Annual Financial Report
31 December 2022
According to Law 3556/2007
The information contained in this Annual Financial Report has been translated from the original Annual Financial
Report that has been prepared in the Greek language. In the event that differences exist between this translation and
the original Greek language Annual Financial Report, the Greek language Annual Financial Report will prevail over this
document.
INDEX
Statement of the Board of Directors – 31 December 2022
8
STATEMENT OF ARTICLE 4 PAR. 2 OF LAW 3556/2007
To the best of our knowledge, the full year 2022 financial statements that have been prepared in accordance with the
applicable accounting standards give a fair and true view of the assets, liabilities, equity and income statement of Piraeus
Financial Holdings S.A. and the group of companies included in the consolidated financial statements, taken as a whole. In
addition, the Board of Director’s Annual Report for 2022 gives a fair and true view of the evolution, performance and position
of Piraeus Financial Holdings S.A. and the group of companies included in the consolidated financial statements, taken as a
whole, including the description of the main risks and uncertainties they have to face.
Athens, 16 March 2023
Non-Executive
Chairman of BoD
Managing Director (CEO)
Executive BoD Member
Non-Executive BoD Member
George
P.
Handjinicolaou
Christos I. Megalou
Solomon A. Berahas
Board of Directors' Report – 31 December 2022
9
Board of Directors’ Annual Report
BOARD OF DIRECTORS’ ANNUAL REPORT
Global Economic Environment and Key Developments
The year 2022 was characterized by new and significant challenges for the global economy. While economic activity gradually
returned to its pre-pandemic level, favored by the lifting of restrictive measures for Covid-19 in most countries, Russia's
invasion of Ukraine and the rise of inflation to a level that the Western world has not faced since the late 1970s created a
completely new economic environment, with increased risks and uncertainty.
Particularly in Europe, the impact of the war was not limited to an unprecedented rise in energy prices, but also highlighted
the risk of insufficient quantities of natural gas during the winter of 2022-23.
To cope with the significantly higher cost of living, the majority of countries in the Western world implemented measures to
support the most vulnerable, especially households, maintaining their expansionary fiscal policy and preventing a large drop
in consumer demand. At the same time, in order to tame the very high and persistent inflation, central banks proceeded with
a rapid tightening of their monetary policies.
Ιn 2022, the global economy grew at a rate of approximately 3.2% (2021: 6.0%), while for 2023, the International Monetary
Fund (“IMF”) estimates a slowdown of 2.7%. At the same time, a significant de-escalation of inflation is expected, although it
will remain much higher than desired.
In the US, the economic activity growth rate in 2022 is estimated to be 1.6% (2021: 5.7%), while for 2023, it is predicted to be
1.0%. At the same time, inflation rose to 8.1% (2021: 4.7%) and is expected to moderate to 3.5% in 2023, according to IMF
forecasts. The Fed increased its monetary policy interest rate by a total of 4.25% in 2022 (from a range of 0.00%-0.25% to a
range of 4.25%-4.50%), while according to the estimates of its members, further increases of 75 basis points (“bps”) in total
are likely in 2023. At the same time, following the end of the quantitative easing program last March, the Fed started to
gradually reducing its balance sheet.
In the Eurozone, based on the IMF's estimates, the 2022 growth rate decelerated to 3.1% (2021: 5.2%), while for 2023 it is
estimated that it will further moderate to 0.5%. At the same time, a significant de-escalation of inflation is expected, specifically
from 8.3% in 2022 to 5.7% in 2023. In 2022, the European Central Bank (“ECB”) proceeded with the completion of its
quantitative easing programs (Pandemic Emergency Purchase Program/ “PEPP” and Asset Purchase Program/ “APP”) and the
successive increase of its key interest rates by a total of 2.50%. The ECB continued interest rate hikes in early 2023 with another
50 bps increase in February 2023, and is expected to begin gradually reducing its balance sheet. However, it will continue
applying flexibility in reinvesting redemptions coming due in the PEPP portfolio and will reinvest the principal payments from
maturing securities purchased under the program until at least the end of 2024.
In China, the zero-tolerance Covid-19 policy significantly affected economic activity, limiting the 2022 growth rate to 3.2%
(2021: 8.1%), according to estimates from the IMF. It is estimated that the 2023 growth rate will be 4.4%, positively affected
by the more moderate pandemic policy announced in December 2022. Inflation is expected to remain at 2.2%. Therefore,
China's central bank is expected to maintain its accommodative monetary policy stance.
Board of Directors' Report – 31 December 2022
10
(annual % change)
Real Gross Domestic Product (“Real GDP”)
Inflation
2021
2022*
2023*
2021
2022*
2023*
World
6.0
3.2
2.7
4.7
8.8
6.5
US
5.7
1.6
1.0
4.7
8.1
3.5
Eurozone
5.2
3.1
0.5
2.6
8.3
5.7
China
8.1
3.2
4.4
0.9
2.2
2.2
*Estimate
Sources:
Developments in the Greek Economy in 2022, Prospects and Risks for 2023
Despite rising inflationary pressures and the strong uncertainty linked to the geopolitical developments and the energy crisis,
the Greek economy grew at a solid pace in 2022, with, real GDP increasing by 5.9% on an annual seasonally adjusted basis -
largely driven by the positive contribution of the private consumption and investments – while the nominal GDP growth rate
reached double-digits at 14.5%. During the same period the unemployment rate declined further to 12.6%, down by 2.7
percentage points compared to the same period a year ago, while employment growth rate reached on average 6.6% on an
annual non - seasonally adjusted basis. However, strong inflationary pressures were a key feature of 2022, both in the global
markets and in Greece. In 2022, the headline national inflation (Consumer Price Index/ “CPI”) reached 9.6% and the harmonized
inflation (“HICP”) reached 9.3%. The Greek government in order to battle the effects of inflation and support the real economy,
undertook a series of fiscal interventions during the course of 2022. These took the form of subsidies of electricity consumption
of households and businesses, increase of the heat allowance and extension of the eligible population, subsidies to the gas
prices, and other tax cuts and subsidies for the low pensioners and weak households. Enhanced surveillance of Greece ended
on the 20th of August 2022 and the first post-program surveillance (“PPS”) report was released on 22 November 2022. In
February 2023, the European Commission (“EC”) released its Winter Interim Forecast which lifted the outlook for growth and
slightly lowered the inflationary projections. For 2023, both the EC and the Ministry of Finance expect that inflationary
pressures will remain strong - albeit less intense - and that the real GDP growth rate will decelerate. However, the EC estimates
that the growth rate will rebound to 2.2% in 2024. Τhe labor market will show resilience and the unemployment rate will
remain unchanged.
Ministry of Finance
1
EC
2 3
2022
2023
2022
2023
2024
Real GDP growth rate
5.6
1.8
5.5
1.2
2.2
Inflation (HICP, %)
9.7
5.0
9.3
4.5
2.4
Unemployment Rate
12.7
12.6
12.6
12.6
12.1
1.
Ministry of Finance, 2023 Budget introductory report, November 2022
2.
Real GDP growth rate & Inflation (HICP, %) as per EC, European Economic Forecast, Winter 2023 Institutional paper 194, February 2023
3.
Unemployment rate as per EC, PPS Report, Greece, Autumn 2022 institutional paper 191, November 2022
Board of Directors' Report – 31 December 2022
11
Based on the 2023 Budget introductory report the headline general government deficit (European System of Accounts/ “ESA”
definition) will narrow from 7.5% of GDP in 2021 to 4.1% of GDP in 2022, which corresponds to a primary deficit of 1.6% of
GDP in 2022. The headline deficit is expected to decrease further to 2.0% of GDP in 2023, bringing the primary balance to a
surplus of 0.7% of GDP. The general government debt to GDP ratio is expected to fall sharply from 194.5% of GDP in 2021 to
168.9% of GDP in 2022, and to remain on a downward trajectory (159.3% of GDP in 2023), supported by the nominal GDP
growth rate and the move into a primary surplus position in 2023.
The implementation of the Recovery and Resilience Facility (“RRF”) plan, both for its grant component, as well as the private-
sector investments through the loan facility, is a key factor for the sustainable growth potentials. Greece stands to benefit from
a total envelope of € 30.16 billion (€ 17.43 billion in grants and € 12.73 billion in loans) under the RRF, 25% of which have
already been disbursed in pre-financing and the first regular instalment in April 2022
1
. On 25 November 2022 the EC endorsed
a positive preliminary assessment of Greece's second payment request for € 3.6 billion, submitted at end-September
2
.
