estate (offices, shopping malls, etc.),
industrial buildings and land;
●
receivables (trade debtors)
and post dated cheques;
●
securities, including listed shares and bonds;
●
deposits;
●
guarantees and letters
of support;
●
insurance policies; and
●
equipment, mainly, vehicles
and vessels.
A specific
coverage
ratio
is pre-requisite,
upon the
credit relationship’s
approval and
on ongoing
basis, for
each collateral
type, as
specified in the Group’s credit
policy.
For
exposures,
other than
loans to
customers
(i.e. reverse
repos,
derivatives),
the
Group
accepts as
collateral
only
cash or
liquid
bonds.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Valuation principles of collaterals
In defining
the maximum
collateral
ratio for
loans, the
Group considers
all relevant
information available,
including the
collaterals’
specific characteristics,
if market
participants
would
take
those into
account
when
pricing the
relevant
assets.
The valuation
and
hence eligibility is based on the following factors:
●
the collateral’s
fair
value,
i.e. the
exit price
that
would
be received
to
sell the
asset in
an orderly
transaction
under current
market conditions;
●
the fair value reflects market participants’ ability to generate economic benefits by using the asset in its highest and best use or
by selling it;
●
a reduction in the
collateral’s
value is considered
if the type, location
or condition (such as deterioration
and obsolescence) of
the asset indicate so; and
●
no collateral value is assigned if a pledge is not
legally enforceable.
The
Group
performs
collaterals’
valuation
in
accordance
with
its
processes
and
policies.
The
Group
has
an
approved
list
of
independent and qualified appraisers,
which is updated on an annual basis or at shorter intervals if necessary.
With the exception of
special cases (e.g. syndicated
loans), the real estate collaterals
of all units are valued by
Cerved Property Services S.A. (“CPS”) who is
the successor
of the
Bank’s
former subsidiary,
Eurobank Property
Services S.A. CPS
is regulated
by the
Royal Institute
of Chartered
Surveyors
and
employs
internal
or
external
qualified
appraisers
based
on
predefined
criteria
(qualifications
and
expertise).
All
appraisals
take
into
account
factors
such
as
the
region,
age
and
marketability
of
the
property,
and
are
further
reviewed
and
countersigned by experienced staff.
The valuation methodology employed is based on International
Valuation Standards
(IVS), while
quality controls are in place, such as reviewing mechanisms, independent
sample reviews by independent well established
valuation
companies.
In order to monitor the valuation of residential property held as collateral, the Group uses the Residential Property Index of the Bank
of Greece. The
index has been
created by
the Real Estate
Market Analysis
Section of BoG using
detailed information
collected from
all Credit
Institutions
and Real
Estate
Investment
Companies (REIC)
operating
in Greece.
The Residential
Property
Index is
used in
combination with physical inspection and desktop
valuation, depending on the EBA status and the
balance of the loan.
For commercial
real
estates,
the Group
uses the
Commercial Real
Estate
Index developed
by CPS.
This index
is derived
through
a
combination of CPS & BoG CRE indices and it is
based on internationally accepted methodology. It constitutes a tool for the statistical
monitoring
of possible
changes of
the values
of the
commercial properties
as well
as for
the trends
in the
particular market.
It is
updated on an annual basis. The
Commercial Real Estate Index is used in combination with physical inspection and desktop valuation,
depending on the EBA status and the balance of the loan.
To ensure
the quality of the post-dated cheques
accepted as collateral, the Bank has developed
a pre-screening system, which
takes
into
account
a
number
of
criteria
and
risk
parameters,
so
as
to
evaluate
their
eligibility.
Furthermore,
the
post-dated
cheques’
valuation is monitored through
the use of advanced statistical
reports and through the review
of detailed information
regarding the
recoverability of cheques, referrals
and bounced cheques, per issuer broken down.
Collateral policy and documentation
Regarding collaterals, Group’s
policy emphasizes the need that collaterals and relevant processes are timely and prudently executed,
in
order
to
ensure
that
collaterals
and relevant
documentation
are
legally
enforceable
at
any
time. The
Group
holds the
right
to
liquidate collateral in the event
of the obligor’s financial
distress and can claim
and control cash proceeds
from the liquidation process.
Guarantees
The guarantees used as credit risk mitigation
by the Group are largely issued by central and
regional governments in the countries in
which
it
operates.
The
Hellenic
Development
Bank
(HDB)
and
similar
funds,
banks
and
insurance
companies
are
also
significant
guarantors of credit risk.
Management of repossessed properties
The
objective
of
the
repossessed
assets’
management
is
to
minimize
the
time
cycle
of
the
asset’s
disposal
and
to
maximize
the
recovery of the capital engaged.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
To this
end, the management of repossessed assets
aims at improving rental
and other income from the
exploitation of such assets,
and at the
same time reducing
the respective holding and
maintenance costs. Additionally, the Group is
actively engaged in identifying
suitable potential buyers for its portfolio of repossessed assets (including specialized funds involved
in acquiring specific portfolios of
properties repossessed), both in Greece and abroad,
in order to reduce its stock of properties with a time horizon
of 3-5 years.
Repossessed assets are closely monitored based on technical and
legal due diligence reports, so that their market value
is accurately
reported and updated in accordance with market
trends.
Counterparty risk
The
Group
mitigates
counterparty
risk
arising
from
treasury
activities
by
entering
into
master
netting
arrangements
and
similar
agreements, as well
as collateral agreements
with counterparties with
which it undertakes
a significant volume
of transactions. The
respective credit risk is reduced through a master netting agreement to the extent that if an event of default occurs, all amounts with
the counterparty are terminated and
settled on a net basis.
In the case of
derivatives, the Group
makes use of
International Swaps
and Derivatives Association
(ISDA) contracts,
which limit the
exposure
via
the
application
of
netting,
and
Credit
Support
Annex
(CSAs),
which
further
reduce
the
total
exposure
with
the
counterparty. Under these agreements, the total exposure with the counterparty is calculated on a daily
basis taking into account any
netting arrangements and collaterals.
The same
process is
applied in
the case
of repo
transactions where
standard
Global Master
Repurchase
Agreements
(GMRAs) are
used. The exposure
(the net difference
between repo
cash and the
market value
of the securities)
is calculated
on a daily basis
and
collateral is transferred
between the counterparties thus minimizing the exposure.
Following
the
European
Market
Infrastructure
Regulation
(EMIR),
the
Bank
performs
centrally
cleared
transactions
for
eligible
derivative contracts
through an EU
authorized European
central counterparty
(CCP), recorded
in trade
repositories. The
use of CCP
increases market transparency
and reduces counterparty credit and operational
risks inherent in derivatives markets.
The Bank uses a comprehensive
collateral management
system for
the monitoring of ISDA, CSAs
and GMRAs, i.e. the daily
valuation
of the derivatives
and the market value
of the securities are used for
the calculation of each counterparty’s
exposure. The collateral
which should be posted or requested by the relevant
counterparty is calculated daily.
With
this
system,
the
Bank
monitors
and
controls
the
collateral
flow
in
case
of
derivatives
and
repos,
independently
of
the
counterparty. The effect of any market
movement that increases the Bank’s exposure is reported and the Bank proceeds to collateral
call accordingly.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
5.2.1.1 Maximum exposure to credit
risk before collateral held
2023
2022
€ million
€ million
Credit risk exposures relating to on-balance sheet assets
are as
follows:
Due from credit institutions
2,355
1,330
Less: Impairment allowance
(1)
2,354
(1)
1,329
Debt securities held for trading
245
87
Derivative financial instruments
881
1,185
Loans and advances to customers at
amortised cost:
- Wholesale lending⁽¹⁾
25,912
26,054
- Mortgage lending
9,942
10,201
- Consumer lending
3,436
3,353
- Small business lending
3,484
3,842
Less: Impairment allowance
(1,258)
41,516
(1,626)
41,824
Fair value changes of loans in portfolio hedging of
interest rate risk
15
(163)
Loans and advances to customers measured
at FVTPL
15
16
Investment securities:
- Debt securities measured at amortised cost
10,974
9,214
Less: Impairment allowance
(18)
10,955
(22)
9,192
Debt securities measured at FVOCI
3,492
3,828
Investment securities at FVTPL
263
241
Other financial assets⁽²⁾
218
202
Less: Impairment allowance
(22)
196
(23)
179
Credit risk exposures relating to off-balance
sheet items (note 42):
- Loan commitments
8,068
7,611
- Financial guarantee contracts and
other commitments
3,348
2,860
Total
71,348
68,189
(1)
Includes loans to public sector.
(2)
Refers to financial assets subject to IFRS 9 impairment requirements, which are recognised within other assets
The above table represents the Group’s
maximum credit risk exposure as at 31 December 2023 and
31 December 2022 respectively,
without taking
account
of any
collateral
held or
other credit
enhancements
that
do not
qualify for
offset
in the
Group's
financial
statements.
For on-balance
sheet assets,
the exposures
set out above
are based
on the carrying
amounts as reported
in the balance
sheet. For
off-balance
sheet
items,
the
maximum
exposure
is
the
nominal
amount
that
the
Group
may
be
required
to
pay
if
the
financial
guarantee contracts
and other commitments
are called upon
and the loan
commitments are drawn
down. Off-balance
sheet credit
risk exposures
presented
above, include
revocable loan
commitments to
extend credit
of €
3.5 billion
(2022: €
3.7 billion)
that are
subject to ECL measurement.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
5.2.1.2
Loans and advances to customers
The section below provides an
overview of the Group’s exposure to credit risk arising
from its customer lending portfolios, in line
with
the guidelines
set by
the Hellenic
Capital
Markets
Commission and
the Bank
of Greece
(BoG) released
on 30
September 2013,
as
updated by the Group
in order to comply with
the revised IFRS 7 ‘Financial
Instruments: Disclosures’,
following the adoption of
IFRS
9
from
2018.
In
addition,
the
types
of
the
Group’s
forbearance
programs
are
in
line
with
the
BoG’s
Executive
Committee
Act
42/30.05.2014 and its amendments.
(a) Credit quality of loans and advances to customers
Loans and advances to customers carried
at amortised cost are classified depending on how ECL is measured.
Accordingly,
loans reported
as non-impaired
include loans
for
which a
‘12-month
ECL allowance’
is recognized
as they
exhibit
no
significant increase in credit risk since initial recognition and loans for which a ‘Lifetime ECL allowance’
is recognized as they exhibit a
significant increase in credit risk since initial recognition
but are not considered to be in default.
Credit impaired loans category includes loans that are considered to be in default, for which a loss allowance equal to a ‘Lifetime ECL’
is recognized,
and loans
classified as ’Purchased
or originated
credit impaired’
(POCI) which are
always measured
on the
basis of a
‘Lifetime
ECL’.
The
Group
applies
a
default
definition
for
accounting
purposes,
which
is
consistent
with
the
European
Banking
Authority (EBA) definition for non-performing
exposure and regulatory definition of default.
Loans
and
advances
to
customers
carried
at
FVTPL
are
not
subject
to
ECL
measurement
and
therefore
are
not
included
in
the
quantitative information provided in the below sections for loans and advances measured at amortised cost, except where indicated.
The Group’s accounting
policy for impairment of financial assets is set out in note 2.2.13.
Quantitative information
The
following
quantitative
analysis
presents
information
about
the
total
gross
carrying
amount
of
loans
and
advances
including
securitization
notes
issued
by
special
purpose
entities
established
by
the
Group,
and
the
nominal
amount
of
credit
related
commitments, that are
classified as non-impaired (stage
1 and stage
2) and those classified as
credit-impaired (stage
3 and POCI). It
also presents
the impairment
allowance recognized
in respect of
all loans and
advances and
credit related
commitments, analyzed
into individually or
collectively assessed, based
on how the
respective impairment allowance has
been calculated, the
carrying amount
of
loans
and advances,
as well
as
the
value
of
collateral
held to
mitigate
credit
risk
which is
capped
to
the respective
gross
loan
amount. In particular,
the following four tables for 2023 and
2022
provide:
●
a summary of the credit quality of lending exposures and credit related
commitments, presenting product line, stage
allocation,
respective impairment allowance and collateral
held
●
the classification of lending exposures and credit related
commitments into the internal credit rating
categories,
●
the movement of the gross carrying amounts for
loans and advances to customers by product line and
stage,
●
the ageing analysis of credit impaired (Stage 3 and
POCI) loans and advances to customers
Public Sector lending
exposures include exposures
to the central
government, local authorities,
state-linked
companies and entities
controlled and fully
or partially owned by the
state, excluding
public and private
companies with commercial activity.
For credit risk
management purposes, exposures to Public Sector
are incorporated in wholesale lending.
.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The following tables present
summary information about the
credit quality (stage analysis,
impairment allowance and
collateral held per product
line) of loans
and advances to
customers carried at amortised
cost and
credit related
commitments.
In addition,
they include the
fair value
changes of
loans in
portfolio hedging
of interest
rate risk
and the loans
and advances
to customers
carried at
FVTPL for
the
purpose of reconciliation with the total carrying amount
of loan and advances to customers:
.
31 December 2023
Impairment allowance
Lifetime ECL -
Stage 3 and POCI⁽¹⁾
Lifetime ECL -
Stage 3 and POCI⁽¹⁾
12-month ECL -
Stage 1
Lifetime ECL - Stage 2
Individually
assessed
Collectively
assessed
Total gross carrying
amount/nominal
exposure
12-month ECL -
Stage 1
Lifetime ECL - Stage 2
Individually
assessed
Collectively
assessed
Carrying amount
Value of
collateral
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Retail Lending
12,331
3,716
85
730
16,861
(99)
(272)
(60)
(381)
16,050
11,385
- Mortgage
6,909
2,618
39
376
9,942
(20)
(154)
(33)
(175)
9,560
Value of collateral
6,726
2,237
16
310
9,289
- Consumer
2,242
297
1
102
2,642
(45)
(48)
(1)
(84)
2,463
Value of collateral
132
1
1
0
133
- Credit card
701
73
0
20
794
(8)
(4)
(0)
(19)
762
Value of collateral
0
0
0
0
0
- Small business
2,480
728
45
231
3,484
(25)
(65)
(26)
(102)
3,265
Value of collateral
1,246
547
23
147
1,962
Wholesale Lending
23,987
1,198
539
169
25,893
(71)
(58)
(219)
(99)
25,447
16,621
- Large corporate
15,791
544
232
27
16,593
(47)
(30)
(85)
(12)
16,420
Value of collateral
8,370
395
150
10
8,926
- SMEs
3,752
654
307
142
4,856
(25)
(28)
(134)
(86)
4,584
Value of collateral
2,429
517
220
86
3,252
- Securitized notes⁽²⁾
4,444
-
-
-
4,444
(0)
-
-
-
4,444
Value of collateral
4,444
-
-
-
4,444
Public Sector
18
0
-
0
19
(0)
(0)
-
(0)
18
1
- Greece
18
-
-
0
18
(0)
-
-
(0)
18
Value of collateral
1
-
-
0
1
- Other countries
0
0
-
-
0
(0)
(0)
-
-
0
Value of collateral
-
-
-
-
-
Fair value changes of loans in
portfolio hedging of interest rate
risk
15
Loans and advances to customers
at FVTPL
15
15
Total
36,336
4,914
624
899
42,773
(170)
(329)
(279)
(480)
41,545
28,022
Total value of collateral
23,348
3,697
409
553
Credit related commitments
11,049
311
36
20
11,416
(18)
(4)
(20)
(6)
Loan commitments
7,801
259
6
2
8,068
(11)
(3)
-
-
Financial guarantee contracts and
other commitments
3,247
51
31
19
3,348
(7)
(1)
(20)
(6)
Value of collateral
1,193
101
14
7
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
31 December 2022
Impairment allowance
Lifetime ECL - Stage 3 and POCI⁽¹⁾
Lifetime ECL - Stage 3 and POCI⁽¹⁾
12-month ECL -
Stage 1
Lifetime ECL - Stage 2
Individually
assessed
Collectively
assessed
Total gross carrying
amount/nominal
exposure
12-month ECL -
Stage 1
Lifetime ECL - Stage 2
Individually
assessed
Collectively
assessed
Carrying amount
Value of
collateral
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Retail Lending
12,169
3,992
105
1,131
17,396
(81)
(280)
(73)
(571)
16,392
11,598
- Mortgage
6,832
2,825
50
495
10,201
(21)
(160)
(41)
(188)
9,792
Value of collateral
6,563
2,378
22
385
9,348
- Consumer
2,028
357
0
214
2,599
(31)
(42)
(0)
(149)
2,376
Value of collateral
125
2
0
3
130
- Credit card
642
70
0
42
755
(6)
(6)
(0)
(37)
705
Value of collateral
0
0
0
0
0
- Small business
2,668
740
54
380
3,842
(23)
(72)
(32)
(197)
3,518
Value of collateral
1,347
550
25
198
2,120
Wholesale Lending
23,424
1,581
841
182
26,028
(68)
(75)
(368)
(109)
25,408
16,836
- Large corporate
14,865
794
284
19
15,961
(40)
(27)
(139)
(11)
15,744
Value of collateral
7,890
551
165
11
8,618
- SMEs
3,658
787
557
163
5,166
(28)
(48)
(228)
(99)
4,763
Value of collateral
2,238
601
387
91
3,317
- Securitized notes⁽²⁾
4,901
-
-
-
4,901
(0)
-
-
-
4,901
Value of collateral
4,901
-
-
-
4,901
Public Sector
25
0
1
0
26
(0)
(0)
(1)
(0)
25
0
- Greece
25
-
-
0
25
(0)
-
-
(0)
24
Value of collateral
0
-
-
0
0
- Other countries
0
0
1
-
1
(0)
(0)
(1)
-
1
Value of collateral
0
-
-
-
0
Fair value changes of loans in
portfolio hedging of interest rate
risk
(163)
Loans and advances to customers
at FVTPL
16
16
Total
35,618
5,573
946
1,313
43,450
(149)
(355)
(441)
(680)
41,677
28,450
Total value of collateral
23,065
4,082
599
688
Credit related commitments
10,129
289
36
17
10,471
(20)
(6)
(24)
(7)
Loan commitments
7,429
178
3
1
7,611
(12)
(5)
(1)
(0)
Financial guarantee contracts and
other commitments
2,701
110
33
16
2,860
(8)
(2)
(23)
(7)
Value of collateral
1,113
56
9
5
(1)
As at 31 December
2023, total gross carrying amount
of credit impaired loans includes
POCI loans of €
29 million and carry an
impairment allowance of €
8.1 million
(2022: € 43 million gross
carrying amount and € 6.5
million impairment
allowance).
(2)
It refers to the
senior notes of the
Pillar, Cairo
and Mexico securitizations that are
collateralized by the underlying
pool of loans held
by the respective securitization
vehicles (note 20). The
amount of the securitized loan
portfolios has been
capped to the gross carrying amount of the senior notes. In addition, the senior notes of the Cairo and
Mexico securitizations are guaranteed by the Hellenic Republic in the context of Hellenic Asset Protection Scheme (note 20).
Notes to the Consolidated Financial Statements
.
67
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31 December 2023 Consolidated Financial Statements
The Group assesses the credit quality of its loans and advances to customers
and credit related commitments that are subject to
ECL
using internal credit
rating systems
for the wholesale
portfolio, which
are based on
a variety of quantitative
and qualitative factors,
while the credit quality of the retail portfolio is based
on the allocation of risk classes into homogenous pools.
The following tables present the distribution
of the gross carrying amount of loans and advances and the nominal exposure
of credit
related commitments based on the credit quality
classification categories and stage allocation:
31 December 2023
31 December 2022
Internal credit rating
12-month ECL-
Stage 1
Lifetime ECL-Stage 2
Lifetime ECL -
Stage 3 and
POCI
Total gross
carrying
amount
12-month ECL -
Stage 1
Lifetime ECL - Stage
2
Lifetime ECL -
Stage 3 and
POCI
Total gross
carrying
amount
Retail Lending
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
- Mortgage
PD<2.5%
6,587
1,282
0
7,869
6,460
1,167
-
7,627
2.5%<=PD<4%
196
69
0
265
265
284
-
549
4%<=PD<10%
105
874
0
980
66
437
-
502
10%<=PD<16%
14
192
0
206
20
553
-
573
16%<=PD<99.99%
7
201
1
209
21
384
-
405
100%
-
-
414
414
-
-
545
545
- Consumer
PD<2.5%
512
0
-
512
287
8
-
294
2.5%<=PD<4%
700
21
-
721
707
34
-
742
4%<=PD<10%
945
29
0
975
964
133
-
1,097
10%<=PD<16%
54
74
-
129
46
11
-
57
16%<=PD<99.99%
30
172
0
202
23
172
-
194
100%
-
-
103
103
-
-
214
214
- Credit card
PD<2.5%
335
1
-
337
372
5
-
377
2.5%<=PD<4%
338
26
0
364
263
41
-
304
4%<=PD<10%
27
15
-
42
6
4
-
11
10%<=PD<16%
-
3
0
3
0
5
-
5
16%<=PD<99.99%
-
27
-
27
0
15
-
15
100%
-
-
20
20
-
-
42
42
- Small business
PD<2.5%
912
26
-
938
1,328
48
-
1,376
2.5%<=PD<4%
715
161
-
876
498
63
-
561
4%<=PD<10%
825
381
-
1,206
652
47
-
699
10%<=PD<16%
1
67
-
68
47
165
-
213
16%<=PD<99.99%
26
93
-
119
143
417
-
559
100%
-
-
276
276
-
-
434
434
Wholesale Lending
- Large corporate
Strong
11,391
1
-
11,392
10,572
0
-
10,572
Satisfactory
4,197
377
10
4,583
4,127
432
-
4,559
Watch list
204
166
-
369
165
362
-
527
Impaired (Defaulted)
-
-
249
249
-
-
303
303
- SMEs
Strong
1,194
19
-
1,213
1,090
9
-
1,098
Satisfactory
2,401
334
0
2,735
2,318
321
-
2,639
Watch list
157
301
-
458
250
458
-
708
Impaired (Defaulted)
-
-
450
450
-
-
720
720
- Securitized notes
Strong
4,444
-
-
4,444
4,901
-
-
4,901
Public Sector
All countries
Strong
18
-
-
18
25
-
-
25
Satisfactory
1
-
-
1
-
-
-
-
Watch list
-
0
-
0
-
0
-
0
Impaired (Defaulted)
-
-
0
0
-
-
1
1
Total
36,336
4,914
1,523
42,773
35,618
5,573
2,259
43,450
Notes to the Consolidated Financial Statements
.
68
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31 December 2023 Consolidated Financial Statements
31 December 2023
31 December 2022
Internal credit rating
12-month ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL -
Stage 3 and
POCI
Total
nominal
amount
12-month ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL -
Stage 3 and
POCI
Total
nominal
amount
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Credit Related
Commitments
Retail Lending
Loan commitments
PD<2.5%
1,084
6
-
1,090
1,455
14
-
1,469
2.5%<=PD<4%
1,356
46
-
1,401
1,025
62
-
1,088
4%<=PD<10%
574
97
-
671
541
30
-
571
10%<=PD<16%
47
18
-
64
33
3
-
37
16%<=PD<99.99%
0
30
-
30
1
13
-
14
100%
-
-
2
2
-
-
1
1
Financial guarantee
contracts and other
commitments
PD<2.5%
14
-
-
14
81
0
-
81
2.5%<=PD<4%
136
0
-
136
77
1
-
78
4%<=PD<10%
29
1
-
30
22
0
-
22
10%<=PD<16%
5
0
-
6
-
0
-
0
16%<=PD<99.99%
1
-
-
1
0
2
-
2
100%
-
-
2
2
-
-
1
1
Wholesale Lending
Loan commitments
Strong
3,738
1
-
3,739
3,126
0
-
3,126
Satisfactory
978
56
-
1,034
1,241
37
-
1,278
Watch list
25
7
-
31
6
18
-
24
Impaired
(Defaulted)
-
-
6
6
-
-
3
3
Financial guarantee
contracts and other
commitments
Strong
2,017
1
-
2,018
1,940
10
-
1,950
Satisfactory
987
31
-
1,018
552
36
-
588
Watch list
57
19
-
77
28
62
-
90
Impaired
(Defaulted)
-
-
48
48
-
-
48
48
Total
11,049
311
57
11,416
10,129
289
53
10,471
The table below depicts the internal credit rating
bands (MRA rating scale or equivalent)
for the wholesale portfolio that correspond
to the credit quality classification categories
presented in the above tables:
Wholesale Lending
Credit Quality classification
categories
Internal Credit Rating
Large Corporate
Internal Credit Rating
SMEs
Strong
1-4
1-3
Satisfactory
5-6
4-6
Watch list
7-9
7-9
Impaired (Defaulted)
10
10
Notes to the Consolidated Financial Statements
.
69
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31 December 2023 Consolidated Financial Statements
The following tables present the movement of the gross carrying
amounts for loans and advances to customers
by product line and stage and is calculated by reference
to the opening and closing balances
for the reporting years from 1 January
2023 to 31 December 2023 and 1 January 2022 to 31 December 2022:
31 December 2023
Wholesale
Mortgage
Consumer
Small business
12-month ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL -
Stage 3 and
POCI
12-month ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL -
Stage 3 and
POCI
12-month ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL -
Stage 3 and
POCI
12-month ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL -
Stage 3 and
POCI
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Gross carrying amount at 1
January
23,448
1,581
1,024
6,832
2,825
545
2,669
427
257
2,668
740
434
43,450
New loans and advances
originated or purchased
5,930
-
-
756
-
-
859
-
-
536
-
-
8,081
Arising from acquisition (note
23.2)
-
-
-
-
-
-
443
-
6
-
-
-
450
Transfers
between stages
-to 12-month ECL
451
(443)
(8)
532
(520)
(12)
74
(65)
(9)
123
(116)
(7)
-
-to lifetime ECL
(363)
498
(135)
(392)
487
(95)
(84)
103
(18)
(186)
235
(49)
-
-to lifetime ECL credit-
impaired loans
(55)
(173)
228
(54)
(163)
217
(36)
(38)
74
(53)
(77)
130
-
Loans and advances
derecognised/ reclassified as
held for sale during the year
(696)
(53)
(29)
(180)
(11)
(174)
(465)
(91)
(129)
(104)
(23)
(155)
(2,109)
Amounts written-off⁽¹⁾
-
-
(216)
-
-
(46)
-
-
(62)
-
-
(62)
(387)
Repayments
(4,654)
(240)
(135)
(858)
(185)
(49)
(484)
(59)
(44)
(578)
(75)
(36)
(7,396)
Foreign exchange differences
and other movements
(55)
27
(21)
274
185
30
(33)
92
48
73
44
21
685
Gross Carrying amount at 31
December
24,005
1,198
709
6,909
2,618
415
2,942
369
124
2,480
728
276
42,773
Impairment allowance
(72)
(58)
(318)
(20)
(154)
(208)
(53)
(53)
(105)
(25)
(65)
(128)
(1,258)
Carrying amount at 31
December
23,934
1,140
391
6,888
2,464
207
2,890
317
19
2,454
663
148
41,515
Notes to the Consolidated Financial Statements
.
70
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31 December 2023 Consolidated Financial Statements
31 December 2022
Wholesale
Mortgage
Consumer
Small business
12-month ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI
12-month ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI
12-month ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI
12-month ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Gross carrying amount at 1
January
20,594
1,670
1,452
6,871
2,735
498
2,572
311
358
2,540
744
469
40,815
New loans and advances
originated or purchased
6,986
-
8
809
-
-
840
-
-
725
-
-
9,368
Transfers
between stages
-to 12-month ECL
576
(575)
(1)
333
(318)
(15)
92
(82)
(10)
154
(143)
(12)
-
-to lifetime ECL
(802)
819
(17)
(506)
611
(105)
(272)
303
(31)
(183)
235
(52)
-
-to lifetime ECL credit-
impaired loans
(41)
(85)
125
(60)
(151)
210
(71)
(44)
115
(38)
(75)
113
-
Loans and advances
derecognised/ reclassified as
held for sale during the year
(2)
(2)
(276)
(2)
-
(0)
(0)
-
-
-
-
(1)
(282)
Amounts written-off⁽¹⁾
-
-
(87)
-
-
(10)
-
-
(141)
-
-
(53)
(290)
Repayments
(4,060)
(293)
(184)
(820)
(179)
(45)
(507)
(87)
(61)
(615)
(70)
(38)
(6,959)
Foreign exchange differences
and other movements
198
46
2
204
127
11
15
26
26
84
49
8
798
Gross Carrying amount at 31
December
23,448
1,581
1,024
6,832
2,825
545
2,669
427
257
2,668
740
434
43,450
Impairment allowance
(68)
(75)
(478)
(21)
(160)
(229)
(37)
(48)
(186)
(23)
(72)
(229)
(1,626)
Carrying amount at 31
December
23,380
1,506
546
6,810
2,665
316
2,633
379
70
2,645
668
205
41,824
(1)
The contractual amount outstanding on lending exposures that were written off during the year ended 31 December 2023 and that are
still subject to enforcement activity is € 338 million (2022: € 111 million).
Note 1: Wholesale product line category includes also Public sector loans portfolio.
Note 2: “Loans and
advances derecognised/ reclassified as held
for sale during the
year” presents loans derecognized due
to a) substantial
modifications of the loans’
contractual terms, b) sale
transactions, c) debt to
equity transactions and
those that have been reclassified as held for sale during the year (notes 20 and 30).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Credit impaired loans and advances to customers
The following
tables present
the ageing
analysis of
credit impaired
(Stage 3
and POCI)
loans and
advances by
product line
at their
gross carrying amounts, as well as the respective impairment
allowance and the value of collaterals held to
mitigate credit risk.
For denounced loans, the Group ceases to monitor the delinquency status and therefore the respective balances have
been included
in the ‘over 360 days’ time band, with the
exception of consumer exposures which continue to be monitored up to 360
days past due.
31 December 2023
Retail lending
Wholesale lending
Public sector
Lifetime ECL
credit-impaired
Mortgage
Consumer
Credit card
Small
business
Large
corporate
SMEs
Greece and
other countries
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
up to 90 days
174
42
6
132
191
189
0
734
90 to 179 days
32
18
6
20
33
14
-
123
180 to 360 days
73
22
5
33
1
45
-
179
more than 360 days
136
21
3
91
33
202
0
487
Total gross carrying
amount
415
104
20
276
259
450
0
1,523
Impairment allowance
(208)
(86)
(19)
(128)
(98)
(220)
(0)
(759)
Carrying amount
207
18
1
148
161
230
0
764
Value of Collateral
326
1
0
169
160
306
0
962
31 December 2022
Retail lending
Wholesale lending
Public sector
Lifetime ECL
credit-impaired
Mortgage
Consumer
Credit card
Small
business
Large
corporate
SMEs
Greece and
other countries
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
up to 90 days
192
68
7
120
138
308
0
832
90 to 179 days
38
23
7
19
16
31
-
133
180 to 360 days
82
38
9
47
1
52
-
228
more than 360 days
233
86
20
248
149
329
1
1,066
Total gross carrying
amount
545
214
42
434
303
720
1
2,259
Impairment allowance
(229)
(149)
(37)
(229)
(150)
(327)
(1)
(1,121)
Carrying amount
316
65
5
205
153
393
0
1,138
Value of Collateral
407
3
0
223
177
478
0
1,287
Note: As at 31 December 2023, total gross carrying amount of credit impaired loans includes POCI loans
of € 29 million (2022: € 43 million).
Notes to the Consolidated Financial Statements
.
72
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31 December 2023 Consolidated Financial Statements
(b) Collaterals and repossessed assets
Collaterals
The Loan-to-Value
(LTV)
ratio of
the mortgage
lending reflects
the gross
loan exposure
at the
balance sheet
date over
the market
value of the property held as collateral.
The LTV ratio
of the mortgage portfolio is presented below:
2023
2022
€ million
€ million
Mortgages
Less than 50%
2,852
2,881
50%-70%
2,456
2,373
71%-80%
1,621
1,524
81%-90%
979
1,042
91%-100%
659
825
101%-120%
557
604
121%-150%
402
437
Greater than 150%
415
516
Total exposure
9,942
10,201
Average LTV
55.18%
57.30%
The breakdown of collateral
and guarantees for loans and advances to
customers at amortised cost is presented
below:
31 December 2023
Value of collateral received
Guarantees
received⁽¹⁾
Real Estate
Financial
Other
Total
€ million
€ million
€ million
€ million
€ million
Retail Lending
10,618
304
463
11,385
554
Wholesale Lending
5,300
877
10,444
16,621
632
Public sector
-
1
0
1
-
Total
15,919
1,181
10,907
28,007
1,186
31 December 2022
Value of collateral received
Guarantees
Received⁽¹⁾
Real Estate
Financial
Other
Total
€ million
€ million
€ million
€ million
€ million
Retail Lending
10,760
443
396
11,598
721
Wholesale Lending
5,544
923
10,368
16,836
744
Public sector
0
0
0
0
-
Total
16,304
1,366
10,764
28,434
1,465
(1)
In addition to the above presented guarantees, (i) from December 2021, the Group has entered into two
financial guarantees contracts ‘Wave I’ and ‘Wave
II’ related to the
portfolios of performing SMEs
and large corporate loans
of € 1.1
billion as at 31
December 2023 (31
December 2022: € 1.4
billion) (ii) from
December 2022, into the financial guarantees contract ‘Wave III’ related to the portfolio of performing shipping loans of € 1.4
billion as at 31 December 2023
(31 December 2022: €
1.6 billion) and (iii) from
December 2023, into
the financial guarantees contract
‘Wave IV’ related to
the portfolios of performing
SBB
and large corporate loans of € 1.5 billion as at 31 December 2023 (note 20).
The collaterals
presented in
the above table
under category
“Other”, include
assigned receivables,
equipment, inventories,
vessels,
etc. They also include the amount of the securitized loans held by the securitizations vehicles that
issued the Pillar, Cairo and Mexico
senior notes. The amount of the securitized loans has been capped
to the gross carrying amount of the senior notes. In addition,
the
senior notes of
the Cairo and
Mexico securitizations are guaranteed by
the Hellenic
Republic in the
context of Hellenic
Asset Protection
Scheme (note 20).
Notes to the Consolidated Financial Statements
.
73
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31 December 2023 Consolidated Financial Statements
Repossessed assets
The Group recognizes
collateral assets
on the balance
sheet by taking
possession usually through
legal processes or
by calling upon
other credit enhancements. As at 31 December
2023, the carrying amount of repossessed assets
which are included in “Other assets”
amounted to € 495 million
(31 December 2022: €
559 million), note 29. These
assets are carried at the lower of
cost and net realizable
value (note 2.2.18).
The main
type of
collateral
that the
Group repossesses
against
repayment
or reduction
of the
outstanding
loan is
real estate.
The
below
table
presents
the
movement
of
repossessed
real
estate
assets
during
the
year,
including
a)
those
transferred
to
the
appropriate category based on their use by the Group as part of its operations i.e. investment property or own-used (notes 2.2.6, 26,
and 27) and b) those reclassified to “held for sale” category
(notes 30).
2023
2022
Real estate
Real estate
Residential
Commercial
Total
Residential
Commercial
Total
€ million
€ million
€ million
€ million
€ million
€ million
Balance at 1 January
212
345
557
209
362
571
Additions⁽¹⁾
11
17
28
14
22
36
Transfers
to investment property
(2)
-
(2)
(3)
(8)
(11)
Disposals
(12)
(27)
(39)
(4)
(22)
(26)
Valuation losses
(4)
(14)
(18)
(4)
(9)
(13)
Held for Sale (note 30 )
(8)
(24)
(32)
-
-
-
Other
(2)
1
(1)
0
(0)
0
Balance at 31 December
195
298
493
212
345
557
(1)
The carrying amount
of the real
estate properties
obtained during the
year and held
at the year
ended 31
December 2023
amounted to €
24 million
(31
December 2022: € 32 million).
In addition, the Group
repossesses other types of
collaterals mainly
referring to
equity positions due to
the participation in debt
for
equity transactions as part of forbearance measures
(see below “Debt for equity swaps”).
(c) Geographical and industry concentrations
of loans and advances to customers
As
described
above
in
note
5.2.1,
the
Group
holds
diversified
portfolios
across
markets
and
countries
and
implements
limits
on
concentrations arising from the
geographical location or the
activity of groups
of borrowers that could
be similarly affected by
changes
in economic or other conditions, in order to mitigate
credit risk.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The following
tables break
down the
Group’s
exposure into
loans and
advances to
customers and
credit related
commitments at
their gross
carrying amount
and nominal
amount respectively
by stage,
product line, industry and geographical region
and impairment allowance by product line, industry and geographical
region:
31 December 2023
Greece
Rest of Europe
Other Countries
Gross carrying/nominal amount
Gross carrying/nominal amount
Gross carrying/nominal amount
12-month ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
Impairment
allowance
12-month ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
Impairment
allowance
12-month ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
Impairment
allowance
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Retail Lending
8,338
3,374
687
(638)
3,983
341
127
(173)
10
0
0
(0)
-Mortgage
4,821
2,531
361
(331)
2,080
87
53
(51)
7
0
0
(0)
-Consumer
936
131
53
(89)
1,303
166
50
(89)
3
0
0
(0)
-Credit card
546
43
16
(25)
154
30
5
(7)
0
0
0
(0)
-Small business
2,035
670
258
(193)
445
59
18
(26)
0
-
-
(0)
Wholesale Lending
11,601
668
573
(348)
9,038
527
133
(96)
3,348
3
3
(3)
-Commerce and services⁽²⁾
4,443
284
270
(168)
5,411
69
70
(45)
427
3
1
(1)
-Manufacturing
2,614
131
189
(110)
780
42
21
(14)
5
-
-
(0)
-Shipping
14
-
0
(0)
210
-
-
(0)
2,725
-
1
(2)
-Construction
1,329
30
42
(36)
784
80
4
(4)
83
-
0
(0)
-Tourism
1,045
215
67
(22)
357
98
9
(8)
-
-
-
-
-Energy
2,098
0
4
(7)
244
21
3
(4)
-
-
-
-
-Other
58
9
1
(4)
1,253
217
25
(20)
107
-
-
(0)
Public Sector
18
-
0
(0)
0
0
-
-
-
-
-
-
Total
19,957
4,042
1,260
(986)
13,021
868
260
(269)
3,358
3
3
(3)
Credit related
Commitments
8,066
199
49
(44)
2,634
109
8
(4)
349
3
0
(0)
-Loan commitments
5,778
163
0
(11)
1,687
94
7
(3)
336
3
0
(0)
-Financial guarantee
contracts and other
commitments
2,287
36
49
(33)
947
15
1
(1)
13
-
0
(0)
Notes to the Consolidated Financial Statements
.
75
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31 December 2023 Consolidated Financial Statements
31 December 2022
Greece
Rest of Europe
Other Countries
Gross carrying/nominal amount
Gross carrying/nominal amount
Gross carrying/nominal amount
12-month ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
Impairment
allowance
12-month ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
Impairment
allowance
12-month ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
Impairment
allowance
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Retail Lending
8,547
3,571
1,024
(807)
3,614
420
210
(197)
7
0
1
(1)
-Mortgage
4,978
2,677
463
(337)
1,848
147
81
(72)
6
0
1
(1)
-Consumer
835
177
126
(141)
1,191
180
88
(82)
1
0
0
(0)
-Credit card
543
51
36
(43)
98
19
6
(6)
0
0
0
(0)
-Small business
2,191
665
399
(286)
477
74
35
(38)
0
-
-
(0)
Wholesale Lending
10,579
1,001
804
(479)
9,676
572
207
(131)
3,169
8
12
(11)
-Commerce and services⁽²⁾
4,135
331
393
(242)
6,215
106
62
(47)
535
0
6
(6)
-Manufacturing
2,658
292
130
(96)
969
39
26
(16)
5
-
-
(0)
-Shipping
8
2
44
(44)
241
-
15
(16)
2,455
-
6
(5)
-Construction
1,279
51
57
(45)
616
62
17
(14)
65
8
-
(0)
-Tourism
962
308
176
(48)
228
118
44
(2)
-
-
-
-
-Energy
1,474
1
2
(3)
234
31
16
(8)
-
-
-
-
-Other
64
17
1
(0)
1,174
215
28
(28)
109
-
-
(0)
Public Sector
25
-
0
(0)
0
0
1
(1)
-
-
-
-
Total
19,151
4,572
1,829
(1,286)
13,291
992
418
(328)
3,176
9
13
(11)
Credit related Commitments
7,352
175
48
(47)
2,489
114
4
(10)
288
0
0
(0)
-Loan commitments
5,493
109
2
(12)
1,654
70
2
(6)
281
0
0
(0)
-Financial guarantee
contracts and other
commitments
1,859
66
46
(35)
835
44
2
(4)
7
-
0
(0)
(1)
Includes POCI loans of € 12.7 million held by operations in Greece, € 16.1 million held by operations in Rest of Europe and € 0.1 million held by operations
in Other Countries (2022: € 8.3 million in Greece, € 34.3 million in
Rest of Europe and €
0.1 million in Other Countries).
(2)
The operations in Rest of Europe include € 4,444 million related to the notes of the Pillar, Cairo and Mexico securitizations (2022: € 4,901 million).
As at 31 December 2023, the carrying amount of Group's loans measured at
FVTPL of € 15 million was included in Wholesale lending portfolio, which
was held by operations in Greece (2022: € 16 million).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
(d) Forbearance practices on lending activities
Modifications
of
the
loans’
contractual
terms
may
arise
due
to
various
factors,
such
as
changes
in
market
conditions,
customer
retention and other factors as
well as due
to the potential
deterioration in the borrowers’ financial
condition. The Group
has employed
a range of forbearance
solutions in order to
enhance the management of
customer relationships
and the effectiveness
of collection
efforts, as well as to improve
the recoverability of cash flows
and minimize credit losses for both retail
and wholesale portfolios.
Forbearance practices’ classification
Forbearance practices
as monitored
and reported by
the Group, based
on the European
Banking Authority Implementing
Technical
Standards (EBA
ITS) guidelines,
occur only
in the
cases where
the contractual
payment terms
of a
loan have
been modified,
as the
borrower is considered unable to
comply with the existing loan’s
terms due to apparent financial difficulties, and
the Group grants a
concession by
providing more
favorable
terms and
conditions that
it would
not otherwise
consider had
the borrower
not been
in
financial difficulties.
All other
types of
modifications granted
by the
Group, where
there is
no apparent
financial difficulty
of the
borrower and
may be
driven by factors of a business nature
are not classified as forbearance measures.
Forbearance solutions
Forbearance solutions are granted following an assessment of the borrower’s ability and willingness to repay and can be of a short or
longer
term
nature.
The
objective
is to
assist
financially
stressed
borrowers
by rearranging
their
repayment
cash
outflows into
a
sustainable
modification,
and
at
the
same
time,
protect
the
Group
from
suffering
credit
losses.
The
Group
deploys
targeted
segmentation strategies
with the objective
to tailor different
short or long
term and sustainable
management solutions
to selected
groups of borrowers for
addressing their specific financial needs.
The nature and type of forbearance options
may include but is not necessarily limited to, one or more of the
following:
●
arrears capitalization;
●
arrears repayment plan;
●
reduced payment above interest
only;
●
interest-only payments;
●
reduced payment below interest
only;
●
grace period;
●
interest rate reduction;
●
loan term extensions;
●
split balance and gradual step-up of installment
payment plans;
●
partial debt forgiveness/write-down;
●
operational restructuring; and
●
debt to equity swaps.
Specifically
for
unsecured
consumer
loans
(including
credit
cards),
forbearance
programs
(e.g.
term
extensions),
are
applied
in
combination with debt consolidation whereby all existing consumer balances are pooled together.
Forbearance solutions are applied
in
order
to
ensure
a
sufficient
decrease
on
installment
and
a
viable
solution
for
the
borrower.
In
selected
cases,
the
debt
consolidations may be combined with mortgage prenotations
to convert unsecured lending exposures
to secured ones.
In the case of mortgage loans, a decrease of installment
may be achieved through
forbearance measures such as extended payment
periods, capitalization of arrears,
split balance and gradual step-up of installment
payment plans.
Wholesale exposures
are subject to
forbearance when
there are indications
of financial difficulties
of the borrower,
evidenced by a
combination of factors including the deterioration
of financials, credit rating downgrade, payment
delays and other.
Debt for equity swaps
For
wholesale
portfolios,
the Group
on
occasion
participates
in
debt
for
equity
transactions
as
part
of
forbearance
measures,
as
described in note
2.2.9. In 2023,
there were
no equity
positions acquired
by the Group
and held as
of 31 December
2023. In
2022,
equity positions acquired by the Group and held
as of 31 December 2022, related
to the participation of 3% in Kalogirou S.A.
for trade
of footwear,
apparel and leather goods for a nil consideration.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
i.
Classification of Forborne loans
Forborne loans are classified either as non-impaired (stage
2), or impaired (stage 3) by assessing their delinquency and credit quality
status.
Credit impaired
forborne loans enter
initially a probation
period of one
year where
the borrowers’
payment performance
is closely
monitored. If at
the end of the abovementioned
period, the borrowers
have complied with
the terms of the
program and there
are
no past due amounts and concerns
regarding the loans’ full
repayment, the loans are
then reported as non-impaired forborne
loans
(stage 2).
In addition,
non-impaired forborne
loans, including those
that were
previously classified as
credit impaired
and complied
with the
terms of
the program,
are monitored
over a
period of
two years.
If,
at the
end of
that period,
the borrowers
have made
regular payments
of a
significant aggregate
amount, there
are no
past due
amounts over
30 days
and the
loans are
neither credit
impaired nor any other SICR criteria are met they
exit forborne status and are classified as stage
1.
Particularly,
the category
of
credit
impaired
forborne
loans includes
those that
(a) at
the date
when
forbearance
measures
were
granted, were
more than
90 days
past due
or assessed
as unlikely
to pay,
(b) at
the end
of the one
year probation
period met
the
criteria of entering the
non -impaired status and
during the two years monitoring
period new forbearance
measures were extended
or became more than 30 days past
due, and (c) were initially classified as non-
impaired and during the two years
monitoring period
met the criteria for entering the credit impaired
status.
Furthermore,
forborne
loans
that
fail
to
perform
under
the
new
modified
terms
and
are
subsequently
denounced
cease
to
be
monitored as
part of the
Group’s
forbearance activities
and are reported
as denounced credit
impaired loans (stage
3) consistently
with the Group’s management
and monitoring of all denounced loans.
ii.
Impairment assessment
Where forbearance
measures are extended,
the Group performs
an assessment of
the borrower’s
financial condition and
its ability
to repay,
under the
Group’s
impairment policies,
as described
in notes
2.2.13 and
5.2.1. Accordingly,
forborne loans
to wholesale
customers,
retail
individually
significant
exposures
and
financial
institutions
are
assessed
on
an
individual
basis.
Forborne
retail
lending
portfolios
are
generally
assessed
for
impairment
separately
from
other
retail
loan portfolios
on a
collective
basis as
they
consist of large homogenous portfolio.
iii.
Loan restructurings
In
cases
where
the
contractual
cash
flows
of
a
forborne
loan
have
been
substantially
modified,
the
original
forborne
loan
is
derecognized
and a
new loan
is recognized.
The Group
records
the modified
asset as
a ‘new’
financial asset
at fair
value and
the
difference with the carrying amount of the existing
one is recorded in the income statement
as derecognition gain or loss.
In cases where
the modification as
a result of
forbearance measures
is not considered
substantial, the Group
recalculates the
gross
carrying amount of
the loan and
recognizes the difference as a
modification gain or loss
in the income
statement. The Group continues
to monitor the modified forborne loan in
order to determine if the financial
asset exhibits significant increase in credit risk since
initial
recognition during the forbearance period.
As at 31 December 2023, the carrying amount of Group's forborne
loans measured at FVTPL was nil (2022: nil).
The following
tables present
an analysis
of Group’s
forborne activities
for loans
measured at
amortised cost.
In order
to align
with
the quantitative
information provided
in section (a) based
on revised IFRS
7 requirements,
the relevant
tables below are
presented
on a gross
carrying amount basis,
while cumulative
impairment allowance is
presented separately,
in line with
the Group’s
internal
credit risk monitoring and reporting.
