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National Bank of Greece: From Nation-Builder to Near-Death and Back
I. Introduction & Episode Roadmap
On a hot summer day in late June 2015, a scene unfolded on Athens's Stadiou Street that would have seemed impossible just a decade earlier. Greeks—retirees, young professionals, small business owners—stood in lines that snaked around city blocks, waiting under the blazing Mediterranean sun for their turn at an ATM. Many had been there for hours. The machine would dispense €60—perhaps—before running dry. Then the queue would shuffle to the next bank branch, hoping for better luck.
The bank run that led to these scenes had been triggered after the European Central Bank decided not to increase emergency liquidity assistance. Withdrawals from ATMs were capped at 60 euros daily. The branches behind those desperate customers belonged to Greece's oldest and once-mightiest financial institution: the National Bank of Greece.
Founded in 1841 as the newly independent country's first financial institution, NBG has long been the largest Greek bank, a position it still held in the early 21st century. For most of its 184-year existence, this institution was the very embodiment of Greek economic sovereignty—the bank that once literally printed the nation's money, that financed the country's modernization, that served as the financial backbone for generations of Greek families and businesses.
The central question of NBG's story is simple yet profound: How did an institution that survived four centuries of Ottoman rule's aftermath, two world wars, military dictatorship, and countless political upheavals nearly collapse in the span of five years—only to emerge, phoenix-like, as a transformed, profitable, dividend-paying bank?
The answer involves €65 billion in recapitalizations, the largest sovereign default in world history, a government-backed bad loan cleanup scheme named after a mythological hero, and perhaps the most dramatic financial restructuring any European banking system has ever witnessed. It's a story of institutional resilience meeting existential crisis, of how taxpayer bailouts can either destroy value forever or create the conditions for eventual recovery.
National Bank of Greece demonstrated strong financial performance in 2024, driven by resilient net interest income and a significant rise in fee income. The bank's strategic focus on digital transformation and AI applications has positioned it well in the competitive landscape, allowing it to maintain a leading position in the Greek financial sector.
The bank's FY24 core Profit After Tax amounted to €1.3 billion, with core Return on Tangible Equity standing at 17.5%, well above full year guidance. Dividends resumed after a 16-year absence. The state is nearly out. The bad loans are gone. And the transformation from a quasi-governmental institution to a modern, tech-forward commercial bank is essentially complete.
The roadmap from here takes us through NBG's founding in the aftermath of Greek independence, its evolution from the nation's money printer to commercial powerhouse, the hubris of Eurozone-era expansion, the apocalyptic debt crisis, three recapitalizations that wiped out shareholders multiple times, capital controls that seemed to presage Grexit, and finally the digital phoenix emerging from the ashes of Greece's worst economic catastrophe.
II. The Birth of a Nation's Bank (1821–1880s)
Context: Greece's Independence and Economic Vacuum
To understand why NBG matters, you need to understand the Greece of 1841. The country had been free from Ottoman rule for barely a dozen years. Shortly after the outbreak of the Greek War of Independence in 1821, patriots like Georgios Stavros supported the uprising by supplying the revolutionaries with firearms, ammunition, and food. In 1824, Stavros moved to Greece and the next year was appointed Chief Cashier of the Executive body of the First Hellenic Republic.
Greece won its independence in 1829, but building a modern state from scratch—with virtually no institutions, infrastructure, or financial system—proved even harder than winning independence on the battlefield. The newly established Greek state desperately needed a financial backbone. Without banks, there was no way to finance commerce, agriculture, or the basic functions of government.
The publication of a few crucial words establishing the National Bank in the Official Government Gazette was not an easy task at all. The adoption of the famous law "On the establishment of a National Bank" on 30 March 1841 was preceded by a long and strenuous behind-the-scenes effort. Endless discussions, unpredictable meetings, constant negotiations and briefings, diplomatic maneuvers, brutal cancellations, multifaceted and concurrent procedures were taking place.
The Founding
The bankers Jean-Gabriel Eynard and Georgios Stavros founded NBG in 1841 as a commercial bank. Stavros was also elected as the first director of the Bank until his death in 1869. The bank's creation was acknowledged by the decree "On the establishment of (a) National Bank" according to which the National Bank is a private limited company based in Athens with a capital of 5,000,000 drachmas, divided into 5,000 shares of 1,000 drachmas.
The partnership between Eynard and Stavros represented a fascinating blend of European capital and Greek patriotic zeal. Swiss philhellene Jean-Gabriel Eynard worked closely with Georgios Stavros, his proxy in Greece, to launch the new bank. It was established by royal decree on 30 March 1841, with Stavros as its first Governor.
Upon its establishment, the Greek state became the largest shareholder, holding 1,000 out of the initial 3,402 shares. Key early shareholders included Nicholas Zosimas with 500 shares and Jean-Gabriel Eynard with 300 shares. King Louis of Bavaria also held 200 shares.
The shareholder structure itself tells the story of early Greek state-building: a new nation cobbling together capital from wherever it could find it—wealthy diaspora Greeks, sympathetic European philhellenes, and even a Bavarian king whose son Otto had become Greece's first monarch.
The Note-Issuing Privilege
What truly distinguished NBG from any ordinary commercial bank was its monopoly on money creation. The National Bank had the exclusive right to issue drachma banknotes for the Greek state. It maintained this right until 1928, when a new central bank, the Bank of Greece, was established.
From 1841 to 1928, the National Bank circulated 13 issues that included 71 different banknotes, at denominations ranging from 1 to 5,000 drachmas. The first issue of paper drachmas was in 1842 and included 4 denominations: 25, 50, 100 and 500 drachmas. The notes were printed in France under the supervision of Jean-Gabriel Eynard. They were only printed on one side and were numbered by hand.