Developments in the
Greek Banking System
The Greek banking system in 2022 continued to recover, despite the challenging macroeconomic and geopolitical environment
(war in Ukraine, energy crisis, high inflation rates).
The measures that ECB had taken to deal with the negative effects of the pandemic, mainly through the Targeted Longer Term
Refinancing Operations (“TLTRO”) facility, improved the funding and liquidity status of the system, while deposits continued
rising in 2022. In December 2022, private sector deposits reached € 188.7 billion, up 4.9% year on year.
As at 21 December 2022 Greek banks repaid part of the TLTRO III funding, following the ECB’s decision in its 27 October
meeting, to recalibrate the TLTRO III terms with effect from 23 November 2022 and until the maturity date or early repayment
date of each respective outstanding TLTRO III operation. Following the repayment and as at 31 December 2022, total ECB
funding to the Greek banking system had been reduced to € 35.4 billion compared to € 50.8 billion at the end of December
2021
3
.
Loans to the domestic private sector presented growth in 2022, following the clean-up of Greek banks’ balance sheets and
solid new loan origination on the back of an expanding economy. In December 2022, loans to the domestic private sector grew
by 5.4% yoy to € 115 billion.
Going forward, credit expansion is expected to be positively affected by the funds of the Next Generation European Union
(“EU”), the funding package during the period 2021-2026, sponsored by the EU, which targets to alleviate the impact of the
Covid-19 pandemic. The Greek banking system is expected to leverage the EU funds in order to support the Greek economy
and lay the ground for sustainable growth rates in the next years. The 6 domestic banking institutions that have signed
agreements with the Ministry of Finance for the utilization of the € 12.7 billion loans from RRF have already started absorbing
the first tranches and receiving approval for the second tranches. So far, 41 loan contracts have been signed, regarding an
aggregate of € 1.8 billion of RRF eligible projects, while 210 projects have been submitted in total to "Greece 2.0", with their
budget amounting to € 8.2 billion, out of which € 2.7 billion relates to banking financing.
1
EC, PPS Report, Greece, Autumn 2022 institutional paper 191, November 2022
2
3
Board of Directors' Report – 31 December 2022
12
Since mid-2020, Greek banks have increased their exposure on Greek sovereign debt, which has led to significant gains due to
the normalization of Greek sovereign bond yields, on the back of the country’s economic recovery. In 2022, Greek sovereign
debt yields increased from historical low levels witnessed in August 2021, driven by ECB’s decision to cease net asset purchases
under the PEPP at the end of March 2022, along with the increased geopolitical uncertainty, inflationary pressures and tighter
monetary policy from major central banks. Greek banks have, to a large extent, weathered the 2022 rise in Greek sovereign
bond yields, as the majority of their Greek sovereign bond positions have been classified under amortized cost portfolios, while
at the same time derivative hedges have been used extensively to protect the debt securities portfolios from rising yields.
During 2022 all systemic Greek Banks proceeded with the issuance of Senior Preferred Bonds of a total amount of
approximately € 2.5 billion, as part of their strategy to increase their minimum requirements for own funds and eligible
liabilities (“MREL”).
As at 30 September 2022, the Non-Performing Exposures (“NPE”) balance of the Greek banking system stood at € 14.6 billion
4
with the NPE ratio standing at 9.7%, compared to 15% a year ago. The main driver of NPE ratio decline has been Hellenic Asset
Protection Scheme (“HAPS”), also called “Hercules” plan, which has been instrumental in assisting banks to reduce their NPEs
between 2020-22, through securitizations of which the senior tranches bear Government’s guarantee; HAPS expired in October
2022, which however does not pose a risk for the undergoing NPE securitizations that have already submitted applications for
the Government’s guarantee.
Significant developments that are expected to play key role in the Greek banks’ priorities during 2023 are:
●
The ECB’s Governing Council decisions since the July 2022 meeting to raise interest rates cumulatively by 300 bps in total
and the prospect for further hikes in the near future. This development is having positive implications on the banks’ net
interest income and therefore group profits, although it is expected to affect funding costs negative ly;
●
The deployment of the RRF funds for the financing of Greek businesses that is expected to mobilize € 60 billion in total
investments in the country over the next five (5) years;
●
The 2023 supervisory Stress Tests that have been launched in January 2023 with the publication of the macroeconomic
scenarios. The results will be published by the end of July 2023. The 2023 EU-wide stress test uses a constrained bottom-
up approach with some top-down elements. Balance sheets are assumed to be constant. The aim of the EU-wide stress test
is to assess the resilience of EU banks to a common set of adverse economic developments in order to identify potential
risks, inform supervisory decisions and increase market discipline;
●
The establishment of the new MREL by the Single Resolution Board (“SRB”), which became effective from 1 January 2022
and aims to ensure that banks are provided with sufficient own funds and eligible liabilities to guarantee their capacity to
absorb losses in adverse scenarios, thus ensuring the continuity of their activity. For Greek Banks, MREL targets have been
set according to a transition period, i.e. setting the final binding target by 31 December 2025.
Piraeus Financial Holdings Group Developments
The most important corporate events for Piraeus Financial Holdings Group
(hereinafter
the “Group”) during 2022 and up to
the authorization date for issuance of the annual financial statements by the Board of Directors (“BoD”), were the following:
Project Dory - Agreement for the sale of shipping NPEs portfolio
4
Board of Directors' Report – 31 December 2022
13
On 4 January 2022, Piraeus Financial Holdings (hereinafter the “Company ”) announced that its subsidiary Piraeus Bank S.A.
(the “Bank”) had reached an agreement with an entity affiliated with Davidson Kempner Capital Management LP, for the sale
of a shipping NPE portfolio amounting to a gross book value of € 0.4 billion. On 4 March 2022, the sale was completed, and the
total agreed consideration of the transaction reached € 0.2 billion, or 53% of the portfolio gross book value. The Transaction
was completed after receiving all the required approvals, as well as the consent of the Hellenic Financial Stability Fund (“HFSF”).
Controlling Stake in Trastor Real Estate Investment Company
On 21 January 2022, the Company announced that its subsidiary Piraeus Bank had reached an agreement with WRED LLC
(“WRED”), a company affiliated with Värde Partners, for the acquisition of WRED’s c. 52% stake in Trastor Real Estate
Investment Company S.A. (hereinafter “Trastor”). The Transaction was completed on 28 February 2022, after receiving the
required approvals, as well as the consent of the HFSF. The cash consideration of the transaction amounted to € 98 million (€
1.25 per share). On 20 June 2022, the period of the mandatory tender offer by the Bank for the remaining 3.25% free float of
Trastor’s shares was concluded. Following the completion of the mandatory tender offer, the Bank holds 98.4% of the total
shareholding of Trastor .
Piraeus Bank and Euronet Worldwide initiated their strategic cooperation in merchant acquiring services
On 16 March 2022, the Company announced that the Bank successfully com pleted the spin-off of merchant acquiring services
to a new company and its subsequent sale to Euronet Worldwide Inc. The total consideration of the transaction amounted at
€ 300 million.
Piraeus Bank agrees to acquire Iolcus Investments
On 19 July 2022, the Company announced that the Bank completed the acquisition of 100% stake in Iolcus Investments AIFM
(“Iolcus”), based on the relevant agreement signed on 5 April 2022, having obtained the necessary regulatory approvals. With
the completion of Iolcus’ acquisition, the Bank’s Group assets under management are in the order of c. € 6.9 billion as at 31
December 2022.
Rating Upgrades
On 13 January 2022, DBRS Morningstar assigned first-time public ratings to the Bank, including a long-term issuer rating of “B”
and a stable outlook. On 7 December 2022, DBRS upgraded the Bank’s long-term issuer rating and Senior Preferred debt rating
to B (high) with a stable outlook.
On 18 February 2022, Fitch Ratings upgraded the Bank’s long-term issuer rating to “B-” from “CCC+”, with a positive outlook,
reflecting the progress in improving asset quality and capital. The Bank’s Senior Preferred debt rating was also upgraded by
two notches, to “B -“. Further, on 31 January 2023, Fitch Ratings upgraded the Bank’s long-term issuer rating and the Bank’s
Senior Preferred debt rating to “B”, maintaining a positive outlook.