Notes to the Consolidated Financial Statements
.
78
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31 December 2023 Consolidated Financial Statements
The following table presents a summary of the types of the Group’s
forborne activities:
2023
2022
€ million
€ million
Forbearance measures:
Split balance
147
234
Loan term extension
787
1,044
Arrears capitalisation
72
137
Reduced payment below interest owed
36
71
Interest rate reduction
117
136
Reduced payment above interest owed
81
111
Arrears repayment plan
96
109
Interest only
57
35
Grace period
68
55
Debt/equity swaps
-
8
Partial debt forgiveness/Write-down
1
1
Operational restructuring
13
14
Other
34
54
Total gross carrying
amount
1,509
2,012
Less: cumulative impairment allowance
(307)
(401)
Total carrying amount
1,202
1,611
The following tables present a summary of the credit
quality of forborne loans and advances to customers:
31 December 2023
Total loans &
advances at
amortised
cost
Forborne
loans &
advances
% of Forborne
loans &
advances
€ million
€ million
Gross carrying amounts:
12-month ECL-Stage 1
36,336
-
-
Lifetime ECL-Stage 2
4,914
889
18.1
Lifetime ECL-Stage 3 and POCI
1,523
620
40.7
Total Gross Amount
42,773
1,509
3.5
Cumulative ECL Loss allowance:
-
-
12-month ECL-Stage 1
(170)
-
Lifetime ECL-Stage 2
(329)
(49)
Lifetime ECL-Stage 3 and POCI of which:
(759)
(257)
- Individually assessed
(279)
(112)
- Collectively assessed
(480)
(145)
Total carrying amount
41,515
1,202
2.9
Collateral received
28,007
1,184
Notes to the Consolidated Financial Statements
.
79
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31 December 2023 Consolidated Financial Statements
31 December 2022
Total loans &
advances at
amortised cost
Forborne loans
& advances
% of Forborne
loans &
advances
€ million
€ million
Gross carrying amounts:
12-month ECL-Stage 1
35,618
-
-
Lifetime ECL-Stage 2
5,573
1,138
20.4
Lifetime ECL-Stage 3 and POCI
2,259
874
38.7
Total Gross
Amount
43,450
2,012
4.6
Cumulative ECL Loss allowance:
-
-
12-month ECL-Stage 1
(149)
-
Lifetime ECL-Stage 2
(355)
(80)
Lifetime ECL-Stage 3 and POCI of which:
(1,121)
(321)
- Individually assessed
(441)
(165)
- Collectively assessed
(680)
(156)
Total carrying amount
41,824
1,611
3.9
Collateral received
28,434
1,527
The following table presents the movement
of forborne loans and advances:
2023
2022
€ million
€ million
Gross carrying amount at 1 January
2,012
2,946
Forbearance measures in the year
322
299
Forborne loans derecognised/ reclassified as held
for sale during the year ⁽¹⁾
(85)
(56)
Write-offs of forborne loans
(47)
(22)
Repayment of loans
(221)
(233)
Loans & advances that exited forbearance status
⁽²⁾
(582)
(965)
Other
110
42
Less: cumulative impairment allowance
(307)
(401)
Carrying amount at 31 December
1,202
1,611
(1)
“Forborne loans derecognised/ reclassified as held for sale
during the year” presents loans derecognized during the year due
to a) sale transactions and b)
substantial modifications of the loans’ contractual terms and those that have been reclassified as held for sale during the year (notes
20 and 30).
(2)
In 2023, an amount of € 73 million loans and advances that exited forbearance status refers to loans that were denounced (2022: € 88 million).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The following table presents the Group’s
exposure to forborne loans and advances by
product line:
2023
2022
€ million
€ million
Retail Lending
762
1,153
- Mortgage
457
751
- Consumer
78
106
- Credit card
6
16
- Small business
220
280
Wholesale Lending
747
859
-Large corporate
237
277
-SMEs
510
582
Total gross carrying
amount
1,509
2,012
Less: cumulative impairment allowance
(307)
(401)
Total carrying amount
1,202
1,611
The following table presents the Group’s
exposure to forborne loans and advances by
geographical region:
2023
2022
€ million
€ million
Greece
1,116
1,638
Rest of Europe
388
374
Other countries
5
0
Total gross carrying
amount
1,509
2,012
Less: cumulative impairment allowance
(307)
(401)
Total carrying amount
1,202
1,611
The
following
table
provides
information
on
modifications
due
to
forbearance
measures
on
lending
exposures
which
have
not
resulted
in
derecognition.
Such financial
assets
were
modified
while
they
had
a loss
allowance
measured
at
an
amount
equal
to
lifetime ECL.
2023
2022
Modified lending exposures
€ million
€ million
Loans modified during the year with loss allowance measured
at an amount equal to lifetime ECL
Gross carrying amount at 31 December
401
449
Modification gain / (loss)
8
2
Loans modified since initial recognition at a time when loss allowance was based on
lifetime ECL
Gross carrying amount at 31 December for which loss allowance has changed to 12-month
ECL measurement
410
370
In
the
year
ended
31
December
2023,
the
gross
carrying
amount
of
loans
previously
modified
for
which
the
loan
allowance
has
reverted to being measured at an amount
equal to lifetime ECL amounted to
€ 284 million (2022: € 371 million).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
5.2.1.3 Debt Securities
The following
tables present
an analysis
of debt
securities by
external
credit rating
agency designation
at 31
December 2023
and
2022, based on Moody's ratings or their equivalent:
31 December 2023
12-month ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL-
Stage 3
Total
€ million
€ million
€ million
€ million
Debt securities at amortised cost
Aaa
2,789
-
-
2,789
Aa1 to Aa3
132
-
-
132
A1 to A3
231
4
-
235
Lower than A3
7,602
3
-
7,605
Unrated
180
-
32
212
Gross Carrying Amount
10,935
7
32
10,974
Impairment Allowance
(11)
(0)
(7)
(18)
Carrying Amount
10,924
7
25
10,955
Debt securities at FVOCI
Aaa
316
-
-
316
Aa1 to Aa3
202
-
-
202
A1 to A3
436
8
-
444
Lower than A3
2,411
40
-
2,451
Unrated
63
-
-
63
Carrying Amount
3,427
48
-
3,475
31 December 2022
12-month ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL-
Stage 3
Total
€ million
€ million
€ million
€ million
Debt securities at amortised cost
Aaa
2,617
-
-
2,617
Aa1 to Aa3
140
-
-
140
A1 to A3
133
-
-
133
Lower than A3
6,211
6
7
6,224
Unrated
74
-
26
100
Gross Carrying Amount
9,175
6
33
9,214
Impairment Allowance
(12)
(0)
(10)
(22)
Carrying Amount
9,163
6
23
9,192
Debt securities at FVOCI
Aaa
339
-
-
339
Aa1 to Aa3
212
-
-
212
A1 to A3
398
-
-
398
Lower than A3
2,605
121
-
2,726
Unrated
58
-
-
58
Carrying Amount
3,612
121
-
3,733
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
31 December 2023
Debt securities
held for trading
Debt securities
measured at
FVTPL
€ million
€ million
Debt securities at FVTPL
Aaa
55
-
A1 to A3
14
-
Lower than A3
176
0
Unrated
0
25
Carrying Amount
245
26
31 December 2022
Debt securities
held for trading
Debt securities
measured at
FVTPL
€ million
€ million
Debt securities at FVTPL
Lower than A3
86
0
Unrated
1
-
Carrying Amount
87
0
The carrying
amount of
debt securities
rated
lower than
A3, amounting
to €
10,222 million
(2022: €
9,022 million),
is analyzed
as
follows:
2023
2022
Sovereign
Banks and
Corporate
Sovereign
Banks and
Corporate
€ million
€ million
€ million
€ million
Debt securities
Greece
6,015
1,248
5,413
959
Other Eurozone members
967
604
922
520
Other EU members ⁽¹⁾
765
67
541
26
Other countries ⁽¹⁾
194
362
300
341
Carrying Amount
7,941
2,281
7,176
1,846
(1)
It includes debt securities issued by non-Eurozone members European countries of the Group's presence. As at 31 December 2023, it includes
debt securities
issued by Bulgaria with carrying value of € 527 million (2022: securities issued by
Bulgaria and Serbia with carrying value of € 517 million)
Following
a
series
of
sovereign
rating
upgrades
in
the
second
half
of
2023,
Greek
government’s
long-term
debt
securities
were
considered investment grade by four out of the five Eurosystem-approved External Credit Assessment Institutions (Fitch, Scope, S&P:
BBB-, stable outlook; DBRS: BBB(low),
stable outlook), and one notch below investment
grade by the fifth one, Moody’s
(Βa1, stable
outlook) as of March 2024.
The carrying amount of unrated
debt securities of € 293 million (2022: € 152
million) mainly comprise € 181 million Greek corporate
bonds (2022: € 133 million), and € 90 million Cyprus corporate bonds (2022: € nil).
As at
31 December 2023,
the nominal
value of
the Group’s
Russian debt
exposures, which
have been
classified as
credit impaired,
amounted to € 36 million, with an impairment allowance of
€ 5 million.
For the year
ended 31 December 2023,
the Group proceeded
with the disinvestment
of debt securities measured
at amortized cost
of face value
of € 204 million, mainly
for risk concentration
management purposes, resulting
in a derecognition
gain of € 0.2
million
approximately.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
GGBs swap transaction
In July 2023, the
Public Debt Management
Agency (PDMA) proceeded to
a transaction, which included
a switch and tender
offer on
specific Greek government bonds (GGB) maturing in 2024 and 2025 with coupons 3.45% and 3.375%,
respectively, at the repurchase
price of 100.15 for each of the notes, against a new GGB,
maturing in 2038 with a coupon of 4.375%, at a final offer price of 99.042.
Pursuant to the above, the Bank offered
GGBs of face value € 469 million, of which € 466 million held at the amortized
cost portfolio
and acquired an equal face amount of
the new GGB, of which
€ 459 million were classified
at amortized cost portfolio and € 10
million
within trading portfolio. Accordingly,
the original bonds were derecognized from
the Group’s
balance sheet with a resulting loss of €
19 million.
The following tables present the Group's exposure in debt securities, as categorized by stage, counterparty's geographical
region and
industry sector:
31 December 2023
Greece
Other European countries
Other countries
12-month
ECL-Stage 1
Lifetime ECL-
Stage 3
12-month
ECL-Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL-
Stage 3
12-month
ECL-Stage 1
Lifetime ECL-
Stage 2
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Debt securities at amortised cost
Sovereign
4,966
-
1,358
-
-
1,164
-
7,488
Banks
923
-
572
-
-
-
-
1,495
Corporate
326
4
1,012
3
27
614
4
1,991
Gross Carrying Amount
6,215
4
2,942
3
27
1,778
4
10,974
Impairment Allowance
(7)
(2)
(3)
(0)
(5)
(1)
(0)
(18)
Net Carrying Amount
6,208
3
2,939
3
22
1,777
4
10,955
Debt securities at FVOCI
Sovereign
909
-
887
-
-
426
-
2,221
Banks
14
-
210
-
-
-
-
224
Corporate
172
-
528
40
-
281
8
1,029
Carrying Amount
1,095
-
1,625
40
-
707
8
3,475
31 December 2022
Greece
Other European countries
Other countries
12-month
ECL-Stage 1
Lifetime ECL-
Stage 3
12-month
ECL-Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL-
Stage 3
12-month
ECL-Stage 1
Lifetime ECL-
Stage 2
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Debt securities at amortised cost
Sovereign
4,379
-
756
-
-
1,165
-
6,300
Banks
736
-
276
-
-
-
-
1,012
Corporate
241
7
989
3
26
633
3
1,902
Gross Carrying Amount
5,356
7
2,021
3
26
1,798
3
9,214
Impairment Allowance
(9)
(3)
(3)
(0)
(7)
(0)
(0)
(22)
Net Carrying Amount
5,347
4
2,018
3
19
1,798
3
9,192
Debt securities at FVOCI
Sovereign
976
-
1,046
94
-
451
-
2,567
Banks
12
-
209
7
-
-
-
228
Corporate
163
-
475
15
-
280
5
938
Carrying Amount
1,151
-
1,730
116
-
731
5
3,733
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
31 December 2023
Greece
Other
European
countries
Other
countries
Total
€ million
€ million
€ million
€ million
Debt securities at FVTPL
Banks
-
25
-
25
Corporate
0
-
-
0
Carrying Amount
0
25
-
26
Debt securities held for trading
Sovereign
142
18
55
216
Corporate
0
27
3
30
Carrying Amount
142
45
58
245
31 December 2022
Greece
Other
European
countries
Other
countries
Total
€ million
€ million
€ million
€ million
Debt securities at FVTPL
Corporate
0
-
-
0
Carrying Amount
0
-
-
0
Debt securities held for trading
Sovereign
63
23
-
86
Corporate
1
-
-
1
Carrying Amount
64
23
-
87
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
5.2.1.4 Offsetting of financial assets and financial liabilities
Financial assets and
financial liabilities are
offset according
to IAS 32
‘Financial Instruments
and the net
amount is presented
in the
balance sheet when, there is a legally enforceable right
to set off the recognized amounts and there
is an intention to settle on a net
basis, or to realize the asset and settle the liability simultaneously (the offsetting criteria), as also set out in Group's accounting policy
2.2.4.
Financial instruments
that meet the
offsetting criteria
include the eligible
repos and
reverse repos
under global
master repurchase
agreements
(GMRAs)
and
the
CCP
(Central
Counterparty)
cleared
OTC
derivative
financial
instruments.
Regarding
the
latter,
the
Group has assessed the terms of the clearing agreements for the derivatives
entered into with Clearing Members and has concluded
that the offsetting criteria are met, in respect of the cash accounts used for variation margin purposes for such derivatives, which are
also used for
the settlement
of all payments
thereunder.
Accordingly,
derivative assets
of € 752
million (2022: €
1,376 million)
and
derivative
liabilities
of
€
492
million
(2022:
€
444
million)
(note
19)
were
offset
against
€
317
million
(2022:
€
932
million)
cash
collateral received (note 32) and
€ 57 million (2022: nil) cash collateral pledged (note
17).
Financial instruments under
master netting
arrangements and
similar agreements that
do not meet the
criteria for offsetting
in the
balance
sheet
include
derivatives
(bilateral
agreements)
as
well
as
repos
and
reverse
repos,
for
which
a)
the
right
of
set-off
is
enforceable
only
following
an
event
of
default,
insolvency
or
bankruptcy
of
the
Group
or
the
counterparties
or
following
other
predetermined events and/or b)
the Group and its counterparties may not intend to settle
on a net basis or to realize the assets and
settle the liabilities simultaneously.
The following tables
present financial assets
and financial liabilities that
meet the criteria for
offsetting and thus
are presented
on a
net
basis
in
the
balance
sheet,
as
well
as
amounts
that
are
subject
to
enforceable
master
netting
arrangements
and
similar
agreements for
which the offsetting
criteria mentioned above
are not satisfied.
In respect of
the latter,
the Group
may receive and
provide
collateral
in
the
form
of
marketable
securities
and
cash
that
are
included
in
the
tables
below
under
columns
‘financial
instruments’ and ‘cash collateral’.
31 December 2023
Related amounts not offset in the BS
Gross amounts
of recognised
financial assets
Gross amounts
of recognised
financial
liabilities offset
in the balance
sheet
Net amounts of
financial assets
presented in
the balance
sheet
Financial
instruments
(incl. non-cash
collateral)
Cash
collateral
received
Net
amount
€ million
€ million
€ million
€ million
€ million
€ million
Financial Assets
Reverse repos with banks
1,249
(1,210)
39
(39)
-
-
Derivative financial instruments
1,612
(752)
860
(672)
(56)
132
Other financial assets
4
(4)
-
-
-
-
Deposits to banks pledged as
collateral
1,093
(57)
1,036
(340)
-
696
Total
3,958
(2,023)
1,935
(1,051)
(56)
828
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
31 December 2023
Related amounts not offset in the BS
Gross amounts
of recognised
financial
liabilities
Gross amounts
of recognised
financial assets
offset in the
balance sheet
Net amounts of
financial
liabilities
presented in
the balance
sheet
Financial
instruments
(incl. non-cash
collateral)
Cash
collateral
pledged
Net
amount
€ million
€ million
€ million
€ million
€ million
€ million
Financial Liabilities
Derivative financial
instruments
1,906
(492)
1,414
(930)
(340)
144
Repurchase agreements with banks
3,638
(1,210)
2,428
(2,428)
-
-
Other financial liabilities
4
(4)
-
-
-
-
Deposits from banks received as
collateral
404
(317)
87
(56)
-
31
Total
5,952
(2,023)
3,929
(3,414)
(340)
175
31 December 2022
Related amounts not offset in the BS
Gross amounts
of recognised
financial assets
Gross amounts
of recognised
financial
liabilities offset
in the balance
sheet
Net amounts of
financial assets
presented in the
balance sheet
Financial
instruments
(incl. non-cash
collateral)
Cash
collateral
received
Net
amount
€ million
€ million
€ million
€ million
€ million
€ million
Financial Assets
Reverse repos with banks
116
(114)
2
(2)
-
-
Derivative financial instruments
2,540
(1,376)
1,164
(685)
(232)
247
Other financial assets
9
(9)
-
-
-
-
Total
2,665
(1,499)
1,166
(687)
(232)
247
31 December 2022
Related amounts not offset in the BS
Gross amounts
of recognised
financial
liabilities
Gross amounts
of recognised
financial assets
offset in the
balance sheet
Net amounts of
financial
liabilities
presented in the
balance sheet
Financial
instruments
(incl. non-cash
collateral)
Cash
collateral
pledged
Net
amount
€ million
€ million
€ million
€ million
€ million
€ million
Financial Liabilities
Derivative financial
instruments
2,043
(444)
1,599
(685)
(237)
677
Repurchase agreements with banks
877
(114)
763
(763)
-
-
Other financial liabilities
9
(9)
-
-
-
-
Deposits from banks received as
collateral
1,226
(932)
294
(232)
-
62
Total
4,155
(1,499)
2,656
(1,680)
(237)
739
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Derivative
financial assets
and liabilities
not under
master
netting arrangements
and similar
agreements
of carrying
value of
€ 21
million and € 36 million, respectively,
(2022: € 21 million and € 62 million, respectively) are not presented
in the above tables.
Financial assets and
financial liabilities are
disclosed in the above
tables at their
recognized amounts,
either at fair
value (derivative
assets and liabilities) or amortized cost (all other financial instruments),
depending on the type of financial instrument.
5.2.2
Market risk
The Group takes on exposure to market risk, which is the risk of potential financial loss due to an adverse change in market variables.
Changes
in
interest
rates,
foreign
exchange
rates,
credit
spreads,
equity
prices
and
other
relevant
factors,
such
as
the
implied
volatilities, can affect the Group’s
income or the fair value of its financial instruments. The market
risks, the Group is exposed to, are
monitored, controlled and estimated
by Group Market and Counterparty Risk
Unit (GMCRU).
GMCRU is responsible
for the measurement,
monitoring, control
and reporting of
all market
risks, including the
interest rate
risk in
the Banking Book (IRRBB) and the credit spread risk
in the Banking Book (CSRBB) of the Group. In particular,
the Bank in response to
the
regulatory
developments
and requirements
(EBA/GL/2022/14),
has
further
enhanced
its infrastructure,
governance
and
limit
structure accordingly, so as to measure and monitor its
CSRBB, via a
dedicated stress testing framework. The Unit reports to
the GCRO
and its main responsibilities include:
●
Monitoring of all key market,
IRRBB and CSRBB risk indicators;
●
Implementation of Stress Testing
methodologies for market risk, IRRBB and
CSRBB (historical and hypothetical);
●
Monitoring and reporting of market and IRRBB and CSRBB risk limits utilization;
●
Development, maintenance and expansion of risk management
infrastructure.
The market risks the Group is exposed
to, are the following:
(a) Interest rate risk
The Group takes
on exposure to
the effects of
fluctuations in the
prevailing levels
of market interest
rates on its
cash flows and
the
fair
value
of
its financial
positions.
Cash flow
interest
rate
risk is
the risk
that
the future
cash flows
of
a financial
instrument
will
fluctuate because of
changes in market
interest rates.
Fair value interest
rate risk
is the risk that
the value of
a financial instrument
will fluctuate because of changes in market interest
rates. Fair value interest
rate risk is further split into ‘General’ and ‘Specific’.
The
former refers
to changes in the fair valuation
of positions due to the movements
of benchmark interest rates,
while the latter refers
to changes in the fair valuation of positions due to the
movements of specific issuer yields and credit spreads.
(b) Currency risk
The Group takes
on exposure to the
effects of fluctuations
in the prevailing foreign
currency exchange rates
on its financial position
and cash flows.
(c) Equity risk
Equity price risk is the risk
of the decrease of fair values as
a result of changes in the
levels of equity indices and the
value of individual
stocks. The equity risk that the Group undertakes
arises mainly from the investment portfolio.
(d) Implied volatilities
The Group carries limited implied volatility (vega)
risk, mainly as a result of open positions on options.
The BoD and
Board Risk Committee set limits on the level of exposure
to market risks, which are monitored
on a daily basis.
Market
risk
in
Greece
and
International
Subsidiaries
is
managed
and
monitored
mainly
using
Value
at
Risk
(VaR)
methodology.
Sensitivity and stress test analysis is additionally performed.
Notes to the Consolidated Financial Statements
.
88
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31 December 2023 Consolidated Financial Statements
(i) VaR
summary for 2023 and 2022
VaR is a
methodology used in measuring financial risk
by estimating the potential
negative change in the
market value of
a portfolio
at a
given confidence
level and
over a
specified time
horizon. The
VaR
that the
Group measures
is an
estimate based
upon a
99%
confidence level and a holding period of 1 day and the methodology used for the calculation is Monte Carlo simulation (full
re-pricing
of the positions is performed).
The VaR
models are designed
to measure
market risk
in a normal
market environment.
It is assumed
that any
changes occurring
in
the risk factors affecting the
normal market environment
will follow a normal distribution.
Although VaR
is an
important tool
for measuring
market risk,
the assumptions
on which
the model
is based
do give
rise to
certain
limitations. Given this, actual outcomes are
monitored regularly,
via back testing process, to test
the validity of the assumptions and
the parameters used in the VaR
calculation.
The perimeter of the VaR
analysis includes Eurobank
Ergasias Services and Holdings
S.A., Eurobank S.A. and its
banking subsidiaries,
taking into account the FVTPL, including trading
and FVOCI portfolios. Consequently,
the potential impact as it is depicted in the VaR
figures would directly affect Group’s
Capital (income statement or equity).
Since VaR
constitutes an
integral part
of the Group's
market risk
control regime,
VaR limits
have been
established for
all the above
operations
(trading
and
investment
portfolios
measured
at
fair
value)
and
actual
exposure
is
reviewed
daily
by
management.
However,
the use of this approach does not prevent losses outside of these limits in the event
of extraordinary market
movements.
VaR by risk type - Greece and International
Subsidiaries
(1)
.
2023
(Average)
2023
2022
(Average)
2022
€ million
€ million
€ million
€ million
Interest Rate Risk
7
9
22
9
Foreign Exchange Risk
0
1
0
0
Equities Risk
2
1
2
4
Total VaR
8
9
23
11
(1)
Includes all portfolios measured at fair value.
The aggregate VaR of the interest
rate, foreign exchange and equities VaR
benefits from diversification effects. The largest
portion of
the Group’s Interest Rate VaR figures is attributable to the risk associated with
interest rate and credit spread sensitive debt securities
and derivatives.
The average
VaR of
2023 is materially
decreased, as
compared to
the average
VaR
of 2022,
following the
reduced
volatility observed in the markets, after
the initial turmoil mainly caused by the geopolitical tension (war
in Ukraine) in 2022.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
(ii) Interest rate gap and sensitivity
The following
table provides
the interest
rate repricing
gap of
the Group,
which analyses
the structure
of interest
rate mismatches
within the balance sheet. The Group’s
financial assets/liabilities are included at their notional/outstanding
amounts and categorized
based on either (i) the next contractual repricing date if floating rate
or (ii) the maturity/call date (whichever is first) if fixed rate.
The
below analysis provides an approximation of the interest rate risk exposure since transactions with different
duration are aggregated
together per time bucket.
31 December 2023⁽²⁾
less than 1
month
1-3 months
3-12 months
1-5
years
More than 5
years
€ million
€ million
€ million
€ million
€ million
Balances with central banks
10,438
-
-
-
-
Due from credit institutions
2,208
1,125
7
-
60
Debt securities⁽¹⁾
758
481
928
5,333
6,446
Loans and advances to customers
16,453
8,026
8,084
5,133
4,675
29,857
9,632
9,018
10,467
11,182
Due to central banks
(3,665)
-
-
-
-
Due to credit institutions
(1,148)
(3,260)
-
(251)
-
Due to customers
(44,418)
(4,859)
(6,655)
(1,406)
-
Debt securities in issue
-
-
(96)
(3,872)
(711)
(49,231)
(8,118)
(6,751)
(5,529)
(711)
Derivative financial instruments
1,891
2,397
60
1,146
(5,584)
Interest rate gap
(17,483)
3,910
2,327
6,084
4,886
31 December 2022⁽²⁾
less than 1
month
1-3 months
3-12 months
1-5
years
More than 5
years
€ million
€ million
€ million
€ million
€ million
Balances with central banks
14,481
-
-
-
-
Due from credit institutions
1,012
64
27
-
-
Debt securities⁽¹⁾
390
215
371
5,513
5,797
Loans and advances to customers
18,658
10,244
8,034
2,536
2,538
34,541
10,523
8,432
8,049
8,335
Due to central banks
(8,872)
-
-
-
-
Due to credit institutions
(575)
(968)
(299)
(1)
(14)
Due to customers
(48,934)
(3,754)
(3,991)
(336)
(2)
Debt securities in issue
(2)
-
(5)
(1,916)
(1,700)
(58,383)
(4,721)
(4,295)
(2,253)
(1,716)
Derivative financial instruments
4,844
(155)
(471)
69
(4,360)
Interest rate gap
(18,998)
5,647
3,666
5,865
2,259
(1)
Including short positions in debt securities (note 35).
(2)
Amounts are before offsetting (note 5.2.1.4).
The Group performs a sensitivity analysis to assess
the impact on net interest income (NII) and
on other comprehensive income (OCI),
to a hypothetical change in the market
interest rates.
.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The impact
on NII is
calculated under
the scenario of
an instantaneous
parallel shift
of all interest
rates by
+/- 100bps,
for a 1-year
period, assuming a static balance sheet approach. As at 31 December 2023 the impact on NII, under the scenario of a parallel shift
in
the yield curves, stands at € 194 million (+100bps) and € -171 million (-100bps) (31 December
2022: € 232 million and € -279 million,
respectively).
The
impact on
OCI is
calculated
as the
fair
value
movement
of
all financial
assets measured
at
FVOCI,
net of
hedging
and of
any
hedging instruments
designated in
qualifying cash flow
hedge relationships.
As at 31
December 2023 the
impact on OCI,
under the
scenario of a parallel shift
in the yield curves, stands
at € -68 million (+100bps) and
€ 72 million (-100bps) (31 December
2022: € -49
million and € 51 million, respectively).
.
(iii) Foreign exchange risk
The following tables present the Group’s
exposure to foreign currency
exchange risk as at 31 December 2023 and 2022:
31 December 2023
USD
CHF
RON
BGN
OTHER
EUR
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
ASSETS
Cash and balances with
central banks
13
2
0
867
7
10,054
10,943
Due from credit
institutions
380
31
33
2
72
1,836
2,354
Securities held for trading
55
-
-
19
0
305
379
Derivative financial
instruments
19
0
-
0
1
861
881
Loans and advances to
customers
3,210
1,886
7
5,129
714
30,599
41,545
Investment securities
1,668
-
-
75
288
12,679
14,710
Other assets⁽¹⁾
13
4
4
288
2
8,452
8,763
Assets of disposal groups
classified as held for sale
(note
30)
0
59
-
-
-
147
206
Total Assets
5,358
1,982
44
6,380
1,084
64,933
79,781
LIABILITIES
Due to central banks and
credit institutions
188
0
0
5
11
6,645
6,849
Derivative financial
instruments
18
2
0
0
1
1,429
1,450
Due to customers
5,822
61
2
5,035
593
45,929
57,442
Debt securities in issue
76
-
-
-
0
4,680
4,756
Other liabilities⁽²⁾
43
1
21
80
7
1,233
1,385
Total Liabilities
6,147
64
23
5,120
612
59,916
71,882
Net on balance sheet
position
(789)
1,918
21
1,260
472
5,017
7,899
Derivative forward
foreign exchange position
668
(1,921)
(10)
(329)
(502)
1,781
(313)
Total Foreign
Exchange
Position
(121)
(3)
11
931
(30)
6,798
7,586
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
31 December 2022
USD
CHF
RON
RSD
BGN
OTHER
EUR
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
ASSETS
Cash and balances with
central banks
29
4
0
375
472
9
14,105
14,994
Due from credit
institutions
330
20
33
0
0
63
883
1,329
Securities held for trading
0
-
-
-
18
0
116
134
Derivative financial
instruments
23
0
0
0
0
0
1,162
1,185
Loans and advances to
customers
3,068
1,999
8
616
3,975
555
31,456
41,677
Investment securities
1,743
-
-
99
81
264
11,074
13,261
Other
assets ⁽¹⁾
16
75
5
99
213
6
8,396
8,810
Assets of disposal groups
classified as held for sale
(note 30)
-
-
-
-
-
-
84
84
Total Assets
5,209
2,098
46
1,189
4,759
897
67,276
81,474
LIABILITIES
Due to central banks and
credit institutions
200
0
0
45
8
9
10,326
10,588
Derivative financial
instruments
21
1
0
129
0
1
1,509
1,661
Due to customers
5,929
95
1
666
4,313
604
45,631
57,239
Debt securities in issue
73
73
-
-
-
5
3,401
3,552
Other
liabilities⁽²⁾
25
1
18
20
51
3
1,584
1,702
Total Liabilities
6,248
170
19
860
4,372
622
62,451
74,742
Net on balance sheet
position
(1,039)
1,928
27
329
387
275
4,825
6,732
Derivative forward foreign
exchange position
778
(1,927)
(15)
(54)
(0)
(281)
819
(680)
Total Foreign
Exchange
Position
(261)
1
12
275
387
(6)
5,644
6,052
(1)
Other assets include Investments in associates and joint ventures, Property and equipment, Investment
property, Intangible assets, Deferred tax
assets and
Other assets.
(2)
Other liabilities include liabilities of disposal group classified
as held for sale (note 30).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
5.2.3
Liquidity risk
The Group
is exposed
to daily
calls on
its available
cash resources
due to
deposits withdrawals,
maturity of
medium or
long-term
notes,
maturity of
secured
or unsecured
funding (interbank
repos and
money market
takings), loan
drawdowns
and forfeiture
of
guarantees. Furthermore, margin calls on secured funding transactions (with ECB and the market), on risk mitigation contracts (CSAs,
GMRAs) and on
centrally cleared transactions
(CCPs) result in
liquidity exposure. The
Group maintains
cash resources to
meet all of
these needs. The Board Risk Committee sets liquidity limits to ensure
that sufficient funds are available to
meet such contingencies.
Past experience
shows that
liquidity requirements
to support
calls under
guarantees and
standby letters
of credit
are considerably
less than the amount
of the commitment. This is
also the case with credit
commitments where the outstanding
contractual amount
to extend
credit does
not necessarily
represent
future cash
requirements,
as many
of these
commitments will
expire or
terminate
without being funded.
The
matching
and
controlled
mismatching
of
the
maturities
and
interest
rates
of
assets
and
liabilities
is
fundamental
to
the
management of the
Group. It is
unusual for banks
to be completely
matched, as transacted
business is often
of uncertain term
and
of different types. An unmatched
position potentially enhances profitability,
but also increases the risk of losses.
The maturities of assets and liabilities and the ability to
replace, at an acceptable cost, interest
bearing liabilities as they mature, are
important factors in assessing the liquidity of the
Group.
Liquidity Risk Management Framework
The Group’s Liquidity Risk Policy
defines the following supervisory and control structure:
-
Board Risk
Committee's role
is to approve
all strategic
liquidity risk
management decisions
and to
monitor the
quantitative and
qualitative aspects of liquidity risk;
-
Group Assets and Liabilities Committee has
the mandate to form and implement
the liquidity policies and
guidelines in conformity
with Group's risk appetite, and to review at
least monthly the overall liquidity position of the Group;
-
Group Treasury is responsible for the implementation of the Group's liquidity strategy,
taking into account the latest funding plan
and for the daily management of the Group’s
liquidity;
-
Group Market
and Counterparty Risk Sector
is responsible for
measuring, controlling, monitoring
and reporting the
liquidity risk
of the Group.
The main items related to liquidity risk that are
monitored on a periodic basis are summarized as follows:
●
The analysis of liquidity buffer held on Group level
per asset type and per subsidiary;
●
The Liquidity Coverage Ratio (LCR) both in solo
and group level;
●
The Net Stable Funding Ratio (NSFR) both in solo and group level;
●
Liquidity stress
test scenarios.
These scenarios
evaluate the
impact of
a number
of stress
events on
the Group's
liquidity
position;
●
Market sensitivities affecting liquidity;
●
The Additional Liquidity Monitoring Metrics (ALMM) both in solo and group level;
●
The Asset Encumbrance (AE) both in solo and group level;
●
Monitoring and implementation of the funding plan.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Maturity analysis of assets and assets held for managing liquidity risk
The following tables present maturity analysis of Group assets as at 31 December 2023 and 2022, based on their carrying values. The
Group has established credit risk mitigation contracts
with its interbank counterparties (ISDA/CSA). Under these contracts
the Group
has
posted
or
received
collateral,
which
covers
the
corresponding
net
liabilities
or
net
assets
from
derivative
transactions.
The
collateral
posted
is
not
presented
in
the
below
tables.
For
derivative
assets
not
covered
by
ISDA/CSA
agreements
the
positive
valuation is presented at fair
value in the ‘over 1 year’ time bucket.
31 December 2023
Less than 1
month
1 - 3
months
3 months
to 1 year
Over 1
year
Total
€ million
€ million
€ million
€ million
€ million
- Cash and balances with central banks
10,943
-
-
-
10,943
- Due from credit institutions
841
128
-
330
1,299
- Loans and advances to customers
2,841
1,348
3,817
33,539
41,545
- Debt Securities
72
93
617
13,919
14,701
- Equity securities
-
-
-
388
388
- Derivative financial instruments
-
-
-
13
13
- Other assets⁽¹⁾
62
16
8
8,677
8,763
- Assets of disposal groups classified as held for sale (note 30)
-
-
206
-
206
Total
14,759
1,585
4,648
56,866
77,858
31 December 2022
Less than 1
month
1 - 3
months
3 months
to 1 year
Over 1
year
Total
€ million
€ million
€ million
€ million
€ million
- Cash and balances with central banks
14,994
-
-
-
14,994
- Due from credit institutions
398
28
-
167
593
- Loans and advances to customers
3,164
1,271
3,549
33,693
41,677
- Debt Securities
115
137
349
12,411
13,012
- Equity securities
-
-
-
383
383
- Derivative financial instruments
-
-
-
9
9
- Other assets⁽¹⁾
62
16
8
8,724
8,810
- Assets of disposal groups classified as held for sale
-
-
84
-
84
Total
18,733
1,452
3,990
55,387
79,562
(1)
Other assets include Investments in associates and joint ventures, Property and equipment, Investment property,
Intangible assets, Deferred tax assets and
Other assets.
The
Group
holds
a
diversified
portfolio
of
cash
and
highly
liquid
assets
to
support
payment
obligations
and
contingent
deposit
withdrawals in a stressed market
environment. The Group's assets held for
managing liquidity risk comprise:
(a) Cash and balances with central banks;
(b) Eligible bonds and other financial assets for collateral
purposes; and
(c) Current accounts with banks and interbank
placings maturing within one month.
The unutilized assets, containing highly liquid and central banks eligible assets, provide
a contingent liquidity reserve of € 22.3 billion
as
of
31 December
2023
(2022:
€
20.1
billion).
This
increase
is
attributed
mainly
to:
i)
inflows
due
to
customer
deposits
(annual
increase from continuing
operations by € 1.8 billion)
and ii) two new senior bond
issuances equal to € 500 million
each.
In addition,
the Group holds other types of liquid
assets, as defined by the regulator,
amounting to € 7.0 billion (cash
value) (2022: € 7.5 billion).
It
should
be
noted
that
a part
of
the
ECB
available
collateral
of
€
1.8
billion
(cash
value)
(2022:
€
3.8
billion)
is
held
by
Group’s
subsidiaries for
which temporary
local regulatory
restrictions are
applied and
currently limit
the level
of its transferability
between
group entities.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Maturity analysis of liabilities
The amounts disclosed
in the
tables below are
the contractual undiscounted cash
flows for the
years 2023 and
2022. Liabilities without
contractual
maturities (sight
and saving
deposits) are
presented in
the ‘less
than 1 month’
time bucket.
The Group
has established
credit risk
mitigation
contracts with
its interbank
counterparties (ISDA/CSA).
Due to
these contracts
the Group
has already
posted
collateral which covers the valuation
of its net liabilities from interbank derivatives. For derivative liabilities not covered
by ISDA/CSA
agreements the negative valuation
is presented at fair value in the ‘less than
1 month’ time bucket.
It should be noted that this table represents the worst case scenario since it is based on the assumption that all liabilities will be paid
at maturity and they will
not be rolled over
(e.g. all term
deposits are withdrawn at their contractual maturity). The
recent experience
shows that even in a period of a systemic
financial crisis the likelihood of such an event is remote.
31 December 2023
Gross nominal
Less than
1 - 3
3 months
Over
(inflow)/
1 month
months
to 1 year
1 year
outflow
€ million
€ million
€ million
€ million
€ million
Non-derivative liabilities:
- Due to central banks and credit institutions
713
2,889
3,079
396
7,077
- Due to customers
44,691
5,775
6,682
424
57,572
- Debt securities in issue
75
593
245
4,986
5,899
- Lease liabilities
4
16
55
143
218
- Other liabilities
501
460
234
-
1,195
45,984
9,733
10,295
5,949
71,961
Derivative financial instruments
11
-
-
-
11
Off-balance sheet items
Less than
Over
1 year
1 year
€ million
€ million
Credit related commitments
2,429
8,989
Contractual commitments⁽¹⁾
37
-
Total
2,466
8,989
31 December 2022
Gross nominal
Less than
1 - 3
3 months
Over
(inflow)/
1 month
months
to 1 year
1 year
outflow
€ million
€ million
€ million
€ million
€ million
Non-derivative liabilities:
- Due to central banks and credit institutions
996
812
4,815
4,379
11,002
- Due to customers
49,755
3,220
4,038
250
57,263
- Debt securities in issue
37
7
141
4,395
4,580
- Lease liabilities
3
6
28
192
229
- Other liabilities
863
416
218
-
1,497
51,654
4,461
9,240
9,216
74,571
Derivative financial instruments
25
-
-
-
25
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Off-balance sheet items
Less than
Over
1 year
1 year
€ million
€ million
Credit related commitments
4,898
5,573
Contractual commitments⁽¹⁾
46
-
Total
4,944
5,573
(1)
It refers to contractual commitments for the purchase of own used and investment property and intangible assets (note 42).
Note: Credit related and contractual commitments of discontinued operations (note 30) amounting to € 461 million and 5 million respectively, are
included in
the table above for 31 December 2022
.
5.2.4
Interest Rate Benchmark reform – IBOR reform
Following
the
cessation
of
the
remaining
USD
LIBOR
tenors
(overnight,
1-,
3-,
6-,
12-month)
on
30
June
2023,
the
Group
has
successfully implemented its IBOR reform transition
program, on the outstanding exposures
that referenced the above rates,
mainly
referring to loans to customers and derivatives. Specifically, within 2023, loans to customers have transitioned to the new alternative
benchmark rates
(SOFR) on their first
roll date after
cessation date, whilst
derivative contracts
have transitioned
to the appropriate
fallback rates
either as a
result of
the application
of the ISDA
IBOR Protocol
or following
bilateral renegotiations.
Furthermore, the
Group
considered
those
hedge
accounting
relationships
that
mature
after
the
cessation
date
of
the
aforementioned
USD
LIBOR
tenors, to continue to qualify for
hedge accounting.
The Group continuously monitors
any developments about further market
initiatives on interest rate
benchmark reform, in order
to
ensure compliance where required.
5.2.5 Climate-related and environmental
risks
The
Group
has
recognized
climate
change
as
a
material
risk
and
based
on
supervisory
guidelines,
has
adapted
its
policies
and
methodologies for identifying and monitoring the relevant
risks.
Specifically,
climate related
and environmental
risks are
defined as
the risks
deriving from
potential loss
or negative
impact to
the
Group, including
loss/damage to physical
assets, disruption of
business or system
failures, transition
expenditures and
reputational
effects from the adverse
consequences of climate change and environmental
degradation.
Climate-related and environmental
risks include the following :
-
Climate related and
environmental physical
risk: Physical risk refers
to the financial impact of a
changing climate, including
more frequent extreme weather events and gradual changes in
climate, as well as
the impact of environmental degradation.
-
Climate related and environmental transition risk: Transition risk
refers to financial loss that can result, directly
or indirectly,
from the process of adjustment towards
a lower- carbon and more environmentally
sustainable economy.
-
Environmental risk: Risk of actual or potential
threat associated with the dependency on nature
and nature impacts and/or
the
misalignment
between
the
Group’s
strategy
and
the
changing
regulatory,
policy,
or
societal
landscape
in
which
it
operates. Environmental
risk excludes the impacts from climate change.
The Group is adopting a strategic approach towards
sustainability, climate change risk identification
and risk management, signifying
the great
importance that
is given
in the
risks
and opportunities
arising from
the transitioning
to
a low-carbon
and more
circular
economy. In
this context, the Bank has approved and implements
its Financed Impact Strategy,
which focuses on:
•
Clients’ engagement and awareness
to adapt their business so as to address climate change challenges
•
Actions for supporting clients in their transition efforts
towards a more ESG-friendly economic environment
•
Enablers and tools such as frameworks and
products to underpin Sustainable Financing
•
The assessment and management of climate-related
risk of exposures
To
facilitate
the
classification
of
sustainable/green
financing
opportunities
in
a
structural
manner,
the
Bank
has
developed
its
Sustainable Finance Framework
(SFF). Through its SFF,
the Bank is able to classify
sustainable lending solutions offered
to its clients,
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
specifying the applied classification approach
and the activities defined as eligible to
access sustainable financing (eligible green
and
social assets).
Furthermore, the Group has updated its governance structure by introducing and defining the roles and responsibilities in relation to
ESG and climate
related &
environmental
(CR&E) risks, embedding
regulatory guidelines
and market practices
,involving various
key
stakeholders
(i.e.
Business
functions,
Units,
and
Committees).
The
Group
applies
a
model
of
defined
roles
and
responsibilities
regarding the management of CR&E risks
across the 3 Lines of Defense.
In this
context
and taking
into account
the significant
impact of
climate-related
and environmental
(CR&E) risks
both on
financial
institutions and on
the global economy, the Group
developed and approved its
CR&E Risks Management
Policy which aims
at fostering
a holistic understanding of the effects
of CR&E risks on
its business model,
as well as support
decision-making regarding these matters
and provide a robust governance under
its Risk Management Framework.
The Group Risk Management
Strategy Planning Operations & Climate Risk
(GRMSPO&CR) has the
overall responsibility for overseeing,
monitoring, and managing CR&E risks.
Specifically, the
Unit operates as the
Project office responsible for
the implementation of the
Climate related
and Environmental
risks roadmap,
(“Program Field”) with
a coordinating
and supervisory role
on all related
project
streams to ensure alignment
with the Bank’s business
strategy and the regulatory
authorities’ expectations. In this context,
the Unit
ensures
the
implementation
of
corresponding
environmental
and
sustainability
initiatives
(frameworks,
policies,
procedures
and
products) and
compliance with
relevant
existing and
upcoming regulations,
under an
ongoing bank-wide
program,
in line
with the
supervisory agreed
roadmap, which
is accelerated
where possible.
Also, the
Unit is
responsible for
coordinating with
Business and
other Risk Units,
preparing and submitting
for approval
of the Financed Impact
Strategy,
as well for
monitoring its implementation.
Furthermore,
the GCRD
leads the
2nd Line
of Defense
independent sustainable
lending re
-assessment process.
Specifically,
in the
context of
implementing the approved
Sustainable Finance Framework
(SFF), the Unit
is responsible for
assessing the sustainability
features
of new
loans and
products
according to
the criteria
set within
the SFF.
Going forward
the role
of Unit
will be
expanded,
covering
the
management
of
ESG
risks.
Further
information
on
ESG
risks
is
provided
in
the
Consolidated
Pillar
3
Report
on
the
Company’s website.
Furthermore, the Group is in the process of successfully completing the European Central
Bank’s (ECB) supervisory one-off Fit-for-55
climate risk scenario analysis,
which was launched in
December 2023 and
aims to gain insights
into the capacity of
the financial system
to support the transition to
lower carbon economy under conditions of stress.
.
5.3
Fair value of financial assets and liabilities
Fair value is
the price that
would be received
to sell an asset
or paid to
transfer a
liability in an orderly
transaction between
market
participants in
the principal (or
most advantageous)
market at
the measurement
date under
current market
conditions (i.e. an
exit
price).
When
a
quoted
price
for
an
identical
asset
or
liability
is
not
observable,
fair
value
is
measured
using
another
valuation
technique that
is appropriate
in the
circumstances
and maximizes
the use
of relevant
observable inputs
and minimizes
the use
of
unobservable inputs. Observable inputs are developed
using market data, such as publicly available
information about actual events
or transactions, and reflect assumptions that market participants would use
when pricing financial instruments, such as
quoted prices
in active markets for similar instruments,
interest rates and yield curves,
implied volatilities and credit spreads.
The Group’s financial instruments measured at fair value or at amortized cost for which fair value is disclosed
are categorized into the
three levels of the fair value hierarchy
based on whether the inputs to the fair values are observable
or unobservable, as follows:
(a)
Level 1-Financial instruments measured based on quoted
prices (unadjusted) in active markets for identical financial
instruments
that the Group can access at the measurement date. A market is considered
active when quoted prices are readily and regularly
available
from
an
exchange,
dealer,
broker,
industry
group,
pricing
service,
or
regulatory
agency
and
represent
actually
and
regularly occurring
transactions.
Level 1
financial instruments
include actively
quoted
debt instruments
held or
issued by
the
Group,
equity
and
derivative
instruments
traded
on
exchanges,
as
well
as
mutual
funds
that
have
regularly
and
frequently
published quotes.
(b)
Level
2-Financial
instruments
measured
using
valuation
techniques
with
inputs,
other
than
level
1
quoted
prices,
that
are
observable
either directly
or indirectly,
such as:
i) quoted
prices for
similar financial
instruments
in active
markets,
ii) quoted
prices for
identical or
similar financial
instruments
in markets
that are
not active,
iii) inputs
other than
quoted prices
that are
directly
or
indirectly
observable,
mainly
interest
rates
and
yield
curves
observable
at
commonly
quoted
intervals,
forward
exchange
rates,
equity
prices,
credit
spreads
and
implied
volatilities
obtained
from
internationally
recognized
market
data
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
providers
and
iv)
other
unobservable
inputs
which
are
insignificant
to
the
entire
fair
value
measurement.
Level
2
financial
instruments
include over
the
counter
(OTC)
derivatives,
less liquid
debt
instruments
held
or issued
by the
Group
and equity
instruments.
(c)
Level
3-Financial
instruments
measured
using
valuation
techniques
with
significant
unobservable
inputs.
When
developing
unobservable
inputs,
best
information
available
is
used,
including
own
data,
while
at
the
same
time
market
participants'
assumptions
are
reflected
(e.g.
assumptions
about
risk).