Think about that for a moment: for 87 years, NBG was Greece's de facto central bank. Every drachma note in circulation bore the bank's imprimatur. The National Bank of Greece was the sole institution that would issue banknotes in Greece (drachmas) for the next 87 years.
Under president Georgios Stavros (1841–1869), NBG expanded to 15 branches nationwide, facilitating credit access in rural and urban areas to foster trade and agriculture in a predominantly agrarian economy.
Beyond Banking: Building a Nation
Following its establishment, the National Bank of Greece was granted the right to invest capital in Greek industries. This strategic move allowed the bank to diversify its services beyond traditional banking, supporting sectors such as agriculture, transportation, and real estate, thereby playing a crucial role in the nation's industrial growth throughout the 19th century.
This early infrastructure enabled the bank to channel funds toward public works, including financing the construction of the National Theater in Athens in 1860, which symbolized cultural advancement amid fiscal constraints.
The bank wasn't just financing farms and factories—it was financing Greek nationhood itself. When the government needed to build cultural institutions that would announce Greece's arrival as a modern European nation, NBG wrote the checks.
Milestones
A significant milestone in the National Bank of Greece's early trajectory was its listing on the newly established Athens Stock Exchange in 1880.
This listing cemented NBG's status as Greece's preeminent financial institution. By the 1880s, the pattern was set: NBG would be the financial pillar upon which Greek economic development rested. The bank's fate and Greece's fate were intertwined in ways that would prove both blessing and curse over the next century and a half.
For investors today, the founding story establishes a crucial pattern: NBG has always been far more than just a commercial bank. It's a national institution whose fortunes track Greek economic and political development. This sovereign linkage would eventually become the bank's near-undoing—but it also explains why the Greek state would move heaven and earth to save it when crisis struck.
III. From Central Bank to Commercial Power (1880s–1990s)
Territorial Expansion and Banking Consolidation
As Greece itself expanded—absorbing the Ionian Islands in 1864, Thessaly in 1881, and Macedonia and Crete after the Balkan Wars—NBG's banking reach grew with it. But territorial expansion brought complexity: newly absorbed regions had their own banking traditions that needed accommodation.
The transition from quasi-central bank to pure commercial institution represented a fundamental identity shift. The Bank of Greece began its operations in 1928, while NBG provided funds and personnel. At the same time, NBG waived its banknote issuing privileges.
A pivotal moment was relinquishing its banknote issuing privilege to the Bank of Greece in 1928. This was the equivalent of a tech founder being told his company would no longer make the core product that defined it. NBG had to reinvent itself as a pure commercial bank—competing for deposits, making loans, and earning returns on capital like any other financial institution.
World War II and Post-War Consolidation
The Nazi occupation of Greece from 1941 to 1945 devastated the country. The post-war period saw Greece torn by civil war and political instability. Yet NBG persevered. Throughout its existence, NBG has undergone significant transformations, including key acquisitions and mergers, such as the acquisition of the Bank of Crete in 1919 and the merger with the Bank of Athens in 1953.
The Bank of Athens merger deserves particular attention. By 1953, NBG was already the dominant Greek bank, and absorbing the second-largest institution cemented that dominance. The consolidated entity controlled a commanding share of Greek banking.
Political Turmoil and Continuity
Greek politics in the post-war era was anything but stable. A military junta seized power in 1967 and ruled until 1974. Through it all, NBG continued operating—a reminder that large financial institutions often outlast the governments that regulate them.
The first credit card in Greece was issued by NBG, and the bank introduced the institution of consumer credit. For the first time in Greece, NBG created the modern real-time transaction processing system.
For the first time in Greece, the bank installed the modern automated teller machines (ATMs).
These innovations—credit cards, real-time processing, ATMs—established NBG as Greece's banking innovator. The bank wasn't just large; it was also technologically ahead of its domestic competitors.
The First NYSE Listing
NBG's stock became listed and traded on the New York Stock Exchange. The 1999 NYSE listing marked NBG's arrival on the global stage. Greek banks were accessing international capital markets, riding the wave of optimism that preceded Greece's entry into the Eurozone.
By the late 1990s, NBG's position seemed unassailable: Greece's oldest bank, its largest, its most technologically advanced, and now internationally listed. The stage was set for what management believed would be an era of European-scale expansion.
IV. Eurozone Entry, Expansion, and Hubris (1990s–2008)
The Road to the Euro
The decision to join the Eurozone would prove the most consequential in modern Greek history—and for NBG, it set in motion the forces that would nearly destroy the bank.
Greece adopted the euro in January 2001. The consequences were immediate and profound: suddenly, Greek borrowers—government, corporations, and consumers alike—could borrow at near-German interest rates. For a country accustomed to high inflation and punitive borrowing costs, this was intoxicating.
Greek 10-year government bond yields, which had exceeded 20% in the early 1990s, plunged to barely above German levels by the mid-2000s. The spread between Greek and German debt—the market's assessment of relative risk—essentially vanished. Markets seemed to believe that Eurozone membership had made Greece as creditworthy as Germany.
This was, we now know, spectacularly wrong. But at the time, cheap credit enabled a borrowing binge that would have seemed impossible just years earlier.
NBG's Aggressive International Expansion
NBG's management saw the Euro era as an opportunity to become a regional powerhouse. NBG expanded to Southeast Europe, acquiring important banks in Bulgaria, Romania, FYROM, Serbia and Turkey, thus supporting Greek business activities in Southeast Europe.
In 2002 NBG merged with ETEBA (National Investment Bank for Industrial Development). The next year, NBG bought Banca Romaneasca, a Romanian bank, and currently holds 88.7% of all outstanding shares. Banca Romaneasca has 90 branches.