On 30 March 2022, Moody’s Investors Service upgraded the Bank’s long-term deposit rating to “B2” from “B3” and maintained
a positive outlook, while it upgraded the Company’s long-term issuer rating to “Caa1” (positive outlook) from “Caa3”. Further,
on 7 November 2022, Moody’s Investors Service upgraded the Bank’s long-term deposit rating to “Ba3” from “B2” and assigned
a stable outlook, while it upgraded the Company’s long-term issuer rating to “B2” (stable outlook) from “Caa1”.
On 19 July 2022, S&P Global Ratings revised the Bank’s outlook to positive from stable and affirmed the “B” long term issuer
Board of Directors' Report – 31 December 2022
14
credit rating. For the Company, the rating agency affirmed the “B“ long term issuer credit rating and maintained the stable
outlook.
Synthetic securitizations of performing loans in Greece
The Bank completed in 2022 four (4) synthetic securitizations of performing loans (namely Ermis Triton, Ermis Mortgage, Ermis
EIF and Ermis VI), comprising mortgage, corporate/ small-medium enterprises (“SME”) and shipping exposures (together the
“Transactions”). In the context of the Transactions, the Bank entered into financial guarantee agreements for total € 3.8 billion
gross book value securitizations of performing loan portfolios with various international counterparties. The underlying loan
portfolios will continue to be presented in the financial position of the Group.
As at 31 December 2022, the Bank has received recognition of significant risk transfer (“SRT”) for all four (4) aforementioned
loan portfolios.
As a result of the Transactions, the Group reduced its risk weighted assets by € 1.6 billion and thus enhanced its total capital
ratio by 80 bps following the respective SRT approvals from the regulatory authorities.
2022 EU-Wide Climate Stress Test Exercise
On 8 July 2022, the ECB announced the results of the first EU-Wide Climate Stress Test Exercise (“Exercise”), to assess
supervised institutions’ level of preparedness for properly managing climate risk. The Bank scored at par with the average of
the European participating banks in the Exercise, demonstrating that the status of challenges that the economy faces regarding
climate change are similar to those affecting the Group. The results indicated an advanced climate risk stress testing framework
(module 1), where the Bank achieved a top ranking among European peers, while it also performed well on data quality.
The Bank will use the results of the Exercise to further examine how to engage with its clients in order to direct them on a low-
carbon path and hence manage potential sensitivities to long-term transition risk, high concentration of corporate exposures
into carbon intensive counterparties, as well as short-term transition and physical risks.
Sunrise III – HAPS Application & Agreement for the sale of Sunrise III Portfolio of NPEs amounting to gross book value € 0.5
billion
Further to the HAPS application submitted by the Bank in July 2022 for inclusion of the Sunrise III senior notes within the HAPS,
the Bank entered into definitive agreements with Intrum AB (publ) and Waterwheel Capital Management LP for the sale of, in
aggregate, 95% of the mezzanine and junior notes of the Sunrise III securitization (the “Transaction”).
The Sunrise III portfolio comprises approximately 37 thousand retail and corporate loans with a gross book value of € 0.5 billion
as at 31 December 2021. The implied valuation of the Transaction, based on the nominal value of the senior notes and the
proceeds from the sale of the mezzanine and junior notes, corresponds to 34.2% of the portfolio gross book value as at 31
December 2021.
The Bank will retain 5% of the mezzanine and junior notes of the Sunrise III securitization, as per the relevant securitization
regulatory requirements, as well as the Sunrise III senior notes in their entirety.
Completion of the Transaction is subject to the approval by the Hellenic Republic for granting a guarantee on the senior notes
amounting to € 0.16 billion, as well as to the consent of the HFSF.
Board of Directors' Report – 31 December 2022
15
Solar - Application for inclusion in the HAPS
On 2 August 2022, the Bank together with the other three (3) systemic banks submitted to the Greek Ministry of Finance a
joint application for inclusion of the senior notes that will be issued in the context of the Solar securitization, of a nominal
amount € 304 million, in HAPS, pursuant to Law 4649/2019. Following the rating and the binding offers received, the allocation
for the Bank is at c. € 96 million, nominal amount.
Piraeus Real Estate Management
On 15 July 2022, the Bank established a new subsidiary namely "Piraeus Real Estate Management", an independent real estate
management company. The Real Estate Owned (“REO”) Assets unit, in its entirety, was transferred to the new company, as
well as the operations of the companies "Piraeus Real Estate" and "Piraeus Property".
Annual General Meeting (“GM”) of Shareholders
On 22 July 2022, the Annual GM of the Company’s Shareholders approved the offsetting of an amount equal to approximately
€ 14,557 million in the Company’s “share premium” account by writing-off equivalent losses (€ 14,557 million) in the general
ledger account 42 “Accumulated losses carried forward”, which includes accumulated losses of approximately € 14,908 million
and a tax-free reserve of approximately € 351 million.
The Annual GM also approved the share capital decrease in kind by decreasing the nominal value of each ordinary registered
share issued by the Company by the amount of € 0.02, and the payment of the amount of the share capital decrease in kind
by distributing to the Company’s shareholders shares issued by the subsidiary namely “SUNRISEMEZZ LTD” (registered in the
Cyprus registry of companies), of a value corresponding to the value of the share capital decrease, i.e. 178,623,889 shares of
the Cypriot Company in total, of nominal value of € 0.14 each, at a ratio of 1 share of the Cypriot Company for every 7 shares
of the Company already held by them.
Distribution-in-kind to the Company’ s shareholders, of the shares issued by SUNRISEMEZZ PLC.
On 20 October 2022, the distribution -in-kind to the Company’s shareholders, of the shares issued by the Cypriot subsidiary
“SUNRISEMEZZ PLC” was completed. SUNRISEMEZZ holds 44% of the mezzanine and junior tranches of the Sunrise I and Sunrise
II NPE securitizations, in accordance with the respective resolution of the Annual GM. Specifically, SUNRISEMEZZ PLC shares
were listed on the ΕΝ.Α. PLUS segment (Alternative Market) of the Athens Stock Exchange on 31 October 2022.
Strategic joint venture with Natech S.A. & Shnappi’s application for banking license
Following the 6 April 2022 announcement of strategic partnership with Natech S.A. to develop an independent innovative
digital bank for customers in Greece and the rest of the European Market for their financial and banking journey, the Company
fully covered on 14 July 2022 the share capital increase of the subsidiary namely Shnappi S.A. with € 19 million. Post the
completion of the share capital increase, the Company holds 55% of the shareholding capital of Shnappi S.A.. Further, on 31
October 2022, the Company submitted the application for a banking license of Shnappi to the Bank of Greece (“BoG”). Shnappi
will launch as a digital-only bank, the only mobile-first bank in the Greek market able to offer consumer credit. Shnappi’s
offering will include a full everyday banking platform where users can seamlessly complete digital payments and money
transfers.
Board of Directors' Report – 31 December 2022
16
Preliminary agreement for the Imithea - Euromedica merger
On 22 July 2022, Imithea Single Member S.A., owner of Henry Dunant Hospital, announced that it has reached an agreement
in principle for the absorption of the Euromedica Group, with the aim of creating one of the largest health groups in Greece
(at that time the Bank owned 100% of Imithea Single Member S.A. and 29.35% of the associate company Euromedica).
Reclassification of debt securities
On 1 October 2022 the Group reclassified debt securities issued by corporations and financial institutions of total nominal value
€ 700 million, from Fair Value through Other Comprehensive Income (“FVTOCI”) to amortised cost, following the change in
business model for managing the said asset class. The Group’s impact before tax as a result of the reclassification was an
increase in closing equity by € 82 million.
Agreement
with Resolute for real estate servicing
On 11 October 2022, the Bank reached an agreement with Resolute for the latter to provide the Bank with real estate services
in Greece. The agreement refers to real estate servicing, real estate valuation services, and asset and property management
of the Bank’s own-use and non-core properties in Greece. For the Bank, the transaction is part of its strategy for further cost
efficiencies and targeted assets utilization, bringing cost savings of more than € 5 million per annum.