Level
3
financial
instruments
include
unquoted
equities
or
equities
traded in markets that are not considered active, certain OTC
derivatives, loans and advances to customers including securitized
notes of loan por
tfolios originated
by the Group
and recognized in
financial assets and
certain debt securities held
or issued by
the Group.
Financial instruments carried at fair value
The fair value hierarchy categorization of the
Group's financial assets and
liabilities measured at
fair value is presented in
the following
tables:
31 December 2023
Level 1
Level 2
Level 3
Total
€ million
€ million
€ million
€ million
Securities held for trading
379
0
-
379
Investment securities at FVTPL
137
21
105
263
Derivative financial instruments⁽¹⁾
0
881
0
881
Investment securities at FVOCI
3,209
271
12
3,492
Loans and advances to customers mandatorily
at FVTPL
-
-
15
15
Financial assets measured at fair value
3,725
1,173
132
5,030
Derivative financial instruments⁽¹⁾
2
1,448
-
1,450
Trading liabilities
121
-
-
121
Financial liabilities measured at fair value
123
1,448
-
1,571
31 December 2022
Level 1
Level 2
Level 3
Total
€ million
€ million
€ million
€ million
Securities held for trading
134
-
-
134
Investment securities at FVTPL
93
15
133
241
Derivative financial instruments⁽¹⁾
1
1,178
6
1,185
Investment securities at FVOCI
3,600
228
-
3,828
Loans and advances to customers mandatorily
at FVTPL
-
-
16
16
Financial assets measured at fair value
3,828
1,421
155
5,404
Derivative financial instruments⁽¹⁾
1
1,660
-
1,661
Trading liabilities
419
-
-
419
Financial liabilities measured at fair value
420
1,660
-
2,080
(1)
Amounts
are presented after offsetting € 752 million and €
492 million level 2 derivative financial assets and liabilities, respectively,
against cash collateral
received/pledged (2022: after offsetting € 1,376 million and € 444 million derivative financial
assets and liabilities, respectively) (note 5.2.1.4).
The Group
recognizes
transfers
into
and out
of the
fair value
hierarchy
levels at
the beginning
of the
quarter in
which a
financial
instrument's transfer
was effected.
During the year ended
31 December 2023, the Group
transferred OTC
derivative instruments
of
€ 7
million
from
Level
3 to
Level
2 following
the
assessment
on
the
significance of
the
CVA
adjustment
to
their entire
fair
value
measurement, calculated based on internal rating
models. In addition, certain Greek and Cypriot government bonds measured at AC
and FVOCI, respectively and fair value at the
beginning of the fourth quarter of € 849 million and € 89 million, were transferred
from
level 1 to level 2 as their market was
not considered active.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Reconciliation of Level 3 fair value measurements
2023
2022
€ million
€ million
Balance at 1 January
155
70
Transfers
into Level 3
1
9
Transfers
out of Level 3
(7)
(0)
Additions, net of disposals and redemptions (note 45) ⁽¹⁾
(20)
87
Total gain/(loss)
for the year included in profit or loss
3
(11)
Foreign exchange differences and other
0
0
Balance at 31 December
132
155
(1)
Including capital returns on equity instruments.
.
Group's valuation processes and techniques
The Group’s
processes and procedures
governing the
fair valuations
are established
by the Group
Market Counterparty
Risk Sector
in line
with the
Group’s
accounting policies.
The Group
uses widely
recognized
valuation
models for
determining the
fair valu
e
of
common
financial
instruments
that
are
not quoted
in an
active market,
such as
interest
and cross
currency
swaps,
that
use only
observable market data
and require little management
estimation and judgment. Specifically,
observable prices or model inputs are
usually
available
in
the
market
for
listed
debt
and
equity
securities,
exchange-traded
and
simple
over-the-counter
derivatives.
Availability
of
observable
market
prices
and
model
inputs
reduces
the
need
for
management
judgment
and
estimation
and
also
reduces the uncertainty associated with determining
fair values.
Where valuation
techniques are used
to determine the
fair values
of financial instruments
that are not
quoted in an
active market,
they
are
validated
against
historical
data
and,
where
possible,
against
current
or
recent
observed
transactions
in
different
instruments,
and
periodically
reviewed
by
qualified
personnel
independent
of
the
personnel
that
created
them.
All
models
are
certified before
they are
used and models
are calibrated
to ensure
that outputs reflect
actual data
and comparative
market prices.
Fair values’
estimates obtained
from models
are adjusted
for any
other factors,
such as liquidity
risk or model
uncertainties, to
the
extent that market
participants would take
them into account in
pricing the instrument. Fair
values also reflect the credit
risk of the
instrument and include adjustments to take
account of the credit risk of the Group and the counterparty,
where appropriate.
Valuation
controls applied by
the Group may
include verification of
observable pricing, re-performance
of model valuations,
review
and approval process for new models and/or changes
to models, calibration and back-testing against observable market transactions,
where available, analysis of
significant valuation movements, etc.
Where third parties'
valuations are used for
fair value measurement,
these are reviewed in order to ensure
compliance with the requirements of IFRS 13.
The fair values of
OTC derivative financial
instruments are estimated
by discounting expected cash
flows using market
interest rates
at the measurement date.
Counterparty credit risk adjustments
and own credit risk
adjustments are applied to
OTC derivatives, where
appropriate. 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 on
the valuation of
these cash flows.
As appropriate in
circumstances,
the Group
considers also
the effect
of any
credit risk
mitigating arrangements,
including collateral
agreements and
master netting agreements on the calculation of
credit risk valuation adjustments (CVAs). CVA calculation uses probabilities of default
(PDs) based
on observable
market data
such as
credit default
swaps (CDS)
spreads, where
appropriate, or
based on
internal rating
models.
The
Group
applies
similar
methodology
for
the
calculation
of
debit-value-adjustments
(DVAs),
when
applicable.
Where
valuation techniques
are based
on internal
rating models
and the
relevant
CVA is
significant to
the entire
fair value
measurement,
such
derivative
instruments
are
categorized
as
Level
3
in
the
fair
value
hierarchy.
A
reasonably
possible
change
in
the
main
unobservable input (i.e.
the recovery rate), used
in their valuation,
would not have
a significant effect on
their fair value measurement.
The Group
determines
fair values
for
debt securities
held using
quoted
market
prices in
active markets
for
securities with
similar
credit
risk,
maturity
and
yield, quoted
market
prices
in
non
active markets
for
identical
or
similar
financial
instruments,
or
using
discounted cash flows method.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Unquoted equity
instruments at
FVTPL, included
in Level
3, are estimated
using mainly
(i) third
parties' valuation
reports based
on
investees'
net
assets,
where
management
does
not
perform
any
further
significant
adjustments,
and
(ii)
net
assets'
valuations,
adjusted where considered necessary.
Loans and advances
to customers
including securitized notes
of loan portfolios
originated by the
Group with contractual
cash flows
that do not represent
solely payments of principal and interest
(SPPI failures), are measured
mandatorily at fair value
through profit
or loss. Quoted market
prices are not available
as there are no active
markets where these
instruments are traded.
Their fair values
are estimated on an individual loan basis by discounting the future expected cash flows over the time period they are expected to
be
recovered, using an appropriate discount rate or by reference to other comparable assets
of the same
type that have been transacted
during
a
recent
time
period.
Expected
cash
flows,
which
incorporate
credit
risk,
represent
significant
unobservable
input
in
the
valuation and as such, the entire fair value
measurement is categorized as Level
3 in the fair value hierarchy.
Financial instruments not measured at fair value
The fair value hierarchy
categorization of the
Group’s financial assets
and liabilities not measured at fair
value on the balance sheet,
is presented in the following tables:
31 December 2023
Level 1
Level 2
Level 3
Fair value
Carrying
amount
€ million
€ million
€ million
€ million
€ million
Loans and advances to customers
-
-
41,888
41,888
41,530
Investment securities at amortised cost
7,191
1,948
1,323
10,462
10,955
Financial assets not measured at fair value
7,191
1,948
43,211
52,350
52,485
Debt securities in issue
2,540
1,626
554
4,720
4,756
Financial liabilities not measured at fair value
2,540
1,626
554
4,720
4,756
31 December 2022
Level 1
Level 2
Level 3
Fair value
Carrying
amount
€ million
€ million
€ million
€ million
€ million
Loans and advances to customers
-
-
41,767
41,767
41,661
Investment securities at amortised cost
6,185
699
1,271
8,155
9,192
Financial assets not measured at fair value
6,185
699
43,038
49,922
50,853
Debt securities in issue
1,343
1,503
553
3,399
3,552
Financial liabilities not measured at fair value
1,343
1,503
553
3,399
3,552
The assumptions and methodologies underlying the calculation of fair values
of financial instruments not measured at fair value,
are
in line with those used to calculate the fair values for
financial instruments measured at fair value. Particularly:
(a)
Loans and advances to customers including securitized notes of loan portfolios originated by the Group: quoted market prices are
not available
as there
are no
active markets
where these
instruments
are traded.
The fair
values are
estimated
by discounting
future expected
cash flows
over the
time period
they are
expected to
be recovered,
using appropriate
risk-adjusted
rates (i.e.,
discounted
expected
cash
flows
technique).
More
specifically,
loans
to
customers
are
grouped
into
homogenous
assets
with
similar
characteristics,
as
monitored
by
Management,
such
as
lending
business
unit,
products’
characteristics,
and
performing/nonperforming status, in
order to improve the
accuracy of the estimated
valuation outputs. In estimating
the future
cash flows of
lending portfolios, the
Group makes assumptions on
expected prepayments, products’ spreads over
risk-free interest
rates, where applicable. The discount
rates applied for the
discounting of loans’ expected
cash flows incorporate inputs that
would
be taken
into account by
independent market participants,
such as risk-free
interest rates,
expected credit losses,
cost of equity
requirements and
funding. For credit
impaired-loans, the timing of
collateral realization
is taken into
account for the
estimation
of the
future cash
flows which
are discounted
by non-credit
risk adjusted
rates.
In addition,
the fair
value of
securitized senior
Notes to the Consolidated Financial Statements
.
100
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31 December 2023 Consolidated Financial Statements
notes of
loan portfolios
originated by
the Group
is estimated
by discounting
the expected
cash flows
using appropriate
market
interest rates of other
comparable assets with similar quality and duration;
(b)
Investment securities
measured at amortized
cost: the fair
values are determined
using prices quoted in
an active market
when
these are
available. In
other cases,
fair values
are determined
using quoted
market prices
for securities
with similar
credit risk,
maturity
and
yield,
quoted
market
prices
in
non
active
markets
for
identical
or
similar
financial
instruments,
or
by
using
the
discounted cash flows method. In addition, for certain high quality corporate bonds for which quoted prices are not available,
fair
value
is determined
using
prices that
are
derived
from
reliable data
management
platforms
while
part
of them
is verified
by
market
participants
(e.g. brokers).
In certain
cases, prices
are
implied by
liquidity agreements
(e.g. repos,
pledges) with
other
financial institutions; and
(c)
Debt securities in issue: the fair values are determined using quoted market prices,
if available. If quoted prices are not available,
fair values are determined based on third party
valuations, quotes for similar debt securities or by discounting the
expected cash
flows at a risk-adjusted rate, where the Group's own credit risk is
determined using inputs indirectly observable, i.e. quoted prices
of similar securities issued by the Group or other Greek issuers.
For other financial instruments, which are short term or re
-price at frequent intervals (cash and balances with central
banks, due
from credit
institutions, due
to central
banks, due
to credit
institutions and
due to
customers), the
carrying amounts
represent
reasonable approximations of fair values.
6.
Net interest income
2023
2022
€ million
€ million
Interest income
Customers
2,122
1,302
- measured at amortised cost
2,121
1,301
- measured at FVTPL
1
1
Banks and other assets⁽¹⁾⁽³⁾
460
80
Securities
429
255
- measured at amortised cost
309
141
- measured at FVOCI
107
103
- measured at FVTPL
13
10
Derivatives (hedge accounting)
527
94
Derivatives (no hedge accounting)
916
495
4,454
2,226
Interest expense
Customers ⁽¹⁾
(435)
(77)
Banks ⁽¹⁾⁽²⁾⁽³⁾
(317)
1
Debt securities in issue ⁽¹⁾
(222)
(118)
Derivatives (hedge accounting)
(430)
(89)
Derivatives (no hedge accounting)
(873)
(461)
Lease liabilities - IFRS 16
(3)
(2)
(2,280)
(746)
Total from continuing
operations
2,174
1,480
(1)
Measured at amortized cost.
.
(2)
For the year
2023, it includes
interest expense
of € 177
million relating to
the funding from
the European Central
Bank (ECB). In
the comparative year,
it
includes net income of € 53 million that is attributable to the targeted longer-term refinancing operations (TLTRO III) of ECB. (note 31).
.
(3)
Interest from financial assets with negative rates, which were applied until June of 2022, was recorded in
interest expense.
. .
In 2023, the increase of 46.9% in the interest
income from continuing operations
against the comparative year
was mainly driven by
higher interest rates,
the organic loans’ growth
and the increased positions
in investment bonds,
partly offset by higher
debt issued
and deposits cost.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Interest income recognized
by quality of Loans and Advances and Product Line is further analyzed
below:
31 December 2023
Interest income
on non-impaired
loans and
advances
Interest
income on
impaired loans
and advances
Total
€ million
€ million
€ million
Retail lending
854
33
888
Wholesale lending⁽¹⁾
1,193
41
1,234
Total interest
income from customers
2,048
74
2,122
31 December 2022
Interest income
on non-impaired
loans and
advances
Interest
income on
impaired loans
and advances
Total
€ million
€ million
€ million
Retail lending
573
23
596
Wholesale lending⁽¹⁾
673
33
706
Total interest
income from customers
1,246
56
1,302
(1)
Including interest income on loans and advances to Public Sector.
7.
Net banking fee and commission income
The
following
tables
include
net
banking
fees
and
commission
income
from
contracts
with
customers
in
the
scope
of
IFRS
15,
disaggregated by major type of services and operating
segments (note 43).
31 December 2023
Retail
Corporate
Global
Markets &
Asset Mngt
International
Other ⁽²⁾
Total
€ million
€ million
€ million
€ million
€ million
€ million
Lending related activities
8
111
16
15
2
152
Mutual funds and assets under
management
17
2
39
11
6
75
Network activities and other⁽¹⁾
62
7
31
90
3
193
Capital markets
-
7
16
6
(2)
27
Total from continuing
operations
87
127
102
122
9
447
31 December 2022
Retail
Corporate
Global
Markets &
Asset Mngt
International
Other⁽²⁾
Total
€ million
€ million
€ million
€ million
€ million
€ million
Lending related activities
8
97
14
11
1
132
Mutual funds and assets under
management
13
1
41
9
5
69
Network activities and other ⁽¹⁾
68
7
31
93
2
201
Capital markets
-
9
13
6
(3)
26
Total from
continuing operations
90
114
99
119
5
427
(1)
Including income from credit cards related services
.
(2)
Includes “Remedial and Servicing Strategy” and “Other and elimination
center” segments.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
8.
Income from non banking services
Income from
non banking
services from
continuing operations
includes rental
income of
€ 95.5
million (2022:
€ 92.8
million) from
real estate properties and other income
of € 1.0 million (2022: € 2.2 million) from IT services provided by the Group
entities.
9.
Net trading income and gains less losses from investment securities
2023
2022
€ million
€ million
Net trading income/(loss)
Debt securities, including short positions
(24)
98
Derivative financial instruments
86
625
Equity securities⁽¹⁾
4
1
Revaluation on foreign exchange
positions
5
1
Total
71
725
Gains less losses from investment securities
Debt securities
38
(26)
- measured at FVOCI ⁽²⁾
57
(26)
- measured at AC⁽³⁾
(18)
(0)
- measured at FVTPL
(1)
(0)
Equity securities
19
17
Total from
continuing operations
57
(9)
(1)
In 2023, € 22 million loss relating to derivatives on
equity instruments is presented along with equity securities that
hedge economically.
Comparative figure
has been adjusted accordingly and includes € 2 million gain.
(2)
It includes termination fees from related derivatives in single hedging relationships
amounting to € 6 million income (2022: € 4 million income)
(3)
Mainly refers to the swap transaction of Greek government bonds (note 5.2.1.3).
Trading
results of
€ 24 million
loss related
to debt
securities, include
€ 1 million
loss (2022: €
9 million
loss) from
trading securities
and
€
23
million
loss
(2022:
€
107
million
gain)
on
short
positions
on
debt
instruments
entered
into
the
context
of
the
Group's
economic hedging strategies (note 35).
Gains from
derivative financial
instruments of
€ 86 million
comprise mainly
a) € 33
million loss resulting
from fair
value changes
of
derivatives not
designated in
hedge accounting
relationships and
b) €
124 million
gains from
portfolio hedging
of interest
rate risk
(macro hedging),
of which €
4 million gains
arise from
hedge ineffectiveness
and € 120
million gains
from fair
value changes
of the
hedging derivatives that occur as
part of the
dynamic management of the
pool of hedging
instruments on a monthly
basis, and include
fair value changes before
initial designation or after de-designation
as well as realized gains
of the liquidated positions following
de-
designation (notes 2.2.3i and 19).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
10.
Other income/ (expenses)
2023
2022
€ million
€ million
Gain/(loss) from change in fair value of investment
property (note 27)
6
34
Gain on initial application of equity accounting for Hellenic Bank (note 24)
111
-
Sale of merchant acquiring
business - Project Triangle
-
325
Derecognition gain/(loss) on loans measured at
amortised cost (note 20)
3
2
Loss on loans' modifications and related adjustments
(49)
(1)
Fee expense related to the deferred
tax credits (note 13)
(6)
(6)
Gain/ (loss) on the disposal/liquidation of subsidiaries and
associates (notes 23 and 24)
0
(34)
Dividend income
3
2
Gains/(losses) on loans at FVTPL
(0)
3
Other
0
(2)
Total from continuing
operations
68
323
In the context of the increased interest rates
environment, the Group has assessed the probability of prepayment
on its floating rate
loans,
focusing
on retail
portfolios
of long-term
loans that
are expected
to
exhibit higher,
than historically
observed,
prepayment
rates,
depending on
their particular
contractual
terms. Accordingly,
for performing
retail
loans that
their contractual
interest
rate
spread is scheduled to
increase (step-up) over the
next few years, the Group has
assessed that the
combined increase of the
reference
interest rates
and the pre-determined client
spreads, increase the probability
of the borrowers’ prepaying
or refinancing their loans
at prevailing market rates earlier than
their contractual maturity. Therefore, a prepayment probability was incorporated in
the specific
loans’ expected cash flows, resulting in a
loss of ca. € 35 million with a corresponding adjustment on their gross carrying amount.
In April 2023, the Bank announced the launch of a reward initiative for housing loan clients under floating rate loans, that introduced
“a
cap”
in
the
loans’
applicable
base
rates
for
a
period
of
12 months,
with
a view
to
protect
borrowers
against
reference
rates’
increase. The above initiative resulted in a
modification loss of ca. € 8 million (note 20).
The aforementioned items are included
in “Loss on loans’ modification and related adjustments” of the
above table.
Eurobank merchant acquiring business -Project ‘Triangle’
On 30
June 2022,
following
the agreement
with
Worldline
B.V.
and after
receiving all
necessary approvals,
the sale
of the
Bank’s
merchant acquiring
business was
completed for
a cash
consideration
of €
254 million.
The resulting
gain from
the transaction
that
was recognised
in “Other
income/(expenses)”,
amounted to
ca. €
325 million
before tax
(ca. €
231 million
after tax),
including the
costs
directly
attributable
to
the
transaction.
Further
relevant
information
is
provided
in
note
30
of
the
consolidated
financial
statements for the year
ended 31 December 2022
.
11.
Operating expenses
2023
2022
€ million
€ million
Staff costs
(473)
(419)
Administrative expenses
(275)
(252)
Contributions to resolution and deposit guarantee
funds
(33)
(69)
Depreciation of real estate properties
and equipment
(42)
(43)
Depreciation of right of use assets
(37)
(37)
Amortisation of intangible assets
(41)
(37)
Contribution to restoration
initiatives after natural disasters
(14)
-
Total from
continuing operations
(915)
(857)
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
In
the third
quarter
of 2023,
the Bank
recognized
a provision
of
€ 13.5
million
for
its contribution
to
the restoration
of damages
following the recent natural disasters in Greece. This is mainly relating to the destructive floods in Thessaly and the relevant initiative
of the four Greek
systemic banks,
in the context
of their corporate
social responsibility,
to contribute € 50
million to the restoration
effort,
which
will
be
allocated
and
provided
mostly
for
infrastructure,
in
collaboration
with
the
related
ministries,
the
local
administration and social and economic institutions
of the region.
Contributions to resolution and deposit guarantee funds
In November 2023, the Bank was informed by
the Hellenic Deposit and Investment Guarantee Fund (HDIGF) that no
contributions are
required for
2023 and onwards for
the Resolution Scheme of
HDIGF,
in accordance with
the article 36 of law
4370/2016, as in force
(2022: € 32 million).
In 2016, the Single Resolution Mechanism (SRM),
which is one of the
pillars of the Banking Union in
the euro area alongside the Single
Supervisory Mechanism
(SSM), became
fully operational.
The Single
Resolution
Fund (SRF)
was established
by the
SRM Regulation
(EU) No 806/2014 (SRMR)
in order to
ensure uniform
practice in the
financing of resolutions
within the SRM and
it is owned by
the
Single
Resolution
Board
(SRB).
The
SRMR
provided
that
the
SRF
would
be
built
up
over
a
period
of
eight
years
with
‘ex-ante’
contributions from the
banking industry,
which could include irrevocable
payment commitments
(IPC) as a part of
the total amount
of contributions (for further information
on the IPC of the Bank, refer to note 42).
According to its press release of 15 February 2024, the
SRB confirmed that the financial means available in the SRF
as at 31 December
2023 had reached the target level of at least 1% of covered
deposits held in the Member States participating in the SRM as set out in
the SRMR. As such, no regular annual contributions will be collected in 2024 from
the institutions falling within the scope of SRF.
For
the year
ended 31
December 2023,
the amount
of operating
expenses
(excluding
any
contribution
to
a deposit
guarantee
or
resolution fund) for the Group’s
Greek activities was € 641 million (2022: € 590 million).
Staff costs
2023
2022
€ million
€ million
Wages, salaries and performance remuneration
(355)
(309)
Social security costs
(52)
(50)
Additional pension and other post employment costs
(21)
(17)
Other
(45)
(43)
Total from
continuing operations
(473)
(419)
The
average
number
of
employees
of
the
Group’s
continuing
operations
during
the
year
was
10,323
(2022:
10,076).
As
at
31
December 2023,
the number
of branches
and business/private
banking centers
of the
Group
amounted
to 540
(2022: 515
for the
Group’s continuing
operations).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
12.
Other impairments, risk provisions and restructuring costs
2023
2022
€ million
€ million
Impairment and valuation losses on real estate properties⁽¹⁾
(49)
(15)
Impairment losses on computer hardware and software (notes 26, 28)
(17)
(23)
Impairment (losses)/reversal on bonds (note 5.2.1.3)
4
(20)
Other impairments, litigation and conduct-related
provisions and costs
(34)
(45)
Other impairments, risk provisions and related costs
(96)
(103)
Voluntary exit schemes and other related costs
(7)
(60)
Other restructuring costs
(30)
(29)
Restructuring costs
(37)
(89)
Total from continuing
operations
(133)
(192)
(1)
For 2023, it includes € 23
million remeasurement/impairment loss on real estate properties of IMO
Property Investments Sofia E.A.D, which
was disposed of during the year (note 23.1).
In the year
ended 31 December
2023, the Group
recognized €
30 million other
restructuring costs
of which €
10.6 million refers
to
the acquisition
of BNP
Paribas Personal
Finance Bulgaria
by Eurobank
Bulgaria
A.D.
(note 23.2),
while the
remaining
costs mainly
relate to the Group’s
transformation projects and initiatives (2022: € 29 million, mainly relate to the Group’s
transformation projects
and initiatives).
In the
year ended
31 December
2022, an
amount of
€ 48
million for
employee termination
benefits was
included in
restructuring
costs in respect of the Voluntary
Exit Scheme (VES) that was launched by the Group in February 2022 for
eligible units in Greece.
13.
Income tax
2023
2022
€ million
€ million
Current tax
(83)
(46)
Deferred tax
(178)
(360)
Total income tax from
continuing operations
(261)
(406)
According
to
Law
4172/2013
currently
in
force,
the
nominal
Greek
corporate
tax
rate
for
credit
institutions
that
fall
under
the
requirements
of article 27A
of Law
4172/2013 regarding
eligible deferred
tax assets
(DTAs)/deferred
tax credits
(DTCs) against
the
Greek State is 29%.
The Greek corporate tax
rate for legal entities
other than the
aforementioned credit institutions is
22%. In
addition,
the withholding tax rate for
dividends distributed, other than
intragroup dividends, is 5%.
In particular, the intragroup dividends under
certain preconditions are relieved from
both income and withholding tax.
The nominal corporate tax
rates applicable in the banking
subsidiaries incorporated in the
international segment of the Group
(note
43) are as follows: Bulgaria 10%, Serbia 15%, Cyprus
12.5% and Luxembourg 24.94%.
Pillar Two income taxes
The Pillar Two legislation that introduces a minimum global tax rate at 15% on multinational entities with consolidated revenues over
€750 million (top
up tax), effective
as of 1 January
2024, has been enacted
or substantively
enacted in certain
jurisdictions that the
Group operates.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
In particular,
the Group, considering
the most recent
country-by-country reporting
data, as well as
the reporting packages
available
for the Group entities, has identified
potential exposure to Pillar Two income taxes in respect of profits earned in
Bulgaria and Cyprus.
The Pillar
Two
effective
tax rate
is lower
than 15%
in the
above jurisdictions
mainly due
to their
nominal corporate
tax rates
(CIT)
applying on their profits (i.e. the current CIT in Bulgaria and Cyprus
is 10% and 12.5% respectively). In addition, there is
also a number
of jurisdictions where
the transitional
safe harbor relief
applies, or the
Pillar Two
effective tax
rate is
close to 15%.
The Group does
not expect a material exposure to Pillar Two
income taxes in those jurisdictions.
The proportion of
the Group’s
profit before
tax from
continuing operations
for the year
ended 31 December
2023 that would
have
been subject to Pillar
Two income taxes, as adjusted with the
relevant top-up tax reliefs, is approximately 26% (
based on the relevant
group entities’
profits before
any intercompany
eliminations)
. The
Pillar two
effective tax
rate (weighted
average)
applicable to
those profits is 11.7% (10.2% and 12.8% applicable to Bulgaria and Cyprus respectively).
Furthermore, the proportion of profit before tax and the effective tax
rates in financial year beginning 1 January 2024 will depend on
factors such as revenues/expenses
per country and the provisions of the Corporate Income
Tax Code applying
in each country.
Tax certificate
and open tax years
The Company and its subsidiaries, associates
and joint ventures, which operate
in Greece (notes 23 and 24) have
in principle up to 6
open tax years. For fiscal years starting from 1 January
2016 onwards, pursuant to the Tax Procedure Code, an ‘Annual Tax Certificate’
on an optional basis, is provided for the Greek entities, with annual financial statements audited compulsorily,
which is issued after a
tax audit is performed
by the same statutory auditor
or audit firm that audits the annual
financial statements. The Company
and, as
a general rule, the Group’s
Greek companies have opted to obtain
such certificate.
Following the completion
in 2023, of the
tax audit of
the Company by
the tax authorities
for the tax
year 2019, and
of the Bank
for
the tax years 2020 and 2021, the Company’s open tax years are 2018 and 2020-2023, while the Bank’s open tax years are 2022-2023.
The tax certificates of the Company,
the Bank and the other Group’s entities, which operate in Greece, are unqualified for
their open
tax years until 2022. In addition, for
the year ended 31 December 2023, the tax audits from external
auditors are in progress.
In accordance
with the
Greek tax
legislation and
the respective
Ministerial Decisions
issued, additional
taxes and
penalties may
be
imposed by
the Greek
tax authorities
following a
tax audit
within the applicable
statute
of limitations
(i.e. in principle
five years
as
from
the
end
of
the
fiscal
year
within
which
the
relevant
tax
return
should
have
been
submitted),
irrespective
of
whether
an
unqualified tax
certificate has
been obtained
from the
tax paying
company.
In light of
the above,
as a general
rule, the
right of the
Greek State
to impose taxes
up to tax
year 2017 (included)
has been time-barred
for the Group’s
Greek entities
as at 31
December
2023.
The open tax years of the foreign banking entities of the Group are as follows: (a) Eurobank Cyprus Ltd, 2018-2023 (a tax audit for tax
years
2018-2020 is
in progress),
(b) Eurobank
Bulgaria
A.D.,
2018-2023 (a
tax
audit of
limited scope
for
tax
years
2020-2023 was
completed)
and (c) Eurobank
Private Bank
Luxembourg S.A.,
2019-2023. The remaining
foreign entities
of the Group
(notes 23 and
24), which
operate
in countries
where a
statutory
tax audit
is explicitly
stipulated
by law,
have in
principle up
to 6
open tax
years,
subject to certain preconditions of the applicable tax
legislation of each jurisdiction.
In reference
to its total
uncertain tax
positions, the Group
assesses all relevant
developments (e.g. legislative
changes, case
law,
ad
hoc tax/legal opinions, administrative
practices) and raises adequate provisions.
Deferred tax
Deferred tax
is calculated
on all deductible
temporary differences
under the
liability method as
well as for
unused tax losses
at the
rate in effect at
the time the reversal is expected to take
place.
The net deferred tax is analyzed
as follows:
2023
2022
€ million
€ million
Deferred tax assets
3,991
4,161
Deferred tax liabilities
(28)
(31)
Net deferred tax
3,963
4,130
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The movement on deferred tax
is as follows:
2023
2022
€ million
€ million
Balance at 1 January
4,130
4,396
Income statement credit/(charge) from
continuing operations
(178)
(360)
Investment securities at FVOCI⁽¹⁾
(8)
96
Cash flow hedges
1
(0)
Actuarial gains/(losses)
1
(1)
Discontinued operations (note 30)
17
-
Other
(0)
(1)
Balance at 31 December
3,963
4,130
(1)
As of the second quarter of 2023, the Group’s investment in Hellenic Bank was
accounted for as an associate (note 24), therefore an amount of € 13
million
deferred tax liability for the fair value gains, during the period it was designated at FVOCI, was reversed.
Deferred income tax (charge)/credit
from continuing operations is attributable
to the following items:
2023
2022
€ million
€ million
Impairment/ valuation relating to loans, disposals and write-offs
(213)
(128)
Tax deductible PSI+ losses
(50)
(50)
Carried forward debit difference of law 4831/2021
39
(73)
Change in fair value and other temporary differences
46
(109)
Deferred income tax (charge)/credit
from continuing operations
(178)
(360)
Deferred tax assets/(liabilities) are
attributable to the following items:
2023
2022
€ million
€ million
Impairment/ valuation relating to loans and accounting write-offs
940
1,030
PSI+ tax related losses
901
951
Losses from disposals and crystallized write-offs of loans
2,120
2,242
Carried forward debit difference of law 4831/2021
39
-
Other impairments/ valuations through the income statement
(49)
(120)
Cash flow hedges
6
5
Defined benefit obligations
7
5
Real estate properties, equipment and intangible assets
(97)
(78)
Investment securities at FVOCI
(23)
(15)
Other⁽¹⁾
119
110
Net deferred tax
3,963
4,130
(1)
It includes, among others, DTA on deductible temporary differences relating to operational risk provisions and the leasing operations.
Further information, in relation to
the aforementioned categories of deferred
tax assets as at 31 December 2023, is as follows:
(a)
€
940
million
refer
to
deductible
temporary
differences
arising
from
impairment/valuation
relating
to
loans
including
the
accounting debt write-offs
according to the Greek
tax law 4172/2013, as
in force. These temporary
differences can be utilized
in
future periods with no specified time limit and according to current
tax legislation of each jurisdiction;
(b) €
901 million
refer to
losses resulted
from the
Group’s
participation in
PSI+ and the
Greek’s
state debt
buyback program
which
are subject to amortization for tax purposes over a thirty-year period, i.e. 1/30 of
losses per year starting from year 2012 onwards
(see below – DTCs section);
(c) € 2,120 million refer to the unamortized part of the crystallized tax
losses arising from write-offs and disposals of loans, which are
subject to amortization over a twenty
-year period;
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Assessment of the recoverability of deferred
tax assets
The recognition
of the deferred
tax assets
is based on
management’s assessment
that the Group’s
legal entities will
have sufficient
future taxable profits, against which the deductible temporary differences and the unused tax losses can be utilized. The deferred tax
assets
are
determined
on
the
basis
of
the
tax
treatment
of
each
deferred
tax
asset
category,
as
provided
by
the
applicable
tax
legislation of each jurisdiction
and the eligibility of
carried forward
losses for offsetting
with future taxable
profits. Additionally,
the
Group’s
assessment
on
the
recoverability
of
recognized
deferred
tax
assets
is
based
on
(a)
the
future
performance
expectations
(projections
of
operating
results)
and
growth
opportunities
relevant
for
determining
the
expected
future
taxable
profits,
(b)
the
expected timing of reversal of the
deductible and taxable temporary
differences, (c) the probability
that the Group entities will have
sufficient taxable
profits in the
future, in the
same period as
the reversal
of the deductible
and taxable
temporary differences
or in
the years into which the tax losses can be carried forward, and (d) the historical levels of Group entities’ performance in combination
with the previous years’ tax losses caused by
one off or non-recurring events.
In particular,
for the
year ended 31
December 2023, the deferred
tax asset
(DTA)
recoverability
assessment has
been based on
the
three-year
Business Plan that
was approved
by the
Board of Directors
in February
2024, for the
period up to
the end of
2026 (also
submitted to
the Single Supervisory
Mechanism -SSM-). For
the years
beyond 2026,
the forecast
of operating
results was
based on
the management projections considering the growth opportunities
of the Greek and European economy,
the banking sector and the
Group
itself.
Specifically,
the
management
projections
for
the
Group’s
future
profitability
adopted
in
the
Business
Plan,
have
considered, among
others, (a)
the gradual
decrease of interest
rates in
2024 onwards,
(b) the sustainable
increase in loan
volumes
with pressure in business
lending spreads and the
growth, at a relatively lower
pace, of customer deposits
with gradually higher betas,
(c) the
increase
in fee
and commission
income
mostly
driven
by assets
under
management,
bancassurance,
network
and lending
related activities, cards’ issuing and investment
property rentals, (d) the discipline to operating expenses’ targets
taking into account
the sustained - albeit easing inflationary pressures, (e) the further decrease of NPE ratio, (f) the resilient asset quality with lower cost
of
risk,
which is
expected
to
carry the
effect
from
the
improved
macroeconomic
outlook
driven
by the
resilient
growth
of Greek
economy,
above
European
average,
as
well
as
the
unemployment
rate
at
single
digit
levels,
close
to
historical
lows
and
(g)
the
fulfilment
of
interim
MREL
targets
throughout
the
plan
period.
The
major
initiatives
introduced
in
the
context
of
the
Group’s
transformation plan “Eurobank 2030”,
will contribute to meeting its financial objectives.
The Group closely
monitors and constantly assesses
the developments on
the macroeconomic and geopolitical
front (note 2) including
the inflationary
pressures
and their
potential
effect
on the
achievement
of its
Business Plan
targets
in terms
of asset
quality
and
profitability and will continue to update
its estimates accordingly.
Deferred tax credit against the
Greek State and tax regime for
loan losses
As at 31 December 2023, pursuant to the Law 4172/2013, as in force, the Bank’s eligible DTAs/deferred
tax credits (DTCs) against the
Greek State amounted
to € 3,212 million (31
December
2022: € 3,402 million). The
DTCs are accounted
for on: (a) the
unamortised
losses from the Private
Sector Involvement (PSI)
and the Greek State Debt
Buyback Program, which are subject to
amortisation over
a thirty-year
period and
(b) on the
sum of (i)
the unamortized
part of the
DTC eligible
crystallized tax
losses arising
from write-offs
and disposals
of loans, which
are subject
to amortization
over a
twenty-year period,
(ii) the accounting
debt write-offs
and (iii) the
remaining
accumulated
provisions
and
other
losses
in
general
due
to
credit
risk
recorded
up
to
30
June
2015.
The
DTCs
will
be
converted into directly enforceable claims (tax credit) against
the Greek State provided that the Bank’s after tax accounting
result for
the year is a loss.
According
to
the
Law
4831/2021
(article
125),
which
amended
Law
4172/2013,
the
amortization
of
the
PSI
tax
related
losses
is
deducted from
the taxable
income at a
priority over
that of the
crystallized tax
losses (debit difference)
arising from
write-offs and
disposals of loans. In addition, the amount of the annual tax amortization of the above crystallized tax losses is limited to the amount
of the
annual taxable
profits, calculated
before the
deduction of
such losses
and following
the annual
tax deduction
of the
PSI tax
related losses. The
unutilized part of the
annual tax amortization
of the crystallized
loan losses can be carried
forward for
offsetting
over a period of 20
years. If at the end
of the 20-year utilization period, there are balances
that have not been offset, these will
qualify
as
a tax
loss, which
is subject
to
the
5-year
statute
of
limitation.
The above
provisions
apply
as
of
1 January
2021 and
cover
the
crystallized tax losses that
have arisen from write-offs and disposals of
loans as of 1 January 2016 onwards.
Taking
into
account
the
tax
regime
in
force,
the
recovery
of
the
Bank’s
deferred
tax
asset
recorded
on
loans
and
advances
to
customers
and
the
regulatory
capital
structure
are
further
safeguarded,
contributing
substantially
to
the
achievement
of
NPE
management targets through
write-offs and disposals, in line with the regulatory framework
and SSM requirements.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
According to tax Law 4172/2013 as in
force, an annual fee of 1.5% is
imposed on the excess amount of
deferred tax assets guaranteed
by the Greek
State, stemming
from the difference
between the current
tax rate
for the eligible
credit institutions
(i.e. 29%) and
the
tax rate applicable on 30 June 2015 (i.e. 26%). For the year ended
31 December 2023, an amount of €
5.6 million has been recognized
in “Other income/(expenses) (31 December 2022: € 5.9 million).
Income tax reconciliation and unused tax losses
The tax on the
Group's profit before
tax differs
from the theoretical
amount that would
arise using the Bank’s
applicable tax rate
of
29% as follows:
2023
2022
€ million
€ million
Profit before tax
1,542
1,751
Tax at the applicable tax
rate
(447)
(508)
Tax effect
of:
- income not subject to tax and non deductible expenses
5
1
- effect of different tax rates
in different countries
70
44
- Share of results of associates/joint ventures and related income
58
10
- Tax deductible losses for which DTA
had not been recognised
63
66
- other
(10)
(19)
Total income tax from
continuing operations
(261)
(406)
For the
year ended
31 December 2023,
the Group’s
effective tax
rate reached
17%, mainly driven
by the Bank’s
impairment losses
relating
to
loans
accounted
in
prior
years,
for
which
a
DTA
amounting
to
€
45
million
had
not
been
recognised,
which
became
deductible for tax
purposes in 2023 upon
the disposal of Bank’s
subsidiary IMO Property
Investments Sofia E.A.D.
(note 23) (23% in
the comparative period, including the effect of the offsetting of a part of the Bank’s carried forward tax losses, for which DTA had not
been recognised against the taxable
profit for the year ended 31 December 2022).
As at 31 December
2023, the Company
and the Bank have
not recognised deferred
tax asset (DTA)
on unused tax losses
amounting
to € 421 million (2022: € 470 million).
The analysis of unrecognized DTA
on unused tax losses of the Company
and the Bank per year
of maturity of related tax losses is presented
in the table below:
Unrecognized
DTA
€ million
Year of maturity of unused tax losses
2024
61
2025
345
2026
12
2027
1
2028
2
Total
421
14.
Earnings per share
Basic earnings
per share,
in principle, is
calculated by
dividing the
net profit
attributable to
ordinary shareholders
by the
weighted
average number of ordinary shares in issue
during the year, excluding the average number of ordinary shares purchased by the Group
and held as treasury shares.
The diluted earnings
per share, in principle,
is calculated by
adjusting the weighted
average number
of ordinary shares
outstanding
to
assume
conversion
of
all
dilutive
potential
ordinary
shares
during
the
period.
As
at
31
December
2023,
the
Group’s
dilutive
potential
ordinary
shares
relate
to
the
share
options
that
were
allocated
to
executives
of
Eurobank
Holdings
and
its
affiliated
companies (note 39). The
weighted average
number of shares is adjusted
for the share
options by calculating the
weighted average
number of shares
that could have
been acquired at
fair value (determined
as the average
market price of
the Company's shares
for
the period). The number of shares resulting from
the above calculation is added to the weighted
average number of ordinary
shares
Notes to the Consolidated Financial Statements
.
110
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31 December 2023 Consolidated Financial Statements
in issue in
order to determine
the weighted
average number
of ordinary shares
used for the
calculation of the
diluted earnings per
share.
Year ended 31 December
2023
2022
Net profit for the year attributable to ordinary shareholders
(note 2.3)
€ million
1,140
1,347
Net profit for the year from continuing operations attributable
to ordinary
shareholders
€ million
1,281
1,345
Weighted average number of ordinary
shares used for
basic earnings per share
Number of shares
3,698,802,084
3,708,988,032
Weighted average number of ordinary
shares used for diluted earnings per
share
Number of shares
3,713,688,124
3,714,564,870
Earnings per share
- Basic and diluted earnings per share
€
0.31
0.36
Earnings per share from continuing operations
- Basic and diluted earnings per share
€
0.34
0.36
The effect
on the basic
and diluted
EPS from
the share buyback
agreement with
HFSF at a
price of €1.80
per share
that was
higher
than the market price of the Company’s shares at the transaction date, is immaterial; therefore
it has not been included in the above
EPS calculation.
Basic and diluted losses per share from discontinued
operations for the year ended 31 December 2023 amounted
to € 0.04.
15.
Cash and balances with central banks
2023
2022
€ million
€ million
Cash in hand
502
504
Balances with central banks
10,441
14,490
Total
10,943
14,994
The
Bank
and
its
banking
subsidiaries
in
Eurozone
(Cyprus
and
Luxemburg),
are
required
to
hold
a
minimum
level
of
deposits
(minimum reserve requirement
- MRR) with their national
central bank on an
average basis
over maintenance periods
(i.e. six week
periods);
these deposits
are
calculated
as 1%
of certain
liabilities, mainly
customers’
deposits, and
can be
withdrawn
at any
time
provided that the MRR is met over the determined period of time. Similar obligations for the maintenance of minimum reserves with
its national central
bank are also applied
to the banking subsidiary
in Bulgaria (2022: Bulgaria
and Serbia). As at
31 December 2023,
the mandatory
reserves (i.e.
those that
the Group
entities maintain
in order
to meet
the MRR)
with central
banks amounted
to €
1,096 million (2022: €
1,040 million). MRR deposits placed
to the European Central Bank (ECB)
were remunerated at the ECB’s deposit
facility rate (DFR) until September
2023 and at zero (0%) thereafter.
.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
16.
Cash and cash equivalents and other information on cash flow statement
For the
purpose of
the cash
flow statement,
cash and
cash equivalents
comprise the
following balances
with original
maturities of
three months or less:
2023
2022
€ million
€ million
Cash and balances with central banks (excluding mandatory and collateral
deposits with
central banks) (note 15)
9,847
13,954
Due from credit institutions
998
418
Securities held for trading
0
16
Total
10,845
14,388
Other (income)/losses on investment securities presented
in continuing operating activities are analyzed
as follows:
2023
2022
€ million
€ million
Amortisation of premiums/discounts and accrued interest
(10)
(22)
(Gains)/losses from investment securities
(57)
9
Dividends
(3)
(2)
Total
(70)
(15)
In the year ended
31 December 2023,
other adjustments of €
153 million mainly
include a) €
111 million gain on
investment in Hellenic
Bank accounted
for as
an associate
and b)
€ 88 million
income from
share of
results in
associates and
joint ventures
(note 24),
(31
December
2022: € 244 million mainly include € 325 million
gain resulting from the sale of Eurobank’s merchant acquiring business to
Worldline B.V.
, note 10).
Changes in liabilities arising from financing activities
During the year ended
31 December 2023,
changes in the Group’s liabilities arising
from financing activities, other
than lease liabilities
(note 41),
are attributable
to: a) debt
issuance amounting
to € 1,078
million (2022: €
1,070 million) (net
of issuance costs),
b) debt
repayment amounting to € 30 million (2022: € 11 million) and c) accrued interest
and amortisation of debt issuance costs amounting
to € 51.3 million (2022: € 57.1 million).
17.
Due from credit institutions
2023
2022
€ million
€ million
Pledged deposits with banks⁽¹⁾
1,036
911
Placements and other receivables from banks⁽¹⁾
970
196
Current accounts and settlement balances with banks
348
222
Total
2,354
1,329
(1)
The amounts presented are after offsetting (note 5.2.1.4).
As at 31 December 2023, the Group’s
pledged deposits with banks include: a) € 999 million mainly
cash collaterals on risk mitigation
contracts for derivative transactions and repurchase agreements (CSAs, GMRAs) and b) € 37 million
cash collateral relating to the sale
of former Romanian subsidiaries.
The
Group's
exposure
arising
from
credit
institutions,
as
categorized
by
counterparty's
geographical
region,
is
presented
in
the
following table:
2023
2022
€ million
€ million
Greece
59
42
Other European countries
2,139
1,217
Other countries
156
70
Total
2,354
1,329
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
18.
Securities held for trading
2023
2022
€ million
€ million
Debt securities (note 5.2.1.3)
245
87
Equity securities
134
47
Total
379
134
19.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments
both for hedging and non-hedging purposes.
The table below presents the fair values of the Group’s derivative financial instruments by product type and hedge relationship along
with
their
notional
amounts.
The
notional
amounts
of
derivative
instruments
provide
a
basis
for
comparison
with
instruments
recognized on
the balance sheet
but do not
necessarily indicate the
amounts of future
cash flows involved
or the current
fair value
of the instruments and, therefore, are
not indicative of the Group’s
exposure at the reporting date.
31 December 2023
31 December 2022
Contract /
notional
amount
Fair values
Contract /
notional
amount
Fair values
Assets
Liabilities
Assets
Liabilities
€ million
€ million
€ million
€ million
€ million
€ million
Derivatives for which hedge accounting is
not applied/ held for trading
- Interest rate swaps
33,909
1,215
1,059
35,481
1,778
1,372
- Interest rate options⁽¹⁾
9,268
69
71
3,616
74
96
- Foreign exchange contracts⁽²⁾
3,468
21
26
3,686
62
71
- Other ⁽³⁾
462
5
40
154
2
2
1,310
1,196
1,916
1,541
Derivatives designated as fair value hedges
- Interest rate swaps
8,221
308
452
7,277
463
431
- Interest rate swaps/portfolio hedging
6,642
15
94
4,792
180
-
- Interest rate floors
6,447
-
53
7,791
-
55
323
599
643
486
Derivatives designated as cash flow hedges
- Cross currency interest
rate swaps
1,579
-
147
1,646
2
78
-
147
2
78
Offsetting (note 5.2.1.4)
- Interest rate swaps
(752)
(492)
(1,376)
(444)
Total derivatives
assets/liabilities
881
1,450
1,185
1,661
(1)
Interest rate options include interest rate caps and floors and swaptions.
(2)
It includes currency swaps, forwards and options
(3)
It includes credit default swaps, warrants, commodity derivatives, futures and exchange traded equity options.
Information on the fair value measurement
and offsetting of derivatives is provided
in notes 5.3 and 5.2.1.4, respectively.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The
Group
uses
certain
derivatives
and
other
financial
instruments,
designated
in
a
qualifying
hedge
relationship,
to
reduce
its
exposure to market
risks. The hedging practices
applied by the Group,
as well as the
relevant accounting
treatment are disclosed
in
note 2.2.3. In particular:
(a) Fair value hedges
The Group
hedges a
portion of
its existing
interest
rate risk
resulting from
any potential
change in
the fair
value of
fixed rate
debt
securities, held
or issued,
or fixed
rate loans,
denominated both
in local
and foreign
currencies, using
interest rate
swaps whereby
the fixed
legs represent
the economic
risks of
the hedged
items. The
Group uses
pay fixed/receive
floating interest
rate
swaps to
hedge its fixed rate debt
securities held and loans and pay floating/receive fixed interest
rate swaps to hedge its fixed
rate liabilities.