The strategic logic seemed sound: Greece's economy was too small to support the growth ambitions of a major bank. Southeast Europe—Bulgaria, Romania, Serbia, Macedonia—offered faster GDP growth, underbanked populations, and natural synergies with Greek businesses operating in the region.
Strategic Retreat from Diaspora Markets
While it was expanding to Southeast Europe, NBG was retreating in North America and other places serving the Greek diaspora. The first move occurred in 2005 when NBG sold all its operations in Canada to Bank of Nova Scotia. The next year NBG sold its US arm, Atlantic Bank of New York, to New York Community Bancorp for US$400 million in cash. It then used proceeds from the sale to help finance further acquisitions in southeast Europe.
This was a revealing strategic choice. The Greek diaspora in North America was wealthy and established, but those markets were mature and competitive. Southeast Europe offered the illusion of easier growth—less competition, higher margins, faster economic development.
In retrospect, the North American retreat looks like a mistake. Those operations, in stable currencies and well-regulated markets, would have provided diversification when the Greek crisis hit. Instead, NBG doubled down on geographic proximity to Greece—right before the whole region was about to face catastrophe.
Market Dominance Pre-Crisis
By the mid-2000s, NBG was not just Greece's largest bank—it dominated the Greek financial landscape. The bank commanded massive market share in deposits, loans, and virtually every banking product.
NBG's current market position is reinforced by its extensive service network, which as of September 30, 2024, includes 356 units and 1,476 ATMs across Greece. The bank serves approximately 6 million clients.
At its peak, the branch network reached 600 locations. NBG was present in essentially every corner of Greece—every island, every village, every Athens neighborhood. This physical infrastructure was both a strength and a burden: invaluable for deposit gathering, but expensive to maintain.
For investors trying to understand pre-crisis NBG, the key insight is this: the bank's strategy was essentially a levered bet on Greek economic growth and Eurozone convergence. If Greece continued converging toward German living standards—as cheap credit seemed to promise—NBG would be spectacularly profitable. If convergence stalled or reversed, the bank's concentrated exposure to Greek sovereign risk and domestic borrowers would prove devastating.
We now know which scenario unfolded.
V. The Perfect Storm: Greek Debt Crisis Begins (2008–2010)
The Global Financial Crisis Hits Greece
The 2008 global financial crisis hit Greece differently than it hit the United States or Western Europe. Greece didn't have a subprime mortgage problem or outsized exposure to Lehman Brothers. The initial impact seemed manageable.
But the global crisis triggered something far worse for Greece: a reassessment of sovereign credit risk. Suddenly, investors were asking hard questions about government debt sustainability—questions they'd blissfully ignored during the cheap credit era.
In October 2008 the Greek banks were in crisis; the Karamanlis Government announced a €28 billion bail-out plan, of which €3.5 billion were used to recapitalize the banks and the remainder served as guarantees.
This first bailout seemed like a standard financial crisis response—governments everywhere were supporting their banking systems. But Greece's problems ran far deeper than bank liquidity.
The Revelation
The decisive moment came in October 2009. The newly elected PASOK government, led by Prime Minister George Papandreou, conducted an audit of public finances. What they found was shocking—even by Greek standards.
Greece's budget deficit wasn't the 6% of GDP that the previous government had claimed. It was at least 12%—and would later be revised to an eye-watering 15.4%. The previous government had systematically hidden debt, massaged statistics, and deceived European partners about the true state of Greek finances.
In April 2010, it was estimated that up to 70% of Greek government bonds were held by foreign investors, primarily banks. Credit rating agencies then downgraded Greek bonds to junk status in late April 2010.
This froze private capital markets and put Greece in danger of sovereign default without a bailout. On 2 May, the European Commission, European Central Bank and International Monetary Fund (the Troika) launched a €110 billion bailout loan to rescue Greece from sovereign default.
The Three Shocks
Economists analyzing the Greek crisis have identified three distinct but mutually reinforcing shocks:
First, a sovereign debt crisis: investors suddenly perceived Greek government debt as unsustainable, driving yields to punitive levels.
Second, a banking crisis: As of 2010, Greek banks held 98% of their Eurozone government-bond portfolio in Greek government bonds. This percentage was highest across countries, and hence the government-bond portfolio of Greek banks was the most "home-biased."
This extreme home bias—which had seemed unremarkable when Greek bonds traded at near-German yields—became catastrophic when Greek bond prices collapsed. Banks' capital was devastated.
Third, a sudden stop: foreign capital fled Greece entirely. ECB loans rose from 48 billion euros in January 2010 to a maximum of 158 billion euros in February 2012. The ECB loans were at their maxima around times when there was a high-perceived risk of Greece exiting the EZ (Grexit).
The ECB essentially became the Greek banking system's lender of last resort—and in some periods, virtually its only lender.
First Bailout and Austerity
The government enacted 12 rounds of tax increases, spending cuts, and reforms from 2010 to 2016, which at times triggered local riots and nationwide protests. Despite these efforts, the country required bailout loans in 2010, 2012, and 2015.
The austerity measures were brutal and their economic effects devastating. Greek GDP would eventually fall by roughly 25%—a Depression-era collapse. Unemployment would peak at nearly 28%, with youth unemployment exceeding 60%.
For NBG and other Greek banks, austerity created a vicious cycle. Austerity crushed economic activity, which caused borrowers to default on loans, which weakened banks, which reduced credit availability, which further crushed economic activity. The "doom loop" between sovereign and banking crisis was fully engaged.
The first bailout, intended to buy time for reforms, instead bought time for the crisis to deepen. Greece's problems were not liquidity problems that could be solved with bridge loans. They were solvency problems that required debt restructuring—something European policymakers desperately wanted to avoid.