Repayment of € 500 million of a 5-year covered bond
On 31 October 2022, the Bank repaid € 500 million of a 5-year Covered Bond Series bearing a floating coupon of 3-month
Euribor + 250bps. The bond was issued under the € 10 billion Covered Bond Programme and was privately placed and fully
subscribed by the European Investment Bank, the European Investment Fund and the European Bank for Reconstruction and
Development. The funds raised from the issuance were used to finance Greek SMEs from all sectors of the economy.
Piraeus Bank successfully priced a Senior Preferred Bond amounting to € 350 million
In November 2022, the Bank successfully completed the issuance of a € 350 million Senior Preferred Bond at a coupon of 8.25%
and a yield of 8.50%, attracting the interest of a large number of institutional investors. The Bond has a maturity of four (4)
years, an embedded issuer call option after three (3) years and is listed on the Luxembourg Stock Exchange’s Euro MTF market.
The issuance is part of the Bank’s strategy to increase MREL, which is a supervisory requirement for all banks .
Piraeus Bank contributed to Strix Holdings LP bond loans of total gross book value € 421 million
In November 2022, the Bank contributed into Strix Holdings LP, two (2) bond loans of total gross book value € 421 million
(carrying amount € 329 million), in exchange for additional limited partnership interests in Strix Holdings LP. As a result of this
contribution, the Bank’s cost of investment in Strix Holdings LP increased by an equivalent amount. No gain or loss was
recognized by the Group, as a result of the said contribution.
Agreement for the sale of a leasing NPE portfolio (Project Sunshine) amounting to € 0.5 billion gross book value
On 23 December 2022, the Company announced that the Bank had reached an agreement with Bain Capital Credit, for the sale
of 100% of the Group’s leasing subsidiary Sunshine Leases (“Sunshine”), including a classified as held-for -sale (“HFS”) portfolio
of leasing NPEs, of a gross book value of € 0.5 billion (the “Transaction”). The total consideration of the Transaction corresponds
to approximately 26% of gross book value. The Transaction is subject to the ordinary terms and approvals by the competent
Greek authorities.
Board of Directors' Report – 31 December 2022
17
Voluntary Exits
In accordance with its strategic objectives and transformation priorities, the Group initiated in 2022 a new Voluntary Exit
Scheme (“VES”) for a certain group of employees. As a result, a corresponding provision of € 57 million was booked within
2022, increasing equally the staff cost of the Group. The number of full time equivalents that exited during the year 2022,
making use of the 2022 VES, as well as the 2021 VES stood at 635.
Mandatory Tender Offers (“MTOs”) for the common shares in MIG and Attica
On 6 February 2023, the Company announced that the Bank acquired 47,242,062 shares in Marfin Investment Group Holdings
S.A. (“MIG”), bringing its total shareholding in MIG to 340,308,728, representing 36.22% of the total common shares
outstanding. As a result, in line with provisions of L.3461/2006, the Bank, on 9 February 2023, launched a mandatory tender
offer for the remaining common registered voting shares of MIG, with an offer price of € 0.1668 per share. Further, up to 1
March 2023, the Bank had acquired additional MIG shares corresponding to 17.91% of its voting rights, bringing the total voting
rights of MIG held by the Bank, at 54.13%. The shareholding acquired in excess of one third of MIG’s outstanding shares is
subject to regulatory approval by the Hellenic Competition Commission (“HCC”) and as a result, pursuant to the relevant
provisions of antitrust law, the voting rights arising from such shares are not currently exercisable. The highest price paid by
the Bank for the acquisition of MIG shares, stood at € 0.2170 per share, therefore the provisions of article 9 para. 2 of Law
3461/2006 shall apply to the tender offer. Following the increase of its shareholding in excess of one third of MIG’s outstanding
shares, Piraeus Bank launched on 22 February 2023 a corollary MTO to the shareholders of Attica Holdings S.A. holding a total
stake of 20.62%, in order to purchase their shares at a price of € 1.855 per share.
Organizational Structure of the Group
The Chief Executive Officer (“CEO”), supported by the members of the Group Executive Committee, is considered the Chief
Operating Decision Maker for the purposes of identifying the Group’s reportable segments. The Group manages its business
through the following reportable segments:
Retail Banking
segments as well as Channels.
Corporate Banking
Piraeus Financial Markets (“PFM”)
rate gap management arising from all banking activities) and Institutional Clients.
Other
– includes all management related activities not allocated to specific customer segments, the management of REO
assets, Wealth and Asset Management (“WAM”) activities, certain equity participations of the Group, funding transactions
approved by the Asset and Liability Management Committee (“ALCO”) and intersegmental eliminations.
NPE Management Unit (“NPE MU”)
whether the said exposures are serviced by the Group or third parties. In addition, following the derecognition of Phoenix,
Vega I, II, III, Sunrise I and Sunrise II securitized portfolios, this reportable segment includes also the senior and subordinated
notes issued by the securitization special purpose vehicles and retained by the Group. The fees payable for servicing the
Group’s NPE portfolio are recognized within this segment. Furthermore, the respective segment includes certain equity
participations classified in either FVTOCI or Fair Value through Profit or Loss (“FVTPL”), and certain associates (i.e., Strix Asset
Management Ltd, Strix Holdings LP and Strix Holdings NC LP).
Board of Directors' Report – 31 December 2022
18
Business segments include internal allocations of income and expense based on an internally approved methodology. These
allocations include, among other, the costs of certain support services and functions to the extent that they can be meaningfully
attributed to the reportable business segments. Such allocations are made on a systematic and consistent basis and involve a
degree of subjectivity. Costs that are not allocated to business segments are included in Corporate Centre (reported under
business segment “other”).
Where relevant, income and expense amounts presented, include the results of inter-segment funding along with inter-
company and inter-business line transactions. All inter company transactions between business segments are undertaken on
arm’s length terms and inter-segment transactions and balances are eliminated within each relevant segment.
Evolution of Volumes and Results of the Group during 2022
The Group has a systemic position in the Greek banking market in terms of total assets, which amount to € 75.7 billion as at 31
December 2022. The Group holds the most extensive footprint in Greece with 389 branches (plus another 16 branches in 2
countries abroad) and a wide customer base of 5.7 million active customers. The branch network in Greece was reduced by 25
units during 2022. As at 31 December 2022, the Group’s headcount totaled 8,604 employees in the continuing operations, of
which 8,271 were employed in Greece (reduced by 633 compared to a year ago, mainly due to the implementation of VES).
Balance Sheet
Regarding the financial position of the Group as at 31 December 2022, total assets amounted to € 75.7 billion compared to €
79.8 billion as at 31 December 2021, with the decline attributed to less cash with central banks due to the repayment of a
significant amount of the TLTRO facility.
Customer deposits of the Group continued to increase, reaching € 58.4 billion as at 31 December 2022, corresponding to an
increase of 5.3% compared to 31 December 2021. The Group holds 28% domestic market share in deposits as at 31 December
2022. Savings deposits constitute 44.2% of the total deposits of the Group with time deposits at 17.7% and current, sight and
other deposits at 38.1%. Corporate deposits correspond to 30.2% of the total deposit base with retail deposits at 69.8%. The
descending trend in time deposits’ cost ended in 2022, with average time deposits’ cost picking up at 0.29% in 2022 versus
0.14% in 2021. The Group’s loan book in terms of gross balance (grossed up with Purchased Price Allocation adjustment / “PPA
adjustment”) consists of corporate and public sector by 77.4%, mortgage by 17.7% and consumer, personal, credit cards and
other loans by 4.9%.
Board of Directors' Report – 31 December 2022
19
Selected Balance Sheet Figures
31/12/2022
31/12/2021
YoY
Gross Loans (grossed up with PPA adjustments)
38,787
38,492
0.8%
Less: Expected credit losses (“ECL”) allowance (grossed up with PPA adjustment)
(1,421)
(1,971)
-27.9%
Net Loans
37,367
36,521
2.3%
Financial Assets
12,523
12,754
-1.8%
Other Assets
25,771
30,514
-15.5%
Total Assets
75,661
79,789
-5.2%
Due to Banks
6,922
14,865
-53.4%
Due to Customers
58,372
55,442
5.3%
Other Liabilities
3,786
3,680
2.9%
Total Liabilities
69,080
73,987
-6.6%
Total Equity
6,581
5,803
13.4%
Utilisation of the Eurosystem funding stood at € 5.4 billion as at 31 December 2022, following the repayment of € 9 billion of
the TLTRO facility on the back of the ECB’s decision in its 27 October meeting, to recalibrate the TLTRO III terms. Interbank
repo funding remained low at € 298 million as at 31 December 2022.