In 2023, the Group
recognized a loss
of € 175 million (2022:
€ 886 million gain)
from changes in
the carrying amount of
the hedging
instruments and
€ 173 million
gain (2022: €
862 million loss)
from changes
in the fair
value of the
hedged items
attributable to
the
hedged risk. The amount of hedge ineffectiveness recognized for 2023 in “Net trading income/(loss)” was € 2 million loss (2022:
€ 24
million gain).
(b) Fair value hedges – portfolios of assets
and liabilities
The Group hedges a portion of its existing interest rate risk resulting from any potential
change in the fair value of a portfolio of fixed
rate loans
including securitized notes
initially issued and subsequently
held by the Group
(macro-hedging), using a group
of interest
rate
swaps. The
Group
primarily designates
the change
in fair
value attributable
to changes
in the
benchmark interest
rate as
the
hedged risk including
also assumptions for
prepayment risk and,
accordingly,
enters into
interest rate
swaps whereby
the fixed legs
represent
the economic
risks of
the hedged
items. In
2023, the Group
recognized a
loss of
€ 139 million
(2022: €
180 million
gain)
from changes in the carrying amount of the hedging instruments and € 145 million gain (2022: € 159 million
loss) from changes in the
fair
value
of
the
designated
hedged
items
attributable
to
the
hedged
risk.
Accordingly,
the
amount
of
hedge
ineffectiveness
recognized for 2023 in “Net trading
income/(loss)” was € 6 million gain (2022: € 21 million gain).
The Group also
hedges the variability
deriving from the
fair value changes
of purchased
interest rate
floors embedded
in portfolios
of floating rate
loans and debt securities by
writing the floors in
the market. In
2023, the Group recognized
a gain of € 45
ths (2022:
€ 20 million
gain) from
changes in the
carrying amount
of the hedging
instruments, and
€ 45 ths
loss (2022: €
20 million loss)
from
changes in the fair value of the hedged items attributable
to the hedged risk.
Finally,
similar to
portfolio
hedging of
interest
rate
risk for
assets, the
Group
hedges part
of its
interest
rate
exposure
of demand
deposit portfolios attributable
to changes in the benchmark interest
rates (macro-hedging). Despite
their contractual terms and due
to their nature,
part of the demand deposits
are interest
rate-insensitive and
hence behave similarly to
fixed interest
rate liabilities.
Accordingly, the Group enters into a group of interest rate swaps that receives fixed interest rate and pays floating interest rate based
on the
benchmark rate
and its
volume is
re-assessed on
a monthly
basis. In
2023, the
Group recognized
a loss
of €
7 million
from
changes in
the carrying
amount
of the
hedging instruments
and €
5 million
gain
from changes
in the
fair value
of the
designated
hedged items attributable
to the hedged risk.
Accordingly,
the amount of hedge
ineffectiveness recognized
for 2023 in “Net
trading
income/(loss)” was € 2 million loss.
(c) Cash flow hedges
The Group hedges
a portion of
its existing interest rate and
foreign currency risk resulting
from any cash flow
variability due to
changes
in market interest
rates on floating rate
loans, denominated in foreign currency,
using cross currency interest
rate swaps, where
the
variable legs are based
on the benchmark rates
of the hedged items. The
interest rate
risk with respect to the
benchmark reference
rate -
swap curve
of such items,
which share the
same benchmark interest
rate risk
may be hedged
on a single
item or group
basis
using interest rate
swaps of similar maturity.
For the year ended 31 December 2023, an amount
of € 3 million loss was recognised in
other comprehensive income in relation to
derivatives designated as cash flow hedges
(2022: € 19
million gain). Furthermore, in 2023,
the ineffectiveness recognized
in the income statement that
arose from cash flow hedges was nil (2022: nil).
In addition, the Group
uses other derivatives,
not designated in a
qualifying hedge relationship,
to manage its exposure
primarily to
interest rate and foreign currency risks. Non
qualifying hedges are derivatives entered into
as economic hedges of
assets and liabilities
for which hedge accounting
was not applied. The said
derivative instruments are
monitored and have been
classified for accounting
purposes along with those held for trading.
The
Group's
exposure
in
derivative
financial
assets,
as
categorized
by
counterparty's
geographical
region
and
industry
sector,
is
presented in the following tables:
Notes to the Consolidated Financial Statements
.
114
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31 December 2023 Consolidated Financial Statements
31 December 2023
Greece
Other
European
countries
Other
countries
Total
€ million
€ million
€ million
€ million
Sovereign
227
-
-
227
Banks
12
228
335
575
Corporate
72
7
-
79
Total
311
235
335
881
31 December 2022
Greece
Other
European
countries
Other
countries
Total
€ million
€ million
€ million
€ million
Sovereign
249
-
-
249
Banks
12
291
570
873
Corporate
51
12
-
63
Total
312
303
570
1,185
As at 31 December 2023,
the net carrying value
of the derivatives with
the Hellenic Republic amounted
to a liability of €
260 million
(31 December 2022: € 489 million liability).
At 31 December 2023 and 2022,
the maturity profile of the nominal amount
of the financial instruments designated
by the Group in
hedging relationships is presented in the tables
below:
31 December 2023
Fair Value Hedges
Cash Flow Hedges
1 - 3
months
3 - 12
months
1-5 years
Over 5
years
Total
1 - 3
months
3 - 12
months
1-5 years
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Interest rate swaps⁽¹⁾
500
16
4,285
3,420
8,221
-
-
-
-
Interest rate options
-
-
800
5,647
6,447
-
-
-
-
Cross currency interest rate
swaps
-
-
-
-
-
175
602
802
1,579
Total
500
16
5,085
9,067
14,668
175
602
802
1,579
31 December 2022
Fair Value Hedges
Cash Flow Hedges
1 - 3
months
3 - 12
months
1-5 years
Over 5
years
Total
3 - 12
months
1-5 years
Over 5
years
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Interest rate swaps⁽¹⁾
255
24
2,884
4,114
7,277
-
-
-
-
Interest rate options
-
-
800
6,991
7,791
-
-
-
-
Cross currency interest
rate swaps
-
-
-
-
-
101
1,545
-
1,646
Total
255
24
3,684
11,105
15,068
101
1,545
-
1,646
(1)
Nominal amount
of interest rate swaps designated as fair value macro hedges is not included.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
(a) Fair value hedges
The following
tables present
data relating
to the hedged
items under fair
value hedges
for the years
ended 31 December
2023 and
2022:
2023
Carrying
amount/Exposure
designated as
hedged
Accumulated
amount of FV
hedge
adjustments
related to the
hedged item
Change in value as
the basis for
recognising hedge
ineffectiveness
€ million
€ million
€ million
Assets
Loans and advances to customers⁽¹⁾
9,184
69
172
Debt securities AC⁽¹⁾
4,474
154
163
Debt securities FVOCI
1,027
(54)
88
Liabilities
Debt securities in issue
3,812
(15)
105
Due to customers⁽¹⁾
1,628
20
(5)
2022
Carrying amount/
Exposure
designated as
hedged
Accumulated
amount of FV
hedge adjustments
related to the
hedged item
Change in value as
the basis for
recognising hedge
ineffectiveness
€ million
€ million
€ million
Assets
Loans and advances to customers⁽¹⁾
12,693
(216)
(225)
Debt securities AC⁽¹⁾
3,978
(17)
(431)
Debt securities FVOCI
1,336
(157)
(266)
Liabilities
Debt securities in issue
2,373
(120)
(120)
(1)
For loans
and advances
to customers
hedges,
debt securities
at amortised
cost included
in portfolio
hedges and
due to
customers hedges,
the exposure
designated as hedged is presented.
At 31 December
2023, the accumulated
amounts
of fair value
hedge adjustments
remaining in the balance
sheet for any
items that
have ceased to be adjusted for
hedging gains and losses were € 253 million assets for
debt securities held at AC, € 3 million liabilities
for debt issued and € 44 million liabilities for adjustments related to debt securities held at FVOCI (2022: € 279 million assets for debt
securities held
at
AC,
€ 4
million liabilities
for
debt
issued and
€ 19
million liabilities
for
adjustments
related
to
debt securities
at
FVOCI). The
respective
fair value
hedge adjustments
relating to
macro-hedging, amounted
to €
57 million
loss for
loans (including
securitized notes) and € 25 million gain for deposits.
(b) Cash flow hedges
The cash flow
hedge reserves
for continuing
hedges as at
31 December 2023 were
€ 0.7 million
gain (2022: €
4 million gain),
which
relate to loans and advances to customers.
As at 31 December 2023, the
balances remaining in the cash
flow hedge reserve from
any cash flow hedging
relationships for which
hedge accounting is no longer applied was € 20 million loss (2022: € 20 million loss).
The reconciliation of the components of Group’s
special reserves including cash flow hedges is provided in note 38.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
20.
Loans and advances to customers
2023
2022
€ million
€ million
Loans and advances to customers at amortised cost
- Gross carrying amount
42,773
43,450
- Impairment allowance
(1,258)
(1,626)
Carrying Amount
41,515
41,824
Fair value changes of loans in portfolio hedging of interest rate
risk
15
(163)
Loans and advances to customers at FVTPL
15
16
Total
41,545
41,677
The table below presents the carrying amount of loans and advances to customers
per product line and per stage as at 31 December
2023:
31 December 2023
31 December 2022⁽⁵⁾
12-month ECL-
Stage 1
Lifetime
ECL-
Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
Total amount
Total amount
€ million
€ million
€ million
€ million
€ million
Loans and advances to customers at
amortised cost
Mortgage lending:
- Gross carrying amount
6,909
2,618
415
9,942
10,201
- Impairment allowance
(20)
(154)
(208)
(382)
(409)
Carrying Amount
6,888
2,464
207
9,560
9,792
Consumer lending:
- Gross carrying amount
2,942
369
124
3,436
3,353
- Impairment allowance
(53)
(53)
(105)
(210)
(271)
Carrying Amount
2,890
317
19
3,225
3,082
Small Business lending:
- Gross carrying amount
2,480
728
276
3,484
3,842
- Impairment allowance
(25)
(65)
(128)
(219)
(324)
Carrying Amount
2,454
663
148
3,265
3,518
Wholesale lending:⁽²⁾⁽³⁾
- Gross carrying amount
24,005
1,198
709
25,912
26,054
- Impairment allowance
(72)
(58)
(318)
(447)
(621)
Carrying Amount
23,934
1,140
391
25,465
25,432
Total loans and advances to customers
at
AC
- Gross carrying amount , of which:
36,336
4,914
1,523
42,773
43,450
Non Performing exposures (NPE)
1,512
1,512
2,257
- Impairment allowance
(170)
(329)
(759)
(1,258)
(1,626)
Carrying Amount
36,166
4,584
764
41,515
41,824
Fair value changes of loans in portfolio
hedging of interest rate risk
15
(163)
Loans and advances to customers at FVTPL
Carrying Amount⁽⁴⁾
15
16
Total
41,545
41,677
(1)
As at 31 December 2023, POCI loans
of € 29 million gross carrying amount
(€ 11 million included in performing exposures and €
18 million in non performing
exposures), which carried € 8 million
impairment allowance, are presented in ‘Lifetime ECL –
Stage 3 and POCI’
(31 December 2022: € 43 million
gross carrying
amount,
which carried € 6.5 million impairment allowance).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
(2)
Includes € 4,444 million related to the senior notes of Pillar, Cairo and Mexico securitizations, which have been categorized in Stage 1.
(3)
Includes loans to public sector.
(4)
Includes € 9.9 million related to the mezzanine notes of the Pillar, Cairo and Mexico securitizations.
(5)
As at 31
December 2022, gross
loans and advances
to customers
and impairment allowance
relating to Eurobank
Direktna a.d. disposal
group (note
30)
amounted to € 1,639 million and € 53 million, respectively.
Sustainability linked loans
In
line
with
its
Sustainable
Finance
Framework,
the
Group
grants
loans,
which
as
part
of
their contractual
terms,
incentivize
the
borrower’s
achievement
of
predetermined
sustainability
performance
targets
(SPTs).
Specifically,
these
SPTs
consist
of
a
list
of
environmental
(E), social (S), and
governance (G) targets,
the fulfillment of
which by the
client is determined
by meeting respective
KPIs, i.e.,
metrics to
quantify the
client’s
performance,
for
example
climate-related
targets,
such as
reducing
carbon
emissions or
social targets, such as increasing the level of diversity at Board level. As part of the terms of these loans, the contractual
interest rate
is increased if the borrower fails to meet
specific targets linked to its
activity.
The abovementioned
loans held
as of 31
December 2023 have
been assessed,
in line with
the Group’s
accounting policies
(note 2)
that their
contractual
cash flows
are considered
to fulfil
the SPPI
test.
Their contractual
terms are
consistent
with a
basic lending
arrangement, therefore
they are held at amortized cost.
As at 31 December 2023, the carrying amount of the sustainability linked
loans amounted to € 354 million (2022: € 432 million).
Project “Solar”
In the context
of its NPE management strategy,
the Group has structured
another NPE securitization transaction
(project ‘Solar’), as
part of a joint initiative with the
other Greek systemic banks (the Banks) initiated since 2018, in
order to decrease further its NPE ratio
and strengthen
its balance
sheet de-risking.
In addition,
the Group
targets
to the
prudential and
accounting
derecognition
of the
underlying
corporate
loan
portfolio
from
its
balance
sheet
by
achieving
a
Significant
Risk
Transfer
(SRT)
and
including
‘Solar’
securitization under the Hellenic Asset Protection Scheme (HAPS), thus
the senior note of the securitization to become
entitled to the
Greek
State’s
guarantee.
The
Management
remains
committed
to
its
plan
for
the
completion
of
the
above
transaction
and
has
undertaken actions, along with the other participating banks, towards
the disposal of the majority stake of the mezzanine and junior
notes to be issued in the
context of the above-mentioned securitization. More specifically, on 2 November 2023, the Bank
announced
the execution of a binding agreement
between the Banks and Waterwheel
Capital Management, L.P.,
with respect to the sale to the
latter of 95% of the Mezzanine and Junior notes
to be issued in the context of “Solar” securitization. The Banks will hold 100% of the
Senior
notes
as
well
as
5% of
the
Mezzanine
and Junior
notes.
The
completion
of
the
transaction
is subject
to
the
fulfillment
of
customary conditions for such transactions,
including, among others, the HAPs guarantee and SRT approval
mentioned above.
Since June 2022, the
Group classified the underlying corporate loan portfolio as
held for sale and
remeasured the portfolio’s expected
credit losses, in
accordance with the
Group’s accounting policy for the
impairment of financial
assets, which resulted
in the
recognition
of impairment
loss of
€ 12
million in
the fourth
quarter of
2023 (note
21). The
aforementioned
impairment loss
was calculated
by
reference to the currently estimated fair
value of the notes to be retained by the Group, upon the completion of transaction, and the
consideration expected
to be received
by the sale
of mezzanine
and junior notes.
As at 31
December 2023, the
carrying amount of
the aforementioned loan portfolio
reached € 48 million, comprising loans with
gross carrying amount of € 246 million, which carried
an
impairment
allowance
of
€
198
million.
Furthermore,
the
impairment
allowance
of
the
letters
of
guarantee
included
in
the
underlying portfolio reached € 1 million (note 35).
Project “Leon”
In December 2023, the
Bank, aiming to accelerate
further its NPE reduction
plan, initiated the sale
process of a mixed
NPE portfolio
of total gross book value ca. € 400 million, engaging in parallel in negotiations with potential investors. The transaction is expected to
be completed by the end of 2024.
Accordingly, as at 31 December
2023, the Bank
classified the above
loan portfolio as
held for sale,
remeasured the portfolio’s expected
credit losses,
in accordance
with the
Bank’s
accounting policy
for the
impairment of
financial assets and
recognized an
impairment
loss of € 55 million (note
21), which was calculated
by reference to
the consideration expected
to be received from
its sale. As at 31
December 2023, the
carrying amount of
the aforementioned loan portfolio reached
€ 121
million, comprising loans
with gross carrying
amount of € 398 million, which carried an impairment allowance of € 277 million (note
30).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Project Wave
In December 2023,
the Bank proceeded
with the execution
of another synthetic
risk transfer
transaction (project
“Wave IV”) in
the
form
of
a
financial
guarantee,
providing
credit
protection
over
the
mezzanine
loss
of
a
portfolio
of
performing
SME
and
Large
Corporate loans
amounting to €
1.5 billion (the
reference portfolio).
Similarly to the
previous synthetic
risk transfer
transactions of
similar characteristics (‘Wave’ projects) , the Wave
IV transaction was accounted for as a purchased financial guarantee contract that
is not
integral
to the
contractual
terms of
the reference
portfolio,
where a
compensation
right resulting
from the
expected credit
losses of the
protected loans
is recognized,
to the
extent that
it is virtually
certain that
the Group will
be reimbursed
for the
credit
losses incurred. The reference portfolios
of Wave projects continued
to be recognised on the Group’s
Balance Sheet.
As at 31 December
2023, the Wave
IV transaction, that
was performed in
the context of
the Group’s
initiatives for the
optimization
of its regulatory capital, resulted in a capital
benefit of 41 bps.
Support measures to customers
In April 2023, the Bank announced the launch of a reward
initiative for housing loan clients under floating
rate loans,
disbursed until
31
December
2022,
who
had
no
delinquencies
and
met
their
financial
obligations
in
a
consistent
manner.
The
reward
program
introduced “a cap”
in the loans’ applicable base rates
for a period of 12 months,
with a view to protect
borrowers against
reference
rates’ increase (note 10)
Post balance sheet event
In March
2024, the
Bank announced
that the
aforementioned
reward
initiative will
be extended
with the
same terms
for another
twelve months, in its effort to
continue to support and reward its non-delinquent
housing clients.
In the
third quarter
of 2023,
the Bank,
as a
response to
the unprecedented
wildfires
and floods
that impacted
several regions
in
Greece offered
certain support
measures to
affected
borrowers,
owners
of properties
located in
the affected
areas or
companies
operating
in the
same regions,
who had
delinquencies up
to 89
days
and had
filed a
relevant
application to
the Bank.
The above
support
measures
include
loans’
arrears
capitalization,
if
any,
payment
holidays
on
an
interest-bearing
and
for
wildfire
affected
companies specifically, 50%
spread reduction. These measures are accounted
for as modifications with no impact in profit or loss.
Securitizations of loan portfolios originated by the Group
The Group
in the
context
of the
achievement
of its
NPE reduction
targets
has entered
into the
securitization
of various
classes of
primarily NPE
through the
issue of senior,
mezzanine and
junior notes,
which resulted,
as described below,
in the derecognition
of
the underlying loan portfolios and the recognition of the retained
notes.
‘Mexico’ securitization
In May
2021, the
Group, through
its special
purpose financing
vehicle (SPV)
‘Mexico Finance
Designated
Activity Company’
issued
senior, mezzanine and
junior notes of total face value of ca. € 5.2 billion, via a securitization of a mixed portfolio comprising primarily
NPE. The
Group
included ‘’Mexico”
securitization
under the
Hellenic Asset
Protection
Scheme (HAPS)
thus
the senior
note of
the
securitization became entitled to the Greek
State’s
guarantee.
In December 2021, the sale of 95% of the mezzanine and junior notes of Mexico securitization to doValue
S.p.A. was completed and,
as a result, the Group
ceased to control
the SPV and derecognized
the underlying loan portfolio
from its balance sheet,
on the basis
that
it transferred
substantially
all risks
and rewards
of the
portfolio’s
ownership and
ceased to
have
control
over the
securitized
loans. In addition, the Group recognized the retained notes on its balance sheet i.e. 100% of the senior and 5% of the mezzanine and
junior notes, with carrying amount € 1,415 million at 31 December 2023 (31 December 2022: € 1,539 million).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
‘Cairo’ securitization
In June
2019, the
Group, through
the special
purpose financing
vehicles (SPVs)
‘Cairo No.
1 Finance
Designated Activity
Company’,
‘Cairo No. 2 Finance Designated
Activity Company’ and ‘Cairo No. 3 Finance Designated
Activity Company’,
issued senior,
mezzanine
and junior notes of total face value of ca. € 7.5 billion, via a securitization
of a mixed portfolio consisting primarily of non-performing
loans
(NPE)
(“Cairo”
securitization).
In
December
2019,
the
Group
announced
that
it
has
entered
into
a binding
agreement
with
doValue S.p.A. for the sale
of 20% of
the mezzanine and 50.1%
of the junior
notes of “Cairo”
securitization. The Group included
“Cairo”
securitization under
the Hellenic Asset
Protection Scheme
(HAPS) thus
the senior
note of
the securitization
became entitled
to the
Greek State’s
guarantee.
In June 2020,
the sale of
the aforementioned
notes was
completed and,
as a result,
the Group ceased
to control
the Cairo
SPVs on
the basis that it does not have
the power to direct their
relevant activities. Furthermore,
in June 2020, Eurobank Holdings,
following
a decision of the Board of
Directors (BoD), proceeded
to the contribution of the
retained Cairo notes,
i.e. 75% of the mezzanine
and
44.9% of
the junior
notes, along
with an
amount of
€ 1.5
million in
cash to
its Cyprus-based
subsidiary Mairanus
Ltd, renamed
to
‘Cairo Mezz Plc’,
in exchange for
the newly-issued shares
of the aforementioned
subsidiary.
In July 2020, the
General Shareholders’
Meeting of the Company
approved the distribution of Cairo
Mezz Plc shares to
Eurobank Holding’s shareholders through the decrease
in kind of its share capital.
In September 2020,
following the completion
of the distribution
of the Cairo
Mezz Plc shares,
the underlying loan
portfolio and the
related assets and liabilities were derecognized
from the Group’s
balance sheet, on the basis that at that time the Group transferred
substantially all risks
and rewards of the portfolio’s
ownership and ceased to have
control over the securitized
portfolio. In addition,
the Group recognized
the retained notes
on its balance sheet,
i.e. 100% of the
senior notes, 5% of
mezzanine and junior
notes with
carrying amount € 2,019 million at 31 December 2023 (31 December 2022: € 2,332 million).
‘Pillar’ securitization
In
June
2019, the
Group,
through
the special
purpose
financing vehicle
(SPV)
‘Pillar
Finance Designated
Activity
Company’ issued
senior,
mezzanine
and
junior
notes
of
total
value
of
ca.
€
2
billion,
via
a
securitization
of
residential
mortgage
primarily
NPE.
In
September 2019, the Group sold 95% of the above-mentioned mezzanine and
junior notes to Celidoria S.A R.L. Upon the completion
of the
sale, the
Group ceased
to control
the SPV
and derecognized
the underlying
loan portfolio
in its
entirety,
on the
basis that
it
transferred substantially
all the risks and rewards of the underlying loan portfolio’s
ownership. In addition, the Group recognized the
retained
notes, i.e.
100% of
the senior,
5% of
the mezzanine
and junior
notes, on
its balance
sheet with
carrying amount
€ 1,020
million at 31 December 2023 (31 December 2022: € 1,039 million).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
21.
Impairment allowance for loans and advances to customers
The following tables present the movement
of the impairment allowance on loans and advances to customers
(expected credit losses – ECL):
31 December 2023
Wholesale
Mortgage
Consumer
Small business
12-month
ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
12-month
ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
12-month
ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
12-month
ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Impairment allowance as at 1 January
68
75
478
21
160
229
37
48
186
23
72
229
1,626
New loans and advances originated or
purchased
23
-
-
0
-
-
20
-
-
4
-
-
47
Transfers between stages
- to 12-month ECL
23
(20)
(3)
10
(8)
(1)
15
(7)
(7)
11
(8)
(2)
-
- to lifetime ECL
(6)
28
(22)
(3)
27
(23)
(2)
15
(13)
(2)
13
(11)
-
- to lifetime ECL credit-impaired loans
(5)
(21)
27
(0)
(12)
12
(1)
(6)
6
(1)
(10)
11
-
Impact of ECL net remeasurement
(31)
(3)
72
(7)
(16)
148
4
10
84
(7)
(1)
89
342
Recoveries from written - off loans
-
-
18
-
-
8
-
-
18
-
-
6
49
Loans and advances derecognised/
reclassified as held for sale during the
year⁽²⁾
(4)
(1)
(17)
(0)
(0)
(92)
(4)
(7)
(95)
(1)
(1)
(115)
(337)
Amounts written off⁽³⁾
-
-
(216)
-
-
(46)
-
-
(62)
-
-
(62)
(387)
Unwinding of Discount
-
-
(8)
-
-
(3)
-
-
(2)
-
-
(3)
(16)
Foreign exchange and other movements
3
(0)
(10)
0
4
(24)
(16)
(1)
(11)
(1)
0
(13)
(67)
Impairment allowance as at 31 December
72
58
318
20
154
208
53
53
105
25
65
128
1,258
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
31 December 2022
Wholesale
Mortgage
Consumer
Small business
12-month
ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
12-month
ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
12-month
ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
12-month
ECL
-Stage 1
Lifetime ECL
-Stage 2
Lifetime ECL -
Stage 3 and
POCI⁽¹⁾
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Impairment allowance as at 1 January
69
76
737
17
138
170
44
39
257
41
58
227
1,872
New loans and advances originated or
purchased
29
-
-
2
-
-
21
-
-
6
-
-
58
Transfers between stages
- to 12-month ECL
20
(20)
(0)
10
(9)
(1)
14
(8)
(5)
13
(10)
(3)
-
- to lifetime ECL
(12)
13
(1)
(4)
24
(20)
(8)
24
(15)
(7)
19
(12)
-
- to lifetime ECL credit-impaired loans
(6)
(8)
14
(1)
(9)
10
(5)
(7)
11
(2)
(7)
9
-
Impact of ECL net remeasurement⁽⁴⁾
(35)
13
(1)
(3)
12
100
(25)
(0)
91
(30)
12
69
202
Recoveries from written - off loans
-
-
23
-
-
9
-
-
12
-
-
9
53
Loans and advances
derecognised/reclassified as held for sale
during the year⁽²⁾
-
(0)
(202)
-
-
(0)
-
-
-
-
-
(1)
(203)
Amounts written off⁽³⁾
-
-
(87)
-
-
(10)
-
-
(141)
-
-
(53)
(290)
Unwinding of Discount
-
-
(11)
-
-
(1)
-
-
(3)
-
-
(2)
(18)
Foreign exchange and other movements
4
1
5
(0)
3
(27)
(4)
1
(21)
2
1
(14)
(49)
Impairment allowance as at 31 December
68
75
478
21
160
229
37
48
186
23
72
229
1,626
(1)
The impairment allowance for POCI loans of € 8.1 million is included in ‘Lifetime ECL – stage 3 and POCI’ (2022: € 6.5 million).
(2)
It represents the impairment allowance of loans derecognized due to a) substantial modifications of the loans’ contractual terms, b) sale transactions, c) debt to equity transactions and those that have been reclassified as held for sale during
the year (notes 20 and 30).
(3)
The contractual amount outstanding on lending exposures that were written off during the year ended 31 December 2023 and that
are still subject to enforcement activity is € 338 million (2022: € 111 million).
(4)
It includes € 14 million impairment loss on loans and advances relating
to discontinued operations (note 30).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The impairment
losses relating
to loans
and advances
to customers
from continuing
operations recognized
in the
Group’s
income
statement for the year ended 31 December 2023 amounted
to € 412 million, including
€ 67 million loss relating to the projects Solar
and Leon (note 20) (2022: € 276 million) and are analyzed as follows:
2023
2022
€ million
€ million
Impairment loss on loans and advances to customers
(390)
(246)
Net income / (loss) from financial guarantee contracts⁽¹⁾
(37)
(22)
Modification gain / (loss) on loans and advances to customers
8
2
Impairment (loss)/ reversal for credit
related commitments
7
(10)
Total from
continuing operations
(412)
(276)
(1)
It refers to purchased financial guarantee contracts, not integral to the guaranteed loans (projects Wave).
22.
Investment securities
2023
2022
€ million
€ million
Investment securities at FVOCI
3,492
3,828
Investment securities at amortised cost
10,955
9,192
Investment securities at FVTPL
263
241
Total
14,710
13,261
Note: information on debt securities of the investment portfolio is presented in note 5.2.1.3
In April 2023,
Attica Bank,
a financial institution
located in
Greece, announced the
completion of its
share capital
increase with
the
joint participation of Hellenic
Financial Stability Fund (HFSF) and private investors. Eurobank participated in the
above capital increase
and designated its investment amounting
to € 10 million at FVOCI. As at 31 December 2023, its fair value
stood at € 8 million.
In November 2023, the
Bank acquired a minority
stake in Plum
Fintech Limited (“Plum”),
a fintech company
based in the UK. Under
the terms
of the agreement,
the Bank initially
invested €
5 million
in Plum and
subject to
the fulfillment of
certain conditions,
may
invest another € 5 million in due time. The investment
of the Bank in the aforementioned company was
designated at FVOCI.
In October
2023, Eurobank
Asset Management,
a fully
owned subsidiary
of Eurobank,
acquired a
minority
stake
in Mintus
Group
Limited (“Mintus”),
a UK
based company
providing access
to alternative
investment
categories globally.
The investment
in Mintus
was designated at FVOCI and its fair
value at 31 December 2023 stood at € 2 million.
Sustainability linked bonds
As at 31 December
2023, the Group holds positions
in sustainability linked bonds with Sustainability
Performance Targets (SPTs)
(note
20) of carrying value of € 118 million, of which € 82 million measured at FVOCI and € 36 million at AC (2022: € 173 million, of which €
123 million at
FVOCI and
€ 50 million
at AC).
The Group
has assessed the
ESG features
of the aforementioned
debt instruments,
in
line with the Group’s
accounting policies (note 2)
and has concluded that
they do not create
exposure to risks
that are inconsistent
with a basic lending arrangement and therefore
the SPPI criteria are met.
.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
22.1
Movement of investment securities
The tables below present the movement of the carrying
amount of investment securities per measurement category
and per stage:
31 December 2023
Debt securities at FVOCI
Investment securities at amortised cost
Investment
securities at
FVTPL
Equity
securities at
FVOCI
12-month
ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL-
Stage 3
12-month
ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL-
Stage 3
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Gross carrying amount at 1
January
3,612
121
-
9,175
6
33
241
95
13,283
Additions, net of disposals and
redemptions
(394)
-
-
1,621
-
(2)
3
18
1,246
Transfers between stages
76
(76)
-
(1)
1
-
-
-
-
Net gains/(losses) from changes in
fair value for the year
244
4
-
-
-
-
19
7
273
Amortisation of
premiums/discounts and interest
(19)
0
-
28
(0)
2
(0)
-
10
Changes in fair value
due to hedging⁽¹⁾
-
-
-
146
0
-
-
-
146
Exchange adjustments and other
movements⁽²⁾
(11)
(1)
-
(34)
(0)
(1)
0
(103)
(150)
Discontinued operations⁽³⁾
(81)
-
-
-
-
-
-
-
(81)
Gross carrying amount at 31
December
3,427
48
-
10,935
7
32
263
17
14,729
Impairment allowance
-
-
-
(11)
(0)
(7)
-
-
(18)
Net carrying amount at 31
December
3,427
48
-
10,924
7
25
263
17
14,710
31 December 2022
Debt securities at FVOCI
Investment securities at amortised cost
Investment
securities at
FVTPL
Equity
securities at
FVOCI
12-month
ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL-
Stage 3
12-month
ECL-
Stage 1
Lifetime ECL-
Stage 2
Lifetime ECL-
Stage 3
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Gross carrying amount at 1
January
6,456
9
-
4,672
-
-
141
44
11,322
Additions, net of disposals and
redemptions
(1,979)
(6)
(14)
4,904
-
-
80
17
3,002
Transfers between stages
(131)
117
14
(40)
6
34
-
-
-
Net gains/(losses) from changes in
fair value for the year
(740)
3
-
-
-
-
16
34
(687)
Amortisation of
premiums/discounts and interest
(42)
(2)
-
64
-
2
0
-
22
Changes in fair value due to
hedging⁽¹⁾
-
-
-
(449)
-
(4)
-
-
(453)
Exchange adjustments and other
movements
48
(0)
-
24
-
1
4
-
77
Gross carrying amount at 31
December
3,612
121
-
9,175
6
33
241
95
13,283
Impairment allowance
-
-
-
(12)
(0)
(10)
-
-
(22)
Net carrying amount at 31
December
3,612
121
-
9,163
6
23
241
95
13,261
(1)
Changes in fair value due to continued hedging relationships amount to € 172 million gain (2022: € 548 million loss)
(2)
Other movements in equity
securities at FVOCI mainly
refer to Hellenic Bank which
was accounted for as a
Group's associate as of the
second quarter of 2023
(note 24).
(3)
Refers to ERB Direktna (note 30).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
22.2
Movement of ECL
The table below presents the ECL movement per portfolio,
including ECL movement analysis per stage:
31 December 2023
31 December 2022
Measured at
amortised cost
Measured at
FVOCI
Total
Measured at
amortised cost
Measured at
FVOCI
Total
€ million
€ million
€ million
€ million
€ million
€ million
Balance at 1 January
22
12
34
6
12
18
New financial assets purchased
4
2
6
16
2
18
- of which 12-month ECL-Stage 1
4
2
6
16
2
18
Transfers
between stages
- (from)/to 12-month ECL-Stage 1
0
1
1
(6)
(11)
(17)
- (from)/to lifetime ECL-Stage 2
(0)
(1)
(1)
0
0
0
- (from)/to lifetime ECL-Stage 3
-
-
-
6
11
17
Remeasurement due to change in
ECL risk parameters
(8)
(5)
(13)
3
13
16
- of which 12-month ECL-Stage 1
(5)
(4)
(9)
(2)
9
7
- of which lifetime ECL-Stage 2
(0)
(1)
(1)
1
4
5
- of which lifetime ECL-Stage 3
(3)
-
(3)
4
-
4
Financial assets disposed during the
year
(1)
(1)
(2)
(3)
(4)
(7)
- of which 12-month ECL-Stage 1
(1)
(1)
(2)
(3)
(4)
(7)
Financial assets redeemed during the
year
(0)
(0)
(0)
-
(10)
(10)
- of which lifetime ECL-Stage 3
-
-
-
-
(10)
(10)
Foreign exchange and other
movements
1
(0)
1
(0)
(1)
(1)
Balance as at 31 December
18
8
26
22
12
34
22.3
Equity reserve: revaluation of the investment
securities at FVOCI
Gains
and
losses
arising
from
the
changes
in
the
fair
value
of
investment
securities
at
FVOCI
are
recognized
in
a
corresponding
revaluation reserve in equity.
The movement of the reserve is as follows:
2023
2022
€ million
€ million
Balance at
1 January
(10)
322
Net gains/(losses) from changes in fair value
255
(702)
Tax (expense)/benefit (note
13)
(49)
180
206
(522)
Net (gains)/losses transferred to net profit on disposal
(50)
29
ECL transferred to net profit
(3)
4
Tax (expense)/benefit on net (gains)/losses
transferred to net profit on disposal
15
(7)
Tax (expense)/benefit on ECL
transferred to net profit
1
(1)
(37)
25
Net (gains)/losses transferred to net profit from
fair value hedges
(91)
270
Tax (expense)/benefit
24
(73)
(67)
197
Revaluation reserve from associated undertakings, net of tax
⁽¹⁾
1
(33)
Revaluation reserve for the investment
in Hellenic Bank transferred to R/E (note 24)
(45)
-
Balance at 31 December
48
(10)
(1)
In 2023,
it also includes
€ 7
million negative
impact on fair
value reserve,
due to
IFRS 9
adoption by
the Group’s
associate Eurolife
FFH Insurance
Group
Holdings S.A. (note 38).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
23.
Group composition
23.1
Shares in subsidiaries
The following is a listing of the Company's subsidiaries as at 31 December 2023, included in the consolidated financial statements
for
the year ended 31 December 2023:
Name
Note
Percentage
holding
Country of
incorporation
Line of business
Eurobank S.A.
100.00
Greece
Banking
Be Business Exchanges S.A. of Business Exchanges
Networks and Accounting and Tax Services
98.01
Greece
Business-to-business e-commerce,
accounting, tax and sundry services
Eurobank Asset Management Mutual Fund Mngt
Company Single Member S.A.
100.00
Greece
Mutual fund and asset management
Eurobank Equities Investment Firm Single Member
S.A.
100.00
Greece
Capital markets and advisory services
Eurobank Leasing Single Member S.A.
100.00
Greece
Leasing
Eurobank Factors Single Member S.A.
100.00
Greece
Factoring
Herald Greece Single Member Real Estate
development and services S.A. 1
100.00
Greece
Real estate
Herald Greece Single Member Real Estate
development and services S.A. 2
100.00
Greece
Real estate
Piraeus Port Plaza 1 Single Member Development S.A.
100.00
Greece
Real estate
(Under liquidation) Anchor Hellenic Investment
Holding Single Member S.A.
100.00
Greece
Real estate
Athinaiki Estate Investments Single Member S.A.
100.00
Greece
Real estate
Piraeus Port Plaza 2 Single Member Development S.A.
100.00
Greece
Real estate
Piraeus Port Plaza 3 Single Member Development S.A.
100.00
Greece
Real estate
Tenberco Real Estate
Single Member S.A.
100.00
Greece
Real estate
Value Touristiki Single Member Development S.A.
100.00
Greece
Real estate
ADEXA Real Estate Single Member S.A
i
100.00
Greece
Real estate
Eurobank Ananeosimes Single Member S.A
m
100.00
Greece
Production and distribution of
solar generated electric energy
Eurobank Bulgaria A.D.
d
99.99
Bulgaria
Banking
PB Personal Finance E.A.D.
h
99.99
Bulgaria
Pension assurance intermediary business
Berberis Investments Ltd
100.00
Channel Islands
Holding company
Eurobank Cyprus Ltd
100.00
Cyprus
Banking
Foramonio Ltd
100.00
Cyprus
Real estate
Lenevino Holdings Ltd
100.00
Cyprus
Real estate
Rano Investments Ltd
100.00
Cyprus
Real estate
Neviko Ventures Ltd
100.00
Cyprus
Real estate
Zivar Investments Ltd
100.00
Cyprus
Real estate
Amvanero Ltd
100.00
Cyprus
Real estate
Revasono Holdings Ltd
100.00
Cyprus
Real estate
Volki Investments Ltd
100.00
Cyprus
Real estate
Adariano Investments Ltd
100.00
Cyprus
Real estate
Elerovio Holdings Ltd
100.00
Cyprus
Real estate
Afinopio Investments Ltd
I
100.00
Cyprus
Real estate
Ovedrio Holdings Ltd
I
100.00
Cyprus
Real estate
Primoxia Holdings Ltd
I
100.00
Cyprus
Real estate
Eurobank Private Bank Luxembourg S.A.
n
100.00
Luxembourg
Banking
Eurobank Fund Management Company (Luxembourg)
S.A.
100.00
Luxembourg
Fund management
ERB Lux Immo S.A.
100.00
Luxembourg
Real estate
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Name
Note
Percentage
holding
Country of
incorporation
Line of business
ERB New Europe Funding B.V.
100.00
Netherlands
Finance company
ERB New Europe Funding II B.V.
100.00
Netherlands
Finance company
ERB New Europe Holding B.V.
100.00
Netherlands
Holding company
ERB IT Shared Services S.A.
100.00
Romania
Informatics data processing
IMO Property Investments Bucuresti S.A.
100.00
Romania
Real estate services
Seferco Development S.A.
99.99
Romania
Real estate
ERB Leasing A.D. Beograd-in Liquidation
f
100.00
Serbia
Leasing
IMO Property Investments A.D. Beograd
100.00
Serbia
Real estate services
Reco Real Property A.D. Beograd
100.00
Serbia
Real estate
Karta II Plc
-
United Kingdom
Special purpose financing vehicle
Astarti Designated Activity Company
-
Ireland
Special purpose financing vehicle
ERB Recovery Designated Activity Company
-
Ireland
Special purpose financing vehicle
The following entities are not included in the consolidated
financial statements due to immateriality:
(i) the Group’s
special purpose financing
vehicles and the
related holding
entities, which are
dormant and/or
are under liquidation:
Themeleion
III
Holdings
Ltd,
Themeleion IV
Holdings
Ltd,
Themeleion Mortgage
Finance Plc,
Themeleion
II Mortgage
Finance Plc,
Themeleion
III
Mortgage
Finance
Plc,
Themeleion
IV
Mortgage
Finance
Plc,
Themeleion
V
Mortgage
Finance
Plc,
Themeleion
VI
Mortgage Finance Plc, Anaptyxi APC Ltd and Byzantium
II Finance Plc.
(ii) the holding entity of Karta II Plc: Karta II Holdings Ltd.
(iii) dormant entity: Enalios Real Estate
Development S.A.
(iv) entities
controlled by
the Group
pursuant to
the terms
of the relevant
share pledge
agreements: Finas
S.A., Rovinvest
S.A. and
Promivet S.A.
In 2023,
the changes
in the
Group
structure
due to:
a) acquisitions,
mergers
and establishment
of companies,
b) sales
and other
corporate actions,
which resulted in
loss of control,
c) transactions with
the non-controlling interests,
which did not result
in loss of
control and d) liquidations, are as follows:
(a) ERB Hellas (Cayman Islands) Ltd, Cayman Islands
In December 2022, the
liquidation of the
company was
decided. In February
2023, the return
of the company’s
share capital
to the
Bank, through the repurchase of its own shares, was
completed.
(b) Retail Development S.A., Romania
In February 2023, the Bank signed an agreement for
the sale of its participation interest
of 99.99% in Retail Development S.A.,
along
with the
loan receivable
from the
company,
to a third
party for
a cash
consideration of
€ 8.1 million.
The resulting
loss on disposal
amounted to € 1.1 million and was recognized
in “Other income/(expenses)”.
(c) Eurobank Direktna a.d., Serbia
On 2 November 2023, the Bank announced that the sale of its 70% shareholding in Eurobank Direktna a.d. to AIK Banka a.d. Beograd
was completed (note 30).
(d) Acquisition of BNP Paribas Personal Finance Bulgaria by Eurobank
Bulgaria A.D.
On 9 December
2022, Eurobank
Holdings announced that
it had reached
an agreement
for the
acquisition of
BNP Paribas
Personal
Finance Bulgaria
(the “Business”)
by Eurobank’s
subsidiary in Bulgaria,
Eurobank Bulgaria
A.D. (“Postbank”).
The completion
of the
transaction took place in May 2023, following
the receipt of the approvals by all competent
regulatory authorities (note 23.2).
(e) ERB Hellas Plc, United Kingdom
In April 2023, the liquidation of the company was completed.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
(f) ERB Leasing A.D. Beograd-in Liquidation, Serbia
In May 2023,
the Bank’s
subsidiary Eurobank Direktna
a.d. transferred
the shares held
in ERB Leasing A.D.
Beograd to
the Bank and
thus, the Group’s participation
in the company increased from 85.15% to 100%.
(g) IMO Property Investments Sofia E.A.D., Bulgaria
During the second quarter of 2023, the sale of IMO Property
Investments Sofia E.A.D. was
considered highly probable, therefore
the
company was
classified as held
for sale
and measured
by reference
to the
pre-agreed consideration
with the third
party,
being the
lower of
its carrying amount
and fair
value less
costs to
sell, in accordance
with IFRS
5. Accordingly,
a remeasurement/impairment
loss of € 23
million on real estate properties
was recognised in the
income statement. In May 2023, the
sale of the
Bank’s participation
interest of 100% in the company, along with the loan receivable from the company,
was completed with a total cash consideration of
€ 15.5 million.
(h) PB Personal Finance EAD, Bulgaria
In May 2023, the Bank’s
subsidiary Eurobank Bulgaria A.D. established
the wholly owned subsidiary PB Personal Finance EAD.
(i) ADEXA Real Estate Single Member S.A., Greece
In June 2023,
the Bank acquired
100% of the
shares and voting
rights of ADEXA
Real Estate Single Member
S.A. for a
cash consideration
of €
50.8 million.
In line with
IFRS 3 requirements,
the acquisition
was accounted
for as
an asset acquisition
rather than
a business
combination, since
substantially all
of the fair
value of the
gross assets
acquired was
concentrated
in a single
identifiable asset and
no substantive
business processes
were acquired.
Accordingly,
no goodwill
was recognized,
whereas the
acquired property,
along
with other
assets/other liabilities,
were recognized
in the
Group’s
balance sheet
by allocating
the purchase
price to
the individual
identifiable assets and
liabilities on the
basis of their relative
fair values. Following
the above treatment,
at the acquisition
date the
total assets of
the company amounted
to € 52.3 million,
of which € 33.4
million refer
to own used
property and €
18.7 million refer
to investment property,
while total liabilities amounted to € 1.5 million.
(j) IMO-II Property Investments S.A., Romania
In May 2023, the liquidation of the company was decided. In December 2023, the distribution of the company’s
surplus assets to the
shareholders was completed with
an immaterial effect for the Group.
(k) Sagiol Ltd, Macoliq Holdings Ltd and Senseco
Trading Ltd,
Cyprus
In June 2023,
the companies’ liquidator resolved the
distribution of their surplus
assets to the Bank
(their sole shareholder). The
effect
of the aforementioned liquidations was
immaterial for the Group.
(l) Afinopio Investments Ltd, Ovedrio Holdings
Ltd and Primoxia Holdings Ltd, Cyprus
In June 2023, in the context of the management
of its NPE, the Bank’s
subsidiary Εurobank Cyprus Ltd established
the wholly owned
subsidiaries, Afinopio Investments Ltd, Ovedrio Holdings Ltd and Primoxia Holdings Ltd to operate as real estate companies in Cyprus.
(m) Eurobank Ananeosimes Single Member S.A., Greece
In July 2023, the Bank established the wholly owned subsidiary Eurobank Ananeosimes Single Member
S.A. to operate as a company
in the area of the production and distribution of solar generated
electric energy.
(n) Eurobank Private Bank Luxembourg
S.A., Luxembourg
In July 2023, the Greek branch of the Bank’s
subsidiary Eurobank Private Bank Luxembourg
S.A. was established.
(o) ERB New Europe Funding III Ltd, NEU Property Holdings Ltd
and NEU 03 Property Holdings Ltd, Cyprus
In the
third quarter
of 2023,
the liquidation
of the
companies was
decided and
the distribution
of their
surplus assets
to the
Bank
(their sole shareholder) was completed. The effect
of the aforementioned liquidations was
immaterial for the Group.
(p) Standard Single Member Real Estate
S.A. and Cloud Hellas Single Member Ktimatiki S.A., Greece
In December
2023, the
merger of
the Bank
and its
wholly owned
subsidiaries Standard
Single Member
Real Estate
S.A. and
Cloud
Hellas Single Member Ktimatiki S.A. was completed,
by absorption of the latter by the former.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
In 2022,
the changes
in the
Group
structure
due to:
a) acquisitions,
mergers
and establishment
of companies,
b) sales
and other
corporate actions,
which resulted in
loss of control,
c) transactions with
the non-controlling interests,
which did not result
in loss of
control and d) liquidations, are as follows:
(i) IMO 03 E.A.D., Bulgaria
In February
2022, the
Bank disposed
of its participation
interest of
100% in
IMO 03
E.A.D. (which
as of
31 December 2021
was
classified as held
for sale) to
a third party
for a cash
consideration of €
5.8 million.
The resulting loss
on the disposal
was immaterial.
(ii) (Under liquidation) Real Estate Management
Single Member S.A., Greece
In February 2022, the liquidation of the company was completed.
(iii) Hellenic Post Credit S.A., Greece
In February 2022,
the Bank reached
an agreement for
the acquisition of
the remaining 50%
of the share
capital of Hellenic
Post
Credit S.A., settled
by offsetting
receivables it
held from
the other
shareholder of the
entity.