VI. NBG's Near-Death Experience: Recapitalizations and Restructuring (2010–2015)
The Bank-Sovereign Doom Loop
The economic crisis was accompanied by a sovereign crisis and a banking crisis. Greece restructured its public debt in 2012, lowering the debt's face value from €205.6bn to €98.5bn, a drop of 52.1% in relative terms. Greece's sovereign default was the largest in world history. Greece's default rendered all Greek banks insolvent.
Read that again: all Greek banks—including NBG, the oldest and largest—were rendered insolvent by the sovereign default. The bonds on their balance sheets, which had been treated as risk-free assets, suddenly lost more than half their value.
Holdings of Greek government bonds and other loans to the Greek state were 303% of capital for the aggregate of state-controlled banks (National Bank of Greece, ATE Bank, Postbank) and 171% for the aggregate of privately-controlled banks.
NBG, as a state-influenced bank, had the heaviest sovereign exposure. When Greek bonds collapsed, NBG's capital was wiped out multiple times over.
The Greek Default and PSI (Private Sector Involvement)
In March 2012, Greece agreed to a debt restructuring with its private creditors. Under the terms of this private-sector involvement (PSI), privately held government debt with face value of 199.2 billion euros was replaced by debt with a face value of 92.1 billion. Greece was the only Eurozone country to default on its creditors.
This included a bank recapitalization package worth €48bn. Private bondholders were required to accept extended maturities, lower interest rates and a 53.5% reduction in the bonds' face value.
The PSI was essentially a controlled default. It reduced Greece's debt burden, but at enormous cost to anyone who held Greek bonds—including Greek banks and Greek pension funds. The restructuring, designed to make Greek debt sustainable, paradoxically made the banking crisis worse by crystallizing massive losses.
Massive State Intervention via HFSF
Based in Athens, the HFSF was founded in July 2010 under Law 3864/2010 as a state-owned private legal entity with the purpose to "contribute to the maintenance of the stability of the Greek banking system, for the sake of public interest." The fund has been seeded by the European Financial Stability Facility (EFSF) with 50 billion euros to recapitalize Greece's banks.
The Hellenic Financial Stability Fund (HFSF) completed a €48.2bn bank recapitalization in June 2013, of which the first €24.4bn were injected into the four biggest Greek banks. Initially, this recapitalization was accounted for as a debt increase that elevated the debt-to-GDP ratio by 24.8 points by the end of 2012. In return for this, the government received shares in those banks.
Since 2013, the HFSF has held a substantial stake in the share capital of NBG (as high as 84.39% in 2013), which it has been gradually reducing through divestments.
At its peak, the Greek state owned more than 84% of NBG—a complete nationalization in all but name. The bank that had helped create the Greek state was now effectively owned by it.
Consolidation of Greek Banking
The four largest banks were recapitalized, and the remaining ones were either resolved or recapitalized, and then transferred to the four large banks. That process was completed in July 2013, with €38.9bn of public funds and €3.1bn of private funds.
The consolidation of over 60 banks resulted in four systemic banks—National Bank of Greece (NBG), Alpha Bank, Eurobank, and Piraeus Bank—and a few nonsystemic banks.
The Greek banking sector has consolidated dramatically since the crisis years, with four systemic banks now controlling approximately 95% of assets: Piraeus Bank, National Bank of Greece, Alpha Bank, and Eurobank.
This consolidation was necessary but painful. Smaller banks were absorbed or liquidated. Shareholders in those institutions were wiped out. But by concentrating resources in four systemically important banks, regulators created entities large enough to survive and eventually recover.
For investors, the 2010-2013 period offers a stark lesson: in a sovereign-banking doom loop, there is no floor under equity values. NBG shareholders who bought in 2010 thinking they were getting a bargain watched their investments vaporize as recapitalization after recapitalization diluted them to near-zero.
VII. Capital Controls and the 2015 Crisis
Syriza Election and Escalating Tensions
Just when it seemed the worst was over, politics intervened. On 25 January 2015, SYRIZA captured 36.3 per cent of votes, dethroning the ND-PASOK coalition and securing 149 seats in the 300-member Hellenic Parliament.
Syriza ran on an explicit anti-austerity platform, promising to renegotiate Greece's bailout terms. Finance Minister Yanis Varoufakis, a game theorist by training, approached negotiations with European creditors as an intellectual exercise in brinksmanship.
The result was catastrophic for Greek banks. Given that Tsipras took everyone by surprise, there was a bank run, that led to the closing of Greek banks and the imposition of capital controls.
Bank Run and Capital Controls
The move to impose capital controls followed two days of long lines forming at ATMs across the country, following Tsipras' decision to call a referendum on creditor proposals for Greek reforms in return for vital bailout funds.
Already Greek banks have instituted capital controls, meaning that Greek citizens have a limit of €60 a day that they are able to withdraw from their bank accounts, after billions of euros being pulled out of deposit accounts.
The images from that period are seared into Greek collective memory: pensioners weeping outside shuttered bank branches, unable to access their life savings. Tourists stranded without cash. Businesses unable to pay suppliers or employees.
Greece's five-year financial crisis took its most dramatic turn to date, with the cabinet deciding, after an 8-hour session, that Greek banks would remain shut for six working days and restrictions would be imposed on cash withdrawals. A decree published in the official Government Gazette stipulates banks will not open Monday morning and will remain closed. The finance minister could decide to shorten or extend that period.
The Referendum and Third Bailout
Held on 5 July 2015, the referendum yielded a 61.3 per cent "No" vote. Public sentiment was clear: Greeks rejected deeper austerity. Yet the victory proved pyrrhic.
Despite the overwhelming "No" vote, Tsipras capitulated within days. The alternative—a chaotic exit from the Eurozone, bank collapses, a return to the drachma—was simply too terrifying to contemplate.