The Group’s financial assets portfolio has declined marginally to € 12.5 billion as at 31 December 2022, compared to € 12.8
billion as at 31 December 2021, mainly the result of lower balances in the Group’s trading securities book.
Gross loans as at 31 December 2022 amounted to € 38.8 billion compared to € 38.5 billion as at 31 December 2021, while net
loans stood at € 37.4 billion as at 31 December 2022, compared to € 36.5 billion as at 31 December 2021, with the Group’s
seasonally adjusted net loans to deposits ratio at 61.5%, lower compared to 31 December 2021 (63.3%) driven by the strong
deposit increase during 2022.
Group NPEs reduced further to € 2.6 billion as at 31 December 2022, compared to € 4.9 billion as at 31 December 2021. The
NPEs over total gross loans ratio for the Group stood at 6.8% as at 31 December 2022 from 12.7% as at 31 December 2021,
declining to single digit NPE ratio due to the continuous efforts of the Group to improve its asset quality, mainly through the
utilization of the HAPS NPE securitizations. As at 31 December 2022, the Group NPE coverage ratio increased to 54.1% from
40.1% as at 31 December 2021.
Profit & Loss
The Group’s net interest income amounted to € 1,353 million in 2022, presenting a decrease of 4% compared to 2021,
attributed to the loss of NPE-related income due to the derecognition of NPEs. Net fee and commission income and income
from non-banking activities amounted to € 485 million (income from non-banking activities amount to € 64 million), in 2022,
12.3% higher compared to 2021, driven by strong performance in loan origination, funds transfers and card business, while
rental income also comprises a positive driver. Other income rose to € 744 million in 2022 compared to € 682 million in 2021.
Both periods were mainly affected by enhanced trading gains in the fixed income portfolio and the one-off profit realization
from the long-term partnership for the management of non-core equity participations owned by the Bank in 2021 and the
carve-out and sale of the Bank’s merchant acquiring business unit in 2022.
Total net income in 2022 amounted to € 2.6 billion presenting an increase of 2.3% compared to 2021. The Group’s total
operating expenses, in 2022 stood at € 889 million, compared to € 892 million in 2021. Excluding the extraordinary cost related
to VES for 2021 of € 25 million and € 61 million related to VES and other extraordinary depreciation costs for 2022, total
operating expenses amounted to € 827 million in 2022, a reduction of 4.6% versus the comparative period.
Board of Directors' Report – 31 December 2022
20
Selected Profit & Loss Figures
31/12/2022
31/12/2021
As
reclassified 1
YoY
Net Interest Income
1,353
1,410
-4.0%
Net Fee & Commission Income 2
485
432
12.3%
Other Income
744
682
9,1%
Total Net Income
2,582
2,523
2.3%
Staff Costs
(446)
(405)
10.1%
-excl. VES costs
(389)
(380)
2.4%
Administrative expenses
(337)
(377)
-10.6%
Depreciation and amortization
(106)
(110)
-3.6%
Total Operating Expenses
(889)
(892)
-0.3%
-excl. VES and other non-recurring costs
(828)
(867)
-4.5%
Profit Before Provisions, Impairment and other credit risk related expenses
1,693
1,631
3.8%
ECL impairment losses and other credit risk related expenses on loans and advances tο customers
at amortised cost
(615)
(4,284)
-85.6%
Other impairment and provisions
(70)
(56)
25,0%
Share of profit/ (loss) of associates and joint ventures
29
18
61.1%
Profit / (Loss) Before Income Tax
1,037
(2,691)
-
Income tax benefit / (expense)
(140)
(316)
-55.7%
Profit/ (Loss) for the Period
948
(3,014)
-
Profit/ (Loss) attributable to the equity holders of the parent (from Continuing Operations)
899
(3,007)
-
Profit / (Loss) attributable to the equity holders of the parent (from Discontinued Operations)
51
(7)
-
Earnings / (losses) per share attributable to the equity holders of the parent (from Continuing
Operations)
0.72
(3.50)
-
(1)
The comparative figures have been reclassified to reflect the amendments in the presentation of income from non-banking
activities and of fees payable for having the NPE portfolio managed. Refer to notes 8 and 15 for further information.
(2)
The Net Fee and Commission Income also includes income from non-banking activities.
As a result of the above, Group’s profit before provisions, impairments and other credit risk related expenses in 2022 amounted
to € 1.7 billion, compared to € 1.6 billion in 2021, an increase of 3.8%. The results of the period ended 31 December 2022 were
burdened by ECL impairment charges on loans plus other credit risk related expenses amounting to € 615 million, whereas the
results of the comparative period, were burdened by € 4.3 billion ECL impairment losses on loans.
The Group’s profit before income tax in 2022 recovered to profit of € 1.0 billion compared to a loss of € 2.7 billion in 2021,
while profit from continuing operations attributable to equity holders of the parent amounted to € 899 million compared to a
loss of € 3.0 billion in 2021.
Capital
As at 31 December 2022, the Group’s total equity amounted to € 6.6 billion, compared to € 5.8 billion as at 31 December 2021,
as a result of the recovered profitability of the Group. The Group’s Basel III total capital adequacy ratio (“TCR”) stood at 17.82%
compared to 15.75% on 31 December 2021. The Common Equity Tier 1 (“CET 1”) ratio stood at 13.04% vis-à-vis levels of 11.12%
at 31 December 2021.
The amount of deferred tax assets included in the Group’s regulatory capital in accordance with the provisions of Greek Laws
4172/2013, 4302/2014, 4340/2015, stood at € 3.5 billion as at 31 December 2022, compared to € 3.6 billion as of 31 December
Board of Directors' Report – 31 December 2022
21
2021. The Group’s fully loaded TCR stood at 16.4%, compared to 13.4% as at 31 December 2021 and the fully loaded CET1 at
11.5% versus 8.6% on 31 December 2021.
Following the conclusion of the Supervisory Review and Evaluation Process (“SREP”), the ECB informed the Group of its Overall
Capital Requirement (“OCR”), valid for 2023. According to the decision, the Group would have to maintain an overall OCR of
14.50%, which includes: (a) the minimum Pillar I total capital requirements of 8.00% as per article 92(1) of Regulation
575/2013/EU; (b) the additional Pillar II capital requirement of 3.00% as per article 16(2) of Regulation 1024/2013/EU; (c) the
fully loaded capital conservation buffer of 2.50% under Greek Law 4261/2014, and (d) the transitional Other Systemically
Important Institutions (“O-SII”) capital buffer of 1.00% under Greek Law 4261/2014.
Share Capital
On 31 December 2022, the share capital of the Group amounted to € 1,163 million divided into 1,250,367,223 common
registered voting shares with a nominal value of € 0.93 each. Common shares of the Company are intangible, registered and
listed on Athens Stock Exchange.
The number of the outstanding shares of the Company is the following:
Number of outstanding common shares owned by the HFSF / Percentage of total share
capital
337,599,150
27.00%
Number of outstanding common shares owned by private investors / Percentage of
total share capital
912,768,073
73.00%
Total number of outstanding common shares / Percentage of total share capital
1,250,367,223
100.00%
Pursuant to par. 1, art. 16C of Greek Law 3864/2010 the acquisition of treasury shares is not permitted, without the approval
of HFSF, for as long as the HFSF is a shareholder of the Company. The purchases and sales of treasury shares during 2022, as
well as the treasury shares owned as 31 December 2022, are related to transactions that are carried out by the Group's
subsidiary Piraeus Securities S.A. through its activities, which are derived from its role as a market maker. As at 31 December
2022, Piraeus Securities held 259,798 of the Group’s common shares, of total nominal value € 241,612.
The Company’s shareholder structure presents great diversity. The total number of the Company’s common shareholders was
approximately 17,000 as at 31 December 2022. The HFSF held 27% of the outstanding common shares (1,250,367,223 of a
nominal value € 0.93 each) and the remaining 73% was held by the private sector and in particular 66% were legal entities and
7% individuals.