In November
2022, after
receiving
the required approvals
from the competent
authorities, the merger of
the Bank and Hellenic Post
Credit S.A. was completed,
by
absorption of the latter by the former.
The merger had no impact in the Group’s
financial statements.
(iv) Staynia Holdings Limited, Cyprus
In February 2022, the
liquidation of the company
was decided. In June
2022, the distribution of
the company’s
surplus assets to
the Bank (its sole shareholder) was completed with an immaterial
effect on the Group’s
income statement.
(v) ERB Istanbul Holding A.S. in liquidation, Turkey
In
June
2022,
the
liquidation
of
the
company
was
completed.
The
Group
recognized
a)
€
76.3
million
loss
in
“Other
income/(expenses)”,
arising mainly from the recyclement of foreign currency losses of
€ 75.9 million, previously recorded in other
comprehensive income, to the income statement
and b) € 2.5 million tax expense on the liquidation proceeds.
(vi) Vouliagmeni Residence Single Member S.A., Greece
In March
2022, the Bank
signed an agreement
for the
sale of its
participation interest
of 100% in
Vouliagmeni Residence
Single
Member S.A. to a third party. On the basis of
the said agreement, the company was classified as held
for sale since 31 March 2022
and an
impairment loss
of €
0.7 million
was recognised
in the
income statement
line “Other
impairments, risk
provisions and
related costs”.
In July 2022, the sale of the company was completed for a cash consideration of € 9.7 million with no effect on the
Group’s income statement.
(vii) Eliade Tower
S.A., Romania
In September 2022, the Group decided to proceed with the sale of its participation interest of 99.99% in Eliade Tower S.A. On this
basis, as at 30 September 2022 the company was classified as
held for sale and an impairment loss of
€ 1.5 million was recognized
in the
income statement
line “Other
impairments, risk
provisions and
related costs”.
In October
2022, the
sale of
Eliade Tower
S.A. was completed for a cash consideration
of € 4.4 million with an immaterial effect on the Group’s
income statement.
(viii) Village Roadshow Operations Hellas S.A., Greece
The
Bank had
acquired
“Village Roadshow
Operations
Hellas S.A.”
in
the third
quarter
of 2021,
following
the enforcement
of
collateral
on the
company’s
shares under
a lending arrangement.
The company
since its
acquisition had been
classified as held
for sale. On 2 August
2022, in the context of the
Group’s loan restructuring
activities, the Bank signed an agreement
with a third
party for the sale of its participation interest of 100% in the company and the restructuring
of its existing loan facilities subject to
certain preconditions, which were fulfilled in November 2022. Following the completion
of the agreement, the Group recognized
a) € 21.5 million benefit
due to the reversal
of loan provisions in the
Bank’s accounts,
in the income statement
line “Impairment
losses relating to
loans and advances
to customers”
and b) € 2
million loss from
the disposal of
the company’s
shares, including
costs directly attributable to the agreement,
in the income statement line ”Other
income/(expenses)”.
(ix) Sagiol Ltd, Macoliq Holdings Ltd and Senseco Trading
Limited, Cyprus
In October 2022, the liquidation of the companies was decided.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Post balance sheet event
Reco Real Property A.D. Beograd, Serbia
In February 2024, the Bank signed an agreement for
the sale of its participation interest
of 100% in Reco Real Property
A.D. Beograd
to a third party. The
completion of the transaction is subject to the approval
from the competent authority.
Significant restrictions on the Group's ability to access or
use the assets and settle the liabilities of the Group
The Group does
not have any
significant restrictions
on its ability to
access or use its
assets and settle
its liabilities other than
those
resulting from regulatory,
statutory and contractual requirements,
set out below:
●
Banking and
other financial
institution subsidiaries
are subject
to regulatory
restrictions
and central
bank requirements
in the
countries
in
which
the
subsidiaries
operate.
Such
supervisory
framework
requires
the
subsidiaries
to
maintain
minimum
capital
buffers and
certain capital adequacy
and liquidity ratios,
including restrictions to
limit exposures and/or
the transfer
of funds to the
Company
and
other
subsidiaries
within
the
Group.
Accordingly,
even
if
the
subsidiaries’
financial
assets
are
not
pledged
at
an
individual entity level, their transfer within the
Group may be restricted under the
existing supervisory framework. As at 31
December
2023, the
carrying
amount
of the
Group
financial institution
subsidiaries’
assets and
liabilities, before
intercompany
eliminations,
amounted to € 85.6 billion and € 76.2 billion, respectively,
including Eurobank S.A. (2022: € 89.7 billion and € 80.3 billion).
●
Subsidiaries
are
subject
to
statutory
requirements
mainly
relating
with
the
level
of
capital
and
total
equity
that
they
should
maintain, restrictions on the distribution of capital and special reserves, as well as dividend payments to
their ordinary shareholders.
●
The Group
uses its financial
assets as
collateral
for repo
and derivative
transactions, secured
borrowing from
central and
other
banks, issuances of covered bonds, as well
as securitizations. As a result of financial assets’ pledge,
their transfer within
the Group is
not permitted. Information relating
to the Group’s pledged
financial assets is provided in notes 17, 29 and 40.
●
The Group is
required to maintain mandatory and
collateral deposits with central banks.
Information for these deposits
is provided
in note 15.
23.2. Acquisition of BNP Paribas Personal Finance Bulgaria by Eurobank Bulgaria A.D.
On 9 December
2022, Eurobank
Holdings announced that
it had reached
an agreement
for the
acquisition of
BNP Paribas
Personal
Finance Bulgaria (the Business) by
Eurobank’s subsidiary
in Bulgaria, Eurobank Bulgaria
A.D. (“Postbank”). Specifically,
Postbank had
signed a put option letter for the benefit of BNP Paribas
Personal Finance providing for
the sale of its Bulgarian branch, based on the
agreed
terms.
Pursuant
to
the
above
agreement,
a
consultation
process
with
the
French
Labour
Council
had
taken
place,
the
conclusion
of which
led to
the signing
of a
Business Transfer
Agreement
(“the Agreement”)
in January
2023. The
transaction
was
completed on 31 May 2023, following the receipt
of the approvals by all competent regulatory
authorities.
The acquisition was accounted for as a business combination using the
purchase method of accounting. In accordance with the terms
of the Agreement, the funding arrangements of the branch were excluded
from the liabilities assumed by Postbank. Accordingly,
the
consideration transferred
for the acquisition of the Business amounted to € 392 million.
Notes to the Consolidated Financial Statements
.
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The provisional
fair values of
the identifiable assets
and liabilities of
the Business as
at the date
of the acquisition
and the resulting
goodwill are presented in the table below:
.
Fair value
€ million
ASSETS
Cash and balances with central banks
3
Net loans and advances to customers
450
Gross contractual amount: € 500 million
Other assets⁽¹⁾
9
Total assets
461
LIABILITIES
Due to customers
103
Other liabilities
9
Total liabilities
111
Net assets acquired
350
Goodwill arising on acquisition
42
Purchase consideration transferred⁽²⁾
392
(1)
Other assets include right-of-use assets, tangible, intangible assets and other receivables.
(2)
Net cash flow on acquisition after cash and cash equivalents acquired amounted to € 389 million.
The results of the Business
were incorporated
in the Group’s
financial statements prospectively,
as of 1 June 2023. If the
acquisition
had occurred
on 1 January
2023, the Business
would have
contributed net
profit of
€ 12 million
to the Group
for the period
from 1
January 2023 up to 31 May 2023.
The transaction
is in
line with
the Group’s
strategy
to further
strengthen
Postbank’s
position in
the Bulgarian
retail sector,
while it
also
provides
significant
opportunities
for
cross-selling,
given
BNP
Paribas
Personal
Finance Bulgaria’s
clientele
of
more
than
300
thousand clients.
24.
Investments in associates and joint ventures
.
.
As at 31 December 2023, the
carrying amount of the Group’s investments in associates and joint ventures amounted to € 541 million
(2022: € 187 million). The following is the listing of the Group’s
associates and joint ventures as at 31 December 2023:
.
Name
Country of
incorporation
Line of business
Group's
share
Femion Ltd
Cyprus
Special purpose investment vehicle
66.45
Global Finance S.A.⁽¹⁾
Greece
Investment financing
33.82
Odyssey GP S.a.r.l.
Luxembourg
Special purpose investment vehicle
20.00
Eurolife FFH Insurance Group Holdings S.A.⁽¹⁾
Greece
Holding company
20.00
Alpha Investment Property Commercial Stores S.A.
Greece
Real estate
30.00
Peirga Kythnou P.C.
Greece
Real estate
50.00
doValue Greece Loans and Credits Claim Management S.A.
Greece
Loans and Credits Claim Management
20.00
Perigenis Business Properties S.A.
Greece
Real estate
18.90
Hellenic Bank Public
Company Ltd⁽¹⁾
Cyprus
Banking
29.20
(1)
Hellenic Bank group (Hellenic
Bank Public Company
Ltd and
its subsidiaries), Eurolife
Insurance group (Eurolife
FFH Insurance Group
Holdings S.A. and its
subsidiaries) and Global Finance group (Global Finance S.A. and its subsidiaries)
are considered as the Group’s associates.
Note: In November 2023, the General Μeeting of the Group’s
joint venture Rosequeens Properties Ltd, resolved to
proceed with the strike off procedure
from
the Cyprus registrar of companies.
Omega Insurance
and Reinsurance
Brokers
S.A. in which
the Group
holds 26.05% is
not accounted
under the
equity method in
the
consolidated financial statements. The Group is
not represented in the
Board of Directors of
the company, therefore does not exercise
significant influence over it.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Femion Ltd.
is accounted
for as
a joint
venture of
the Group
based on
the substance
and the
purpose of
the arrangement
and the
terms of the
shareholder’s agreement which require the
unanimous consent of
the shareholders for significant
decisions and establish
shared control through the equal representation
of the shareholders in the management bodies of the company.
Perigenis Business Properties
S.A. is accounted
for as an
associate of the
Group based
on the Bank’s
representation
in the Board
of
Directors and the decision-making process as prescribed
in the company’s articles of association.
Hellenic Bank Public Company Ltd, Cyprus
On 4 April 2023
the Bank announced
that after the
receipt of the
relevant regulatory
approvals, it has
completed the acquisition
of
an additional 13.41% holding in
Hellenic Bank Public Company Ltd (“Hellenic
Bank”), a financial institution located in
Cyprus and listed
in the Cyprus Stock Exchange, for a consideration
of € 73 million including related transaction costs.
Following that, the total holding
in Hellenic Bank, including the previously held participation of
15.8% (designated at FVOCI) with carrying value of €
103 million on the
above date (including a revaluation
amount of € 45 million), reached 29.2% and the Group
in accordance with the IFRS is considered
to have significant influence over the
entity.
In the context of the initial application of the equity accounting, the difference between: (a) the share of the fair value of the Hellenic
Bank group’s net identifiable assets at the acquisition date, amounting to € 287 million and (b) the deemed cost of the
Bank’s holding
in the
entity amounting
€ 173
million, resulted
in a
gain of
€ 111
million, net
of ca.
€ 3
million acquisition-related
costs, that
was
recognized
in the
income statement
line “Other
income/(expenses)”.
The aforementioned
gain on
acquisition reflects
the trading
price levels of the Hellenic Bank shares in the local stock exchange
at the time of the agreement.
Furthermore,
in
August
2023,
the
Bank
announced
that
it
has
entered
into
share
purchase
agreements
(SPAs)
with
certain
shareholders of the Hellenic Bank, pursuant to which, it has agreed to acquire
an additional total holding of 26.1% in the entity, for
a
total consideration of € 253.2 million
(announcements dated on August 23
rd
, 25
th
and 30
th
).
The consideration for the said transactions
is subject to possible adjustments depending inter alia on the timing of the completion and the terms of the mandatory tender offer,
in accordance
with the
provisions of
the Takeover
Bids Law
of 2007
in Cyprus.
The completion
of the
acquisitions is
subject to
the
receipt of all customary regulatory approvals.
Following their completion, the total holding in Hellenic Bank will amount
to 55.3%.
Post balance sheet event
On
5
February
2024,
the
Bank
announced
that
the
Commission
for
the
Protection
of
Competition
of
the
Republic
of
Cyprus
(“Commission”) in
its meeting
on 2
February
2024, approved
the concentration
arising from
the increase
of the
Bank’s
holding
in
Hellenic Bank
share
capital.
Following
the approval
of the
Commission, the
acquisition of
the additional
total
holding of
26.1% in
Hellenic Bank, as
per the aforementioned signed agreements
with certain of its
shareholders, is subject to
the approvals of the
Central
Bank of Cyprus/European Central Bank and the Superintendent
of Insurance of Cyprus.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Tefin S.A., Greece
In June 2023, the liquidation of the company was completed with the distribution of its surplus assets to the Bank
amounting to € 2.7
million.
Associates and joint ventures material to
the Group
With regards to the Group’s
associates and joint ventures, Hellenic Bank Public Company
Ltd, Eurolife FFH Insurance
Group Holdings
S.A. and
doValue
Greece
Loans
and
Credits
Claim Management
S.A. are
considered
individually
material
for
the
Group.
Financial
information regarding those
entities is provided in the tables below:
Hellenic Bank Public Company Ltd
The financial data
for Hellenic Bank
set out below
have been based
on the available
published consolidated
information by the
end
of the third quarter of 2023.
2023
€ million
Total assets
20,039
Total liabilities
18,669
Equity
1,370
Group's share in equity
400
Fair value adjustments
⁽¹⁾
(55)
Group’s carrying amount of the investment
345
Operating income
465
Net profit from continuing operations
222
Net profit from discontinued operations
19
Net profit⁽²⁾
241
Total comprehensive
income
241
(1)
it includes the
effect from fair value adjustments
(Group’s share) made upon the
initial application of
the equity method for
Hellenic Bank and the
subsequent
accounting.
(2)
The Group’s share of the associate’s net profit for the
six month period ended 30 September 2023, including the effect of the subsequent accounting for the
aforementioned fair value adjustments, amounts to € 58 million.
As at 31 December
2023, the fair value of
the investment in Hellenic bank
based on its quoted
market price in the local
stock exchange
amounted to € 268,8 million.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Eurolife FFH Insurance Group Holdings S.A.
As
of
1
January
2023,
Eurolife
FFH
Insurance
Group
Holdings
S.A.
(Eurolife)
has
adopted
IFRS
17
“Insurance
Contracts”
with
retrospective
application
as
of
1
January
2022
(note
2.3).
The
comparative
information
presented
below
has
been
adjusted
accordingly. In
addition, on the same date Eurolife has adopted IFRS
9 “Financial instruments” (note 38).
2023
2022
Restated
€ million
€ million
Current assets
3,387
3,148
Non-current assets
353
226
Total assets
3,740
3,374
Current liabilities
380
403
Non-current liabilities
2,683
2,342
Total liabilities
3,063
2,745
Equity
677
629
Group’s carrying amount of the investment
135
126
Operating income
152
255
Net profit
112
180
Other comprehensive income
(18)
(15)
Total comprehensive
income
94
165
Dividends paid to the Group
7
14
doValue Greece Loans and Credits
Claim Management S.A.
2023
2022
€ million
€ million
Current assets
153
90
Non-current assets
323
347
Total assets
476
437
Current liabilities
157
95
Non-current liabilities
60
121
Total liabilities
217
216
Equity
259
221
Group's share in equity
52
44
Goodwill and other adjustments
(4)
1
Group’s carrying amount of the investment
48
45
Operating income
79
72
Net profit
57
53
Total comprehensive
income
57
53
Dividends paid to the Group
5
5
Note:
Goodwill and other
adjustments comprise
a) €
6 million Goodwill
included in the
carrying amount of
the investment,
after an impairment
loss of
€ 6
million that was recognised in 2023 and b) €
-10 million adjustment from the elimination of the Group’s
share of the associate’s income
relating to upstream
transactions with the Bank,
of which €
1 million (income)
was recognised in
2023. The Group’s
share of the
associate’s results after
the above adjustments,
amounts to €
6 million
income (2022: € 0.5 million loss).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The carrying amount, in aggregate, of the Group's joint ventures as at 31 December 2023 amounted to € 4 million (2022: € 6 million).
The Group’s share
of profit and loss and total comprehensive income of the
above entities was immaterial (2022: immaterial).
The carrying
amount, in
aggregate,
of the
Group's associates
excluding
Hellenic Bank
Public Company
Ltd,
Eurolife
FFH Insurance
Group
Holdings S.A.
and doValue
Greece Loans
and Credits
Claim Management
S.A. which
is presented
above (i.e.
Global Finance
S.A., Odyssey GP S.a.r.l.
,
and Perigenis Business Properties
S.A.)
as at 31 December 2023 amounted to
€ 9 million (2022: € 9 million).
The Group’s share
of profit and loss and total comprehensive income of the
above entities was immaterial (2022: immaterial).
The Group has not recognized losses in relation
to its interest in its joint ventures,
as its share of losses exceeded its interest
in them
and no
incurred obligations
exist or
any payments
were performed
on behalf
of them. For
the year
ended 31
December 2023,
the
unrecognized share of
losses for the Group’s
joint ventures amounted
to € 0.1 million (2022: € 2
million). The cumulative amount of
unrecognized share of losses for
the joint ventures amounted to € 4 million (2022: € 4 million).
As
at
31
December
2023,
the
Group
has
no
unrecognized
commitments
in
relation
to
its
participation
in
joint
ventures
nor
any
contingent liabilities regarding its participation
in associates or joint ventures, which could result to a future outflow
of cash or other
resources.
The Group’s associate Hellenic Bank is subject to regulatory and statutory
restrictions and is required to maintain sufficient capital to
meet the prudential requirements based on the Supervisory Review
and Evaluation Process (SREP) that is conducted
annually by the
European Central Bank (ECB). Based on
the published information for the period
ended 30 September 2023,
the Hellenic Bank group’s
regulatory
capital
ratios
were
above
the
minimum
regulatory
requirements,
while
the
ECB’s
approval
shall
be
obtained
prior
to
making any distribution to its shareholders.
The Group’s associate
Eurolife FFH Insurance Group Holdings S.A is subject to regulatory
and statutory restrictions and is required
to
maintain sufficient capital to satisfy
its insurance obligations.
Except
as described
above, no
significant restrictions
exist (e.g.
resulting
from loan
agreements, regulatory
requirements
or other
contractual arrangements) on the ability of associates or joint ventures to
transfer funds to the Group either as dividends or to repay
loans that have been financed by the Group.
25.
Structured Entities
The Group is involved in various types of structured
entities, such as securitization vehicles, mutual funds and private
equity funds.
A structured
entity is
an entity that
has been
designed so
that voting
or similar rights
are not the
dominant factor
in deciding
who
controls the entity, such as when any voting rights
relate to administrative tasks only and the relevant activities are
directed by means
of contractual arrangements. A structured entity often has restricted activities, a narrow well-defined objective, insufficient equity to
permit it
to finance
its activities
without subordinated
financial support
and financing
in the
form
of multiple
contractually
linked
instruments to investors
that create concentrations
of credit or other risks.
An
interest
in
a
structured
entity
refers
to
contractual
and non-contractual
involvement
that
exposes
the
Group
to
variability
of
returns from
the performance
of the
structured
entity.
Examples of
interest
in structured
entities include
the holding
of debt
and
equity instruments, contractual arrangements,
liquidity support, credit enhancement, residual value.
Structured entities may be established
by the Group or by a third party and are
consolidated when the substance of the relationship
is such that the structured entities are controlled by the Group, as set out in note 2.2.1(i). As a result of the consolidation assessment
performed, the Group has involvement
with both consolidated and unconsolidated structured
entities, as described below.
Consolidated structured entities
The
Group,
as
part
of
its
funding activity,
enters
into
securitization
transactions
of
various
classes of
loans
(corporate,
small
and
medium enterprise, mortgage, consumer loans, credit card and bond loans), which generally result in
the transfer of the above assets
to structured
entities (securitization
vehicles), which,
in turn
issue debt
securities held
by investors
and the
Group’s
entities.
The
Group monitors the credit quality of the securitizations’ underlying loans, as well as the credit ratings of the debt instruments issued,
when applicable,
and provides
either credit
enhancements to
the securitization
vehicles and/or
transfers
new loans
to the
pool of
their underlying assets, whenever necessary,
in accordance with the terms of the relevant
contractual arrangements in force.
A listing of the Group’s
consolidated structured entities is set out in note 23.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
As at 31 December 2023, the face value of debt securities issued by the securitizations sponsored by the Group amounted
to € 3,959
million, of which € 3,406 million were held by the Bank (2022: € 5,258 million, of which € 4,705 million were held by the Bank) (notes
20 and 34).
The Group did not provide any
non contractual financial or other support
to these structured entities, where applicable,
and currently
has no intention to do so in the foreseeable future.
Unconsolidated structured entities
The
Group
enters
into
transactions
with
unconsolidated
structured
entities,
which
are
those not
controlled
by
the Group,
in
the
normal course of business, in order to provide
fund management services or take advantage
of specific investment opportunities.
Moreover,
the Group
in the context
of its NPE
reduction acceleration
plan entered
into the
securitization of
various classes
of NPE
through the issue of senior,
mezzanine and junior notes (Cairo, Pillar and Mexico,
note 20).
Group managed funds
The Group establishes
and manages structured
entities in order
to provide customers,
either retail or
institutional, with investment
opportunities.
Accordingly,
through
its subsidiaries
Eurobank
Asset Management
Mutual Fund
Mngt
Company
S.A. and
Eurobank
Fund Management
Company
(Luxembourg)
S.A., it
is engaged
with the
management
of different
types of
mutual funds,
including
fixed income, equities, funds of funds and money market.
Additionally,
the Group
is entitled to
receive management
and other
fees and
may hold
investments
in such mutual
funds for
own
investment purposes as well as for the benefit
of its customers.
The Group is involved in the initial design of the mutual funds and, in its capacity as fund manager, takes investment decisions on the
selection
of
their
investments,
nevertheless
within
a
predefined,
by
relevant
laws
and
regulations,
decision
making
framework.
Τherefore, the Group has determined
that it has no power over these funds.
Furthermore,
in its
capacity as
fund manager,
the Group
primary acts
as an
agent in
exercising
its decision
making authority
over
them. Based on the above, the
Group has assessed that it has no
control over these mutual funds and as a
result does not consolidate
them. The Group does not have any contractual obligation to provide financial
support to the managed funds and
does not guarantee
their rate of return.
Non-Group managed funds
The Group purchases and
holds units of
third party managed
funds including mutual
funds, private equity and
other investment funds.
Securitizations
The Group has interests in unconsolidated securitization vehicles by investing in residential
mortgage backed and other asset-backed
securities issued by these entities.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The
table
below
sets
out
the
carrying
amount
of
the
Group’s
interests
in
unconsolidated
structured
entities,
recognized
in
the
consolidated
balance
sheet
as
at
31
December
2023,
representing
its
maximum
exposure
to
loss
in
relation
to
these
interests.
Information relating
to the
total income
derived from
interests in
unconsolidated
structured entities,
recognized either
in profit
or
loss or
other comprehensive
income during
2023 is also
provided (i.e.
fees, interest
income, net
gains or
losses on revaluati
on and
derecognition):
31 December 2023
Unconsolidated structured entity type
Securitizations
Group
managed funds
Non- Group
managed funds
Total
€ million
€ million
€ million
€ million
Group's interest-
assets
Loans and advances to customers⁽¹⁾
4,454
-
-
4,454
Investment securities
4,929
85
28
5,042
Other Assets
-
2
-
2
Total
9,383
87
28
9,498
Total
income from Group interests
300
62
0
362
31 December 2022
Unconsolidated structured entity type
Securitizations
Group
managed funds
Non- Group
managed funds
Total
€ million
€ million
€ million
€ million
Group's interest-
assets
Loans and advances to customers ⁽¹⁾
4,911
-
-
4,911
Investment securities
1,486
71
17
1,574
Other Assets
-
2
-
2
Total
6,397
73
17
6,487
Total
income from Group interests
77
48
2
127
(1)
Includes the senior and mezzanine notes of the Pillar, Cairo and Mexico securitizations (note 20).
For the year ended 31 December 2023, total
income related to the Group’s
interests from securitizations
mainly includes: (i) € 289.8
million, € 6.8 million and € 0.1 million interest income of debt securities retained by the Group measured at amortized cost,
at FVOCI
and FVTPL
respectively
and (ii)
€3.4 million
from
gains
or losses
on revaluation
recognized
in other
comprehensive
income. Total
income from Group
interests in relation
to Group managed
funds consists of: (i)
€ 52.8 million income
relating to management
fees
and other commissions for
the management of funds
and (ii) € 8.9 million gains
or losses on revaluation
or from sale of the
Group’s
holding in funds recognized in profit or
loss. In addition, total income
in relation to non-Group managed funds consists mainly
of gains
or losses on revaluation or from sale of the Group’s
holding in funds and has been recognized in profit
or loss.
As at 31
December 2023, the
total assets
of funds under
the Group’s
management as well
as the notional
amount of notes
in issue
by unconsolidated
securitization vehicles
amounted to
€ 4,283 million
(2022: € 3,163
million) and
€ 35,228
million (2022: €
33,227
million), respectively.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
26.
Property and equipment
31 December 2023
Land, buildings,
leasehold
improvements
Furniture,
equipment,
motor
vehicles
Computer
hardware,
software
Right of use
assets (RoU)⁽¹⁾
Total
€ million
€ million
€ million
€ million
€ million
Cost:
Balance at 1 January
676
206
526
328
1,736
Arising from acquisitions (note 23)
33
1
1
2
37
Transfers
3
-
14
-
17
Additions
28
15
11
11
65
Disposals, write-offs and adjustment to RoU ⁽¹⁾
(6)
(21)
(217)
20
(224)
Impairment
(1)
-
(9)
-
(10)
Discontinued operations⁽²⁾
(36)
(10)
(10)
(23)
(79)
Balance at 31 December
697
191
316
338
1,542
Accumulated depreciation:
Balance at 1 January
(221)
(156)
(443)
(141)
(961)
Arising from acquisitions (note 23)
-
(1)
-
-
(1)
Transfers
1
0
(1)
-
0
Disposals, write-offs and adjustment to RoU ⁽¹⁾
4
20
217
2
243
Charge for the year
(13)
(8)
(20)
(37)
(78)
Discontinued operations⁽²⁾
9
5
6
8
28
Balance at 31 December
(220)
(140)
(241)
(168)
(769)
Net book value at 31 December
477
51
75
170
773
31 December 2022
Land, buildings,
leasehold
improvements
Furniture,
equipment,
motor
vehicles
Computer
hardware,
software
Right of use
assets (RoU)⁽¹⁾
Total
€ million
€ million
€ million
€ million
€ million
Cost:
Balance at 1 January
675
198
507
336
1,716
Transfers
(10)
0
6
-
(4)
Transfers
from/to repossessed assets
1
(2)
-
-
(1)
Additions
24
18
29
18
89
Disposals, write-offs and adjustment to RoU⁽¹⁾
(9)
(8)
(5)
(26)
(48)
Impairment
(6)
(0)
(11)
-
(17)
Held for sale (note 30)
1
-
-
-
1
Balance at 31 December
676
206
526
328
1,736
Accumulated depreciation:
Balance at 1 January
(217)
(155)
(423)
(106)
(901)
Transfers
1
0
-
-
1
Disposals, write-offs and adjustment to RoU⁽¹⁾
8
8
4
6
26
Charge for the year
(13)
(9)
(24)
(41)
(87)
Balance at 31 December
(221)
(156)
(443)
(141)
(961)
Net book value at 31 December
455
50
83
187
775
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
(1)
The respective lease liabilities are presented in “other
liabilities” (note 35). Adjustment to RoU
refers to termination, modifications and remeasurements of
RoU. It includes the remeasurement from
revised estimates of the lease term
during the year, considering all
facts and circumstances that affect
the Group’s
housing needs.
(2)
Refers to Eurobank Direktna, which was disposed on 2 November 2023.
As at
31 December
2023, the
RoU assets
amounting to
€ 170
million (31
December 2022:
€ 187
million) refer
to leased
office and
branch premises, ATM
locations, residential properties
of € 165 million (31 December 2022: € 180
million) and motor vehicles of € 5
million (31 December 2022: € 7 million).
Leasehold improvements relate to
premises occupied by the Group for its own activities.
27.
Investment property
The
Group
applies
the
fair
value
model
regarding
the
measurement
of
Investment
Property
according
to
IAS
40
“Investment
property”.
The movement of investment property
is as follows:
2023
2022
€ million
€ million
Balance at 1 January
1,410
1,492
Additions
4
4
Arising from acquisition
19
-
Transfers
from/to repossessed assets
2
13
Other transfers
(3)
9
Disposals⁽¹⁾
(80)
(119)
Net gain/(loss) from fair values adjustments
6
32
Held for sale/Discontinued operations
(note 30)
(3)
(21)
Additions and adjustment to RoU
2
-
Balance at 31 December
1,357
1,410
(1)
For 2023, it includes € 48 million referring to investment property of disposed of subsidiaries.
As at 31 December
2023, RoU assets
that meet the definition
of investment
property amount to
€ 16 million (31
December 2022: €
14 million). The respective lease liabilities are presented
in “other liabilities” (note 35).
Changes
in
fair
values
of
investment
property
are
recognized
as
gains/(losses)
in
profit
or
loss
and
included
in
the
"Other
Income/(expense)" (note 10). All gains/(losses) are unrealized.
During
the year
ended 31
December 2023,
an amount
of €
89 million
(2022: €
88 million)
was
recognized
as rental
income from
investment property
in income from
non banking services (note
8). As at
31 December 2023,
the contractual
obligations in relation
to investment property amounted
to approximately € 3.5 million, and are
mainly associated with property enhancements.
The main classes of investment property have
been determined based on the nature, the characteristics
and the risks of the Group’s
properties. The
fair value
measurements of
the Group’s
investment property,
which are categorized
within level
3 of the
fair value
hierarchy,
are presented in the below table.
2023
2022
€ million
€ million
Residential
6
11
Commercial
1,320
1,358
Land Plots
30
32
Industrial
1
9
Total
1,357
1,410
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The
basic
methods
used
for
estimating
the
fair
value
of
the
Group’s
investment
property
are
the
income
approach
(income
capitalization/discounted
cash flow
method), the
comparative
method and
the cost
approach, which
are also
used in
combination
depending on the class of property being valued.
The discounted cash flow (DCF) method is the primary method used for estimating
the fair value of the Group’s
investment property
and is used mainly
for the commercial class of investment property but also
for other classes of investment property to a
large extent,
in conjunction
with other methods.
Under DCF method,
the fair
value is
calculated through
the projection
of a series
of cash
flows
using explicit
assumptions
regarding
the benefits
and liabilities
of ownership
(income and
operating
costs,
vacancy
rates,
income
growth),
including
the
residual
value
anticipated
at
the
end
of
the
projection
period.
To
this
projected
cash
flows
series,
an
appropriate, market-derived discount
rate is applied to establish its present
value.
Under
the
income
capitalization
method,
also
used
for
the
commercial
class
of
investment
property,
a
property’s
fair
value
is
estimated based on the
normalized net operating
income generated by
the property,
which is divided by the capitalization
rate (the
investor's rate of
return).
The comparative method is used for the residential, commercial and land plot classes of investment
property. Fair value
is estimated
based on data for
comparable transactions, by
analyzing either real transaction
prices of similar properties,
or by asking prices after
performing the necessary adjustments.
The cost approach is used
for estimating the fair value of
the residential and the industrial
classes of the Group’s investment property.
This approach refers to the
calculation of the
fair value based on
the cost of
reproduction/replacement (estimated construction costs),
which is then reduced by an appropriate rate
to reflect depreciation.
The Group’s
investment
property valuations
are performed
taking into
consideration the
highest and
best use of
each asset that
is
physically possible, legally permissible and financially feasible.
The main method used to estimate the fair value of Group’s Investment property portfolio as at 31 December 2023, is
the discounted
cash flow method. Significant unobservable inputs used in the fair value measurement of the
relevant portfolio are the rental income
growth and the discount
rate. Increase in rental
income growth would result
in increase in the carrying
amount while an increase in
the discount rate would have the
opposite result. The discount rate used
ranges from 7% to 13%.
As at 31
December 2023, an increase
or decrease
of 5% in
the discount
rate used
in the DCF
analysis, would
result in
a downward
or upward
adjustment of
the carrying
value of the respective investment
properties by € 31 and € 34 million, respectively.
In the context of properties’ valuation, sustainability and environmental matters encompass a wide
range of physical, climate change,
social, corporate responsibility and economic factors,
including key environmental risks such as flooding, energy efficiency,
as well as
matters of design, configuration, accessibility and legislation, that impact their value. The Group is gradually upgrading its real-estate
portfolio, aiming to reduce its environmental footprint and shift towards high-end, modern, environmentally friendly buildings, given
that such buildings are in
high demand. In addition,
the Group has introduced “green” certifications to its real
estate assets, validating
their sustainability value and at the same time maximizing their return and market value. On the other hand, environmental
risks are
taken into
account in properties’ valuation
in cases where there
is an indication that
the valued property
is subject to physical
risks,
such as floods, is contaminated or is adversely
affected by existing environmental
laws/regulations.
On an
annual
basis,
the
Group
aims at
the
evaluation
of
an
increased
number
of
selected
properties
included
in
the
investment
property portfolio
for their
gradual certification
in accordance with
international standards,
while actively investing
to improve
the
energy efficiency of its properties’ portfolio and its
environmental profile.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
28.
Intangible assets
As at 31 December
2023, the carrying
amount of intangible assets
was € 334 million
(31 December 2022: € 297
million), comprising
€ 290 million computer software, which refer
to purchased and developed software, and € 44 million goodwill.
The table below presents the movement of computer
software:
2023
2022
€ million
€ million
Cost:
Balance at 1 January
658
587
Arising from acquisitions
1
-
Transfers
(14)
(6)
Additions
83
94
Disposals and write-offs
(142)
(7)
Impairment
(8)
(10)
Discontinued operations
(63)
-
Balance at 31 December
515
658
Accumulated amortisation:
Balance at 1 January
(362)
(320)
Transfers
1
-
Amortisation charge for the year
(42)
(49)
Disposals and write-offs
142
7
Discontinued operations
36
-
Balance at 31 December
(225)
(362)
Net book value at 31 December
290
296
Goodwill
As at 31 December 2023, the carrying amount of goodwill of € 44 million mainly
comprises € 42 million, attributed to
the acquisition
of BNP Paribas Personal Finance
Bulgaria by Eurobank Bulgaria A.D, in
May 2023, based on
the provisional fair values of
its identifiable
assets and liabilities, note 23.2 (31 December 2022: € 1.6 million of which € 0.9 million relates
to ERB Lux Immo S.A.).
29.
Other assets
2023
2022
€ million
€ million
Receivable from Deposit Guarantee and Investment
Fund
286
495
Repossessed properties and relative prepayments
509
577
Pledged amount for a Greek sovereign risk financial guarantee
236
234
Balances under settlement⁽¹⁾
53
51
Deferred costs and accrued income
85
92
Other guarantees
215
215
Income tax receivable⁽²⁾
58
30
Other assets
325
286
Total
1,767
1,980
(1)
Includes settlement balances with customers and brokerage activity.
(2)
Includes withholding taxes, net of provisions.
Pursuant to
Law 4370/2016 as
in force,
the receivable
from the Hellenic
Deposit and Investment
Guarantee Fund
(HDIGF) referring
to the
“Supplementary Deposit
Cover Fund”
is refundable
to the
Greek credit
institutions in
three equal
instalments, starting
from
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
2022 and each year thereafter,
subject to the provisions
of the article 25a of the law.
Following that, in December
2023, the second
instalment of € 211 million was refunded to
the Bank by HDIGF.
As at 31 December 2023, other assets net of provisions, amounting to
€ 325 million include, among others, receivables related
to (a)
prepayments to suppliers, (b) public entities, (c) property management activities (d)
legal cases and e)the sale of
the Bank’s Merchant
Acquiring Business in 2022 .
30.
Disposal groups classified as held for sale and discontinued operations
2023
2022
€ million
€ million
Assets of disposal groups
Real estate properties
37
15
Loans portfolios (note 20)
169
69
Total
206
84
Liabilities of disposal groups
Other liabilities related to loans portfolios (notes 20 and 35)
1
1
Total
1
1
Real estate properties
Starting
from
the
end
of
2019,
the
Group,
in
the
context
of
its
strategy
for
the
active
management
of
its
real
estate
portfolio
(repossessed,
investment
properties and
own used
properties), has
gradually
classified as
held for
sale (HFS)
certain pools
of real
estate assets of total remaining carrying amount ca. € 9 million as at 31 December 2023 (31 December 2022: € 15 million), after their
remeasurement in accordance with the IFRS
5 requirements.
In addition, in the third quarter of 2023,
the Group initiated negotiations with potential investors for the disposal of a mixed portfolio
of repossessed real
estate assets
of carrying amount
ca. € 33 million
and classified it
as held for
sale. Since the disposal
group’s
fair
value less cost to sell,
based on the estimated selling price, was
lower than its carrying amount, an
impairment loss of ca. € 5 million
was recognised in income statement
line “Other impairments, risk provisions and related
costs”.
The Group remains
committed to
its plan to sell
the aforementioned
assets, which are gradually
being disposed, and undertakes
all
necessary actions towards this direction.
The above
non-recurring fair
value measurements
were categorized
as Level 3
of the fair
value hierarchy
due to the
significance of
the unobservable inputs used, with no change occurring up to 31 December 2023.
Eurobank Direktna a.d. disposal group
On
2
March
2023,
the
Bank
announced
that
it
has
signed
a binding
agreement
(share
purchase
agreement)
with
AIK
Banka
a.d.
Beograd (“AIK”)
for the
sale of its
70% shareholding
in its subsidiary
in Serbia, Eurobank
Direktna a.d.
(the “Transaction”).
The sale
was considered
highly probable,
therefore,
as of
31 March
2023 the
assets of
Eurobank Direktna
a.d. and
the associated
liabilities
(“disposal
group”),
which
formed
part
of
the
share
purchase
agreement,
were
classified
as
held
for
sale
and
presented
as
a
discontinued operation
,
representing a
separate geographical
area of Group’s
operations.
The subsidiary was
the major part
of the
Group’s operations
in Serbia, which are presented in the International
segment (note 43).
On
2
November
2023,
following
the
receipt
of
the
approvals
by
all
competent
regulatory
authorities,
the
sale
of
the
Bank’s
shareholding in Eurobank Direktna to AIK
Banka a.d. Beograd was completed for a
cash consideration of € 188.7 million,
net of related
costs. Following the remeasurement losses
of € 63.5
million recognized until 31 October
2023, in accordance with
IFRS 5 requirements
the resulting
loss from
the sale amounted
to € 123
million before
tax, including
the recyclement
to the income
statement
of € 124
million cumulative losses (mainly currency translation
differences), previously recognized
in other comprehensive income.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The transaction
had a
positive impact
on Eurobank
Holdings Group’s
CET 1
ratio
(ca. 45
bps based
on 30
September
2023 ratio),
reflecting
the
release
of
related
RWAs
(Risk
weighted
assets),
and
is
consistent
with
Eurobank’s
strategy
to
redirect
capital
to
opportunities with more compelling RoTBV (Return
on Tangible Book Value)
and to further enhance its presence in its core markets.
The income statement, statement
of total comprehensive income and cash flow statement
distinguish discontinued operations from
continuing operations. Comparative
information has been adjusted accordingly.
The results of Eurobank
Direktna a.d. disposal
group, including the loss
from the IFRS
5 remeasurement and
its disposal, are set
out
below.
... .. ..
2023
2022
€ million
€ million
Net interest income
82
70
Net banking fee and commission income
17
22
Other income/(expenses)
2
3
Operating Expenses
(57)
(61)
Profit before impairments, remeasurement losses, risk provisions and restructuring
costs from
discontinued operations
44
34
Impairment losses relating to loans and advances to customers
(8)
(14)
Remeasurement losses on non current and other assets
(64)
-
Other impairment, risk provisions and restructuring costs
(19)
(18)
Profit/(loss) before tax from discontinued operations
before loss on disposal
(47)
2
Loss on disposal
(123)
-
Income tax
17
0
Net profit/(loss) from discontinued operations
(153)
2
Net profit/(loss) from discontinued operations attributable to
non controlling interest
(12)
0
Net profit/(loss) from discontinued operations attributable to shareholders
(141)
2
The major classes of assets and liabilities of Eurobank Direktna a.d. disposal group
are set out below.
..
31 October
2023
€ million
Loans and advances to customers
1,546
Cash and balances with central banks⁽¹⁾
713
Investment securities
81
Due from credit institutions⁽¹⁾
74
Other assets
29
Total assets of disposal group
2,443
Due to customers
1,809
Due to credit institutions
209
Other liabilities
31
Total liabilities of disposal group
2,049
Net intragroup liabilities associated with the disposal group
123
Net assets of disposal group
271
Net assets of disposal group attributable to non controlling
interests
84
Net assets of disposal group attributable to shareholders
187
(1)
As at 31 October 2023, the cash and cash equivalents included above amounted to € 636
million.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
31.
Due to central banks
2023
2022
€ million
€ million
Secured borrowing from ECB
3,771
8,774
As at 31
December 2023, the
Group’s
outstanding principal
under the TLTRO
III refinancing program
of the European
Central Bank
(ECB) amounted to € 3.7 billion (31 December 2022: € 8.9 billion outstanding
principal under TLTRO III program).
32.
Due to credit institutions
2023
2022⁽²⁾
€ million
€ million
Secured borrowing from credit institutions⁽¹⁾
2,428
764
Borrowings from international financial and similar institutions
379
663
Deposits from banks received as collateral⁽¹⁾
87
294
Current accounts and settlement balances with banks
79
76
Interbank takings
105
17
Total
3,078
1,814
(1)
The amounts presented are after offsetting (note 5.2.1.4).
(2)
As at 31 December 2022, due to credit institutions relating to Eurobank Direktna a.d. disposal
group (note 30) amounted to € 218 million.
Borrowings from international
financial and similar institutions include borrowings
from European Investment
Bank, European Bank
for Reconstruction and Development
and other similar institutions.
33.
Due to customers
2023
2022⁽¹⁾
€ million
€ million
Savings and current accounts
37,238
42,840
Term deposits
20,209
14,198
Repurchase agreements
-
201
Carrying amount
57,447
57,239
Fair value changes of deposits in portfolio hedging
of interest rate risk
(5)
-
Total
57,442
57,239
(1)
As at 31 December 2022, due to customers relating to Eurobank Direktna a.d. disposal group (note 30) amounted to € 1,630 million.
For the year
ended 31 December
2023, due to
customers for
the Greek and
International operations
amounted to
€ 39,955 million
and € 17,492 million, respectively (2022: € 39,575 million and € 17,664 million, respectively).
34.
Debt securities in issue
2023
2022
€ million
€ million
Securitisations
555
553
Subordinated notes (Tier 2)
1,296
1,259
Medium-term notes (EMTN)
2,905
1,740
Total
4,756
3,552
Securitisations
As at 31 December 2023, the carrying
value of the class A asset
backed securities issued by the
Bank’s special purpose
entities Karta
II Plc and Astarti DAC, amounted to
€ 305 million and € 250 million, respectively.
Tier 2 Capital instruments
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
On 30 November 2022, the Company announced the issuance of a € 300 million
subordinated Tier II debt instrument which matures
in
December
2032,
is
callable
in
December
2027
offering
a
coupon
of
10%
per
annum
and
is
listed
on
the
Luxembourg
Stock
Exchange’s
Euro
MTF
market.
On
the
same
date,
the
Bank
issued
a
subordinated
instrument
of
equivalent
terms,
held
by
the
Company.
In
January
2018,
Eurobank
Ergasias
S.A.
issued
Tier
2
capital
instruments
of
face
value
of
€
950
million,
in
replacement
of
the
preference shares which had been issued in the context of
the first stream of Hellenic Republic’s plan to support liquidity in the
Greek
economy under Law 3723/2008. The aforementioned
instruments have a maturity of ten
years (until 17 January 2028) and pay fixed
nominal interest rate of 6.41%, that
shall be payable semi-annually.
Covered bonds
Financial disclosures required by the Act 2620/28.08.2009
of the Bank of Greece
in relation to the covered bonds issued, are available
at the Bank's website (Investor
Report for Covered Bonds Programs).
Medium-term notes (EMTN)
In January 2023, the Bank completed the issue of a € 500 million senior preferred
note. The bond, which is listed on the Luxembourg
Stock
Exchange’s
Euro
MTF market,
matures
in January
2029 and
is callable
at
par in
January 2028,
offering
a coupon
of 7%
per
annum.
In November 2023,
the Bank completed
the issue of
a € 500
million senior preferred note.
The bond, which
is listed on
the Luxembourg
Stock Exchange’s Euro MTF market,
matures in November 2029 and is callable at par in November 2028, offering a coupon of 5.875%
per annum.
The proceeds from the above issues will support Group’s strategy to ensure
ongoing compliance with its MREL requirements and will
be used
for the
Bank’s
general funding
purposes. Further
information about
the issues
is provided
in the
relevant
announcements
published in the Company’s website on
20 January 2023 and 22 November 2023, respectively.
During the
year ended
31 December 2023,
the Bank
proceeded with
the issue
of medium term
notes of
face value
of € 91
million,
which were designated for Group’s
customers.
Post balance sheet event
In January 2024, the Company announced the issuance of a € 300 million subordinated Tier II debt instrument which matures in April
2034, is callable
at par
in April 2029
offering a
coupon of
6.25% per annum
and is listed
on the Luxembourg
Stock Exchange’s
Euro
MTF market. On the same date, the Bank issued a subordinated instrument
of equivalent terms, held by the Company.
The proceeds
from the
issue will
support Eurobank
Holding’s
Group strategy
to ensure
ongoing compliance
with its
total capital
adequacy ratio
requirements and will be
used for the Bank’s general funding
purposes. Further information about
the issue is
provided in the relevant
announcement published in the Company’s website
on 19 January 2024.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
35.
Other liabilities
2023
2022
€ million
€ million
Lease liabilities
190
205
Balances under settlement⁽¹⁾
380
444
Deferred income and accrued expenses⁽²⁾
194
156
Other provisions⁽²⁾
116
80
ECL allowance for credit related commitments (note
5.2.1.2)
48
57
Standard legal staff retirement
indemnity obligations and employee termination benefits
(note 36)
59
80
Sovereign risk financial guarantee
31
33
Income taxes payable
30
14
Deferred tax liabilities (note 13)
28
31
Trading liabilities
121
419
Other liabilities⁽³⁾
188
183
Total
1,385
1,702
(1)
Includes settlement balances relating to bank cheques and remittances, credit card transactions,
other banking and brokerage activities.
(2)
Potential losses
related to
representations and
warranties provided in
the context
of the
Group’s NPE
securitizations transactions (see
below) have
been
presented within “Other Provisions”; comparative information has been adjusted accordingly.
(3)
Includes € 1 million impairment allowance of the letters of guarantee related to the loans of Solar portfolio classified as held
sale (note 20).
As
at
31
December
2023,
other
liabilities
amounting
to
€
188
million
mainly
consist
of
payables
relating
with
(a)
suppliers
and
creditors, (b) contributions to insurance
organizations, and (c) duties and other taxes.
As at 31
December 2023, trading
liabilities amounted to
€ 121 million
(31 December 2022:
€ 419 million)
following the termination
of the short positions in debt instruments entered into in the context
of the Group’s economic hedging strategies,
aiming to manage
on a pool basis market driven risks that derive from asset positions. For the year ended 31 December 2023, the loss
recognized in net
trading income from the aforementioned
short positions amounted to € 23 million (31 December 2022: € 107 million gain).
In the context
of its non-performing exposures
(NPE) securitizations (Pillar,
Cairo, Mexico), and
as is customary for
the seller in such
types
of transactions,
the Bank
has provided
representation
and warranties
(R&Ws)
to the
investors
in respect
of the
underlying
loans, covering various
areas such as legality,
ownership and good
title of the loans,
accuracy of collateral
data etc., time-barred
up
to three
years
from the
transactions’
date. Accordingly,
as at
31 December
2023, the
Bank has
recognized
a provision
of ca.