The European Central Bank agreed to recapitalize Greek banks with 10 billion euros to 25 billion euros, allowing them to reopen. Banks imposed a 420 euros weekly limit on withdrawals.
Third Recapitalization
Since 2010, the four systemic banks have completed four stress tests and three rounds of recapitalization totaling about €65 billion.
The 2015 recapitalization was the third—and hopefully final—round. But by this point, dilution had become almost comical. Shareholders who had held NBG stock through multiple recapitalizations saw their ownership stakes reduced to fractions of fractions.
Yet the system held. Capital controls, while economically devastating, prevented a complete banking system collapse. And crucially, no haircut on depositors and other debtholders was imposed. Liquidation and haircuts were ruled out because they were viewed as destabilizing.
Unlike Cyprus, where large depositors suffered losses, Greek depositors were made whole. This distinction matters enormously for NBG's ability to retain customer trust and rebuild its franchise post-crisis.
VIII. The Hercules Program and NPL Resolution (2016–2024)
The NPL Mountain
Even after three recapitalizations, Greek banks faced a problem that capital injections alone couldn't solve: their loan books were radioactive. The recapitalizations did not prevent non-performing loans (NPLs) from reaching astronomical levels and remaining there for many years. NPLs reached 39.5% of all loans at the end of 2013, kept rising until 2016.
By 2016, the NPL ratio had reached an almost incomprehensible 49%. Half of all loans on Greek bank balance sheets were effectively in default. No banking system can function with such impaired assets—the capital required to provision against losses would consume all earnings indefinitely.
The Hercules Asset Protection Scheme
According to a recent report from Morningstar DBRS, the Greek Non-Performing Loans (NPL) market has made significant strides over the past five years, largely due to the implementation of the Hercules Asset Protection Scheme (HAPS). This initiative, launched in 2019 by the Hellenic Ministry of Economy and Finance, was designed to help Greek banks reduce their massive NPL portfolios. The program's success has been pivotal in stabilizing the country's banking sector.
Drawing inspiration from the labors of the mythological hero Hercules, the Hercules Asset Protection Scheme (HAPS) reflects the immense challenge it was designed to tackle. Much like Hercules, who was tasked with completing twelve seemingly impossible feats, HAPS was introduced to bring order to a financial system plagued by bad debts and an unstable banking environment.
The naming was appropriate: cleaning up €100+ billion in bad loans was indeed a Herculean task.
The first version of the Hercules Asset Protection Scheme ran for 18 months with a budget of €12 billion, enabling banks to securitize and offload bad loans. Following the success of HAPS I, the program was extended twice, and HAPS III is currently underway. To date, 17 transactions have been executed under the scheme, involving Greece's four systemic banks.
The mechanism was elegant: banks would package their NPLs into securitizations. The senior tranches would receive government guarantees, making them attractive to institutional investors. Banks would sell the junior and mezzanine tranches to specialized investors. Bad loans would move off bank balance sheets and into the hands of specialized servicers better equipped to work them out.
NBG's Frontier Securitization
NBG executed one of the largest NPL securitizations under the Hercules scheme. National Bank closed in 2021 with an NPE index of 6.9% after the completion of Frontier I, a transaction totaling approximately 6 billion euros. With the completion of Frontier II, the bank's NPE index approached 5%, with a target of 3% in 2024.
The transformation was remarkable. From 49% system-wide NPLs in 2016 to single digits by 2021, Greek banks—including NBG—had accomplished what many observers thought impossible.
Results: A Clean Balance Sheet
NBG's asset quality shows resilience, with a Non-Performing Exposure (NPE) ratio of 2.6% in Q1 2025, significantly lower than the Greek banking sector's overall NPL ratio of 3.8% in December 2024.
The bank maintains high NPE and S3 coverage ratios of 97% and 54% respectively.
The ultimate goal of lenders is for NPEs to be close to 3%, which is the EU average. Greek banks are planning this year the sale of three large non-performing loan securitizations, totaling about 6 billion euros.
NBG has now achieved NPL ratios below EU averages—a transformation that seemed unimaginable just eight years ago. The bad loans are gone, the provisions are adequate, and the balance sheet is clean.
For investors, the NPL cleanup represents the final chapter of the crisis story. With NPLs at 2.6% and coverage at 97%, NBG's credit risk is now comparable to well-run European peers. The existential risk that defined the 2010-2016 period has been eliminated.
IX. The Transformation Program and Digital Renaissance (2018–Present)
Leadership Transition
Mr. Pavlos Mylonas was appointed Chief Executive Officer of National Bank of Greece in July 2018. He joined NBG in 2000 and served, inter alia, as Deputy CEO, CRO and Head of Strategy. He worked as a Senior Economist at the OECD from 1995 to 2000, as well as at the International Monetary Fund from 1987 to 1995. In the years 1985-1987 he was visiting Assistant Professor at the Department of Economics in Boston University.
Mylonas's background is revealing: Princeton PhD, IMF and OECD economist, then two decades rising through NBG's ranks. He understood both the macroeconomic forces that had devastated Greece and the granular operational challenges facing the bank. His appointment coincided with the shift from crisis management to transformation.
He was elected Executive Member of the Board of Directors and Deputy CEO of NBG in June 2014. He was appointed Chief Risk Officer in December 2013. He is a Member of the Executive Committee since 2012 and of the ALCO Committee of the Group since 2000. In July 2012, he was appointed General Manager of Strategy and International Operations. From December 2010 until July 2012, he served as General Manager of Strategy and Governance. From April 2004 to December 2010, he was General Manager of Strategy and Research, Head of Investor Relations and Chief Economist of NBG Group.