Going concern conclusion
Management has made an assessment on the Group’s ability to continue as a going concern. Management’s assessment
considered the Group’s principal business risks deriving mainly from the macroeconomic environment in combination with the
Group’s strategy, its liquidity and capital position. The following were taken into consideration:
a)
the solid economic growth in 2022, and the prospects for a sustainable rate of growth of GDP in the medium term,
taking also into account the deployment of the RRF funds to the Greek economy, the continued recovery of the
residential and commercial real estate prices despite of the high level of inflation and energy prices;
Board of Directors' Report – 31 December 2022
22
b)
the Group’s effective liquidity risk management leading to a robust liquidity position as evident by the Liquidity
Coverage Ratio (“LCR”) as of 31 December 2022, as well as Management’s assessment of the impact of stress test
scenarios, within the Internal Capital Adequacy Assessment Process (“ICAAP”) and Internal Liquidity Adequacy
Assessment Process (“ILAAP”) framework, on the Group’s liquidity position and on mandatory liquidity ratios ;
c)
the capital adequacy of the Group, which exceeded the OCR (including Pillar II Guidance) and the MREL ratio of Piraeus
Bank Group, which exceeded the Intermediate Guidance of 19.08%, effective from 1 January 2023. It is estimated that
for the next 12 months the Group’s capital adequacy ratios and the MREL ratio will remain higher than the required
minimum regulatory levels;
d)
Ukraine, which comprise a financial institution, namely JSC Piraeus Bank ICB, and investments in real estate assets
which represent approximately 0.2% of the total consolidated assets of the Company as of 31 December 2022;
e)
and amounted to € 899 million, compared to a loss of € 3,007 million in 2021 and the NPE ratio dropping to 6.8% as
at 31 December 2022 from 12.7% as at 31 December 2021.
Based on the analysis performed, Management has concluded that that there are no material uncertainties which would cast
significant doubt over the ability of the Group and the Company to continue to operate as a going concern for a period of 12
months from the date of approval of the Annual Financial Statements for issuance by the BoD. For this reason , the Group
continues to adopt the going concern basis of accounting for preparing the financial statements.
The basis of preparation is presented in Note 2.1 of the Annual Financial Statements.
Non-Financial Information 2022 (Greek Law 4403/2016)
Group Human Resources (“HR”)
In full alignment with the Organization's strategic goals and corporate values, we cultivate a cohesive culture of high
performance, continuous growth, inclusion and open communication, with equal opportunities for all.
Learning & Knowledge Sharing
:
Learning initiatives were designed and developed digitally by using modern design and new
technology tools. In total, 409 training programs were carried out in 2022, involving 7,881 participants and a total of 30,229
man-hours of training. 91% of employees participated to at least one training program. At the same time, a new, modern,
digital learning platform (Learning Management System) was designed and developed as a single point of contact for all
learning initiatives in order to change the training experience of employees, to support personalized training and to strengthen
accountability. In December 2022, a pilot project was conducted to a limited number of users and units. The new platform will
be launched to the whole organization during first quarter 2023.
Performance Management
:
During 1
st
for 98% of eligible employees. In this context, 97 calibration meetings were held, while 58% of managers received peer & team
feedback. In addition, the Objections Committee for performance evaluations of 2020 & 2021 examined 45 cases. The 2022
performance cycle ran on schedule, while the pulse check captured useful insights about the employees’ contribution to the
team's goals phase.
Board of Directors' Report – 31 December 2022
23
Talent Management & Development:
In 2022, the Regulation for Talent Management was developed while the Become &
Achieve platform was redesigned to ensure that the structured process to map talent for the whole organization in 2023 will
be feasible via the Become & Grow module.
Succession Planning:
Following the identification of potential successors for CEO’s direct reports that was completed in 2021,
the identification of critical roles across the organization was done in 1st semester 2022 in order to be able to extent the
Succession Planning process to the whole organization. The initial identification of potential successors for critical roles was
completed by the Head of the pillars, in order to be validated during the performance calibration meeting of the leadership
team.
Development Centers:
At the same time, specially designed Development Centers were created and implemented to identify
the skills and development potential of organization’s people. The outcomes of the assessment become the basis for the design
of the individual development plan.
A culture of ethics, inclusion and equal opportunities:
Within the 1st semester 2022, the revision of the content of the Code
of Conduct and Ethics began in order to align it with the current institutional and regulatory framework, but also with the
updated policies and regulations of the Group. At the same time, the Whistle Blowing Committee assigned 22 cases to be
managed.
With respect to the EQUALL Bank's innovative program, the initiatives for the cultivation of common understanding on issues
of inclusion and equal opportunities in the workplace, with the series of speeches "We put an end to prejudices" were
completed. The 5 different speeches gathered more than 5,000 participations.
New Policy and Procedure for Preventing and Combating Incidents of Discrimination, Violence and Harassment in the
Workplace:
Firmly oriented towards ensuring a working environment that promotes respect and zero tolerance for incidents
of violence and harassment, the new Policy was signed in October 2022. The new Policy highlights the Group’s principles and
values and describes and encourages the desired behaviors in the organization. At the same time, the Group is committed to
investigate and handle any related complaint with confidentiality and respect for human dignity.
Internal site “yello”:
The new internal site was launched in February 2022, with a constant flow of topics and the ability for
any colleague or unit to contribute with news and useful information. The new site is digital and interactive, accessible from
any device, anywhere and anytime, with the ability to submit real time comments or/ and likes. 397 news were posted while
approximately 6,500 employees visit it each month. At the same time, through the intranet site, employees are informed about
operational news, where about 40 announcements are posted on a daily basis.
Idea Box Competition:
In the context of “Act Transformation Program”, the 1st Idea Box was completed during 2022. More
than 400 ideas that upgrade customer experience and contribute to the creation of the bank of the new era were submitted.
Following a structured way and process, the 10 best ideas were distinguished and top 3 were awarded by the Bank’s leadership
team.
New Leadership Principles & Guidewise:
A practical guide was designed to help managers align, motivate, and get closer to
their team members through collaborative practices and initiatives, based on the following 3 new Leadership Principles,
developed during 2022:
●
Different views unite, when expressed openly;
●
Development of our people, the key priority;
●
Technology driven business with our people at the core.
Anti-bribery and Corruption
Board of Directors' Report – 31 December 2022
24
The Group is committed to high standards of ethical behavior and operates a zero-tolerance approach to bribery and
corruption. In this context, the Group has adopted appropriate measures to protect its reputation in matters of ethical conduct,
financial integrity and reliability of its operations. Consequently, all employees receive training for the recognition and
avoidance of involvement in bribery, and are encouraged for the awareness and prompt reporting of any case in which bribery
is suspected within the administration of the Group.
The prevention, detection and reporting of bribery is the responsibility of all employees and management of the Group as
detailed in the Whistle Blowing Policy. For the purposes of the foregoing, the Group has established appropriate
communication channels for those reporting on cases of bribery, fraud and corruption or for any potential suspicion, with the
utmost confidentiality so as to immediately inform the competent authority. Upon authorization of the Group Audit
Committee, the Group Internal Audit has been charged with the management concerning the confidential reporting of staff on
issues of bribery, corruption and fraud.
Health, safety & well-being of employees and their families:
During 2022, actions and practices that highlight the value of
physical and mental health prevention were designed with the aim of supporting employees and their family members, while
securing the organization from psychosocial risks. In addition to the fixed measures, calls to the Covid-19 telephone line
exceeded 8,000 during its operation. First aid trainings, acuity control measurements and dermatological examinations were
organized with more than 540 participations. The personalized consulting support through the 24/7 Help Line and free
counselling are active for all employees and their families. Supporting the parental role, the organization granted to new
mothers 131 cumulative maternity leave absences.
“Ευ ζην” program:
During the holistic program for Mind - Body - Bonds, a total of 60 actions were carried out with more than
7,000 participations. As part of the Group’s commitment to the environment and society, employees participated to beaches
clean-up operations in regions of Athens and Thessaloniki, took part in the Race for the Cure and walked for a good cause,
donating to Children's Villages SOS and supporting the Emergency Aid Program for children and families in Ukraine.
Benefits Policy:
In the context of the harmonization of HR Policies, during 1st quarter 2022, the Benefits Policy was
implemented, based on the new levels of responsibility of the Job Family Model.