€ 12
million for potential losses, in 2023 in expectation
of such R&Ws realization (31 December 2022: € 9 million).
Considering that
the substantiation
and crystallization
of potential
amounts under
dispute and
final agreement
between
involved
parties require significant time, the Group continues
to assess their impact as more information becomes available.
As at 31 December
2023, other provisions
amounting to € 116
million (2022: € 80
million) mainly include: (a)
€ 38 million for
claims
in dispute and
outstanding litigations against
the Group (note 42), (b)
€ 22 million relating to
the sale of Bank’s
former subsidiaries,
(c)
€
12
million
for
R&Ws
provided
to
investors
in
the
context
of
the
NPE
securitization
transactions,
d)
€
15
million
for
other
operational risk events and e) € 13.3 million relating
to contribution to restoration
initiatives after natural disasters
(note 11).
Notes to the Consolidated Financial Statements
.
146
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31 December 2023 Consolidated Financial Statements
The movement of the Group's other provisions,
is presented in the following tables:
31 December 2023
Litigations and
claims in
dispute
Other
Total
€ million
€ million
€ million
Balance at 1 January
28
52
80
Amounts charged during the year
21
34
55
Amounts used during the year
(5)
(7)
(12)
Amounts reversed during the year
(1)
(1)
Foreign exchange and other movements
(1)
(0)
(1)
Discontinued operations
(4)
(1)
(5)
Balance at 31 December
38
78
116
31 December 2022
Litigations and
claims in
dispute
Other
Total
€ million
€ million
€ million
Balance at 1 January
64
31
95
Amounts charged during the year
13
21
34
Amounts used during the year
(46)
(1)
(47)
Amounts reversed during the year
(3)
(2)
(5)
Foreign exchange and other movements
-
3
3
Balance at 31 December
28
52
80
36.
Standard legal staff retirement indemnity obligations (SLSRI) and termination benefits
The Group provides for staff retirement indemnity obligation for its employees in Greece and abroad, who are entitled to a lump sum
payment
based on
the number
of years
of service
and the
level of
remuneration
at the
date
of retirement,
if they
remain in
the
employment of the Group until
normal retirement age, in accordance with the
local labor legislation. The
above retirement indemnity
obligations typically expose the Group to actuarial risks such as interest rate risk and salary risk. Therefore, a decrease in the discount
rate used to calculate
the present value of
the estimated future cash
outflows or an increase in
future salaries will increase the
staff
retirement indemnity obligations
of the Group.
In addition, the Group has
provided employee termination benefits mainly in respect of
the Voluntary Exit Schemes (VES), which have
been implemented through either
lump-sum payments or long-term
leaves during which the
employees will be
receiving a percentage
of a monthly salary, or a combination
thereof.
The table below presents the breakdown
of defined benefit obligations.
31 December 2023
31 December 2022
1 January 2022
€ million
€ million
€ million
SLSRI obligation
22
19
23
Employee termination benefits
37
61
64
Total
59
80
87
The table
below presents
a reconciliation
from
the opening
to
the
closing balance
for
staff
retirement
indemnity
obligations
and
employee termination benefits. Comparative
information has been adjusted to include employee termination
benefits.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
2023
2022
€ million
€ million
Balance at 1 January
80
87
Arising from acquisition (note 23.2)
1
-
Current service cost
3
3
Interest cost
2
0
Past service cost and (gains)/losses on settlements
6
49
Remeasurements:
Actuarial (gains)/losses arising from changes in financial assumptions
(1)
(2)
Actuarial (gains)/losses arising from changes in demographic assumptions
(0)
(0)
Actuarial (gains)/losses arising from experience and other adjustments
3
(2)
Benefits paid
(34)
(55)
Exchange adjustments
0
0
Discontinued operations (note 30)
(1)
-
Balance at 31 December
59
80
For SLSRI obligations the significant actuarial assumptions
(expressed as weighted averages)
were as follows:
2023
%
2022
%
Discount rate
3.6
3.4
Future salary increases
3.2
2.9
As at
31 December
2023, the
assumption for
the price
inflation
(weighted
average)
is 2.3%
(2022: 2.6%)
and has
been taken
into
account in determining the above actuarial assumptions for
future salaries increases.
As at 31 December 2023,
the average duration of the standard legal staff retirement indemnity obligation was 7 years (2022: 8 years).
A quantitative
sensitivity analysis
based on
reasonable
changes to
significant actuarial
assumptions as
at 31
December 2023
is as
follows:
An increase/(decrease) of the discount
rate assumed, by 50 bps/(50 bps),
would result in a (decrease)/increase of the
standard legal
staff retirement obligations
by (€ 0.7 million)/ € 0.7 million.
An increase/(decrease) of
the future salary
growth assumed, by
0.5%/(0.5%) would result
in an increase/(decrease)
of the standard
legal staff retirement
obligations by € 0.7 million/(€ 0.7 million).
The above sensitivity analysis is based on a change in an assumption while
holding all other assumptions constant. In practice,
this is
unlikely to occur,
and changes in some of the assumptions may be correlated.
The
methods
and
assumptions
used
in
preparing
the
above
sensitivity
analysis
were
consistent
with
those
used
to
estimate
the
retirement benefit obligation
and did not change compared to the previous year.
For
employee
termination
benefits,
the
discount
rate
(weighted
average)
is
the
significant
actuarial
assumption,
which
as
at
31
December 2023 stood
at 3.8% based
on the applicable
tenor of the
liabilities. On the
same date, an
increase/(decrease) of the
discount
rate assumed,
by 50
bps/(50 bps),
would result
in a
(decrease)/increase of
employee termination
benefits by
(€ 0.2 million)/
€ 0.2
million.
Post balance sheet event
In February 2024, Eurobank decided to launch a new VES for
eligible units in Greece, which will be offered mainly to employees
over
a specific age limit. The estimated
cost of the new VES,
which will be implemented through
either lump-sum payments or
long term
leaves during which they
will be receiving a percentage
of a monthly salary,
or a combination thereof,
amounts to ca. € 129
million,
pre-tax. The estimated saving
in personnel expenses amounts to € 30 million on an annual basis.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
37.
Share capital, share premium and treasury shares
As
at
31 December
2023, the
par value
of the
Company's
shares is
€ 0.22
per
share
(2022: €
0.22). All
shares
are
fully paid.
The
movement of share capital and share
premium is as follows:
Share capital
Share
premium
€ million
€ million
Balance at 1 January 2022
816.0
8,055.7
Offsetting of equity accounts
-
(6,894.4)
Share capital increase following the exercise of share options
0.3
0.0
Balance at 31 December 2022
816.3
1,161.3
Balance at 1 January 2023
816.3
1,161.3
Share capital increase following the exercise of share options
1.3
0.1
Balance at 31 December 2023
817.6
1,161.4
Share capital increase
Following the exercise of share options granted
to executives of the Group under the current share options’ plan (see below), and by
virtue
of
the decision
of
the
Board
of
Directors
of
the Company
on
31 August
2023, the
Company’s
share
capital
increased
by
€
1,276,499.18 through the issue of 5,802,269 new common voting shares, of a nominal value of € 0.22 per share and exercise price
of
€ 0.23 per share.
The difference between
the exercise price
of the new
shares and their nominal
value, net of the
expenses directly
attributable to the equity transaction, amounted to € 39,286 and was recorded in the
account “Share premium”. Following the above
increase, as at
31 December 2023,
the share capital
of the Company
amounts to €
817,625,550.94 divided into
3,716,479,777 common
shares with a nominal value of € 0.22 each. The new shares were
listed on the Athens Exchange on
14 September 2023.
The following is an analysis of the movement in the number of the
Company’s shares outstanding:
Number of shares
Issued
Shares
Treasury
Shares
Net
Balance at 1 January 2022
3,709,161,852
(784,540)
3,708,377,312
Share capital increase following the exercise of share options
1,515,656
-
1,515,656
Purchase of treasury shares
-
(1,745,293)
(1,745,293)
Sale of treasury shares
-
2,269,797
2,269,797
Balance at 31 December 2022
3,710,677,508
(260,036)
3,710,417,472
Balance at 1 January 2023
3,710,677,508
(260,036)
3,710,417,472
Share capital increase following the exercise of share options
5,802,269
-
5,802,269
Buyback of shares held by HFSF
-
(52,080,673)
(52,080,673)
Other purchases of treasury shares
-
(5,740,696)
(5,740,696)
Sale of treasury shares
-
1,654,166
1,654,166
Balance at 31 December 2023
3,716,479,777
(56,427,239)
3,660,052,538
Treasury shares - Buyback of shares held
by HFSF
Following the receipt of the required
approval from the regulator
in May 2023, the General Meeting of the Company’s
Shareholders
(AGM),
which
was
held
on
20
July
2023,
approved
the
acquisition
of
all
the
52,080,673
Company’s
shares
held
by
the
HFSF,
corresponding
to
approximately
1.4% of
the Company’s
share
capital
and voting
rights,
and authorized
the Board
of
Directors
to
determine the specific conditions and relevant
details for the acquisition.
On 9
October
2023, the
acquisition
of
all the
shares
held
by the
HFSF was
completed
for
a total
consideration
of
€ 93.8
million,
including related
third party
fees. Following
the above,
the Company
and the Bank
are no
longer subject
to Law
3864/2010 and
to
the special rights of Hellenic Financial Stability Fund (HFSF) provided
for in such law.
In addition, as at
31 December 2023, the number
of the Company’s
shares held by its
subsidiary Eurobank Equities Investment
Firm
Single Member S.A.
in the ordinary course of its
business, was 4,346,566 (31
December 2022: 260,036).On the same
date, the number
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
of
the
Company’s
shares
held
by
the
Group’s
associates
in
the
ordinary
course
of
their
insurance
and
investing
activities
was
64,163,790 in total (31 December 2022: 64,163,790).
38.
Reserves and retained earnings/losses
Statutory
reserves
Non-taxed
reserves
Fair value reserve
Other
reserves
Retained
earnings/(losses)
Total
€ million
€ million
€ million
€ million
€ million
€ million
Balance at 1 January 2022
411
830
322
8,479
(13,374)
(3,333)
Restatement due to adoption of IFRS 17 by a
Group's associate (note 2.3)
-
-
-
-
(33)
(33)
Balance at 1 January 2022, as restated
411
830
322
8,479
(13,407)
(3,366)
Net profit (restated, note 2.3)
-
-
-
-
1,347
1,347
Transfers between reserves
73
(1)
-
195
(267)
-
Offsetting of equity accounts
(214)
-
-
(6,705)
13,814
6,895
Debt securities at FVOCI
-
-
(323)
-
-
(323)
Cash flow hedges
-
-
-
(0)
-
(0)
Foreign currency translation (note 23.1)
-
-
-
77
-
77
Gains/(losses) from equity securities at FVOCI
-
-
24
-
-
24
Associates and joint ventures
-changes in the share of other comprehensive
income,
net of tax
(restated, note 2.3)
-
-
(33)
31
(0)
(2)
Actuarial gains/(losses) on post employment
benefit obligations,
net of tax
-
-
-
-
4
4
Share options plan
-
-
-
-
4
4
Purchase/sale of treasury shares
-
-
-
1
0
1
Other
-
-
-
(1)
-
(1)
Balance at 31 December 2022
270
829
(10)
2,077
1,495
4,660
Balance at 1 January 2023
270
829
(10)
2,077
1,495
4,660
Net profit
-
-
-
-
1,140
1,140
Transfers between reserves
(42)
(0)
(45)
64
24
-
Debt securities at FVOCI
-
-
83
-
-
83
Cash flow hedges
-
-
-
(2)
-
(2)
Foreign currency translation (note 30)
-
-
-
123
-
123
Gains/(losses) from equity securities at FVOCI
-
-
18
-
-
18
Associates and joint ventures
-Adoption of IFRS 9 “Financial Instruments” by a
Group’s associate (see below)
-
-
(7)
-
7
-
-changes in the share of other comprehensive
income, net of tax
-
-
9
(12)
0
(4)
Actuarial gains/(losses) on post employment
benefit obligations, net of tax
-
-
-
-
(2)
(2)
Share options plan (note 39)
-
-
-
-
7
7
Purchase/sale of treasury shares (note 37)
-
-
-
(100)
-
(100)
Other
(1)
-
(0)
(1)
(1)
(3)
Balance at 31 December 2023
227
829
48
2,147
2,670
5,920
Adoption of IFRS 9 “Financial Instruments” by a Group’s
associate
As of
1 January
2023, Eurolife
FFH Insurance
Group
Holdings S.A.
has adopted
IFRS 9
“Financial instruments”.
This resulted
in €
7
million decrease
of the
Group’s
fair
value
reserve
against
retained
earnings,
mainly due
to the
designation
of equity
securities at
FVTPL, previously classified as available for sale under IAS 39.
As at 31 December 2023, other reserves comprise, among others, a) € 1,713 million reserves relating to dividends and gains from the
sale of participations
(2022: € 1,568
million), b) corporate law reserves
of
€ 8 million,
pursuant to the provisions
of the Greek
company
law in
force (2022:
€ 8
million), c)
€ 101
million (debit
balance) relating
to the
carrying amount
of the
treasury shares
held by
the
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Company
and its
subsidiary Eurobank
Equities Investment
Firm Single
Member S.A.
(2022: €
0.3 million)
(note 37),
d) €
14 million
accumulated loss from cash flow hedging (2022: € 12 million accumulated loss) and e) €
2 million accumulated loss relating to foreign
operations’ translation differences
(2022: € 125 million accumulated loss).
.
Dividends/Distribution of Profits
In December 2023, the
Bank proceeded with the distribution of
non-mandatory reserves totalling €410 million to its
sole shareholder,
Eurobank Holdings, in order to enable the latter to distribute dividend out of the profits of the financial year 2023 to its shareholders
in accordance with the provisions of article 159 of Company
Law 4548/2018.
Based on
the Group’s
financial performance
for the
financial year
2023, Eurobank
Holdings aims to
distribute to
its shareholders
a
cash dividend
equivalent to
at least
25% of
the Group's
adjusted net
profit for
financial year
2023, subject
to the
approval
of the
Annual General Meeting of its shareholders and the
regulatory authorities.
In
addition,
Eurobank
Holdings
intends
to
proceed
also
with
the
distribution
of
profits
to
the
employees
in
accordance
with
its
remuneration policy,
subject to the approval of the Annual General Meeting
of its shareholders.
39.
Share options
The Annual
General Meeting
of the
shareholders
of Eurobank
Holdings held
on 28
July 2020
approved
the establishment
of a
five
year shares
award
plan, starting
from 2021,
in the
form
of share
options rights
by issuing
new shares
with a
corresponding share
capital increase, in accordance with the provisions of article
113 of law 4548/2018, awarded to executives and personnel of Eurobank
Holdings and its affiliated companies according to article 32 of law 4308/2014. The maximum number of rights that
can be approved
was set at 55,637,000 rights, each of
which would correspond to one new share. The exercise price of
each new share would be equal
to
€
0.23.
The
Annual
General
Meeting
authorized
the
Board
of
Directors
of
Eurobank
Holdings
to
define
the
eligible
staff
and
determine the remaining terms and conditions of the plan.
The
final
terms
and the
implementation
of
the
share
options
plan,
which
is
a
forward-looking
long-term
incentive
aiming
at
the
retention of key executives,
are defined and approved annually by the Board of Directors
in accordance with the applicable legal and
regulatory framework, as well as the policies of the
Group.
The options
are exercisable
in portions,
annually during
a period
from one
to five
years. Each
portion may
be exercised
wholly or
partly and converted into shares at the employees’ option, provided that they remain
employed by the Group until the first available
exercise date. The corporate
actions that adjust the number and the price of shares also adjust accordingly the
share options.
The movement of share options during the year
is analysed as follows:
Share options granted
2023
2022
Balance at 1 January
22,268,322
12,374,561
Options awarded during the year
12,101,092
11,654,117
Options cancelled/expired during the year
(1,703,443)
(244,700)
Options exercised during the year
(5,802,269)
(1,515,656)
Balance at 31 December
26,863,702
22,268,322
In July 2023, the Group awarded to its executives
12,101,092 new share options, exercisable in
annual portions up to 2028.
From the share
options exercisable
in 2023, a number
of 5,802,269 options were
exercised during
the year,
resulting in the issue
of
an equal number of new common voting shares.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The share options outstanding at the end of the year
have the following expiry dates:
Share options
Expiry date ⁽¹⁾
31 December 2023
2024
9,279,299
2025
5,345,228
2026
4,951,014
2027
4,951,014
2028
2,337,147
Weighted average remaining contractual
life of share
options outstanding at the end of the period
25 months
(1)
Based on the earliest contractual exercise date.
In accordance
with the
Group’s
accounting policy
on employees’
share based
payments, the
grant date
fair value
of the
options is
recognized as an expense with a corresponding
increase in equity over the vesting period.
The fair
value at
grant date
is determined
using an
adjusted form
of the
Black-Scholes
model for
Bermudan equity
options which
takes
into account
the exercise
price, the
exercise
dates, the
term of
the option,
the share
price at
grant
date and
expected price
volatility of the underlying share, the expected dividend
yield and the risk-free interest
rate for the term of the options.
The weighted
average fair
value of the
share options
granted in
July 2023 was
€ 1.13 (2022:
€ 0.63). The
significant inputs
into the
model were a share price of € 1.442 (2022: € 1.021) at the grant date, exercise price of € 0.23, annualized dividend yield of 3% (2022:
3%), expected average
volatility of 41% (2022: 38%),
expected option life
of 1-5 years, and
a risk-free interest
rate corresponding
to
the options’ maturities, based on the Euro swap yield curve. The expected
volatility is measured at the grant
date of the options and
is based on the average historical volatility
of the share price over the last one and a half year
.
40.
Transfers
of financial assets
The Group
enters
into transactions
by which
it transfers
recognized
financial assets
directly to
third
parties or
to Special
Purpose
Entities (SPEs).
(a) The Group sells, in exchange
for cash, securities under an agreement
to repurchase them (repos)
and assumes a liability to repay
to the counterparty the cash received.
In addition, the Group pledges,
in exchange for cash, securities, covered bonds, as well
as loans
and receivables and assumes a liability to
repay to the counterparty
the cash received. The Group may
also transfer securities under
securities lending agreements with no exchange of cash or pledging of other financial assets as collateral. For
all the aforementioned
transactions, the
Group has
determined that
it retains
substantially all
the risks,
including associated
credit and
interest
rate risks,
and rewards of these financial assets and therefore has not derecognized them. As a result, the Group
is unable to use, sell or pledge
the transferred assets for the duration of the transaction. The related liability, where applicable, is recognized in Due to central banks
and credit institutions (notes 31 and 32), Due to customers
(note 33) and Debt securities in issue (note 34), as appropriate.
The Group
enters
into
securitizations
of various
classes of
loans
(corporate,
small and
medium enterprise,
consumer
and various
classes of non-performing loans), under which it assumes an obligation to pass on the cash flows from the loans to the holders of the
notes. The Group has determined that it retains substantially
all risks, including associated credit and interest rate risks,
and rewards
of these
loans and
therefore
has not
derecognized
them. As
a result
of the
above transactions,
the Group
is unable
to use,
sell or
pledge the
transferred
assets for
the duration
of their retention
by the
SPE. Moreover,
the note
holders' recourse
is limited
to the
transferred
loans. As at 31
December 2023, the carrying
value of the
securitizations’ issues held
by third parties
amounted to €
555
million (2022: € 553 million) (note 34).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The table below sets out the details of Group's financial assets that have been
sold or otherwise transferred, but which do not qualify
for derecognition:
Carrying amount
2023
2022
€ million
€ million
Securities held for trading
14
44
Loans and advances to customers⁽¹⁾
12,889
14,186
-securitized loans⁽²⁾
2,164
3,411
-pledged loans under covered bond program
4,083
4,261
-pledged loans with central banks
6,310
6,309
-other pledged loans
332
205
Investment securities
2,255
3,027
Total
15,158
17,257
(1)
Including loans classified as held for sale (note 30)
(2)
It includes securitized loans of issues held by the Bank, not used for funding.
(b) The Group
may sell or
re-pledge any
securities borrowed
or obtained through
reverse repos
and has an
obligation to
return the
securities.
The
counterparty
retains
substantially
all
the
risks
and
rewards
of
ownership
and
therefore
the
securities
are
not
recognized by the Group. As at 31 December 2023, the
Group had obtained through reverse
repos securities of face value of € 1,413
million (2022: € 134 million face value of which € 15 million sold under repurchase agreements and € 67 million pledged with central
banks).
As at 31 December 2023, the cash value of the assets transferred
or borrowed by the Group through securities lending, reverse
repo
and
other
agreements
(points
a
and
b)
amounted
to
€
8,956
million,
while
the
associated
liability
from
the
above
transactions
amounted to € 7,969
million, of which € 1,210 million repo agreements offset in the balance sheet against reverse
repo deals (notes
31, 32, 33, 34
and 5.2.1.4) (2022: cash
value € 10,512
million and liability
€ 10,412 million, of
which € 114 million
repo agreements
offset in the balance sheet).
In addition, the Group’s
financial assets pledged as collaterals
for repos, derivatives,
securitizations and
other transactions other than the financial assets presented
in the table above are provided in notes 17 and 29.
41.
Leases
Group as a lessee
The Group leases office and branch premises, ATM
locations, residential properties for the Group’s
personnel, and motor vehicles.
The majority of the Group’s property leases are under long term agreements (for a term of 12
years or more in the case of leased real
estate
assets),
with
options
to
extend
or
terminate
the
lease
according
to
the
terms
of
each
contract
and
the
usual
terms
and
conditions
of commercial
leases
applicable
in each
jurisdiction,
while motor
vehicles generally
have
lease terms
of up
to
4 years.
Extension options held by the Group are included in the lease term when it is reasonably certain that they will be exercised
based on
its assessment. For contracts having an indefinite remaining life, the lease term has been determined at an average
of 7 years for the
Bank,
after
considering
all relevant
facts
and circumstances.
For
new
or
modified
lease contracts
with
an
indefinite
life,
that
are
effective from the fourth quarter
of 2023
onwards, the estimated lease
term has been
revised to 5
years. Where applicable, depending
on the terms of each lease contract, lease payments are
adjusted annually in line with the consumer Price Index, as published by the
Greek Statistical Authority,
plus an agreed fixed percentage.
Information about the leases for which the Group
is a lessee is presented below:
Right-of-Use Assets
As at 31 December 2023, the right-of-use assets included in property plant and equipment amounted to €
170 million (31 December
2022: € 187 million) (note
26), while those that
meet the definition of
investment property
amounted to € 16
million (31 December
2022: € 14 million) (note 27).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
Lease Liabilities
The
lease liability
included under
other
liabilities
amounted
to
€ 190
million
as at
31 December
2023 (31
December 2022:
€
205
million) (note 35). The
maturity analysis of lease
liabilities as at 31
December 2023, based on
the contractual undiscounted cash flows,
is presented in note 5.2.3.
Amounts recognised in profit or loss
Interest on lease liabilities is presented in note 6 and the lease expense relating to short term leases is ca. € 1.2 million (31 December
2022: € 3 million).
The Group had total cash outflows for
leases of € 44 million in 2023 (2022: € 39 million).
Group as a lessor
Finance lease
The Group leases out certain real estate
properties and equipment under finance leases, in its capacity as a lessor.
The maturity analysis of finance lease
receivables, based on the undiscounted lease payments to be
received after the reporting date,
is provided below:
2023
2022
€ million
€ million
Not later than one year
230
303
1-2 years
89
83
2-3 years
95
65
3-4 years
53
53
4-5 years
34
36
Later than 5 years
154
164
Lease Payments:
656
704
Gross investment in finance leases
656
704
Less: unearned finance income
(83)
(66)
Net investment in finance leases
573
638
Less: impairment allowance
(93)
(139)
Total
480
499
Operating Leases
The
Group
leases
out
its
investment
property
under
the
usual
terms
and
conditions
of
commercial
leases
applicable
in
each
jurisdiction.
When such
leases do
not transfer
substantially
all of
the risks
and rewards
incidental
to the
ownership
of the
leased
assets, the Group classifies these lease as
operating leases. Information relating to operating leases of investment property,
including
the rental income
recognised by the
Group during the
year, is provided in note
27. The
maturity analysis of
operating lease receivables,
based on the undiscounted lease payments to be received
after the reporting date, is provided below:
2023
2022
€ million
€ million
Not later than one year
94
92
One to two years
83
85
Two to three years
76
78
Three to four years
68
70
Four to five years
64
64
More than five years
209
250
Total
594
639
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
42.
Contingent liabilities and other commitments
The Group
presents
the credit
related
commitments
it has
undertaken
within the
context
of its
lending related
activities into
the
following
three categories:
a) financial
guarantee
contracts,
which refer
to guarantees
and standby
letters
of credit
that carry
the
same credit risk
as loans (credit
substitutes), b) commitments to extend
credit, which comprise firm
commitments that are irrevocable
over the life of the facility or revocable
only in response to a material adverse effect
and c) other credit related commitments, which
refer
to
documentary
and
commercial
letters
and
other
guarantees
of
medium
and
low
risk
according
to
the
Regulation
No
575/2013/EU.
Credit related commitments are analyzed
as follows:
2023
2022
€ million
€ million
Financial guarantee contracts
2,082
1,807
Commitments to extend credit
4,521
3,898
Other credit related commitments
1,268
1,053
Total
7,871
6,758
Note: Credit related commitments of discontinued operations (note 30) amounting to € 259 million are included in the table above for 31 December 2022
.
The
credit
related
commitments
within the
scope of
IFRS
9 impairment
requirements
of
continuing
operations
amount to
€ 11.4
billion (31 December
2022: € 10.5
billion), including revocable
loan commitments
of € 3.5
billion (31 December
2022: € 3.7
billion),
while the corresponding allowance for impairment
losses amounts to € 48 million (31 December 2022: € 57 million).
In addition, the Group has issued a sovereign risk financial guarantee of € 0.24 billion (31 December 2022: € 0.23 billion) for which an
equivalent amount has been deposited under the relevant
pledge agreement (note 29).
Other commitments
(a) The Bank has signed
irrevocable payment
commitment and collateral
arrangement agreements
with the Single Resolution Board
(SRB) amounting in total to € 29 million as at 31 December
2023 (2022: € 24 million), representing 15% of its
resolution contribution
payment
obligation
to
the
Single
Resolution
Fund
(SRF)
for
the
years
2016-2022
and
22.5%
for
year
2023,
whereas
no
annual
resolution contributions
will be required
in 2024 (note
11). According
to the agreements,
which are backed
by cash collateral
of an
equal amount, the Bank undertook to pay to the SRB an amount up to the above IPC, in case of a call and demand for payment made
by it, in relation to a resolution action taken
for another European bank. The IPC has been accounted
for as a contingent liability and
the said cash collateral has been recognized
as a financial asset measured at amortized cost in the Group’s
balance sheet line “Other
assets’’(note 29).
By a ruling in October 2023, the General Court
of the European Union dismissed the appeal of a French
Credit institution against the
Single
Resolution
Board
(SRB)
following
the
rejection,
by
the
latter,
of
the
request
for
return
of
collateral
linked
to
ex-ante
contributions provided
in the
form of
IPC. The reimbursement
of the collateral
linked to
the IPC,
requested by
the institution
after
the withdrawal of its license, had been refused by the SRB, arguing that the return of IPC collateral required the prior payment of the
compulsory contribution for which the institution was
liable.
The aforementioned decision is not final, as the institution concerned decided to appeal to the European
Court of Justice against the
ruling of the General Court
of the European Union, therefore the
Group has not proceeded to any
change in the accounting treatment
described above for the purposes of these financial
statements. Depending on the outcome of the case, any change in
the accounting
treatment
that would
require
the reduction
or non-recognition
of the
collateral
amount of
€ 29
million currently
recognized
as a
financial asset would only affect the Group’s
accounting equity, as the total outstanding
amount of IPC collateral is already deducted
from regulatory capital and therefore
the Group’s capital
position would remain unaffected.
The Group will continue to monitor any
developments in the case and assess the potential impact on its financial statements.
(b) As at 31 December 2023,
the contractual commitments for the acquisition of own used property, equipment and intangible assets
amounted to € 37 million (2022: € 46 million).
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
In February 2023, the Bank signed a binding pre-agreement with a third party for the 100% acquisition of a Cypriot holding company,
which indirectly owns an under-development
office building in Marousi
Attica and has proceeded
with an advance payment
of ca. €
22.3 million, in total, in line
with the agreement. The completion
of the agreement is expected
to take place in the
fourth quarter of
2024.
Legal proceedings
As at 31 December 2023,
the provisions for
legal proceedings outstanding
against the Group
amounted to € 38
million, including an
amount of € 8 million provided for the below mentioned
claim (note 35) (31 December 2022: € 28 million).
There are no significant judicial proceedings, inquiries, or cases under investigation by state or regulatory authorities which may have
important
repercussions
for
the
Group’s
operations.
In
respect
of
the
Hellenic Competition
Commission’s
(HCC)
investigation
for
certain legal
entities of
the financial
sector,
including the
Bank, in
relation
to issues
concerning concerted
practices (but
not price
fixing),
the Bank
decided
to
enter
the
dispute
settlement
procedure
provided
for
in
Art.
29A
of
the
Competition
Act
3959/2011.
Negotiations subsequently
took place which
resulted in
the settlement
of the dispute
in December 2023
on the
basis of
which the
case
was
concluded.
The
Bank
agreed
to
pay
the
amount
of
€7,976,790.63
as
a
fine
for
which a
respective
provision
has
been
recognized in the line “Other impairments,
risk provisions and related costs” of the Income
Statement. In addition, the HCC imposed
a behavioral remedy ordering all financial institutions involved to reduce to
a maximum level the Direct Access Fee (DAF) charged for
‘off-us’
ATM
cash withdrawal
transactions
for
a period
of three
years
from the
introduction
of the
measure (i.e.
1 January
2024).
Eurobank reduced
its DAF
charge by
€0.70 (from
€2.50 to €1.80
per transaction).
In the Bank’s
view there
has been no
violation of
the competition rules; nonetheless,
the Bank opted for
the settlement of the
dispute since the alternative
option would have led
to
a very lengthy trial. With this decision the Bank showed
also its will to cooperate with the HCC. It is noted that
no officer of the Bank
has been held liable for violation of competition rules.
Furthermore, in the normal course of its business, the Group has been involved in a number of legal proceedings, which are either at
still a premature
or at an advanced trial
instance. The final settlement
of these cases may
require the lapse of
a certain time so that
the litigants exhaust the legal remedies provided for by the
law. Management, is closely monitoring the developments to the relevant
cases and having
considered the
advice of Legal
Services, does not
expect that
there will
be an outflow
of resources
and therefore
does not acknowledge the need for a provision.
43.
Operating segment information
Management has
determined the operating
segments based on
the internal reports
reviewed by
the Strategic
Planning Committee
that
are
used
to
allocate
resources
and
to
assess
their
performance
in
order
to
make
strategic
decisions.
The
Strategic
Planning
Committee considers the business both from a business unit and geographic perspective. Geographically, management considers the
performance of its business activities originated from Greece and
other countries in Europe (International).
Greece
is
further
segregated
into
retail,
corporate,
global
markets
& asset
management,
investment
property
and as
of
the
first
quarter
of
2023,
Remedial
and
Servicing
Strategy,
in
order
to
be
aligned
with
its
separate
internal
reporting
to
Management.
International
is monitored
and reviewed
on a
country basis.
The Group
aggregates
segments when
they exhibit
similar economic
characteristics and profile and are expected
to have similar long-term economic development.
In more detail, the Group is organized
in the following reportable segments:
-
Retail:
incorporating
customer
current
accounts,
savings,
deposits
and
investment
savings
products,
credit
and
debit
cards,
consumer loans, small business banking and mortgages.
-
Corporate:
incorporating current
accounts, deposits,
overdrafts,
loan and other
credit facilities,
foreign currency
and derivative
products
to
corporate
entities,
custody
and
clearing
services,
cash
management
and
trade
services
and
investment
banking
services including corporate finance, merger and
acquisitions advice.
-
Global Markets
& Asset Management:
incorporating financial
instruments trading,
services to institutional
investors,
as well as,
specialized financial
advice and intermediation.
In addition, this
segment incorporates
mutual fund products,
institutional asset
management and equity brokerage.
-
International: incorporating
operations in Bulgaria,
Serbia (the operations
of Eurobank Direktna
a.d. disposal group are
included
until 31 October 2023 (note 30)), Cyprus, Luxembourg
and Romania.
-
Investment
Property:
incorporating
investment
property
activities relating
to
a diversified
portfolio
of
commercial
real
estate
assets.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
-
Remedial
and
Servicing
Strategy
(RSS):
incorporating
(a)
the
management
of
non
-
performing
assets,
that
were
previously
reported in
the “Retail”
and “Corporate”
segments, and
(b) the property
management (repossessed
assets), the
notes of
Cairo,
Pillar and
Mexico securitizations,
which were
retained by
the Group,
and the Group’s
share of
results of
doValue
Greece Loans
and Credits Claim Management S.A, that were previously
reported in the “Other” segment.
Other
segment
of
the
Group
refers
mainly
to
(a)
property
management
(own
used
property
&
equipment),
(b)
other
investing
activities (including equities’ positions), (c) private
banking services to medium and high net
worth individuals, (d) the Group’s
share
of results
of Eurolife
Insurance group
and (e)
the results
related
to the
Group’s
transformation
projects and
initiatives. Ιn
the year
ended 31 December 2022, it also included the effect of the liquidation of “ERB Istanbul
Holding A.S.”.
Comparative information has been adjusted
to include the aforementioned changes affecting
the reportable operating segments.
The
Group's
management
reporting
is
based
on
International
Financial
Reporting
Standards
(IFRS)
as
adopted
by
the
EU.
The
accounting policies of the Group's operating segments
are the same with those described in the principal accounting policies.
Revenues from
transactions between business
segments are allocated
on a mutually agreed
basis at rates
that approximate
market
prices.
43.1
Operating segments
31 December 2023
Retail
Corporate
Global Markets &
Asset Mngt
Investment
Property
RSS
International
Other and
Elimination
center
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Net interest income
1,118
437
59
(12)
(8)
657
(77)
2,174
Net commission income
87
127
102
-
5
122
4
447
Other net revenue
(48)
3
108
103
15
(1)
113
293
Total external revenue
1,157
567
269
91
12
778
40
2,914
Inter-segment revenue
41
39
(40)
2
-
(8)
(34)
-
Total revenue
1,198
606
229
93
12
770
6
2,914
Operating expenses
(379)
(118)
(55)
(35)
(62)
(263)
(3)
(915)
Impairment losses relating to loans
and advances to customers
(126)
(31)
-
-
(159)
(57)
(39)
(412)
Other impairments, risk provisions and related costs
(note 12)
(20)
(1)
3
(1)
(25)
(36)
(16)
(96)
Share of results of associates and
joint ventures
-
-
-
-
8
58
22
88
Profit/(loss) before tax from continuing operations
before restructuring costs
673
456
177
57
(226)
472
(30)
1,579
Restructuring costs (note 12)
(4)
(4)
(1)
-
(1)
(11)
(16)
(37)
Profit/(loss) before tax from continuing operations
669
452
176
57
(227)
461
(46)
1,542
Loss before tax from discontinued operations (note
30)
-
-
-
-
-
(170)
-
(170)
Profit/(loss) before tax attributable to non
controlling interests
-
-
-
-
-
(12)
-
(12)
Profit/(loss) before tax attributable
to shareholders
669
452
176
57
(227)
303
(46)
1,384
31 December 2023
Retail
Corporate
Global Markets &
Asset Mngt
Investment
Property
RSS
International
Other and
Elimination
center⁽¹⁾
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Segment assets
12,344
15,897
14,627
1,453
8,259
21,336
5,865
79,781
Segment liabilities
31,264
11,558
4,942
280
1,767
18,740
3,331
71,882
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The International segment is further analyzed
as follows:
31 December 2023
Bulgaria
Serbia
Cyprus
Luxembourg
Romania
Total
€ million
€ million
€ million
€ million
€ million
€ million
Net interest income
322
1
273
58
3
657
Net commission income
76
-
39
8
(1)
122
Other net revenue
6
(4)
-
(2)
(1)
(1)
Total external revenue
404
(3)
312
64
1
778
Inter-segment revenue
-
-
-
(8)
-
(8)
Total revenue
404
(3)
312
56
1
770
Operating expenses
(169)
(2)
(59)
(28)
(5)
(263)
Impairment losses relating to loans and
advances to customers
(52)
-
(16)
-
11
(57)
Other impairments, risk provisions and
related costs
(31)
-
(1)
-
(4)
(36)
Share of results of associates and joint
ventures
-
-
58
-
-
58
Profit/(loss) before tax from continuing
operations before restructuring costs
152
(5)
294
28
3
472
Restructuring costs (note 12)
(11)
-
-
-
-
(11)
Profit/(loss) before tax from continuing
operations
141
(5)
294
28
3
461
Loss before tax from discontinued operations
-
(170)
-
-
-
(170)
Profit/(loss) before tax attributable to non
controlling interests
-
(12)
-
-
-
(12)
Profit/(loss) before tax attributable to
shareholders
141
(163)
294
28
3
303
31 December 2023
Bulgaria
Serbia
Cyprus
Luxembourg
Romania
International
€ million
€ million
€ million
€ million
€ million
€ million
Segment assets⁽²⁾
9,832
91
8,625
2,644
143
21,336
Segment liabilities⁽²⁾
8,714
86
7,300
2,426
214
18,740
31 December 2022
Retail
Corporate
Global Markets
&
Asset Mngt
Investment
Property
RSS
International
Other and
Elimination
center
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Net interest income
422
350
284
(12)
62
386
(13)
1,480
Net commission income
90
114
99
0
4
119
1
427
Other net revenue
324
5
703
183
(9)
(8)
(63)
1,135
Total external revenue
836
470
1,087
171
57
497
(75)
3,041
Inter-segment revenue
22
39
(35)
2
(1)
(2)
(25)
-
Total revenue
858
508
1,052
173
56
494
(99)
3,041
Operating expenses
(375)
(116)
(68)
(39)
(64)
(216)
21
(857)
Impairment losses relating to loans and advances to
customers
(105)
(1)
-
-
(135)
(18)
(17)
(276)
Other impairment losses,risk provisions and related
costs (note 12)
(4)
(2)
(18)
(3)
(15)
(13)
(49)
(103)
Share of results of associates and joint ventures
(0)
0
(0)
-
(0)
-
35
35
Profit/(loss) before tax from continuing operations
before restructuring costs
374
388
966
132
(159)
247
(110)
1,839
Restructuring costs (note 12)
(24)
(1)
(1)
-
(1)
0
(61)
(89)
Profit/(loss) before tax from continuing operations
350
387
966
132
(160)
247
(171)
1,751
Profit before tax from
discontinued operations
-
-
-
-
-
1
-
1
Profit/(loss) before tax attributable to non
controlling interests
-
-
-
-
-
(0)
(0)
(0)
Profit/(loss) before tax attributable to shareholders
350
387
966
132
(160)
248
(171)
1,752
Notes to the Consolidated Financial Statements
.
158
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31 December 2023 Consolidated Financial Statements
31 December 2022
Retail
Corporate
Global Markets
&
Asset Mngt
Investment
Property
RSS
International
Other and
Elimination
center⁽¹⁾
Total
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
Segment assets
12,541
14,871
13,096
1,445
9,041
21,704
8,776
81,474
Segment liabilities
30,097
12,082
5,572
307
2,009
19,736
4,939
74,742
31 December 2022
Bulgaria
Serbia
Cyprus
Luxembourg
Romania
Total
€ million
€ million
€ million
€ million
€ million
€ million
Net interest income
215
(0)
136
34
2
386
Net commission income
73
(0)
40
8
(1)
119
Other net revenue
(5)
(2)
1
0
(2)
(8)
Total external revenue
282
(2)
177
42
(2)
497
Inter-segment revenue
0
(0)
0
(3)
-
(2)
Total revenue
283
(2)
177
39
(2)
494
Operating expenses
(136)
(2)
(50)
(23)
(5)
(217)
Impairment losses relating to loans and
advances to customers
(37)
0
(1)
(0)
20
(18)
Other impairments, risk provisions and
related costs
(5)
(0)
(1)
(0)
(7)
(13)
Share of results of associates and joint
ventures
-
-
-
-
0
0
Profit/(loss) before tax from continuing
operations
before restructuring costs
105
(4)
125
15
6
247
Restructuring costs
-
-
-
-
-
-
Profit/(loss) before tax from continuing
operations
105
(4)
125
15
6
247
Profit before tax from discontinued
operations
-
2
-
-
-
2
Profit/(loss) before tax attributable to non
controlling interests
(0)
(0)
-
-
-
(0)
Profit/(loss) before tax attributable to
shareholders
105
(3)
125
15
6
248
31 December 2022
Bulgaria
Serbia
Cyprus
Luxembourg
Romania
International
€ million
€ million
€ million
€ million
€ million
€ million
Segment assets⁽²⁾
7,944
2,504
8,793
2,304
159
21,704
Segment liabilities⁽²⁾
7,146
2,217
8,031
2,112
230
19,736
(1)
Interbank eliminations between International and the other Group’s segments are included.
(2)
Intercompany balances among the Countries have been excluded from the reported assets and liabilities of International segment.
43.2
Entity wide disclosures
Breakdown of the Group's revenue
for each group of similar products and services is as follows:
2023
2022
€ million
€ million
Lending related activities
1,117
1,364
Deposits, network and asset management activities
1,671
310
Capital markets
(36)
951
Non banking and other services
162
416
Total from continuing operations
2,914
3,041
Information on the Country by Country Reporting based
on Law 4261/2014 is provided in the Appendix.
Notes to the Consolidated Financial Statements
.
159
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31 December 2023 Consolidated Financial Statements
44.
Post balance sheet events
Details of post balance sheet events are provided
in the following notes:
Note 2.1
– Basis of preparation
Note 4
– Capital Management
Note 5.2.1.3
– Debt Securities
Note 11
– Operating expenses
Note 13
– Income tax
Note 20
– Loans and advances to customers
Note 23.1 – Shares in subsidiaries
Note 24
– Investments in associates and joint ventures
Note 34
– Debt securities in issue
Note 36
– Standard legal staff retirement
indemnity obligations (SLSRI) and termination benefits
Note 42
– Contingent liabilities and other commitments
45.
Related parties
Eurobank Ergasias Services and Holdings S.A.
(the Company or Eurobank Holdings) is
the parent company of Eurobank S.A. (the
Bank).
The Board
of Directors
(BoD) of Eurobank
Holdings is the
same as the
BoD of the
Bank and part
of the key
management personnel
(KMP) of the Bank
provides services to Eurobank Holdings
according to the terms
of the relevant agreement between
the two entities.
Fairfax
Group,
which holds
32.93% of
Eurobank
Holdings’
share capital
as
of
31 December
2023 (31
December
2022: 32.99%),
is
considered to have significant influence over the Company.
In addition, following the completion of the acquisition of all of Eurobank
Holdings’ shares held
by the HFSF,
on 9 October
2023 (note 37),
the HFSF is no
longer considered
to have
significant influence over
the Company.
In
January
2022,
an
occupational
insurance
fund
(“Institution
for
occupational
retirement
provision-occupational
insurance
fund
Eurobank’s
Group personnel”
henceforth “the
Fund”) was established
as a not-for
-profit legal
entity under
Law 4680/2020, for
the
benefit of the
employees of the
Company,
the Bank and certain
other Greek entities
of the Group,
which constitute the
sponsoring
employers of the Fund. Accordingly,
in line with IAS 24 Related Parties, the Fund is considered to
be related party to the Group.
A number
of banking
transactions are
entered into
with related
parties in
the normal
course of
business and
are conducted
on an
arm's length basis.
These include loans,
deposits and guarantees.
In addition, as
part of its normal
course of business
in investment
banking activities, the Group at times may hold positions in debt and
equity instruments of related parties.
Notes to the Consolidated Financial Statements
.
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31 December 2023 Consolidated Financial Statements
The
outstanding
balances
of
the
transactions
with
(a)
Fairfax
group,
(b)
the
key
management
personnel
(KMP)
and
the
entities
controlled or jointly controlled by
KMP and (c) other related parties, as well as the relating
income and expenses are as follows:
31 December 2023
31 December 2022
Fairfax
Group⁽²⁾ ⁽⁴⁾
KMP and Entities
controlled or jointly
controlled by KMP⁽¹⁾
Other Related
Parties⁽³⁾
Fairfax
Group⁽²⁾
KMP and Entities
controlled or jointly
controlled by KMP⁽¹⁾
Other Related
Parties⁽³⁾
€ million
€ million
€ million
€ million
€ million
€ million
Investment securities
-
-
60.95
-
-
-
Loans and advances to
customers
119.64
5.25
25.55
73.45
5.69
0.14
Other assets
12.89
0.54
85.19
0.39
-
87.07
Due to credit institutions
-
-
0.04
-
-
-
Due to customers
46.57
16.33
93.24
34.22
20.98
97.50
Debt securities in issue
82.85
2.01
103.56
81.98
1.27
102.47
Other liabilities
0.01
0.11
6.02
0.13
0.20
10.35
Net interest income
3.20
(0.05)
(0.98)
(0.69)
0.01
(4.68)
Net banking fee and
commission income
0.04
0.07
10.57
0.02
0.11
10.89
Net trading income
-
-
-
-
-
0.01
Gains less losses from
investment securities
-
-
0.57
-
-
-
Impairment losses relating to
loans and securities including
relative fees
(2.60)
-
(77.26)
(0.55)
-
(62.75)
Other operating
income/(expenses)
5.71
(13.97)
(9.06)
9.56
(15.18)
(10.17)
Guarantees issued
2.47
-
-
1.97
-
-
Guarantees received
-
-
-
-
0.01
-
(1)
Includes the key management personnel of the Group and their close family members.
(2)
The balances with the Group’s
associate Eurolife FFH Insurance Group
Holdings S.A., which is also a member
of Fairfax Group are presented
in the column
other related parties.
(3)
Other related
parties include
associates (Hellenic
Bank is
included as
of the
second quarter
of 2023,
note 24),
joint ventures
and the
Eurobank Group’s
personnel occupational insurance fund. In particular, as at 31 December 2023 the outstanding balances of transactions with the Fund refer mainly to deposits
of € 1 million received from the Fund (31 December 2022: € 1 million).
(4)
In January 2023, the Bank disposed of a 10.8% holding in Fairfax Group’s
subsidiary “Grivalia Hospitality S.A.” to Eurolife FFH
Insurance Group Holdings S.A
for a cash
consideration of €
48.3 million. Furthermore,
in March and
November 2023, the
Bank participated in
the share capital
increase of “Grivalia
Hospitality
S.A.” with an amount of € 8.6 and € 6.05 million respectively.As at 31 December 2023, the Bank’s retained holding in the entity was 9.2%.
For the year ended 31 December 2023, an impairment of € 0.01 million (2022: € 0.8 million) has been recorded against loan balances
with Group’s
associates
and joint
ventures,
while the
respective
impairment allowance
amounted
to €
0.02 million
(31 December
2022: € 0.02 million).
Key management compensation (directors
and other key management personnel of the Group)
Key management personnel are entitled to compensation in the form of short-term employee benefits of € 8.32 million (2022: € 7.52
million) and long-term employee benefits
of € 1.36 million
(2022: € 1.24
million). Additionally, the Group has recognised € 3.98
million
expense relating
with equity settled
share based payments
(2022: € 1.94 million)
(note 39). Furthermore
,
as at 31
December 2023,
the defined benefit
obligation for
the KMP amounts
to € 1.77
million (31 December
2022: € 1.58
million), while the
respective cost
for
the year
through the
income statement
amounts to
€ 0.14
million (2022:
€ 0.12
million)and
the other
comprehensive
income
(actuarial loss) amounts to € 0.05
million (2022: € 0.07 million actuarial gain).