Digital Transformation
NBG is the only Greek bank upgrading its core banking system, a process expected to conclude in 2025. The bank has the largest digital customer base in Greece, with 3 million registered users and 1.65 million monthly active users.
This system has already migrated the majority of its lending portfolio, with full completion anticipated in 2025. NBG is recognized among the top 10% of European institutions for its technological infrastructure and innovation capabilities.
The core banking system upgrade is perhaps the most important strategic investment NBG has made since the crisis. Legacy systems, some dating to the 1980s, were inadequate for modern digital banking. The new platform enables real-time processing, API-based integration with fintechs, and the data infrastructure needed for AI-driven services.
The launch of an Azure-powered Document AI solution in June 2024 processes thousands of documents daily with 90% accuracy, enhancing operational efficiency. This digital push has resulted in NBG having the largest digital customer base in Greece, with 3 million registered users.
Azure-powered Document AI processing at 0.5 seconds per page. Document AI accuracy rate of 90%. Focus on Artificial Intelligence and Generative AI for enhanced operations.
HFSF Divestment: The Road to Full Privatization
In November 2023, the HFSF reduced its stake in NBG from 40.39% to 20.39%. In October 2024, the HFSF sold a 10% stake in NBG and will transfer its remaining 8.4% stake in National Bank to Greece's sovereign wealth fund at the end of the year.
Since 2013, the HFSF has held a substantial stake in the share capital of NBG (as high as 84.39% in 2013), which it has been gradually reducing through divestments. In November 2023, the HFSF divested a 22% stake in the share capital of NBG, through a fully marketed offering, which reduced its shareholding to 18.39%.
Greece sold a 22% stake in the National Bank of Greece (NBG) for 1.06 billion euros ($1.15 billion), the third divestment made by the Greek state in the past two months.
NBG announces the successful completion of the divestment of a 10% stake in the share capital of the Bank previously held by HFSF, at a price of €7.55 per share. The divestment took place through a private placement book building process outside Greece and a public offering in Greece. The transaction was underpinned by impressive interest from investors in Greece and Internationally, with the total demand exceeding the number of offered shares by nearly 11 times overall and 12 times abroad. In the Greek Public Offering 70% was allocated to retail investors.
The HFSF stake is now down to 8.39% from 40.4% before the start of disinvestment.
The privatization process has been remarkably successful. Strong demand from institutional investors—11x oversubscription—reflects confidence in NBG's transformation. The state is essentially out, and NBG is once again a privately-owned commercial bank.
Return to Profitability and Dividends
Core Profit After Tax reached €1.3 billion (+10% YoY). Earnings Per Share rose to €1.4 (up from €1.2 in 2023).
Capital ratios remain far above target, with CET1 and total capital ratios reaching 18.3% and 21.1%, respectively, including a payout accrual of 50% out of 2024 earnings, compared with 30% paid out last year.
The bank approved a dividend payout in 2023, marking a return to shareholder remuneration after 16 years.
To receive the latest dividend of National Bank of Greece from 6/10/2025 amounting to 0.444 EUR, you needed to have the stock in your portfolio before the ex-date on 6/3/2025. The last dividend was paid out on 6/10/2025.
The resumption of dividends after 16 years is symbolically significant. It marks NBG's return to normal banking—generating profits, returning capital to shareholders, operating without existential uncertainty.
X. Current Position and Strategic Outlook
Financial Snapshot 2024-2025
NBG's financial results for Q3 2025 showcase a bank delivering solid performance despite some challenges. Net profit for the first nine months of 2025 approached €1 billion. The bank's loan portfolio expanded impressively by 12% compared to the same period last year, with total loan disbursements reaching €5.7 billion. This growth significantly exceeded management's initial expansion target of €2.5 billion.
NBG's balance sheet remains robust, with €77.6 billion in total assets as of 1H25. The asset mix includes €7.5 billion in cash and reserves, €20.6 billion in securities, and €37.3 billion in net loans. On the liability side, core deposits of €48.7 billion provide stable funding, complemented by €10.6 billion in time deposits. The bank's strong capital position, with a CET1 ratio of 18.9%, provides significant strategic flexibility.
NBG intends to increase its payout ratio to approximately 60% from 2025 earnings, signaling confidence in future earnings. With CET1 and total capital ratios at 18.7% and 21.5% respectively in 1Q25, NBG maintains a strong capital base.
Business Plan 2025-2027
NBG aims for a 2027 Return on Tangible Equity target of over 14%, with an adjusted target of over 18%. The bank plans to achieve an EPS target of €1.5 and a loan growth CAGR of approximately 8%, with corporate loans growing more than 9% and retail loans around 3%. The cost of risk is expected to normalize below 40 basis points, and the payout ratio target is set at around 60% from 2025 earnings.
CEO Pavlos Mylonas emphasized the favorable economic environment, stating, "Greece's economy remains on a superior growth trajectory." This positive backdrop provides NBG with continued opportunities for expansion and market share gains.
Greek Macroeconomic Context
GDP growth is projected to be relatively stable, with rates of 2.1% in 2025 and 2.2% in 2026, before moderating to 1.7% in 2027. While the economy has so far demonstrated resilience to external challenges, a prolonged increase in geopolitical or trade uncertainty could weigh on exports and investment activity.
The unemployment rate declined to 8.2% in October 2025, its lowest level since 2009, but remains above the EU average.
Greece's GDP increased by a solid 2.3% y-o-y in FY:2024, outpacing the euro area average (0.8% y-o-y) for a 4th consecutive year. In Q4:2024, GDP growth accelerated to 2.6% y-o-y—the strongest annual pace since Q2:2023.
The public debt-to-GDP ratio stood at 154.2% in 2024, 55 percentage points below its peak in 2020. It is expected to decrease further, reaching 138% in 2027. The decline is set to be driven by nominal GDP growth as well as primary budget surpluses.