Variable Incentive Scheme:
During the 2
nd
employees for the performance year 2021, rewarding employees’ high performance (employees from the level of general
manager or higher were excluded according to the law). The new scheme is structured to enhance both the individual and
team effort. Variable amounts are awarded based on predetermined, measurable, quantitative, and qualitative criteria that
incorporate the Group's medium- and long-term strategy, contribute to the alignment of employees' interests to those of the
Group and shareholders.
Piraeus Bank’s Group Personnel Institution for Occupational Retirement, Life & Μedical Provision (“IORP”)
In April 2022, the services provided through IORP were expanded, with the inclusion of the Life Insurance and Medical Care.
This expansion will significantly contribute to the improvement of the provided level of service for the insured members.
Digital work card:
A comprehensive digital application was designed and implemented for the needs of applying the digital
work card in Banks from 1
st
Participation in Global Sustainability Initiatives
The Company is a member of the United Nations Global Compact and the United Nations Environment Programme – Finance
Initiative (“UNEP FI”). The Group has signed the Collective Commitment to Climate Action (“CCCA” – UNEP FI), aiming to reduce
financed emissions and support a transition to a low carbon economy.
Board of Directors' Report – 31 December 2022
25
The Group has signed the United Nations (“UN”) Declaration "United in the Business of a Better World", supporting global
business partnerships with responsibility and transparency, the Women's Empowerment Principles of the UN Global Compact
and UN Women and the Commitment to Financial Health and Inclusion of UNEP FI. In addition, Piraeus Asset Management
A.E.D.A.K. is a member of the Principles for Responsible Investment (“PRI”). Piraeus Bank Group is a full member of Hellenic
Network of Corporate Social Responsibility (“CSR Hellas”) of the Environmental, Social and Governance (“ESG”) - Sustainability
- Governance & Green Banking Steering Committee of the Hellenic Banking Association (“HBA”) and participates in working
groups for sustainable banking.
Sustainability Ratings and Distinctions
Piraeus Bank Group is included in the FTSE4Good sustainability index and the Bloomberg Gender Equality Index (“GEI”) which
assesses the organization's contribution to gender equality. The Group received a “Management B” rating (A to D scale) in the
climate change assessment of the independent non-profit organization CDP, an “A” rating from the MSCI ESG index (AAA to
CCC scale). ISS Corporate Solutions rated the Bank with "1 – HIGHER DISCLOSURE" in the environment and society pillars and
2 in the governance pillar (a score of 10 indicates higher governance risk)
.
The Bank is also the only company from Greece to be included in the 2022 Financial Times list of "Europe's Climate Leaders",
as these 400 companies have achieved the largest reduction in Scope 1 and Scope 2 emissions during the period 2015-2020.
Finally, the Group is included in the "Ethibel EXCELLENCE Investment Register" and the "Ethibel PIONEER" list.
Commitment to the Principles for Responsible Banking
The Principles of Responsible Banking aim to align the activities of banks with the 17 UN Sustainable Development Goals
(“SDGs”) and the Paris Climate Agreement. The overall oversight for their implementation rests with the Group CEO, who is
also one of the 19 Heads of banks and insurance companies from around the world participating in the "Leadership Council"
of UNEP FI, a new international advisory body, which aims to shape the strategy of the financial sector to achieve the goals of
sustainable development. At the same time, the Company has been elected on the Banking Board of UNEP FI. In December
2021, it committed to strengthen financial inclusion by signing the "Commitment to Financial Health and Inclusion" of UNEP
FI.
The Bank is actively participating in UNEP FI working groups for the development of new tools to measure the impact of banks
on sustainable development. In this context, the "Portfolio Impact Analysis Tool for Banks" has been developed, which
estimates the positive and negative impacts of a bank's portfolios on the economy, society, and the environment. The goal is
to enhance financing and investments that contribute positively to sustainable development, while at the same time mitigating
or offsetting negative impacts.
The Bank conducted the second impact analysis of its portfolio, which concludes that the Bank’s financing has positive impacts
on the sustainable economic development and society of Greece.
According to the portfolio impact analysis and considering the overall strategic approach of the organization, the areas of
sustainable development in which the Group focuses and has established objectives are Climate and Financial Health and
Inclusion:
Significant areas of Sustainable
Development for Piraeus Bank
Targets
Board of Directors' Report – 31 December 2022
26
Economy
Financial Health &
Inclusion
ü
Support businesses and households
ü
Annual inclusion in the «Bloomberg Gender Equality index»
ü
Upgrading the EQUALL Programme and its actions and increase the
number of beneficiaries
ü
Development of new products and services targeted to women
Society
Environment
Climate
ü
targets by 2030
ü
Net-zero Scope 2 emissions with electricity consumption sourced
100% by Renewable Energy Sources (“RES”)
ü
Achieve Science – Based Targets by 2030
The Group has published its third progress report on the Principles of Responsible Banking.
5
The Group complies with the Task Force on Climate Related Financial Disclosures (“TCFD Recommendations”), that suggest
disclosing detailed financial information on climate change management in four pillars: Governance - Strategy – Risk
Management (“RM”) - Measurements and Targets. In 2022, the Bank published its third and most detailed report, following
the guidelines issued by the UNEP FI "TCFD Playbook”. The data presented in the report are externally assured.
6
Science Based Targets Initiative: Target Setting
The Group submitted to the Science Based Targets Initiative (SBTi) in 2022 near term emission reduction targets for 2030. The
validation of the targets by SBTi was completed in December 2022. In this context, the Company has set science-based targets
for nine asset classes that cover 9% of its total investments and lending activities as of 2019, representing 56% of financed
emissions. Additionally, the Company has committed to reduce absolute Scope 1 and Scope 2 emissions 73% by 2030 from a
2019 base year, as well as to continue annually sourcing 100% renewable energy through 2030 for its branches and
administrative buildings.
Carbon footprint – Management of carbon dioxide emissions
The Bank is registered under the EU Eco-Management and Audit Scheme (“EMAS”) and its Environmental Management System
(“EMS”) is certified in accordance with ISO 14001:2015. The environmental data and Key Performance Indicators (“KPIs”) are
reported in the Group’s Sustainability & Business Report
7
8
, are validated by a third-party
assurance agency and are externally assured.
The Group purchases Guarantees of Origin, certifying that 100% of the electricity consumed on the Bank’s premises is derived
from RES.
5
6
Piraeus most recent TCFD report:
7
Sustainability & Business Report:
8
Environmental Statement
Environmental Statement
Board of Directors' Report – 31 December 2022
27
The calculation of its financed emissions (Scope 3
9
of Partnership Carbon Accounting Financials (“PCAF”) per banking product category, covering all asset classes of the Bank’s
portfolio.
Specifically, in 2022, the calculation of the Bank’s carbon footprint stemming from its business and investment portfolio
includes corporate bonds, commercial real estate (loans and investments), equity investments, mortgage loans, corporate
loans, energy finance, motor vehicle loans, as well as sovereign bonds and loans.
Selected environmental targets: 50% reduction in Scope 1 emissions by 2030; 15% reduction in total electricity consumption
(2020-2025); 25% reduction in total heating oil consumption (2020-2025); net zero Scope 2 (market based) emissions from
2020 onwards; continuous utilization of technologies in order to reduce its carbon footprint.
Addressing Climate Change
Every year the Bank applies its proprietary Climabiz tool to estimate in monetary terms (€) the climate risk of business
borrowers across different economic sectors mostly vulnerable to climate change. The new methodology adopted by the Group
for the 2021 climate risk assessment, is based on the utilization of three climatic Representative Concentration Pathways
(“RCP”) scenarios of the Intergovernmental Panel on Climate Change (“IPCC”).
10
The table below presents the calculation results which includes the percentage of physical risk and transition risk over total
climate risk per each RCP climate scenario
.
Climate Scenarios
% of Physical Risk
percentage over Total
Climate Risk
% of Adjusted Transition
Risk over Total
Climate Risk
7%
93%
20%
80%
44%
56%
The significant differences in the climate risk outputs among the climate scenarios are primarily due to the fluctuations of the
transition risk which is driven by the price of carbon emissions allowances. To calculate the cost of direct and indirect emissions
( Scope 1, 2 & 3), three different prices of carbon emission allowances €/tCO
2
the Network for Greening the Financial System (“NGFS”) scenarios.