Notes to the Consolidated Financial Statements
.
161
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31 December 2023 Consolidated Financial Statements
46.
External Auditors
The
Group
has
adopted
a
Policy
on
External
Auditors’
Independence
which
provides
amongst
others,
for
the
definition
of
the
permitted
and non-permitted
services the
Group
auditors
may provide
further to
the statutory
audit. For
any
such services
to be
assigned to
the Group’s
auditors there
are specific
controlling
mechanisms in
order for
the Company’s
Audit Committee
to ensure
that a) the non-audit services
assigned to “KPMG Certified Auditors S.A.”, along with the KPMG network (KPMG), have been reviewed
and approved as required and b) there
is proper balance between audit and permitted non-audit work.
The total fees of the Group’s
principal independent auditor KPMG, for audit and other services provided are
analyzed as follows:
2023
2022
€ million
€ million
Statutory audit⁽¹⁾
(2.9)
(2.9)
Tax certificate
(0.4)
(0.4)
Other audit related assignments
(1.4)
(1.1)
Non audit assignments
(0.2)
(0.1)
Total from
continuing operations
(4.9)
(4.5)
(1)
Includes fees for statutory audit of the annual separate and consolidated financial statements.
It is noted
that the non-audit
assignment fees
of “KPMG Certified
Auditors S.A.”
Greece, statutory
auditor of the
Group, amounted
to € 0.08 million.
Notes to the Consolidated Financial Statements
.
162
|
Page
31 December 2023 Consolidated Financial Statements
47.
Board of Directors
The Board of Directors (BoD) was
elected by the Annual
General Meeting
of the Shareholders (AGM) held on
23 July 2021
for a three-
year term of office that will expire on 23 July
2024, prolonged until the end of the period the AGM for the year
2024 will take place.
Further to that:
-
The
AGM
held
on
20
July
2023
approved
the
appointment
of
Mr.
Burkhard
Eckes
and
Mr.
John
Arthur
Hollows
as
new
independent non-executive members
of Eurobank Holdings BoD,
whose term of office will expire
concurrently with the term of
office of the other members of the BoD. On the same day the BoD
decided its constitution.
-
On 9 October 2023, Eurobank Holdings announced the acquisition of all of its
issued shares held by the HFSF, namely 52,080,673
common registered shares (note 37). On the
same day, the HFSF notified Eurobank Holdings that effective as
of 11 October 2023,
the HFSF will no longer
have the special rights
provided in law 3864/2010, including
the right to appoint a
representative in the
Board
of
Directors
and
the
Board
Committees.
Following
these
developments,
the
HFSF
representative
Mrs.
Efthymia
Deli,
member
of
the
Boards
of
Directors
and
of
the
Committees
of
the
Boards
of
Directors
of
Eurobank
Holdings
and
Eurobank,
submitted on 26 October 2023 her resignation from
the abovementioned positions, effective as of
7 November 2023.
-
Mr. Andreas Athanasopoulos, Deputy CEO and Executive Member of the
Boards of Directors of Eurobank Holdings
and Eurobank,
submitted on 31 October 2023 his resignation from
the abovementioned positions, effective as of
31 December 2023.
Following the above, the BoD is as follows:
G. Zanias
Chairman, Non-Executive Member
G. Chryssikos
Vice Chairman, Non-Executive Member
F. Karavias
Chief Executive Officer
S. Ioannou
Deputy Chief Executive Officer
K. Vassiliou
Deputy Chief Executive Officer
B.P.
Martin
Non-Executive Member
A. Gregoriadi
Non-Executive Independent Member
I. Rouvitha Panou
Non-Executive Independent Member
R. Kakar
Non-Executive Independent Member
J. Mirza
Non-Executive Independent Member
C. Basile
Non-Executive Independent Member
B. Eckes
Non-Executive Independent Member
J. A. Hollows
Non-Executive Independent Member
Athens, 28 March 2024
Georgios P.
Zanias
Fokion C. Karavias
Harris V. Kokologiannis
I.D. No ΑI - 414343
I.D. No ΑΙ - 677962
I.D. No AN - 582334
CHAIRMAN
OF THE BOARD OF DIRECTORS
CHIEF EXECUTIVE OFFICER
GENERAL MANAGER OF GROUP FINANCE
CHIEF FINANCIAL OFFICER
Notes to the Consolidated Financial Statements
.
163
|
Page
31 December 2023 Consolidated Financial Statements
APPENDIX – Disclosures under Law 4261/2014
Country by Country Reporting
Pursuant to article 81 of Law 4261/2014, which incorporated article 89 of Directive
2013/36/EC into the Greek legislation, the Group
provides the following information
for each country in which it has an establishment:
(i)
Names, nature of activities and geographical location.
(ii)
The operating income (turnover), the
profit/(loss) before tax, the tax
on profit/ (loss) and the current tax
on a consolidated
basis for each country; intercompany
transactions among countries are eliminated
through the line ‘Intra-Group
amounts’.
The amounts disclosed are prepared on the same basis as
the Group’s financial statements for the year ended 31 December
2023.
(iii)
The number of employees on a full time equivalent basis.
(iv)
The public subsidies received.
For the listing of the
Bank’s subsidiaries
at 31 December 2023, the
country of their incorporation
and the line of their business
refer
to note 23.1.
The information per country is set out below:
Year ended 31 December 2023
Operating
income
Profit/(loss)
before tax
Tax on profit/(loss)
Current
tax
Number of
employees at 31
December
€ million
€ million
€ million
€ million
Greece
2,124
1,044
(192)
(14)
6,320
Bulgaria
406
150
(18)
(17)
3,794
Romania
(5)
(8)
(1)
(1)
13
Cyprus
314
223
(39)
(39)
472
Serbia
(5)
(6)
(0)
(0)
6
Luxembourg⁽¹⁾
78
47
(11)
(12)
123
Netherlands
5
5
-
-
-
Other countries
(1)
(1)
(0)
(0)
-
Intra-Group amounts
(2)
Total from continuing
operations
2,914
1,454
(261)
(83)
10,728
Eurobank Direktna a.d. disposal group
100
(47)
17
(0)
Total from discontinued operations
100
(47)
17
(0)
Total
3,014
1,407
(244)
(83)
10,728
(1)
The operations of Eurobank Private Bank Luxembourg S.A.’s branch in London are included within Luxembourg.
Article 82 of Law 4261/2014
For 2023, the Group’s return on assets (RoA) was
1.39 %. RoA is calculated by dividing the net profit for the year ended 31 December
2023 by the Group’s average
total assets for the year.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2023
8 Othonos Str, Athens
105 57,
Greece
eurobankholdings.gr,
Tel.: (+30) 214 40 61000
General Commercial
Registry No: 000223001000
.
Index to the Financial Statements
..................................................................................................................................................
Page
Balance Sheet ........................................................................................................................................................................................ 1
Statement of Comprehensive Income ................................................................................................................................................... 2
Statement of Changes in Equity................................
............................................................................................................................. 3
Cash Flow Statement ............................................................................................................................................................................. 4
Notes to the Financial Statements
1.
General information ................................................................................................
.....................................................................
5
2.
Basis of preparation and material accounting
policies
................................................................................................................. 5
2.1
Basis of preparation ......................................................................................................................................................................
5
2.2
Material accounting policies .........................................................................................................................................................
9
3.
Critical accounting estimates and judgments
in applying accounting policies ...........................................................................
18
4.
Financial risk management and fair value ................................................................................................
..................................
19
4.1
Financial risk factors and risk management................................................................
................................................................
19
4.2
Fair value of financial assets and liabilities .................................................................................................................................
20
5.
Net interest income .................................................................................................................................................................... 21
6.
Other income/(expenses) ........................................................................................................................................................... 21
7.
Operating expenses .................................................................................................................................................................... 21
8.
Income tax .................................................................................................................................................................................. 21
9.
Investment securities
................................................................................................................................................................
..
22
10.
Shares in subsidiaries
................................................................................................................................................................
..
23
11.
Other assets
................................................................................................................................................................
................
23
12.
Debt securities in issue ............................................................................................................................................................... 23
13.
Other liabilities ................................................................................................................................
...........................................
23
14.
Share capital, share premium and treasury shares ................................
.................................................................................... 24
15.
Reserves and retained earnings/(losses) .................................................................................................................................... 26
16.
Share options
................................................................................................................................................................
..............
26
17.
Cash and cash equivalents ..........................................................................................................................................................
27
18.
Post balance sheet events ................................................................................................................................
..........................
27
19.
Related parties
................................................................................................................................................................
............
28
20.
External Auditors ................................................................................................................................................................
........
29
21.
Board of Directors
................................................................................................................................................................
.......
30
Balance Sheet
.
1
|
Page
31 December
2023 Financial
Statements
Notes on pages 5 to 30 form an integral part of these
financial statements.
Statement of Comprehensive Income
.
2
|
Page
31 December
2023 Financial
Statements
Notes on pages 5 to 30 form an integral part of these
financial statements
Statement of Changes in Equity
.
3
|
Page
31 December
2023 Financial
Statements
(1)
The changes in equity for the year ended 31 December 2023 do not sum to the totals provided due to rounding
Notes on pages 5 to 30 form an integral part of these
financial statements.
Cash Flow Statement
.
4
|
Page
31 December
2023 Financial
Statements
Notes on pages 5 to 30 form an integral part of these
financial statements.
Notes to the Financial Statements
.
5
|
Page
31 December
2023 Financial
Statements
1.
General information
Eurobank
Ergasias
Services and
Holdings S.A.
(the Company
or Eurobank
Holdings) is
the parent
company
of Eurobank
S.A. (the
Bank) which
along with
its subsidiaries
(Eurobank S.A.
Group), comprise
the major
part of
Eurobank Holdings
Group (the
Group)
(note 10).
The Company
operates
mainly in
Greece and
through the
Bank’s
subsidiaries in
Central
and Southeastern
Europe. Its
main activities
relate to
the strategic
planning of
the administration
of non-performing
loans and
the provision
of services
to its
subsidiaries and third parties, while
the Eurobank S.A. Group is
active in retail, corporate
and private banking, asset
management,
treasury,
capital markets
and other services. The
Company is incorporated
in Greece, with
its registered
office at Othonos
Street,
Athens 105 57 and its shares are listed on
the Athens Stock Exchange.
These
financial
statements
were
approved
by
the
Board
of
Directors
on
28
March
2024.
The
Independent
Auditor’s
Report
is
included in section B I of the Annual Financial Report.
2.
Basis of preparation and material accounting policies
The
financial
statements
of
the
Company
have
been
prepared
on
a
going
concern
basis
and
in
accordance
with
the
material
accounting policies set out below:
2.1
Basis of preparation
The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS)
issued by
the International
Accounting
Standards
Board
(IASB), as
endorsed by
the European
Union (EU),
and in
particular with
those standards
and interpretations,
issued and
effective
or issued
and early
adopted as
at the
time of
preparing these
financial
statements.
The financial statements are
prepared under the historical cost basis
except for the financial assets measured
at fair value through
other comprehensive income and financial assets and financial liabilities measured
at fair-value-through-profit
-or-loss.
The accounting policies for the preparation of the financial statements of the Company have been consistently applied to the years
2023 and 2022, after
taking into account
the amendments in IFRSs
as described in section
2.1.1 (a) “New and
amended standards
adopted by the Company
as of 1 January 2023”.
Where necessary,
comparative figures have
been adjusted to conform
to changes
in presentation in the current year.
The
preparation
of
financial
statements
in
accordance
with
IFRS
requires
the
use
of
estimates
and
judgements
that
affect
the
reported amounts of
assets and liabilities and
disclosure of contingent
liabilities at the date
of the financial statements,
as well as
the reported amounts of
revenues and expenses during the
reporting period. Although these
estimates are based on management's
best knowledge of current events and conditions,
actual results ultimately may differ from
those estimates.
The Company’s presentation currency is the Euro (€). Except
as indicated, financial information presented in Euro has
been rounded
to the nearest million. The figures presented
in the notes may not sum precisely to the totals provided
due to rounding.
Notes to the Financial Statements
.
6
|
Page
31 December
2023 Financial
Statements
Going concern considerations
The
Company’s
business
strategy
and
activities
are
linked
to
those
of
its
banking
subsidiary
Eurobank
S.A.
In
this
context,
the
directors monitor closely the
capital and liquidity
position of the
Bank as well
as the associated
risks, uncertainties and the
mitigating
factors affecting
its operations. The annual
financial statements have
been prepared on a
going concern basis, as the
Board of the
Directors considered as appropriate,
taking into consideration the following:
Despite the fragile international environment,
the economies of Greece, Bulgaria and Cyprus remained in expansionary territory
in
2023, overperforming
their European Union
(EU) peers. More
specifically,
according to
provisional data
by the Hellenic
Statistical
Authority (ELSTAT),
the Greek economy expanded by 2%
on an annual basis in 2023 (2022: 5.6%), driven by increases in
exports of
goods and services, household consumption, and fixed investment. According to its Winter Economic Forecast (February 2024), the
European Commission (EC) expects a
GDP growth rate of 2.3% in
2024 and 2025.
Amid strong base effects and easing
energy prices,
the inflation
rate,
as measured
by the
annual change
in the
Harmonized Index
of Consumer
Prices (HICP)
decelerated
to 4.2%
in
2023 from
9.3% in 2022
according to
ELSTAT,
with the EC
forecasting
further de-escalation
to 2.7%
in 2024, and
2% in 2025.
The
average quarterly unemployment rate
decreased to 11.1% from 12.4% in 2022, with the International Monetary Fund forecasts for
2024 and 2025 standing
at 9.2% and 8.5%
in 2024 and 2025 respectively,
according to its
January 2024 Art. IV Country
Report. On
the fiscal front, according to the 2024 State Budget, the general government primary balance is expected to post primary surpluses
of 1.1% and 2.1%
of GDP in 2023
and 2024 respectively,
up from 0.1%
of GDP in 2022.
The gross public
debt-to-GDP ratio,
having
declined significantly to
172.6% in 2022 due to
the strong economic
recovery and the
effect of the
high inflation on
nominal GDP,
is expected to decline further to 160.3% in 2023 and 152.3% in 2024.
According to EC’s winter economic forecasts (February 2024), the real GDP in
Bulgaria is expected to grow by 1.9% and
2.5% in 2024
and 2025, respectively (2023: 2%), while the HICP is forecast to decrease to
3.4% in 2024 and 2.9% in 2025 (2023: 8.6%). In Cyprus,
the real GDP growth is forecast
at 2.8% and 3% in 2024 and 2025, respectively (2023:
2.5%), while the HICP is estimated at 2.4%
in
2024 and 2.1% in 2025 (2023: 3.9%).
Growth in
Greece as well
as in Bulgaria
and Cyprus is
expected to receive
a significant
boost from EU-funded
investment projects
and reforms.
Greece shall receive
€ 36 billion (€
18.2 billion in grants
and € 17.7 billion
in loans) up to
2026 through the
Recovery
and Resilience Facility (RRF), Next Generation EU (NGEU)’s
largest instrument, out of which € 14.7 billion (€ 7.4 billion in grants and
€ 7.3 billion in loans) has
already been disbursed by
the EU. A further € 40
billion is due through EU’s
long-term budget (MFF), out
of
which
€20.9
billion
is
to
fund
the
National
Strategic
Reference
Frameworks
(ESPA
2021–2027).
Moreover,
following
the
September 2023
floods in
the Thessaly
region, Greece
could benefit
from EU
support of
up to
€ 2.65
billion, according
to the
EC
President.
On the monetary
policy front, the
Governing Council of
the ECB, in
line with its strong
commitment to its
price stability mandate,
proceeded with
ten rounds
of interest
rate hikes
in 2022 and
in 2023 (the
most recent
one in September
2023), raising
the three
key ECB interest rates by 450 basis points on aggregate. Furthermore, although net bond purchases under the temporary Pandemic
Emergency
Purchase
Programme
(PEPP)
ended
in
March
2022,
as
scheduled,
the
ECB
will
continue
to
reinvest
principal
from
maturing securities at least until the end of 2024,
including purchases of Greek Government Bonds (GGBs) over and above rollovers
of redemptions.
In 2023, the Greek government issued or
re-opened twelve bonds of various maturities (from 5
to 19 years) through the Public
Debt
Management Agency (PDMA), raising a total of €
11.45 billion from the international financial markets. In
February 2024, the PDMA
raised
an additional
€ 4.4
billion through
a new
10-year
bond issue
and the
reopening
of two
past
issues. Following
a series
of
sovereign rating
upgrades in the
second half of
2023, Greek government’s
long-term debt securities
were considered
investment
grade by four out of the five Eurosystem-approved External Credit Assessment Institutions (Fitch,
Scope, S&P: BBB-, stable outlook;
DBRS: BBB(low), stable outlook), and one notch below
investment grade by the fifth one, Moody’s (Βa1, stable outlook) as
of March
2024.
Regarding
the
outlook
for
the next
12 months,
the major
macroeconomic
risks
and
uncertainties
in
Greece
and
our
region
are
associated with:
(a) the open
war fronts
in Ukraine
and the Middle
East, their
implications regarding
regional and
global stability
and security,
and their repercussions on the
global and the
European economy,
including the disruption in global trade
caused by
the recent attacks on trading vessels in the Red Sea, (b) a potential prolongation
of the ongoing inflationary wave and its impact on
economic growth, employment, public
finances, household budgets,
firms’ production costs, external
trade and banks’ asset
quality,
as well as any potential social and/or political ramifications these may entail, (c) the timeline of the anticipated interest rate cuts by
Notes to the Financial Statements
.
7
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31 December
2023 Financial
Statements
the ECB and the Federal Reserve Bank, as persistence on high rates for longer may
keep exerting pressure on sovereign and private
borrowing costs and certain financial institutions’ balance sheets, but early rate cuts entail the risk of a rebound in inflation, (d) the
prospect of Greece’s
and Bulgaria’s
major trade partners,
primarily the euro
area, remaining stagnant
or even facing
a temporary
downturn,
(e) the
persistently
large current
account
deficits that
have
started
to become
once again
a structural
feature
of the
Greek economy,
(f) the absorption capacity of
the NGEU and MFF funds
and the attraction
of new investments
in the countries of
presence,
especially
in
Greece,
(g)
the
effective
and
timely
implementation
of
the
reform
agenda
required
to
meet
the
RRF
milestones and targets and to boost productivity,
competitiveness, and resilience and (h) the exacerbation of natural
disasters due
to the climate change and their effect on GDP,
employment, fiscal balance and sustainable development
in the long run.
Materialization of the above risks, would have potentially
adverse effects on the fiscal planning
of the Greek government, as it
could
decelerate the pace
of expected
growth and on
the liquidity,
asset quality,
solvency and profitability
of the Greek
banking sector.
In
this
context,
the
Group’s
Management
and
Board
are
continuously
monitoring
the
developments
on
the
macroeconomic,
financial and geopolitical fronts as well as the evolution of the
Group’s asset quality and liquidity KPIs and have increased their level
of
readiness,
so
as
to
accommodate
decisions,
initiatives
and policies
to
protect
the
Group’s
capital,
asset
quality
and
liquidity
standing
as
well
as
the
fulfilment,
to
the
maximum
possible
degree,
of
its
strategic
and
business
goals
in
accordance
with
the
business plan for 2024 - 2026.
For the year ended 31
December 2023, at the Group level,
the net profit attributable
to shareholders amounted
to € 1,140 million
(2022: € 1,347 million, restated). The
adjusted net profit, excluding
the € 111 million gain arising from the acquisition
of the 29.2%
shareholding of Hellenic Bank, accounted
for as an associate, €
141 million net loss from
discontinued operations, €
48 million net
loss on projects ‘Solar’ and ‘Leon' related to the NPE reduction plan, € 10 million provision (after tax) for the Bank’s
contribution to
the restoration initiatives after
natural disasters, and € 29 million restructuring costs (after
tax) amounted to € 1,256 million (2022:
€ 1,178 million, restated), of which € 468 million profit
was related to the international
operations (2022: € 211 million profit). The
net profit for
the Company,
carrying the impact of
the Bank’s
distribution of non-mandatory
reserves totalling €410
million to the
Company
(note 15),
equals to
€ 403
million (2022:
€ 8
million loss).
The Group’s
Total
Adequacy Ratio
(total CAD)
and Common
Equity Tier
1 (CET1) ratios
stood at
19.4% (31
December 2022: 19.2%)
and 16.9%
(31 December 2022:
16%) respectively
as at
31
December 2023.
The
Group
completed
successfully
the
2023 EU-wide
stress
test
(ST), which
was
coordinated
by the
European
Banking Authority (EBA)
in cooperation with
the ECB and
the European Systemic Risk
Board (ESRB). On
9 October 2023,
the Company
completed the
buy back of
all of its
issued shares held
by HFSF.
Accordingly,
the Company
and the Bank
are no
longer subject
to
Law 3864/2010 and to the special rights of HFSF provided
for in the law.
With regard to asset quality, as at 31 December 2023, the Group’s NPE stock stood at € 1.5 billion, following the classification of the
loan portfolio of project ‘Leon’
as held for sale, the
sale of Eurobank Direktna and
the write-offs during the year (31
December 2022:
€
2.3
billion),
driving
the
NPE
ratio
to
3.5%
(31
December
2022:
5.2%),
while
the
NPE
coverage
ratio
improved
to
86.4%
(31
December 2022: 74.6%).
In terms
of liquidity,
as at
31 December 2023,
following the
completion of
the sale of
Eurobank Direktna
a.d. disposal
group, the
Group deposits
stood at
€ 57.4 billion
(31 December 2022:
€ 57.2 billion),
while the
funding from
the ECB refinancing
operations
amounted to € 3.8 billion
(31 December 2022: €
8.8 billion). During the year, the Bank proceeded
with the issuance of
two preferred
senior notes of
€ 500 million
each. More recently, in January
2024, the Company
completed the issue
of a €
300 million Subordinated
Tier II debt instrument. The rise in high quality
liquid assets of the Group led the respective Liquidity Coverage ratio (LCR) to 178.6%
(31 December 2022: 173%).
Going concern assessment
The Board of Directors, acknowledging the geopolitical, macroeconomic and financial risks to the economy and the banking system
and taking
into account
the above
factors
relating to
(a) the
idiosyncratic
growth opportunities
in Greece
and the
region for
this
and the next years,
also underpinned by the mobilisation
of the already approved
EU funding mainly through
the RRF,
and (b) the
Group’s pre-provision
income generating capacity,
asset quality, capital adequacy and liquidity position, has been satisfied that the
financial statements of the Company
can be prepared on a going concern basis.
Notes to the Financial Statements
.
8
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31 December
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2.1.1
New and amended standards and interpretations
(a) New and amended standards adopted by the Company as
of 1 January 2023
The following amendments to standards
as issued by the IASB and endorsed by the EU, that are relevant
to the Company,
apply as
of 1 January 2023:
IAS 8, Amendments, Definition of Accounting Estimates
The amendments in IAS
8 “Accounting Policies, Changes in Accounting Estimates and
Errors” introduced the definition of accounting
estimates and include other
amendments to IAS 8 which
are intended to help
entities distinguish changes in
accounting estimates
from changes in accounting policies.
The amendments
clarify how
accounting policies
and accounting
estimates relate
to each
other by
(i) explaining
that accounting
estimates are developed if the application of accounting policies requires items in the financial statements to be measured in a
way
that involves a measurement uncertainty and (ii) replacing
the definition of a change in accounting estimates with the definition of
accounting estimates,
where accounting
estimates are
defined as
“monetary amounts
in financial statements
that are
subject to
measurement uncertainty”.
In addition, the amendments
clarify that selecting an
estimation or valuation
technique and choosing
the inputs to be used constitutes development
of an accounting estimate and that
the effects of a change in an input or technique
used to
develop
an accounting
estimate
are
changes in
accounting
estimates,
if they
do not
result
from
the correction
of prior
period errors.
The adoption of the amendments had no impact on the financial statements.
Amendments to IAS 1 Presentation of Financial Statements
and IFRS Practice Statement 2: Disclosure
of Accounting policies
IASB issued amendments to IAS 1 “Presentation
of Financial Statements” that require
entities to disclose their material accounting
policies rather than their significant accounting policies.
According
to IASB,
accounting policy
information
is material
if,
when considered
together
with other
information
included in
an
entity’s financial statements, it can
reasonably be expected to
influence decisions that
the primary users
of general purpose financial
statements make on the
basis of those financial statements.
Furthermore, the
amendments clarify how
an entity can
identify material
accounting policy
information and
provide examples
of
when accounting policy information is likely to be material. The amendments
to IAS 1 also clarify that immaterial accounting policy
information does not need to be disclosed. However,
if it is disclosed, it should not obscure material accounting policy information.
To support the IAS 1
amendments, the Board has
also developed guidance
and examples to explain
and demonstrate the application
of the ”four-step
materiality process”,
as described in IFRS Practice
Statement 2 “Making
Materiality Judgements”,”
to accounting
policy disclosures.
The adoption of the amendments
had no impact on the financial
statements. The
Company took into
account the amendments in
disclosing its material accounting policies (note 2.2).
IAS 12, Amendments, Deferred Tax
related to Assets and Liabilities arising from a Single Transaction
The amendments clarify
that the exemption
on initial recognition
set out in IAS
12 ‘Income Taxes’
does not apply
for transactions
such as
leases and
decommissioning obligations
that, on
initial recognition,
give rise
to equal
amounts of
taxable and
deductible
temporary
differences.
Accordingly,
for
such
transactions
an
entity
is
required
to
recognise
the
related
deferred
tax
asset
and
liability, with the recognition
of any deferred tax
asset being subject to the recoverability
criteria in IAS 12. The amendments apply
to transactions that occur on or after the beginning of the earliest
comparative period presented.
The adoption of the amendments had no impact on the financial statements.
IAS 12, Amendment, International Tax
Reform – Pillar Two Model Rules
The amendments introduce a mandatory temporary exception (
relief
) from the recognition and disclosure of deferred taxes arising
from the
implementation of
the Organisation
for Economic
Co-operation and
Development’s (OECD)
Pillar Two
model rules (“the
Pillar Two Income taxes”)
that are applicable as of 1 January 2024.
Notes to the Financial Statements
.
9
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31 December
2023 Financial
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Additionally,
the amendments
require
an entity
to disclose
that it
has applied
the above
exception
related
to Pillar
Two
income
taxes, while
in the periods in
which the legislation
is (substantively) enacted
but not yet effective,
an entity is required
to disclose
of known
or reasonably
estimable information
that helps
users of
financial statements
understand
the entity’s
exposure
arising
from Pillar Two
income taxes. Subsequently,
in the periods when
the legislation is
effective it
is required to
separately disclose
its
current tax expense (income) related
to Pillar Two income taxes.
The Company
has adopted
the amendments
and the
temporary exception
retrospectively,
upon their
endorsement by
the EU
in
November 2023.
The adoption of the amendments
had no impact on the financial statements.
Further information in respect of the Company’s
exposure to Pillar Two
income taxes is provided in note 8.
(b) New and amended standards not yet adopted by the Company
A number of amendments to existing standards are effective
after 2023, as they have not yet been endorsed by the EU or have not
been early applied by the Company.
Those that may be relevant to the
Company are set out below:
IAS 1, Amendments, Classification of Liabilities as Current or Non-Current
(effective 1 January 2024)
The
amendments,
published
in January
2020, introduce
a definition
of
settlement
of
a liability,
while
they
make
clear
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.
In addition, it is clarified that
the assessment for liabilities
classification made at the
end of the reporting
period is not affected
by
the expectations about whether an entity
will exercise its right to
defer settlement of a liability.
The Board also clarified that when
classifying liabilities as current or non-current, an entity can
ignore only those conversion options that
are classified as equity.
In October 2022, the IASB issued Non-current Liabilities with
Covenants (Amendments to IAS 1) with respect to
liabilities for which
an entity’s
right to
defer settlement
for at
least 12
months is
subject to
the entity
complying with
conditions after
the reporting
period. The amendments specify that covenants to be complied with after the
reporting date do not affect the classification of debt
as current or
non-current at the
reporting date.
Instead, the amendments
require a company
to disclose information
about these
covenants in the notes to the financial statements.
The adoption of the amendments is not expected to impact the financial statements.
2.2
Material accounting policies
2.2.1
Investments in subsidiaries
Investments
in subsidiaries, including
investments acquired
through common
control transactions,
are accounted
at cost
less any
impairment losses. Cost is
the fair value of
the consideration given
being the amount of
cash or shares issued,
or if that cannot be
determined reliably,
the consideration received together
with any directly attributable costs.
As an exception to the above measurement basis, when the Company transfers an existing Group entity or business sector to a
new
subsidiary
formed
for
this
purpose
in
a
share
for
share
exchange
that
does
not
have
commercial
substance,
the
Company’s
investment in that newly formed
subsidiary is recognized at the carrying amount of
the transferred entity.
Dividend
income
from
investments
in
subsidiaries
is recognised
in
the
income
statement
when
the
right
to
receive
payment
is
established, that is when the dividend distribution is approved
by the appropriate body of the entity.
A listing of the Company’s subsidiaries is set out
in note 10.
2.2.2 Foreign currencies
Foreign currency
transactions
are translated
into the
functional currency
using the
exchange
rates
prevailing
at the
dates of
the
transactions.
Foreign exchange
gains and
losses resulting
from the
settlement of
such transactions
are recognized
in the
income
statement.
Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency
at the exchange rates
prevailing at each reporting date and
exchange differences are
recognized in the income statement.
Non-monetary assets and liabilities are
translated into the functional currency at the
exchange rates prevailing at initial recognition.
Notes to the Financial Statements
.
10
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31 December
2023 Financial
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2.2.3 Interest income and expense
Interest
income and
expense are
recognized
in the
income statement
for all
interest
bearing financial
instruments on
an accrual
basis, using the
effective interest
rate (EIR)
method. The effective
interest rate
is the rate
that exactly
discounts estimated
future
cash payments or receipts through the expected life of the financial instrument
or, when appropriate,
a shorter period to the gross
carrying
amount
of
the
financial
asset
or
to
the
amortized
cost
of
a
financial
liability.
When
calculating
the
EIR
for
financial
instruments, the
Company estimates
future cash
flows considering
all contractual
terms of
the financial
instrument but
does not
consider expected credit losses.
The EIR calculation includes fees and basis points paid or received that are an integral part of
the effective interest rate, transaction
costs, and other premiums or discounts. Transaction costs include incremental costs that are directly attributable to the acquisition
or issue of a financial asset or liability.
The amortized
cost of
a financial
asset or
liability is
the amount
at which
it is
measured upon
initial recognition
minus principal
repayments, plus or minus cumulative
amortization using the EIR (as described above) and for
financial assets it is adjusted for the
expected
credit
loss
allowance.
The
gross
carrying
amount
of
a
financial
asset
is
its
amortized
cost
before
adjusting
for
ECL
allowance.
The Company
calculates interest
income and
expense by
applying the EIR
to the
gross carrying
amount of
non-impaired financial
assets (exposures in Stage 1 and 2) and to the
amortized cost of financial liabilities respectively.
For
financial
assets
that
have
become
credit-impaired
subsequent
to
initial
recognition
(exposures
in
Stage
3),
the
Company
calculates
interest
income by
applying the
effective
interest
rate
to the
amortized
cost
of the
financial asset
(i.e. gross
carrying
amount adjusted
for the expected
credit loss allowance).
If the asset is
no longer credit
-impaired, then the
EIR is applied again
to
the gross carrying amount.
Interest income and expense are presented separately
in the income statement for all interest bearing financial instruments within
net interest income.
2.2.4 Impairment of subsidiaries
The Company assesses at
each reporting date whether
there is any indication
that its investments
in subsidiaries may be impaired
by considering
both external
and internal
sources of
information,
such as
the net
assets compared
to the
carrying value
of each
subsidiary,
as well
as forward
looking developments
and/or economy
sector in
which they
operate.
In addition,
the collection
of
dividends from subsidiaries is also a potential
trigger that may indicate that
the respective investments
are impaired. In particular,
when
dividend
is
received
from
the
Company’s
subsidiaries,
it
is
also
examined
whether
that
dividend
exceeds
the
total
comprehensive income of the
subsidiary in the period the dividend is declared,
to determine whether an indication
of impairment
exists.
If any
indication of
impairment exists
at each
reporting date,
the Company
estimates the
recoverable
amount of
the investment,
being the higher of its fair value less costs to sell and
its value in use.
An impairment loss is recognized in profit or loss when the
recoverable amount of the investment
is less than its carrying amount.
Investments
in
subsidiaries
for
which
an
impairment
loss
was
recognized
in
prior
reporting
periods,
are
reviewed
for
possible
reversal of such impairment at each reporting
date.
2.2.5 Financial assets
Financial assets – Classification and measurement
The Company classifies
its financial assets based
on the business model
for managing those assets
and their contractual
cash flow
characteristics.
Accordingly,
financial assets
are classified
into one
of the following
measurement categories:
amortized cost
(AC)
and fair value through other comprehensive
income (FVOCI).
Financial Assets measured at Amortized Cost (‘AC’)
The Company classifies and measures a financial asset at AC only if both of the following
conditions are met:
Notes to the Financial Statements
.
11
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31 December
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(a) The financial asset is held within
a business model whose objective is to
collect contractual cash flows
(hold-to-collect business
model) and,
(b) The contractual
terms of the financial
asset give rise on
specified dates to
cash flows that
are solely payments
of principal and
interest on the principal amount outstanding
(SPPI).
These financial assets
are recognized initially at
fair value plus
or minus direct
and incremental transaction costs
that are attributable
to the acquisition of these assets, and are subsequently
measured at amortized cost, using the effective
interest rate
(EIR) method
(as described in 2.2.3 above).
Interest income, realized
gains and losses on derecognition,
and changes in expected credit
losses from assets classified at
AC, are
included in the income statement.
Financial Assets measured at Fair Value through Other
Comprehensive Income (‘FVOCI’)
The Company classifies and measures a financial asset at FVOCI only if both of the
following conditions are met:
(a) The
financial asset
is held
within a
business model
whose objective
is achieved
by both
collecting contractual
cash flows
and
selling financial assets (hold-to-collect-and-sell business model) and,
(b) The contractual terms of the financial asset give rise on specified dates
to cash flows that are SPPI.
Financial
assets
that
meet these
criteria
are
debt
instruments
and are
measured
initially
at
fair
value,
plus or
minus direct
and
incremental transaction costs that
are attributable to the acquisition of these assets.
Subsequent to
initial recognition,
FVOCI debt
instruments are
re-measured at
fair value
through OCI,
except for
interest
income,
related
foreign
exchange
gains
or losses
and expected
credit losses,
which are
recognized
in the
income statement.
Cumulative
gains
and
losses
previously
recognized
in
OCI
are
transferred
from
OCI
to
the
income
statement
when
the
debt
instrument
is
derecognised.
Business model and contractual characteristics assessment
The business model assessment determines how the Company
manages a group of assets to generate
cash flows. That is, whether
the Company's
objective is solely
to collect contractual
cash flows from
the asset, to
realize cash
flows from the
sale of assets,
or
both to
collect contractual
cash flows
and cash
flows from
the sale of
assets. In addition,
the business
model is determined
after
aggregating the
financial assets into
groups (business lines)
which are managed
similarly rather
than at an
individual instrument’s
level.
The business model
is determined by
the Company’s key management personnel consistently with
the operating model, considering
how
financial
assets
are
managed
in
order
to
generate
cash
flows,
the
objectives
and
how
performance
of
each
portfolio
is
monitored and reported and any available
information on past sales and on future sales’ strategy,
where applicable.
Accordingly, in making the above assessment, the Company will consider a number of
factors including the risks associated with the
performance of the business model and how those risks are evaluated and managed, the related personnel compensation,
and the
frequency, volume
and reasons of past sales, as well as expectations about future
sales activity.
Types of business models
The Company’s
business models
fall into
two categories,
which are
indicative of
the key
strategies used
to generate
returns. The
hold-to-collect (HTC) business model
has the objective
to hold the
financial assets in
order to collect
contractual cash flows. Financial
assets classified
within this
business model
include investment
securities and
due from
banks, which
are measured
at amortized
cost. Sales within this model are monitored and may be
performed for reasons which are not inconsistent with this business model.
More specifically, sales of financial assets
due to credit deterioration, as well
as sales close
to the maturity are considered consistent
with
the
objective
of
hold-to-collect
contractual
cash
flows
regardless
of
value
and
frequency.
Sales
for
other
reasons
may
be
consistent with the HTC model such as liquidity needs in any stress case scenario or sales made to manage high concentration level
of credit risk.
Such sales are
monitored and
assessed depending on
frequency and value
to conclude whether
they are
consistent
with the HTC model.
The hold-to-collect-and-sell
business model
(HTC&S) has
the objective
both to
collect contractual
cash flows
and sell
the assets.
Activities such
as liquidity management,
interest yield
and duration
are consistent
with this business
model, while sales
of assets
Notes to the Financial Statements
.
12
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31 December
2023 Financial
Statements
are
integral
to
achieving
the
objectives
of
this
business
model.
Financial
assets
classified
within
this
business
model
include
investment securities which are measured at
FVOCI, subject to meeting the SPPI assessment criteria.
Cash flow characteristics assessment
For
a financial
asset to
be measured
at
AC,
its contractual
terms must
give rise
on specified
dates
to
cash flows
that
are solely
payments of principal and interest (SPPI) on
the principal amount outstanding.
For
the
purpose
of
this
assessment
principal
is
defined
as
the
fair
value
of
the
asset
at
initial
recognition
and
interest
as
the
consideration for the time value of money,
credit risk, other basic lending risks and a profit margin.
More specifically,
at the initial recognition
of a financial asset, an
assessment is performed of
whether the financial asset
contains
a contractual term
that could change the amount
or timing of contractual
cash flows in a way
that it would not be
consistent with
the
above
condition.
The
Company
considers
the
existence
of
various
features,
including
among
others,
prepayment
terms,
deferred
interest-free
payments, extension
and equity
conversion
options .
Where the
contractual
terms introduce
exposure to
risk or volatility
that are inconsistent
with a basic lending
arrangement, the related
financial asset is considered
to have
failed the
SPPI assessment and will be measured at FVTPL.
In
addition,
for
the
purposes
of
the
SPPI
assessment,
if
a
contractual
feature
could
have
an
effect
that
is
de-minimis
on
the
contractual cash flows of the financial asset, it
does not affect its classification. Moreover, a contractual feature is considered as not
genuine by the Company,
if it affects the
instrument’s contractual
cash flows only on the
occurrence of an event
that is extremely
rare, highly abnormal and very unlikely to
occur.
In such a case, it does not affect the instrument’s
classification.
Derecognition of financial assets
The Company
derecognizes
a financial
asset when
its contractual
cash flows
expire, or
the rights
to receive
those cash
flows are
transferred in an outright sale
in which substantially all
risks and rewards of
ownership have been transferred. In addition,
a financial
asset is derecognized even
if rights to receive cash
flows are retained
but at the same time the Company
assumes an obligation to
pay the received cash
flows without a material
delay (pass through agreement)
or when substantially all
the risks and rewards
are
neither transferred
nor retained
but the
Company has
transferred
control
of the
asset. Control
is transferred
if,
and only
if,
the
transferee
has
the
practical
ability
to
sell
the
asset
in
its
entirety
to
unrelated
third
party
and
is
able
to
exercise
that
ability
unilaterally and without imposing additional restrictions
on the transfer.
On derecognition
of
a financial
asset,
the difference
between
the
carrying
amount
of
the asset
and the
consideration
received
(including any new asset obtained less any new
liability assumed) is recognized in income statement.
Modification of financial assets that may result in derecognition
In addition, derecognition of financial
asset arises when its contractual
cash flows are modified and
the modification is considered
substantial
enough so
that the
original asset
is derecognized
and a
new one
is recognised.
Substantial
modifications resulting
in
derecognition may
include among others
change in borrower,
change in the asset’s
denomination currency,
debt consolidation of
unsecured exposure into a single new secured asset. The Company records the modified asset
as a ‘new’ financial asset at
fair value
plus
any
eligible
transaction
costs
and
the
difference
with
the
carrying
amount
of
the
existing
one
is
recorded
in
the
income
statement as derecognition
gain or loss.
2.2.6 Financial liabilities
Financial liabilities - Classification and measurement
The Company classifies its financial liabilities at amortized cost
category.
These
financial
liabilities
are
recognized
initially
at
fair
value
minus
transaction
costs
that
are
attributable
to
the
issue of
these
liabilities, and
are subsequently
measured at
amortized cost,
using the
effective interest
rate (EIR)
method (as
described in
2.2.3
above).
Derecognition of financial liabilities
A
financial
liability is
derecognized
when
the obligation
under
the liability
is discharged,
cancelled or
expires.
When
an existing
financial liability of the Company is replaced by another
from the same counterparty on substantially
different terms, or the
terms
Notes to the Financial Statements
.
13
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31 December
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Statements
of an existing
liability are substantially
modified, such an
exchange or
modification is treated
as an extinguishment
of the original
liability and the recognition of a new liability and any difference
arising is recognized in the income statement.
The Company
considers the
terms to
be substantially
different,
if the
discounted present
value of
the cash
flows under
the new
terms,
including any
fees
paid net
of any
fees
received
and discounted
using the
original effective
interest
rate,
is at
least 10%
different from the discounted
present value of the remaining cash flows
of the original financial liability.
If an exchange
of debt instruments
or modification of
terms is accounted
for as an
extinguishment, any
costs or fees
incurred are
recognized
as
part
of
the
gain
or
loss
on
the
extinguishment.
If
the
exchange
or
modification
is
not
accounted
for
as
an
extinguishment, any costs or fees incurred adjust the carrying amount
of the liability and are amortized over the remaining term of
the modified liability.
Similarly,
when the
Company
repurchases
any
debt instruments
issued by
the Company,
it accounts
for
such transactions
as an
extinguishment of debt.
2.2.7 Fair value measurement of financial instruments
Fair
value of
financial instruments
is the
price that
would be
received to
sell an
asset or
paid to
transfer
a liability
in an
orderly
transaction
between
market
participants
at
the
measurement
date
under
current
market
conditions
in
the
principal
or,
in
its
absence, the most advantageous
market to which the Company
has access at that date. The fair
value of a liability reflects its
non-
performance risk.
When
available,
the
Company
measures
the
fair
value
of
an
instrument
using
the
quoted
price
in
an
active
market
for
that
instrument. A market
is regarded as
active if transactions
for the asset
or liability take
place with sufficient
frequency and volume
to provide
pricing information
on an ongoing
basis. If there
is no quoted
price in an
active market,
then the Company
uses other
valuation techniques that maximize the use of relevant observable inputs and minimize the use of
unobservable inputs. The chosen
valuation technique incorporates
all of the factors that market
participants would take into
account in pricing a transaction.
The Company has elected to use mid-market pricing
as a practical expedient for fair
value measurements within a bid-ask spread.
The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price, i.e. the fair value
of the
consideration
given or
received
unless the
Company
determines
that
the fair
value
at
initial recognition
differs
from the
transaction price.
In this case,
if the fair
value is
evidenced by
a quoted
price in an
active market
for an
identical asset
or liability
(i.e.
Level
1
input)
or
based
on
a
valuation
technique
that
uses
only
data
from
observable
markets,
a
day
one
gain
or
loss
is
recognized
in
the
income
statement.
On
the
other
hand,
if
the
fair
value
is
evidenced
by
a
valuation
technique
that
uses
unobservable inputs,
the financial instrument
is initially measured
at fair
value, adjusted
to defer
the difference
between the fair
value at initial
recognition and the
transaction price (day
one gain or
loss). Subsequently the deferred
gain or loss
is amortized on
an appropriate
basis over the
life of the
instrument or released
earlier if a quoted
price in an
active market
or observable market
data become available or the financial instrument
is closed out.
All assets and liabilities for which fair value is
measured or disclosed in the financial
statements are categorized within the fair value
hierarchy based on the lowest level
input that is significant to the fair value
measurement as a whole.
For assets and liabilities that
are measured at fair
value on a recurring basis,
the Company recognizes transfers
into and out of the
fair value hierarchy
levels at the beginning of the quarter in which a financial instrument's transfer
was effected.
2.2.8 Impairment of financial assets
The Company recognizes allowance for
expected credit losses (ECL) that
reflect changes in credit quality since initial recognition
to
financial assets
that are
measured at
AC. ECL
are a
probability-weighted
average
estimate
of credit
losses that
reflects the
time
value of money.
Upon initial recognition
of the financial instruments,
the Company records
a loss allowance equal
to 12-month ECL,
being the ECL
that result from default events
that are possible within the next twelve months.
Subsequently, for
those financial instruments
that
have
experienced
a
significant
increase
in
credit
risk
(SICR)
since
initial
recognition,
a
loss
allowance
equal
to
lifetime
ECL
is
recognized, arising from default
events that are possible over the expected life
of the instrument.
Accordingly,
ECL are recognized using a three-stage
approach based on the extent of credit deterioration
since origination:
Notes to the Financial Statements
.
14
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31 December
2023 Financial
Statements
•
Stage 1 – When there is no significant increase in credit risk since initial recognition of a financial instrument, an amount equal
to 12-month
ECL is recorded.
The 12 –
month ECL
represent a
portion of lifetime
losses, that
result from
default events
that
are possible within the next 12 months after the reporting date and is equal to the expected cash shortfalls
over the life of the
instrument or group of
instruments, due to loss
events probable within the
next 12 months. Not
credit-impaired financial assets
that are either newly
originated or purchased, as well
as assets recognized following
a substantial modification
accounted for
as a derecognition, are classified initially in Stage 1.
•
Stage 2 – When a financial instrument experiences a SICR subsequent to
origination but is not considered to be in default, it is
included
in
Stage
2. Lifetime
ECL
represent
the expected
credit
losses
that
result
from
all possible
default
events
over
the
expected life of the financial instrument.
•
Stage 3 – Financial instruments that are considered to be in default are included in this stage. Similar to Stage 2, the allowance
for credit losses captures the lifetime expected
credit losses.
A financial asset is credit-impaired when one or more
events that have a detrimental
impact on the estimated future cash flows
of
that exposure have occurred:
•
The borrower faces a significant difficulty
in meeting his financial obligations.
•
There has been a breach of contract,
such as a default or past due event.
•
The Company,
for economic or contractual
reasons relating to the borrower’s
financial difficulty, has
granted to the borrower
a concession(s) that the Company would not otherwise consider.
•
There is a probability that the borrower
will enter bankruptcy or other financial re-organization.
The Company
determines
the risk
of default
using an
internal credit
rating
scale. In
particular,
the Company
considers
financial
assets as credit impaired if the internal rating
of the counterparty corresponds to a rating
equivalent to "C" (Moody's rating
scale).
Significant increase in credit risk (SICR) and staging allocation
Determining
whether
a
loss
allowance
should
be
based
on
12-month
expected
credit
losses
or
lifetime
expected
credit
losses
depends on whether there has been a significant increase in credit
risk (SICR) of the financial assets since initial recognition.
At
each reporting
date,
the Company
performs
an assessment
as to
whether
the risk
of a
default
occurring over
the remaining
expected lifetime
of the
exposure has
increased significantly
from the
expected risk
of a default
estimated at
origination for
that
point in time.
Specifically, the assessment
of SICR is performed on an individual basis based on the number of notches downgrade
in the internal
credit rating scale since the origination date.
Transfers from Stage
2 to Stage 1
A financial asset, which is classified to Stage 2 due to SICR, is reclassified to Stage 1, as long as it does not meet anymore
any of the
Stage 2 Criteria.
Transfers from Stage
3 to Stage 2
A financial asset
is transferred
from Stage
3 to Stage
2, when the
criteria based on
which the financial
asset was
characterized as
credit impaired, are no longer valid.
Measurement of Expected Credit Losses/ECL Key Inputs
The ECL calculations
are based on
the term structures
of the probability
of default (PD),
the loss
given default (LGD) and
the exposure
at
default
(EAD). Generally,
these parameters
are
based on
observed
point-in-time and
historical
data,
derived
by international
rating agencies.