Greece's macro trajectory matters enormously for NBG. The country has outperformed the Eurozone for four consecutive years, unemployment is at 15-year lows, and debt dynamics are improving. This is the opposite of the doom loop that nearly destroyed the banking system a decade ago—now it's a virtuous cycle of growth, fiscal improvement, and financial sector health.
XI. Competitive Landscape and Market Position
The Four Systemic Banks
The top four banks control 90% of both the loan market and deposits.
In Greece, with a 30% market share in loans and 29% in deposits, Piraeus Bank is the country's largest bank.
National Bank of Greece (NBG) is a cornerstone of the Greek banking sector, holding a significant position as the second-largest institution by assets, deposits, and loans. Its substantial financial footprint is underscored by total assets of approximately $81.52 billion as of March 31, 2025.
The competitive dynamics among Greece's four systemic banks—Piraeus, NBG, Alpha, and Eurobank—are fascinating. Having consolidated from 60+ institutions during the crisis, they now collectively control virtually the entire Greek banking market. This oligopolistic structure has pros and cons:
Positives: Strong pricing power, economies of scale, ability to invest in technology, reduced competition on deposits.
Negatives: Limited growth opportunities within Greece, regulatory scrutiny, potential for complacency.
NBG provides a full spectrum of financial services, encompassing retail and corporate banking, lending, deposits, payments, investment banking, asset management, and insurance. The bank also maintains a strong market position in financing renewable energy sources, with €2.4 billion in outstanding balances as of December 31, 2024.
NBG's Competitive Advantages
The bank boasts a clean balance sheet with a low Non-Performing Exposure ratio of 2.6% and high NPE coverage of 97%. Its balance sheet is characterized by a significant portion of low-cost deposit funding. NBG's competitive advantages are further bolstered by its strategic focus on digital transformation.
Notably, NBG's Structured Financing unit expanded its portfolio in 2024 by 32% YoY, with disbursements increasing by almost 70%. These results reflect its strategic focus, operational excellence, and capacity to support transformative investments. NBG has established four equally dynamic pillars within Structured Financing—Energy, Infrastructure, Real Estate and Leveraged Acquisition Finance.
XII. Bull and Bear Case Analysis
Bull Case
Greek Economic Convergence: Greece continues outperforming the Eurozone, potentially for years. RRP funds drive investment, tourism remains strong, and the labor market tightens further. In this scenario, loan growth exceeds 8% targets, credit quality remains pristine, and NBG's ROE approaches 20%.
Digital Leadership: NBG's core banking transformation positions it as the technology leader among Greek banks. First-mover advantages in AI-driven services, embedded finance, and open banking create sustainable competitive differentiation.
Capital Deployment Optionality: With CET1 at 18.7%—far above regulatory minimums—NBG has enormous flexibility. Options include: increased dividends, share buybacks, bolt-on acquisitions, or expansion of structured finance.
NBG successfully executed tender offers in July 2025 for its €500 million 2.75% Green Senior Preferred notes due 2026 (84% acceptance) and £200 million 8.75% Senior Preferred notes due 2027 (85% acceptance). This capital strength supports multiple strategic options, including high shareholder payouts, organic growth initiatives, expansion of international syndicated lending, and potential strategic acquisitions.
Re-Rating Potential: Greek banks trade at significant discounts to European peers despite superior profitability and capital metrics. If international investors regain confidence in Greece fully, valuation multiples could expand substantially.
Bear Case
Sovereign Risk Redux: While unlikely, another Greek fiscal crisis would devastate NBG. The sovereign-banking nexus, though reduced, still exists through government bond holdings and operational exposure.
Rate Normalization Pressure: ECB rate cuts compress net interest margins. Net interest income declined by 9.8% year-on-year to €1.6 billion in the first nine months of 2025. If rate cuts continue faster than expected, NII could fall further.
Concentration Risk: NBG remains almost entirely a Greek story. Unlike diversified European banks, it has minimal geographic hedging if Greece-specific risks materialize.
Execution Risk on Transformation: The core banking system upgrade is nearly complete, but technology projects often disappoint. Delays or cost overruns could impact profitability and market confidence.
Porter's Five Forces Analysis
Rivalry Among Existing Competitors: Moderate. Four banks control 95% of the market, suggesting limited price competition. However, competition for corporate lending and high-net-worth clients remains intense.
Threat of New Entrants: Low. Banking regulations, capital requirements, and branch network requirements create substantial barriers. Digital-only entrants have made limited inroads.
Bargaining Power of Suppliers: Low. NBG's primary "suppliers" are depositors, who have limited negotiating power in an oligopolistic market.
Bargaining Power of Buyers: Moderate. Large corporate clients can negotiate terms across the four systemic banks, but retail customers have limited alternatives.
Threat of Substitutes: Growing. Fintech competition, embedded finance, and alternative lending (private credit, direct lending) are emerging substitutes, particularly for younger demographics.
Hamilton Helmer's 7 Powers Framework
Scale Economies: Moderate. NBG's size provides cost advantages in technology investment, regulatory compliance, and marketing—but these benefits are shared with similarly-sized competitors.
Network Effects: Limited. Unlike payments networks or social platforms, banking has limited inherent network effects.
Counter-Positioning: Potentially significant. NBG's digital transformation may represent a counter-position against competitors hesitant to cannibalize legacy revenues. NBG is the only Greek bank upgrading its core banking system.
Switching Costs: Moderate to high. Business customers face significant switching costs (payment integrations, credit relationships, operational disruption). Retail switching costs are lower but still meaningful.
Branding: Strong. NBG positions itself as "the most trusted bank in Greece." 184 years of history creates brand recognition and trust that newer competitors cannot replicate.