The PDs are obtained by an
international rating agency using risk methodologies that
maximize the use of objective non-judgmental
variables and market data. The Company
assigns internal credit ratings to each counterparty
based on these PDs.
The Exposure at default
(EAD) is an estimate of
the exposure at a future
default date, taking
into account expected
changes in the
exposure after the reporting date.
The LGD is typically
based on historical
data derived mainly
from rating
agencies’ studies but may
also be determined
considering
the existing and expected liabilities structure
of the obligor and macroeconomic environment.
Notes to the Financial Statements
.
15
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31 December
2023 Financial
Statements
Presentation of impairment allowance
For financial assets measured at amortized cost, impairment allowance is
recognized as a loss allowance reducing the gross
carrying
amount of the financial assets in the balance sheet. The respective ECL
is recognised within impairment losses.
Write-off of financial assets
Where the Company has no reasonable expectations of recovering
a financial asset either in its entirety or a portion of it, the gross
carrying amount of that
instrument is reduced directly,
partially or in full, against
the impairment allowance. The
amount written-
off is considered as derecognized. Subsequent recoveries of amounts
previously written off decrease the amount
of the impairment
losses in the income statement.
2.2.9 Income tax
Income tax consists of current and
deferred tax.
(i) Current income tax
Income tax payable
on profits, based
on the applicable
tax law and
the tax rate
enacted at the reporting
date, is recognized
as an
expense in the period in which profits arise.
(ii) Deferred tax
Deferred
tax is
provided
in full,
using the
liability method,
on temporary
differences
arising between
the tax
base of
assets and
liabilities and
their carrying
amounts in
the financial
statements.
Deferred
tax assets
and liabilities are
measured at
the tax
rates
that are expected
to apply to the
period when the asset
is realized or
the liability is settled,
based on tax
rates (and tax
laws) that
have been enacted or substantively enacted
by the balance sheet date.
Deferred
tax
assets are
recognized
where
it is
probable
that
future taxable
profit
will be
available against
which the
temporary
differences can be utilized. The carrying amount of deferred tax assets is reviewed at each
reporting date 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. Any such
reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available. The Company recognises
a previously
unrecognised
deferred
tax asset
to the
extent
that it
has become
probable
that future
taxable
profit will
allow the
deferred tax asset to be recovered.
The deferred tax asset on income tax losses
carried forward is recognized as an
asset when it is
probable that future taxable profits
will be available against which these losses can be utilized.
The
Company
has
applied the
mandatory
temporary
exception
(relief) to
the
requirement
of IAS
12 and
does
not recognise
or
disclose information about deferred
taxes arising from the Pillar Two
Income taxes.
(iii) Uncertain tax positions
The Company determines and assesses all material tax positions taken,
including all, if any, significant uncertain positions,
in all tax
years that are still subject
to assessment (or when
the litigation is in
progress) by relevant tax authorities. In
evaluating tax positions,
the
Company
examines
all
supporting
evidence
(Ministry
of
Finance
circulars,
individual
rulings,
case
law,
past
administrative
practices, ad hoc tax/legal
opinions etc.) to the
extent they are applicable
to the facts and
circumstances of the particular
Company’s
case/ transaction.
In addition, judgments concerning the recognition of a provision against the possibility of
losing some of the tax positions are highly
dependent on advice received from internal/
external legal counselors. For
uncertain tax positions with a high level of uncertainty,
the Company recognizes, on a
transaction by transaction basis,
or together as a
group, depending on
which approach better predicts
the
resolution
of
the
uncertainty
using
an
expected
value
(probability-weighted
average)
approach:
(a)
a
provision
against
tax
receivable which has been booked
for the amount of income tax
already paid but further pursued
in courts or (b) a liability for
the
amount which is expected to be paid to the tax authorities. The Company presents in its balance sheet all uncertain tax balances as
current or deferred tax
assets or liabilities.
The Company as a general rule has opted to obtain
an ‘Annual Tax
Certificate’,
which is issued after a tax audit is performed by the
same statutory
auditor or audit firm
that audits the
annual financial statements.
Further information
in respect of the
Annual Tax
Certificate and the related tax
legislation, is provided in note 8.
Notes to the Financial Statements
.
16
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31 December
2023 Financial
Statements
2.2.10 Employee benefits
(i) Short term benefits
Short term employee benefits are those
expected to be settled wholly before
twelve months after the end of the annual reporting
period in which the employees render the related
services and are expensed as these services are provided.
(ii) Pension obligations
The Company provides
a number of defined
contribution pension
plans where annual
contributions are invested
and allocated to
specific asset categories. Eligible
employees are entitled to the
overall performance of the investment. The
Company's contributions
are recognized as employee benefit
expense in the year in which they are paid.
(iii) Standard legal staff retirement indemnity obligations (SLSRI) and termination
benefits
The
Company
operates
unfunded
defined
benefit
plans,
under
the
regulatory
framework.
In
accordance
with
the
local
labor
legislation,
the
Company
provides
for
staff
retirement
indemnity
obligation
for
employees
which
are
entitled
to
a
lump
sum
payment based
a) on the
number of years
of service, as
of the date
when employee
service first
leads to benefits
under the plan
until the date when further employee
service will lead to no material amount
of further benefits, and b) the level
of remuneration
at the date of retirement, if they remain in the employment of the Company until normal retirement age. In addition, the Company
provides termination benefits mainly in respect of the Voluntary Exit Schemes (VES), which have been implemented through either
lump-sum
payments
or
long-term
leaves
during
which
the
employees
will
be
receiving
a
percentage
of
a
monthly
salary,
or
a
combination
thereof.
Provision
has
been
made
for
the
actuarial
value
of
the
lump
sum
payable
on
retirement
(SLSRI)
and
termination benefits
using the projected
unit credit method.
Under this method
the cost of
providing retirement
indemnities and
termination benefits
is charged
to the income
statement
so as to
spread the
cost over
the period of
service of the
employees, in
accordance with the respective actuarial valuations
which are performed every year.
The SLSRI and termination benefits obligation is calculated as the
present value of the estimated future cash outflows using interest
rates of
high quality corporate
bonds. The currency
and term to
maturity of the
bonds used are
consistent with
the currency
and
estimated term
of the retirement
benefit obligations.
Actuarial gains
and losses that
arise in calculating
the Company’s
SLSRI and
termination benefits obligations
are recognized
directly in other comprehensive
income in the period
in which they occur
and are
not reclassified to the income statement
in subsequent periods.
Interest cost
on the staff
retirement indemnity
and termination
benefits obligations,
as well as
service cost,
consisting of
current
service cost, past service cost and gains or losses on settlement
are recognized in the income statement.
Termination benefits are payable when employment is
terminated by the Company
before the normal retirement date,
or whenever
an employee accepts voluntary redundancy
in exchange for these benefits
(including those in the context of
the VES implemented
by the Company). The Company recognizes termination benefits at the earlier of the following dates: (a) when the Company can no
longer
withdraw
the
offer
of
those
benefits;
and
(b)
when
the
Company
recognizes
costs
for
a
restructuring
that
involves
the
payment of
termination benefits.
Any reversals
of the SLRSI
obligation arising
from employees
that are
included in the
long-term
leaves
scheme
are
accounted
for
as
a
curtailment
gain
recognized
in
the
income
statement.
In
the
case
of
an
offer
made
to
encourage voluntary
redundancy,
the termination
benefits are measured
based on the
number of employees
expected to
accept
the offer. Termination benefits falling due more than 12
months after the
end of the
reporting period are
discounted to their present
value.
(iv) Performance-based cash payments
The Company's Management awards high performing employees with bonuses in cash, from time to time, on a discretionary basis.
Cash
payments
requiring
only
Management
approval
are
recognized
as
employee
benefit
expenses
on
an
accrual
basis.
Cash
payments requiring General
Meeting approval as distribution of
profits to staff
are recognized as
employee benefit expense in the
accounting period that they are approved
by the Company’s shareholders.
(v) Share-based payments
The Company’s Management awards
employees with bonuses in the form of shares and share options on a discretionary basis and
after taking
into
account the
current
legal framework.
Non-performance
related
shares vest
in the
period granted.
Share based
Notes to the Financial Statements
.
17
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31 December
2023 Financial
Statements
payments
that
are
contingent
upon
the
achievement
of
a
performance
and
service
condition,
vest
only
if
both
conditions
are
satisfied.
The fair
value of
the share
options granted
is recognized
as an
employee benefit
expense over
the vesting
period,
with an
equal
credit in equity
i.e. no impact on
the Company’s
equity. The
amount ultimately recognised
as an expense
is based on the
number
of awards that meet the related
service and non-market performance conditions at the
vesting date.
The fair value of the share
options at grant date
is determined by using an adjusted
option pricing model which takes
into account
the exercise
price, the
exercise
dates,
the term
of the
option, the
share
price at
grant
date
and expected
price volatility
of the
underlying share, the
expected dividend yield
and the risk-free
interest rate
for the term
of the options.
The expected volatility
is
measured at the grant date of the options
and is based on the historical volatility of the share price.
For share-based payment awards with non-vesting conditions, the fair
value of the share-based payment at grant date also reflects
such conditions and there is no true-up for differences
between expected and actual outcomes.
When the options are exercised and new shares are issued, the proceeds received net
of any directly attributable transaction costs
are credited to share capital
(par value) and share premium.
Share
options
granted
by the
Company
to
employees
of
group
entities
are
treated
as
a contribution
by
the Company
to
these
entities, thus increasing the investment cost
in them.
2.2.11 Related party transactions
Related parties of the Company include:
(a) an entity that
has control over
the Company and
entities controlled, jointly
controlled or significantly
influenced by this entity,
as well as members of its key management
personnel and their close family members;
(b) an entity that has significant influence over the
Company and entities controlled by this entity;
(c) members of key management personnel of
the Company, their close family members and entities
controlled or jointly controlled
by the abovementioned persons;
(d) subsidiaries; and
(e) post-employment benefit plans established
for the benefit of the Group’s
employees.
Transactions
of similar nature are disclosed
on an aggregate basis. All
banking transactions entered into
with related parties are in
the normal course of business and are conducted on an arm's length
basis.
2.2.12 Provisions and contingent liabilities
Provisions are recognized when the Company
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 reliable estimates
of the
amount of the obligation can be made.
The amount
recognized
as a
provision
is the
best
estimate
of the
expenditure
required
to settle
the present
obligation
at each
reporting date, taking into account
the risks and uncertainties surrounding the amount of such expenditure.
Provisions are
reviewed at
each reporting
date and
adjusted to
reflect the
current best
estimate. If,
subsequently,
it is
no longer
probable
that
an
outflow
of
resources
embodying
economic
benefits
will
be
required
to
settle
the
obligation,
the
provision
is
reversed.
A provision
is not
recognized
and a
contingent
liability is
disclosed when
it is
not probable
that
an outflow
of resources
will be
required to
settle the obligation,
when the amount
of the obligation
cannot be measured
reliably or in
case that the
obligation is
considered possible and is subject to the occurrence or non -occurrence of one
or more uncertain future events.
2.2.13 Share capital
Ordinary shares and preference
shares are classified as equity.
Incremental costs directly attributable
to the issue of new shares or
options are shown in equity as a deduction from the proceeds, net
of tax.
Notes to the Financial Statements
.
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31 December
2023 Financial
Statements
Dividend distribution
on shares
is recognized
as a
deduction in
the Company’s
equity when
approved by
the General
Meeting of
shareholders
and the
required regulatory
approvals,
if any,
are obtained.
Interim dividends
are recognized
as a
deduction in
the
Company's equity when approved by the Board
of Directors.
Intercompany
non-cash
distributions
that
constitute
transactions
between
entities
under
common
control
are
recorded
in
the
Company’s equity by reference
to the book value of the assets distributed.
Where the Company purchases own shares (treasury shares), the consideration paid including any directly attributable incremental
costs (net
of income
taxes), is
deducted from
shareholders’ equity
until the
shares are
cancelled, reissued
or disposed
of. Where
such shares are subsequently sold or reissued, any
consideration received is included in shareholders’
equity.
2.2.14 Cash and cash equivalents
Cash and cash equivalents include cash in hand and due from credit
institutions that are all carried at amortised cost.
3.
Critical accounting estimates and judgments in applying accounting policies
In
the
process
of
applying
the
Company’s
accounting
policies,
the
Management
makes
various
judgments,
estimates
and
assumptions
that
may
affect
the
reported
amounts
of
assets
and
liabilities,
revenues
and
expenses
recognized
in
the
financial
statements
within the
next financial
year and
the accompanying
disclosures. Estimates
and judgments
are continually
evaluated
and
are
based
on
current
conditions,
historical
experience
and
other
factors,
including
expectations
of
future
events
that
are
believed to be reasonable under the circumstances.
Revisions to estimates are recognized
prospectively.
The most significant
areas in which the
Company makes
judgments, estimates and
assumptions in applying its
accounting policies
are set out below:
3.1
Impairment losses on financial assets
The expected
credit losses
(ECL) measurement
of financial
instruments requires
management to
apply judgement
relating to
the
risk parameters
used in
the calculation
of the
ECL and
in assessing
whether
a significant
increase of
credit
risk (SICR)
event
has
occurred
since
initial
recognition.
These
estimates
are
based
on
quantitative
and
qualitative
information
reasonable
and
supportable forward looking information. A degree of uncertainty is involved
in making estimations using assumptions that may be
subjective and sensitive to the risk factors.
Specifically, the assessment
of SICR is performed on an individual basis based on the number of notches downgrade
in the internal
credit
rating
scale since
the origination
date,
while the
PD used
for
the ECL
measurement
is received
by an
international
rating
agency using
risk methodologies
that
maximize
the use
of observable
variables
and market
data.
Furthermore,
the LGD
used is
based on historical data
derived from rating
agencies’ studies that present
the recoveries on such
instruments taking into
account
the seniority of the exposure.
The
Company
independently
validates
all
ECL
key
inputs
and
underlying
assumptions
used
in
the
ECL
measurement
through
competent resources.
3.2
Impairment losses on investment in subsidiaries
The Company assesses
for impairment its
investment in subsidiaries at
each reporting date
as described in
note 2.2.4. If
an indication
of impairment exists, the
Company performs an impairment test
by comparing the carrying
value of the
investment in the subsidiary
with its
estimated
recoverable
amount, determined
as the
higher of
its fair
value less
cost to
sell and
its value
in use,
based on
reasonable and supportable information. The calculation of the recoverable amount involves the exercise of judgement in selecting
the appropriate parameters,
such as the applicable discount and growth rates.
3.3 Income tax
The Company
is subject
to income
taxes
and estimates
are required
in determining
the liability
for
income taxes.
The Company
recognizes liabilities
for anticipated
tax audit issues
based on estimates
of whether additional
taxes will
be due or
for anticipated
tax
disputes.
Where
the
final
tax
outcome
of
these
matters
is
different
from
the
amounts
that
were
initially
recorded,
such
differences will impact the income tax in the
period in which such determination is made.
In addition, the
Company recognizes deferred tax assets to
the extent that it
is probable that
sufficient taxable profit will be
available
against
which unused
tax
losses and
deductible temporary
differences
can be
utilized.
Recognition
therefore
involves
judgment
Notes to the Financial Statements
.
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31 December
2023 Financial
Statements
regarding the future financial performance of the Company.
As at 31 December 2023, based on the Management’s assessment the
Company is not expected to have sufficient
future taxable profits, against
which the unused tax losses can be utilized (note
8).
3.4 Retirement benefit obligations
The present value
of the retirement benefit
obligations depends on
a number of factors
that are determined on
an actuarial basis
using a number of assumptions, such as
the discount rate and future salary increases. Any changes in these assumptions impact
the
carrying amount of the pension obligations.
The Company determines the appropriate discount rate used
to calculate the present value of
the estimated retirement obligations,
at the
end of each
year based
on interest
rates of
high quality
corporate bonds.
The currency
and term
to maturity
of the bonds
used are consistent with the currency and estimated average term to maturity of the retirement benefit obligations. The salary rate
increase assumption
is based
on future
inflation estimates
reflecting also
the Company's
reward
structure and
expected market
conditions.
Other assumptions
for pension
obligations,
such as
future inflation
estimates, are
based in
part on
current and
expected market
conditions.
For information in respect of the Company’s
retirement benefit obligations refer
to note 13.
3.5 Share-based payments
The Company
grants
shares and
share options
to its
employees as
well as
the employees
of the
Group’s
entities, as
a common
feature of employee remuneration.
For shares granted to employees, the fair value is measured directly at the market
price of the entity’s shares, adjusted to take into
account
the terms
and conditions
upon which
the shares
were granted.
For share
options granted
to employees,
in many
cases
market prices are not available because
the options granted are subject to
terms and conditions that
do not apply to
traded options.
If this
is the
case, the
Company estimates
the fair
value of
the equity
instruments granted
using a
valuation technique,
which is
consistent with generally accepted
valuation methodologies.
The
valuation
method
and the
inputs
used to
measure
the share
options
granted
to
employees
of
the
Company
and its
Group
entities are presented in note 16.
4.
Financial risk management and fair value
The Company
is exposed
to financial
risks such
as credit
risk, market
risk (including
currency and
interest
rate risk)
liquidity risk,
operational risk and other non-financial risks, as well as to climate
risk.
4.1
Financial risk factors and risk management
As part of its overall system of internal controls the Company has engaged in a Service Level Agreement (SLA) with Eurobank S.A. in
order
to
receive
supporting
and advisory
services in
all applicable
areas
of
risk
management
(credit,
market,
liquidity
and non-
financial risks) undertaken by the Company.
The
Company’s
overall
risk
management
strategy
seeks
to
minimize
any
potential
adverse
effects
on
its
financial
performance,
financial position and cash flows.
The main financial risks to which the Company is exposed relate
to:
(a) Credit risk
The Company takes
on exposure to
credit risk which
is the risk that
a counterparty will
be unable to
fulfill its payment
obligations
in
full
when
due.
The
Company
is
exposed
to
credit
risk
arising
mainly
from
subordinated
instruments
(note
9)
issued
by
its
subsidiary Eurobank S.A. and
from its deposits that
are placed with the
latter of € 399
million. Accordingly,
the aggregate
carrying
amount of the above financial assets approximates
the maximum credit risk exposure of the Company.
(b) Market risk
The Company
takes
on exposure
to market
risk, which
is the
risk of
potential
financial loss
due to
an adverse
change in
market
variables, such as interest rates
and foreign exchange rates.
Notes to the Financial Statements
.
20
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31 December
2023 Financial
Statements
The
Company’s
interest
rate
risk,
which
relates
to
the
position
in
the
aforementioned
subordinated
fixed
rate
instruments,
is
eliminated by
the subordinated
Tier II
debt instruments
issued by
the Company,
which have
equivalent
terms with
those of
the
forme
r.
With respect to the deposits and borrowing of the Company, a sensitivity analysis is performed to assess the impact on net interest
income (NII) to a hypothetical change in the market
interest rates.
The impact on NII is calculated
under the scenario of an instantaneous
parallel shift of all interest
rates by +/-
100bps, for a 1-year
period, assuming a static balance sheet
approach. As at 31 December 2023 the
impact on NII, under the scenario of a parallel
shift
in the yield curves, stands at € 2 million (+100bps) and € -2 million (-100bps).
The Company’s financial assets and liabilities are
in Euro, therefore, currency
risk is eliminated.
(c) Liquidity risk
The maturity
of the Company’s
main assets
and liabilities, which
relate to
the aforementioned
subordinated instruments,
match,
and
the
underlying
cash
flows
are
the
same.
Accordingly,
the
Company’s
liquidity
or
cash
flow
risk
for
these
instruments
is
substantially
eliminated.
In addition,
the majority
of the
Company’s
aforementioned
deposits with
Eurobank
S.A. mature
within
three months, while its borrowing from the latter
(€ 30 million outstanding balance) matures within one year.
(d) Climate related and environmental risks
Climate related
and environmental
risks are
defined as
the risks
deriving from
potential loss
or negative
impact to
the Company,
including loss/damage to physical assets, disruption of business or system failures, transition
expenditures and reputational effects
from the adverse consequences of climate change
and environmental degradation.
4.2
Fair value of financial assets and liabilities
The Company’s financial instruments carried at amortized cost are categorised into the three levels of fair value hierarchy
based on
whether the inputs to their fair values are market
observable or unobservable, as follows:
●
Level 1
- Financial instruments
are measured
based on quoted
prices (unadjusted)
in active
markets for
identical financial
instruments that the Company
can access at the measurement
date. A market
is considered active when quoted
prices are
readily and
regularly available
from an
exchange, dealer,
broker,
industry group,
pricing service, or
regulatory agency
and
represent
actually and
regularly
occurring transactions.
None of
the Company’s
financial instruments
is categorised
into
Level 1 of the fair value hierarchy.
●
Level
2
–
Financial
instruments
are
measured
using
valuation
techniques
with
inputs
other
than
level
1
quoted
prices,
observable either directly or indirectly, such as (i)
quoted prices for similar financial instruments in
active markets (ii) quoted
prices for identical financial instruments in markets that are
not active, (iii) inputs other than quoted prices that are directly
or indirectly observable, mainly interest rates and yield curves observable at commonly quoted intervals, forward
exchange
rates, equity
prices, credit spreads
and implied volatilities
obtained from
internationally recognised
market data
providers
and (iv) other unobservable
inputs which are insignificant
to the entire fair value
measurement. Level 2 financial
instruments
include
the
subordinated
instruments
(note
9)
issued
by
its
subsidiary
Eurobank
S.A.
and
the
subordinated
Tier
II
debt
instruments (note 12) issued by the Company.
●
Level
3
-
Financial
instruments
are
measured
using
valuation
techniques
with
significant
unobservable
inputs.
When
developing
unobservable
inputs,
best
information
available
is used,
including own
data,
while
at
the
same
time
market
participants’
assumptions
are
reflected
(e.g.
assumptions
about
risk).
The
Company’s
financial
instruments,
which
are
categorised into Level 3 of the fair
value hierarchy refer
mainly to the borrowing and deposits with Eurobank S.A.
The fair value
of the subordinated
Tier II debt instruments
issued by the Company
(note 12) were
determined by using
quotes for
identical financial
instruments
in non-active
markets
obtained from
Bloomberg and
amounted to
€ 1,226
million (2022:
€ 1,188
million). The fair value of the subordinated
instruments issued by the Company’s subsidiary Eurobank
S.A. (note 9) and held by the
Company was determined
based on the aforementioned
instruments which have equivalent
terms, therefore, amounted
also to €
1,226 million (2022: € 1,188 million).
Moreover,
the carrying amount of the Company’s borrowing and deposits with Eurobank
S.A. represent reasonable approximation
of their fair value.
Notes to the Financial Statements
.
21
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31 December
2023 Financial
Statements
5.
Net interest income
In the
year
ended 31
December 2023,
the interest
expense
that
was
recognised
in the
income statement
mainly relates
to
the
subordinated Tier II instruments issued by the Company,
while the interest income of a similar amount relates to the
subordinated
Tier II notes issued by Eurobank S.A. and held by the Company.
6.
Other income/(expenses)
In the year ended 31 December 2023, other income /(expenses),
amounting to € 4 million (2022: € 3 million), consist
of € 3 million
income from IT services (2022: € 1.7 million) and € 1
million income regarding loan portfolio’s related services provided to the Bank
(2022: € 1.6 million).
7.
Operating expenses
In the year ended 31 December 2023, the operating
expenses of € 11 million (2022: € 10 million) mainly refer:
a) to staff cost € 4.4
million (2022: € 4.1
million) and b) other administrative expenses €
6.3 million (2022: €
5.2 million). Administrative expenses include
€ 4.3
million
(2022: €
4.5 million)
insurance
premiums
relating
to
the
Group’s
financial lines
insurance,
including protection
for
professional liability.
8.
Income tax
According
to Law
4172/2013 currently
in force,
the Greek
corporate
tax rate
for
legal entities
other than
credit institutions
(i.e.
credit institutions that fall
under the requirements of article 27A
of Law 4172/2013 regarding eligible DTAs/deferred
tax credits) is
22%.
In
addition,
the
withholding
tax
rate
for
dividends
distributed,
other
than
intragroup
dividends,
is
5%.
In
particular,
the
intragroup dividends under certain preconditions
are relieved from both income and withholding tax.
Current
income
tax
for
the
year
ended
31
December
2023
amounted
to
€
1
thousand
(2022:
€
5
thousand).
Based
on
the
management’s assessment the Company is
not expected to
have sufficient future taxable profits against
which the unused
tax losses
can be
utilized
and accordingly,
in the
year ended
31 December
2023, no
deferred
tax has
been recognized
in the
statement
of
comprehensive income.
Pillar Two income taxes
The Pillar
Two
legislation that
introduces a
minimum global tax
rate at
15% on multinational
entities with
consolidated revenues
over €750 million (top up tax), effective as of 1
January 2024, has been enacted or substantively enacted in certain jurisdictions
that
the Group operates.
In accordance
with the Pillar
Two legislation,
the Ultimate
Parent Entity
of an MNE
Group is primarily
liable for
the Globe Top-up
Tax
of all Low-Tax
(subject to
an ETR below
15%) Constituent
Entities. Top
-up taxation
is mainly triggered
when the jurisdictional
GloBE ETR is below 15% and is levied on the aggregated Globe Pillar Two
results of all Constituent Entities per jurisdiction.
The
Company,
as
the
ultimate
parent
entity
of
the
Group,
has
identified
potential
exposure
to
Pillar
Two
income
taxes
mainly
through its subsidiaries in Bulgaria
and Cyprus. The Pillar Two
effective tax rate
is lower than 15% in the above jurisdictions
mainly
due to their nominal corporate tax rates
(CIT) applying on their profits (i.e. the current CIT in Bulgaria and Cyprus is 10% and 12.5%
respectively).
Notes to the Financial Statements
.
22
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31 December
2023 Financial
Statements
Further information on
Pillar Two income
taxes is provided
in note 13 of the
consolidated financial statements
for the year ended
31 December 2023.
Tax certificate
and open tax years
For fiscal years starting from
1 January 2016
onwards, pursuant to the
Tax Procedure Code, an ‘Annual Tax Certificate’ on an optional
basis, is provided
for the Greek
entities, with annual
financial statements
audited compulsorily,
which is issued after
a tax audit
is
performed by the same
statutory auditor or audit
firm that audits
the annual financial
statements. The Company has opted
to obtain
such certificate.
Following the completion
in 2023, of the
tax audit of
the Company by
the tax authorities
for the tax
year 2019, its
open tax
years
are 2018
and 2020-2023.
The tax
certificates, which
have been
obtained by
the Company
are unqualified
for the
open tax
years
until 2022, while for the year ended 31 December 2023, the tax audit
from external auditor is in progress.
In accordance with the Greek
tax legislation and the respective
Ministerial Decisions issued, additional
taxes and penalties
may be
imposed by the Greek tax authorities following a tax audit
within the applicable statute of limitations (i.e. five years as from the
end
of the
fiscal year
within
which the
relevant
tax
return
should have
been submitted)
,
irrespective
of whether
an unqualified
tax
certificate has been obtained from the tax
paying company.
In reference to its total uncertain tax positions, the Company assesses all relevant
developments (e.g. legislative changes, case law,
ad hoc tax/legal opinions, administrative
practices) and raises adequate provisions.
Unused tax losses
As at 31 December 2023, the Company has not
recognised deferred tax asset (DTA) on unused tax losses amounted to € 337 million
(2022: € 380
million). The
analysis of
unrecognized DTA
on unused
tax losses
of the Company
per year
of maturity
of related
tax
losses is presented in the table below:
9.
Investment securities
As at 31 December 2023, the
total carrying amount of the subordinated debt instruments, issued by the
Bank, held by the Company
and categorised as at amortised cost,
amounted to € 1,277 million (31 December 2022: € 1,275 million), including accrued
interest
of
€ 32.9
million
(31
December
2022: €
32.8 million),
€ 4.2
unamortized
issuance
costs
(31 December
2022:
€
5.2 million)
and
impairment
allowance
of
€
1.5
million
(31
December
2022:
€
2.7
million)
(12-month
ECL).
In
particular,
in
the
year
ended
31
December 2023, the Company
recognised in the statement
of comprehensive income € 1.2
million gain, in relation
to the reversal
of impairment allowance
(31 December 2022: € 1.2
million loss). The fair
value of the said
debt instruments held by
the Company
was
determined
based
on
quotes
for
the
related
subordinated
Tier
II
debt
instruments
issued
by
the
Company
(note
12)
and
amounted to € 1,226 million (31 December 2022: € 1,188 million).
In addition, in the
second quarter of 2023,
the Company acquired from third parties €
4.6 million debt securities,
issued by the Bank,
which
were
classified
as
financial
assets
measured
at
Fair
Value
through
Other
Comprehensive
Income
(‘FVOCI’).
The
abovementioned
debt
securities
were
sold
to
the
Bank
at
the
end
of
June
2023,
with
an
immaterial
effect
on
the
Company’s
operating income (note 19).
Notes to the Financial Statements
.
23
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31 December
2023 Financial
Statements
Post balance sheet event
In January 2024, the Bank following the issuance of a € 300 million subordinated Tier II debt instrument
by the Company (note 12),
issued a subordinated instrument of equivalent
terms, held by the Company.
10.
Shares in subsidiaries
The following is a listing of the Company's subsidiaries held
directly at 31 December 2023:
11.
Other assets
As at 31 December 2023, other assets amounting to € 4 million (31 December 2022:
€ 5 million) primarily consist of (a) € 1.3 million
(31 December 2022:
€ 2 million)
prepaid expenses mainly for
insurance premiums, (b) €
1.2 million (31
December 2022: €
1.7 million)
receivables for
IT services provided
to the
Group companies
and third
parties, (c) €
0.3 million
(31 December 2022:
€ 0.4 million)
receivables from Fairfax
Group relating
to financial consulting
services (d) € 0.2 million
in relation to
property and equipment
and
intangible assets (31 December 2022: € 0.3 million).
12.
Debt securities in issue
In
November
2022,
the
Company
announced
that
it
had
completed
the
issuance
of
€300
million
subordinated
Tier
II
debt
instruments. The said instruments, mature
in December 2032, are callable in December 2027 offering
a coupon of 10% per annum
and are listed
on the Luxembourg
Stock Exchange’s
Euro MTF market.
Their carrying amount,
as at 31 December
2023, was € 298
million (31
December 2022:
€ 297
million), including
€ 4.3
million unamortized
issuance costs
(31 December
2022: €
5.2 million)
and € 2.1 million
accrued interest
(31 December 2022: € 2.1
million). Their fair
value, at the same
date, which was
determined by
using quotes for identical
financial instruments in
non-active markets, amounted to €
339 million (31
December 2022: €
302 million).
In January 2018, Eurobank Ergasias
S.A. issued subordinated Tier II
debt instruments of face
value of € 950 million, in replacement
of the preference shares, which had been issued
in the context of the first stream
of Hellenic Republic’s plan to support liquidity
in
the Greek
economy under
Law 3723/2008.
The said
instruments,
mature in
January 2028
and pay
fixed nominal
interest
rate of
6.41%, that shall be payable semi-annually.
Their carrying amount, as at 31 December 2023, was € 979 million (31 December 2022:
€ 978
million), including
€ 1.7
million unamortized
issuance costs
(31 December
2022: €
2.2 million)
and €
30.8 million
accrued
interest (31 December 2022: € 30.6 million). Their fair value,
at the same date, which was determined by using quotes for
identical
financial instruments in non-active markets, amounted
to € 887 million (31 December 2022: € 886 million).
Post balance sheet event
In January
2024, the
Company announced
the issuance
of a
€ 300
million subordinated
Tier II debt
instrument which
matures in
April 2034, is callable at par in April
2029 offering a coupon of 6.25%
per annum and is listed on the
Luxembourg Stock Exchange’s
Euro MTF market.
13.
Other liabilities
As at
31 December
2023, other
liabilities amounting
to €
2 million
(31 December
2022: €
3 million)
primarily consist
of (a)
€ 0.9
million (31 December 2022:
€ 0.8 million) accrued
expenses, (b) €
0.8 million (31 December
2022: € 1 million)
current payables
to
suppliers and (c) € 0.2 million (31 December 2022: € 0.2 million) Standard
legal staff retirement indemnity
obligations.
Standard legal staff retirement
indemnity obligations (SLSRI) and termination benefits
The Company provides for staff
retirement indemnity obligation for
its employees, who are entitled to a lump sum payment based
on the number of years of service and the level of remuneration at the date of retirement, if they remain in the employment of the
Company until
normal retirement
age, in accordance
with the local
labor legislation.
The above
retirement indemnity
obligations
Notes to the Financial Statements
.
24
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Page
31 December
2023 Financial
Statements
typically expose the Company
to actuarial risks such
as interest rate
risk and salary risk. Therefore,
a decrease in the discount
rate
used to
calculate the
present value
of the
estimated
future cash
outflows or
an increase
in future
salaries will
increase the
staff
retirement indemnity obligations of
the Company.
The movement of the liability for standard
legal staff retirement
indemnity obligations is as follows:
Note: For 2023 and 2022,
there were no employee termination benefits provided
to the Company’s personnel
in the context
of the Voluntary
Exit Schemes
(VES) launched by Eurobank Holdings group.
For SLSRI obligations the significant actuarial assumptions
(expressed as weighted averages)
were as follows:
As at 31
December 2023, the
assumption for
the price inflation
(weighted average)
is 2.3% (2022:
2.6%) and has
been taken
into
account in determining the above actuarial assumptions for
future salaries increases.
As at
31 December
2023, the
average
duration
of the
standard
legal staff
retirement
indemnity obligation
was 7
years
(2022: 9
years).
A quantitative
sensitivity analysis
based on reasonable
changes to significant
actuarial assumptions
as at 31
December 2023 is
as
follows:
An increase/(decrease)
of the
discount rate
assumed, by
50 bps/(50
bps), would
result in
a (decrease)/
increase of
the standard
legal staff retirement
obligations by (€ 0.01 million)/ € 0.01 million.
An increase/(decrease) of the future
salary growth assumed, by
0.5%/(0.5%), would result in
an increase /(decrease) of
the standard
legal staff retirement
obligations by € 0.01 million/ (€ 0.01 million).
The above sensitivity analysis is based
on a change in an assumption while holding
all other assumptions constant.
In practice, this
is unlikely to occur,
and changes in some of the assumptions may be correlated.
The methods
and assumptions
used in
preparing the
above sensitivity
analysis were
consistent
with those
used to
estimate the
retirement benefit obligation
and did not change compared to the previous year.
Post balance sheet event
In February 2024,
Eurobank Holdings group
decided to launch
a new VES
for eligible units
in Greece, which
will be offered
mainly
to employees
over a specific
age limit. The
new VES will
be implemented through
either lump-sum payments
or long term
leaves
during which the employees will be receiving a percentage of a monthly salary, or a combination thereof and the cost mainly refers
to Eurobank S.A. and its subsidiaries.
14.
Share capital, share premium and treasury shares
As at
31 December
2023, the
par value
of the
Company's shares
is €
0.22 per
share (2022:
€ 0.22).
All shares
are fully
paid. The
movement of share capital and share
premium is as follows:
Notes to the Financial Statements
.
25
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31 December
2023 Financial
Statements
Share capital increase
Following the exercise
of share options granted
to executives of the
Group under the current
share options’ plan (see below),
and
by virtue of the decision of
the Board of Directors
of the Company on 31 August
2023, the Company’s share
capital increased by
€
1,276,499.18 through the issue of 5,802,269
new common voting shares, of
a nominal value of € 0.22 per
share and exercise price
of €
0.23 per
share.
The difference
between
the exercise
price of
the new
shares
and their
nominal value,
net of
the expenses
directly attributable to the equity transaction, amounted to € 39,286 and was recorded
in the account “Share premium”. Following
the
above
increase,
as
at
31
December
2023,
the
share
capital
of
the
Company
amounts
to
€
817,625,550.94
divided
into
3,716,479,777 common
shares with
a nominal
value
of €
0.22 each.
The new
shares were
listed
on the
Athens
Exchange
on 14
September 2023.
The following is an analysis of the movement in the number of the
Company’s shares outstanding:
Treasury shares-
Buyback of shares held by HFSF
Following the receipt of the
required approval from the regulator in May 2023, the
General Meeting of the Company’s Shareholders
(AGM),
which
was
held
on
20
July
2023,
approved
the
acquisition
of
all
the
52,080,673
Company’s
shares
held
by
the
HFSF,
corresponding to
approximately
1.4% of
the Company’s
share capital
and voting
rights, and
authorized the
Board of
Directors to
determine the specific conditions and relevant
details for the acquisition.
On 9
October
2023, the
acquisition
of
all the
shares
held
by the
HFSF was
completed
for
a total
consideration
of
€ 94
million,
including related fees. Following the above, the Company is no
longer subject to Law 3864/2010 and to
the special rights of Hellenic
Financial Stability Fund (HFSF) provided for
in such law.
Notes to the Financial Statements
.
26
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31 December
2023 Financial
Statements
15.
Reserves and retained earnings/(losses)
As of
31 December
2023, 'Special
reserves'
of €
1,414 million
(2022: €
1,004 million)
relate
to
dividends
from
participations.
In
particular, in December 2023, the Company recognised € 410 million dividend income, following the Bank’s
distribution of reserves
of equal amount to the Company (see below).
Dividends/ distribution of profits
In
December
2023,
the
Bank
proceeded
with
the
distribution
of
non-mandatory
reserves
totalling
€410
million
to
its
sole
shareholder,
Eurobank Holdings, in order
to enable the latter
to distribute dividend out
of the profits of the
financial year 2023 to
its shareholders in accordance with the provisions
of article 159 of Company Law 4548/2018.
Based on the Group’s
financial performance for the
financial year 2023, Eurobank Holdings
aims to distribute to its
shareholders a
cash dividend
equivalent to
at least 25%
of the Group's
adjusted net
profit for
financial year 2023,
subject to
the approval
of the
Annual General Meeting of its shareholders and the
regulatory authorities.
In
addition, Eurobank
Holdings intends
to
proceed
also
with the
distribution
of
profits
to
the employees
in
accordance
with its
remuneration policy,
subject to the approval of the Annual General Meeting
of its shareholders.
16.
Share options
The Annual General
Meeting of the
shareholders of Eurobank
Holdings held on
28 July 2020 approved
the establishment
of a five
year shares
award plan,
starting from
2021, in the
form of
share options
rights by
issuing new shares
with a corresponding
share
capital
increase,
in
accordance
with
the
provisions
of
article
113
of
law
4548/2018,
awarded
to
executives
and
personnel
of
Eurobank Holdings and
its affiliated companies
according to article 32
of law 4308/2014. The
maximum number of rights
that can
be approved was set at 55,637,000 rights, each of which would correspond to one new share. The exercise price of each new share
would be equal to € 0.23.
The Annual General Meeting authorized the Board of
Directors of Eurobank Holdings to define the eligible
staff and determine the remaining terms
and conditions of the plan.
The final
terms and
the implementation
of the
share options
plan, which
is a
forward-looking
long-term incentive
aiming at
the
retention of
key executives,
are defined
and approved
annually by the
Board of
Directors in
accordance with
the applicable
legal
and regulatory framework, as well as the policies of the
Company and the
Group.
The options are
exercisable in
portions, annually during
a period from
one to five
years. Each
portion may
be exercised
wholly or
partly and converted into shares
at the employees’ option,
provided that they remain
employed by the
Group until the
first available
exercise date. The corporate
actions that adjust the number and the price of shares also adjust accordingly the
share options.
The movement of share options during the year is analysed
as follows:
Notes to the Financial Statements
.
27
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31 December
2023 Financial
Statements
In July 2023, the Group awarded to its executives
12,101,092 new share options, exercisable in
annual portions up to 2028.
From the share options exercisable in 2023, a number of 5,802,269 options were exercised during the year,
resulting in the issue of
an equal number of new common voting shares.
The share options outstanding at the end of the year
have the following expiry dates:
(1)
Based on the earliest contractual exercise date.
In accordance with the Company’s accounting
policy on employees’ share based payments, the grant
date fair value of the options
is recognized
as
an
expense
with
a corresponding
increase
in equity
over
the vesting
period. The
share
options
granted
by the
Company to
employees of
Group entities,
were treated
as a contribution
by the
Company to
the Bank,
being their
parent entity,
thus increasing the investment cost
of the Company in the latter.
The fair
value at
grant date
is determined using
an adjusted
form of the
Black-Scholes model
for Bermudan
equity options which
takes into
account the exercise
price, the exercise
dates, the term
of the option,
the share price
at grant
date and expected
price
volatility of the underlying share, the expected dividend
yield and the risk-free interest
rate for the term of the options.
The weighted average
fair value of the share options granted
in July 2023 was € 1.13 (2022: € 0.63). The significant inputs into
the
model were
a share
price of
€ 1.442
(2022: €
1.021) at
the grant
date, exercise
price of
€ 0.23,
annualized
dividend yield
of 3%
(2022:
3%),
expected
average
volatility
of
41%
(2022:
38%),
expected
option
life
of
1-5
years,
and
a
risk-free
interest
rate
corresponding to the options’ maturities, based on the Euro swap yield curve. The expected volatility is measured at the grant date
of the options and is based on the average historical
volatility of the share price over the last one and a half year.
17.
Cash and cash equivalents
For the
purpose of
the cash
flow statement,
cash and
cash equivalents
with original
maturities of
three months
or less,
as at
31
December 2023, amount to € 399 million (31 December 2022: € 57 million).
For the
year ended
31 December 2023,
changes in debt
securities in issue
arising from
accrued interest
and amortisation of
debt
issuance costs
amount to
€ 1.3
million (31
December 2022:
€ 33
million). In
addition, changes
in income/(losses)
on investment
securities arising from amortization of discounts and
accrued interest amount to € 1 million (31 December 2022: € 33 million).
18.
Post balance sheet events
Details of post balance sheet events are
provided in the following notes:
Note 2.1 - Basis of preparation
Note 9 - Investment securities
Note 12 - Debt securities in issue
Note 13 - Other liabilities
Notes to the Financial Statements
.
28
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Page
31 December
2023 Financial
Statements
19.
Related parties
Eurobank
Ergasias
Services and
Holdings S.A.
(the Company
or Eurobank
Holdings) is
the parent
company
of Eurobank
S.A. (the
Bank).
The Board of Directors
(BoD) of Eurobank Holdings is the same
as the BoD of the Bank and part of
the key management
personnel
(KMP)
of
the
Bank provides
services to
Eurobank
Holdings
according
to
the terms
of
the relevant
agreement
between
the two
entities.
Fairfax
Group, which
holds 32.93%
of Eurobank
Holdings’ share
capital as
of 31
December 2023
(31 December
2022: 32.99%),
is
considered to have significant influence
over the Company. In addition,
following the completion
of the acquisition
of all of
Eurobank
Holdings’ shares held by the HFSF,
on 9 October 2023 (note 14), the HFSF is no longer considered to have significant
influence over
the Company.
In January
2022, an
occupational insurance
fund (“Institution
for
occupational retirement
provision-occupational
insurance fund
Eurobank’s Group
personnel” henceforth “the Fund”) was established
as a not-for-profit legal entity under Law 4680/2020, for the
benefit of the employees of the Company,
the Bank and certain other Greek entities of the Group, which constitute the sponsoring
employers of the Fund. Accordingly,
in line with IAS 24 Related Parties, the Fund is considered to
be related party to the Company.
A number
of transactions
are entered
into with
related
parties in
the normal
course of
business and
are conducted
on an
arm's
length basis. The outstanding balances of the transactions with the Company’s
subsidiaries are as follows:
(1)
The expenses in relation
to KMP services
provided by the Company’s
subsidiary Eurobank S.A. are
included in Key
management compensation disclosed
below.
2)
For the year ended 31 December
2023, it includes interest income of
€ 0.06 million on investment securities
issued by the Bank, which were
purchased from
third parties and sold to the Bank during the period (note 9).
As
at
31
December
2023,
the
Company
has
recognised
receivables
and
operating
income
of
amount
€
0.32
million
related
to
financial consulting
services with
Fairfax
group (31
December 2022: €
0.35 million).
In addition,
for the
year ended
31 December
2023
the
Company
has
recognized
operating
expenses
of
€
0.14
million
(2022:
€
0.12
million
income)
related
to
the
Group’s
associate Eurolife FFH Insurance Group
Holdings S.A., which is also a member of Fairfax Group.
Key management compensation
In the year ended 31 December
2023, the Company recognized
Key management compensation
amounting to € 0.2 million
that is
referring mainly to KMP services provided by
Eurobank S.A. in accordance with the relevant agreement
(2022: € 0.2 million).
Notes to the Financial Statements
.
29
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31 December
2023 Financial
Statements
20.
External Auditors
The Company
has adopted
a Policy
on External
Auditors’ Independence
which provides
amongst others,
for the
definition of
the
permitted and non-permitted services the Company’s
auditors may provide further
to the statutory audit. For any
such services to
be assigned to
the Company’s
auditors there
are specific controlling
mechanisms in order
for the Company’s
Audit Committee to
ensure that a) the non-audit services assigned to “KPMG Certified Auditors S.A.”, along with the KPMG network (KPMG), have been
reviewed and approved as required
and b) there is proper balance between audit and permitted
non-audit work.
The total fees of the Company’s
independent auditor KPMG for audit and other services provided are
analyzed as follows:
(1)
Includes fees for statutory audit of the Company’s annual financial statements.
Notes to the Financial Statements
.
30
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31 December
2023 Financial
Statements
21.
Board of Directors
The Board
of Directors
(BoD) was
elected by
the Annual
General Meeting
of the
Shareholders
(AGM) held
on 23
July 2021
for a
three-
year term of office that will expire on 23 July 2024, prolonged until the end
of the period the AGM for the year 2024 will
take
place.
Further to that:
-
The AGM
held on
20 July
2023 approved
the appointment
of Mr.
Burkhard Eckes
and Mr.
John Arthur
Hollows as
new
independent non-executive
members of
Eurobank Holdings
BoD, whose
term of
office will
expire concurrently
with the
term of office of the other members of the BoD. On the same day
the BoD decided its constitution.
-
On 9
October
2023, Eurobank
Holdings announced
the acquisition
of all
of its
issued shares
held by
the HFSF,
namely
52,080,673 common registered
shares (note 14). On the
same day,
the HFSF notified Eurobank Holdings
that effective as
of
11 October
2023, the
HFSF
will no
longer
have
the
special rights
provided
in
law
3864/2010, including
the
right
to
appoint a
representative
in the
Board of
Directors
and the Board
Committees. Following
these developments,
the HFSF
representative
Mrs. Efthymia
Deli, member of
the Boards of
Directors and
of the Committees
of the Boards
of Directors
of Eurobank Holdings and Eurobank,
submitted on 26 October 2023 her
resignation from the abovementioned
positions,
effective as of 7 November 2023.
-
Mr.
Andreas Athanasopoulos,
Deputy CEO
and Executive
Member of
the Boards
of Directors
of Eurobank
Holdings and
Eurobank, submitted on 31 October 2023
his resignation from the abovementioned positions, effective as of
31 December
2023.
Following the above, the BoD is as follows:
G. Zanias
Chairman, Non-Executive Member
G. Chryssikos
Vice Chairman, Non-Executive Member
F. Karavias
Chief Executive Officer
S. Ioannou
Deputy Chief Executive Officer
K. Vassiliou
Deputy Chief Executive Officer
B.P.
Martin
Non-Executive Member
A. Gregoriadi
Non-Executive Independent Member
I. Rouvitha Panou
Non-Executive Independent Member
R. Kakar
Non-Executive Independent Member
J. Mirza
Non-Executive Independent Member
C. Basile
Non-Executive Independent Member
B. Eckes
Non-Executive Independent Member
J. A. Hollows
Non-Executive Independent Member
Athens, 28 March 2024
Georgios P.
Zanias
Fokion C. Karavias
Harris V. Kokologiannis
I.D. No ΑI - 414343
I.D. No ΑΙ - 677962
I.D. No AN - 582334
CHAIRMAN
OF THE BOARD OF DIRECTORS
CHIEF EXECUTIVE OFFICER
GENERAL MANAGER OF GROUP FINANCE
CHIEF FINANCIAL OFFICER