Cornered Resource: Limited. NBG has no exclusive access to critical resources, though its customer data and relationships represent intangible assets.
Process Power: Growing. If NBG's digital transformation delivers sustainable operational efficiency advantages, this could become a meaningful competitive moat.
XIII. Key KPIs to Monitor
For investors tracking NBG's ongoing performance, three metrics stand out as most critical:
1. NPE Ratio and Coverage
The NPE ratio remains the single best indicator of whether NBG has truly escaped its crisis legacy. Current levels (2.6%) are excellent, but any deterioration—particularly during economic downturns—would signal potential trouble.
What to watch: Quarterly NPE ratio trends, organic NPE formation (new defaults), and coverage ratios. Any material increase in organic NPEs would be a warning sign.
2. Return on Tangible Equity (RoTE)
RoTE captures NBG's fundamental profitability after accounting for goodwill and intangibles. Management targets exceed 14% by 2027 (18% adjusted for excess capital).
What to watch: Quarterly RoTE progression, particularly as interest rates normalize. The key question is whether fee income growth and cost discipline can offset NII pressure.
3. Loan Growth (Particularly Corporate)
NBG's strategy depends on replacing lost interest income with volume growth. The 8% CAGR target for loan growth—with corporate loans growing 9%+—is ambitious.
What to watch: Quarterly loan disbursement data, market share trends, and the quality-quantity tradeoff. Growth is only valuable if credit quality holds.
XIV. Myth vs. Reality
| Consensus Narrative | Reality Check |
|---|---|
| "Greek banks are still risky after the crisis" | NPL ratios are now below EU averages; NBG's 2.6% NPE ratio with 97% coverage represents best-in-class asset quality. The crisis-era risks have been substantially resolved. |
| "State ownership means inefficient management" | HFSF stake has dropped from 84% to 8%. NBG operates as a commercially-oriented institution with sophisticated governance and professional management. |
| "Low valuations reflect fundamental problems" | Greek banks trade at discounts partly due to historical stigma, not current fundamentals. NBG's RoTE exceeds many European peers trading at higher multiples. |
| "Interest rate sensitivity is a major risk" | While NII is rate-sensitive, NBG's business plan explicitly accounts for rate normalization. Loan growth and fee income are designed to offset NII pressure. |
XV. Risks and Regulatory Considerations
Material Regulatory Overhangs
ECB Supervision: NBG has been designated as a Significant Institution since the entry into force of European Banking Supervision in 2014, and as a consequence is directly supervised by the European Central Bank. This supervisory scrutiny provides both discipline and potential constraint on capital actions.
Capital Requirements: NBG maintains substantial buffers above regulatory minimums, but any increase in systemic risk buffers or MREL requirements could restrict shareholder distributions.
HFSF Wind-Down: The remaining 8.4% HFSF stake is scheduled to transfer to Greece's sovereign wealth fund. The mechanics and timing of final state exit could create temporary uncertainty.
Accounting Considerations
IFRS 9 Provisions: NPL provisions under IFRS 9 require significant management judgment regarding forward-looking economic scenarios. Changes in methodology or assumptions could impact reported earnings.
Deferred Tax Assets: Like most Greek banks, NBG carries significant deferred tax assets from crisis-era losses. The realizability of these DTAs depends on future profitability—a circular assumption worth monitoring.
Securities Portfolio Valuation: With €20+ billion in securities, mark-to-market volatility can impact both earnings and capital ratios, particularly during periods of interest rate volatility.
XVI. Conclusion: The Phoenix Emerged
The story of the National Bank of Greece is, in many ways, the story of Greece itself: a proud nation with ancient heritage, a traumatic modern history, periods of remarkable resilience followed by devastating collapse, and ultimately, the grinding work of reconstruction.
NBG was there when Greece declared independence. It printed the nation's money for 87 years. It financed Greece's industrialization, survived two world wars and a military dictatorship, and expanded across Southeast Europe in the heady days before the crisis.
Then it nearly died. The sovereign-banking doom loop, the PSI haircuts, the capital controls, the bank runs—NBG experienced them all. Shareholders were wiped out not once but repeatedly. The Greek state owned 84% of the bank at one point.
And yet, here we are in late 2025, and NBG is thriving. Core PAT amounted to €1.3b, with core RoTE standing at 17.5%. Key contributor to these solid results was the resilience of NII, benefitting from the strong expansion of the performing loan book, up by €3.1b yoy.
The bank plans to distribute an interim dividend in Q4 2025 representing approximately one-third of its targeted 60% payout ratio. Management also highlighted the ongoing transformation program, including a core banking system upgrade expected to complete in Q1 2026.
The transformation is real. NPLs that once exceeded 40% are now below 3%. The state stake has dropped from 84% to 8%. Dividends have resumed after 16 years. Digital banking users number in the millions. The balance sheet is fortress-like.
For long-term fundamental investors, NBG presents a compelling case study in institutional resilience and transformation. The risks of the 2010-2016 period have been substantially addressed. What remains is a dominant domestic franchise, strong capital generation, and meaningful optionality for capital deployment.
The key insight for investors: NBG's story is now a Greek economic recovery story rather than a Greek banking crisis story. If you believe in Greece's continued convergence toward European living standards—in the tourism industry's resilience, the RRP-funded investment boom, the fiscal discipline that has reduced debt from 209% of GDP to 154%—then NBG is a leveraged way to participate in that recovery.
The bank continues to operate in a Greek economy that remains on a "superior growth trajectory," according to CEO Pavlos Mylonas.
184 years after Georgios Stavros opened the doors of Greece's first bank, the institution he built has survived its greatest test. The phoenix has emerged from the ashes. The question now is how high it can fly.
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