●
For the RCP 2.6 the emissions allowance price of the Net Zero 2050 NGFS scenario was used at 139.9€/t
CO
2
●
For the RCP 4.5 the emissions allowance price of the Nationally Determined Contributions (“NDCs”) scenario was
used at 73.5€/t CO
2
●
For the RCP 8.5 the emissions allowance price of the Current Policies NGFS scenario was used at 21.4€/t CO
2
9
Scope 1 emissions are the direct emissions emitted from sources owned or controlled by the Bank (e.g., heating oil consumption and fuel consumption by
company cars). Scope 2 emissions derive from electricity consumption in buildings and Scope 3 is defined as all other indirect emissions that are not included
in the Scope 2 category and are related to the Bank's activities, including its financing.
10
Intergovernmental Panel on Climate Change
(
Board of Directors' Report – 31 December 2022
28
Disclosure obligation in accordance with article 8 of the EU Taxonomy Regulation
In 2020, the European Parliament adopted the Taxonomy Regulation, setting out an EU-wide framework -a classification
system- that allows investors and undertakings to determine whether certain economic activities are environmentally
sustainable. On 6 July 2021, the EC adopted the Commission Delegated Regulation (EU) 2021/2178 supplementing Article 8 of
the Taxonomy Regulation (EU) 2020/8522 (“the Disclosures Delegated Act”), which specifies the content, methodology and
presentation of information to be disclosed by financial and non-financial undertakings concerning the proportion of
environmentally sustainable economic activities in their business, investments or lending activities.
The main indicator of alignment is the Green Asset Ratio (“GAR”) which enterprises must disclose from 2024 onwards. For a
credit institution, GAR is defined as the proportion of its assets invested in taxonomy-aligned economic activities over its
total covered assets. The GAR should be calculated based on the on-balance sheet exposures (total covered assets) according
to the prudential scope of consolidation for the types of assets and accounting portfolios specified in the Disclosures Delegated
Act. Credit institutions should disclose the aggregate GAR for on-balance sheet covered assets, a breakdown for the
environmental objective pursued by environmentally sustainable assets, the type of counterparty, and the subset of
transitional and enabling activities.
The disclosure requirements for the financial years 2021 and 2022 are limited to Taxonomy eligibility and relevant ratios.
Beyond this initiation phase, the sequential step in the disclosure process, relates to the specific Taxonomy alignment, which
will apply for the year 2023. This graduated approach is deemed necessary due to the reliance on information that is publicly
disclosed by counterparties.
For the years 2021 to 2023, the Group will be disclosing the following information on a consolidated level:
(a) the proportion in the Group’s total assets of exposures to Taxonomy non-eligible and Taxonomy-eligible economic activities;
(b) the proportion in the Group’s total assets of the exposures to central governments, central banks and supranational issuers
and derivatives;
(c) the proportion in the Group’s total assets of the exposures to undertakings that are not obliged to publish non-financial
information pursuant to Article 19a or 29a of Directive 2013/34/EU;
(d) the proportion of their trading portfolio and on demand inter-bank loans in their total assets; and
(e) qualitative information referred to in Annex XI of the Disclosures Delegated Act
Board of Directors' Report – 31 December 2022
29
EU Taxonomy eligibility & non eligibility ratios
as a proportion of Group’s total
assets (%)
31/12/2022
31/12/2021
€
billio
n
% of
total
assets
€
billion
% of
total
assets
1. Exposures to Taxonomy -eligible activities
19.6
26%
17.7
22%
2. Exposures to Taxonomy non-eligible activities
10.5
14%
12.4
16%
3. Exposures to sovereigns, central banks and supranational issuers
12.6
17%
13.2
17%
4. Exposures to derivatives
5. Exposures to corporates not subject to non financial reporting directive (“NFRD”)
1.8
10.2
2%
13%
0.6
9.8
1%
12%
6. Trading book
0.5
1%
0.9
1%
7. On-demand interbank exposures
9.5
13%
15.2
19%
Group’s total assets
75.7
79.8
Regarding the contextual information in support of the quantitative indicators, for the calculation of the aforementioned ratios
specific assumptions and proxies were considered on the respective numerators, while limitations were also existent. These
proxies were considered in order to offer a best effort estimation of the eligibility ratio incorporating requirements of the
Disclosures Delegated Act and taking into consideration the frequently asked questions that the EC published on 20 December
2021 and 2 February 2022, respectively with the intention to cover the Group’s total assets and activities depicted by the
aforementioned table. In July 2022, a Complimentary Climate Delegated Act including specific nuclear and gas energy activities
was published. Until 2023, the Group is required to assess and disclose taxonomy -eligibility and non-eligibility of nuclear and
fossil gas related activities.
With the aim to reflect the nature and objectives of the Taxonomy, the Group based the calculation of the eligibility ratio
numerator on the NACE codes that currently meet the criteria of Climate Mitigation or Climate Adaptation as published by the
EC. This information is available in the Group’s business lending portfolio, however there was no sufficient and reliable data
on respective eligible activities of counterparties at the time of the publication of this report. Financing activities that were not
identified to the specific NACE Codes were only included in the ratio's numerator [2]. This also applies for the investments
portfolio as there was not available data relevant to the eligibility regarding the counterparties.
For the estimation of the ratio [5], it was necessary to assume for the scope of this exercise, that all Non-Financial Corporates
that comprised the Business Lending Portfolio and were SMEs were not subject to NFRD.
The increase of the eligibility ratio in 2022 compared to the previous year is mainly attributed to the reduction of the total
assets stemming from the reduction in the TLTRO III utilization (€ 9 billion) and the enhancement of the perimeter incorporated
in the numerator of ratios [2] and [5].
The Group is committed to continuously improve its processes and enhance the availability of data and its proxies in order to
upgrade its reporting scope according to the EU Taxonomy.
Furthermore, the Group is taking steps further to enhance the eligible part of its portfolio. Namely new disbursements for RES
projects exceeded € 500 million in 2022. The total RES exposure amounted at € 2.4 billion. This particular loan portfolio grew
Board of Directors' Report – 31 December 2022
30
further as the Group’s inaugural Green Bond issued in November 2021 had earmarked € 500 million that are allocated to
eligible Green Projects according to the Group’s Green Bond Framework. In particular, an amount representing 70% of the net
proceeds of the Green Bond was
category. More specifically, loans related to
the acquisition, development, manufacturing, construction, operation and maintenance, distribution and transmission of
renewable energies such as: Offshore and Onshore Wind, Solar Photovoltaic (“Solar PV”), Small scale Hydropower (<20MW).
Moreover, Sustainability Linked Loans have been accepted by Greek Businesses, new financing contracts were signed in 2022
with large and medium sized enterprises with the total new production balance exceeding € 280 million. Overall, since their
inception in June 2020, we have built a portfolio comprising 16 contracts with large and medium sized companies, with an
aggregated balance exceeding € 640 million.
Piraeus AEDAK, the asset management arm of the Bank has been a member of the global initiative Principles for Responsible
Investments (“PRI”) for more than 3 years. It has incorporated in its strategy the application of the principles of responsible
investments. It was the company that launched the first Mutual Fund in the Greek market, which invests in companies that
adhere to the principles of ESG. The Group has placed in the market 12 ESG Mutual Funds all compliant with Sustainable
Finance Disclosure Regulation (“SFDR”), totaling € 329 million, ranking top in the Greek ESG Asset Management market at the
end of December 2022.
Lastly, in Retail Banking, the ESG agenda has unfolded both in the lending and investment products portfolio. The Bank has
supported more than thirty thousand (30,000) households in the program “Energy Saving at Home” by supporting the effort
to upgrade Greece’s aging real estate stock and improving the environmental performance of homes, cutting energy costs. A
complete range of financing solutions to meet every "green" small business need is also provided, such as: financing the
installation & upgrade of Photovoltaic Stations, net metering and the energy efficiency upgrade of businesses or the purchase
of an electric or hybrid car etc. In 2022 new production of this portfolio amounted at € 170 million.
The Group’s aim is to gradually align its objectives to be consistent with the EU Taxonomy. Its sustainable finance proposition
will be to support our customers' transition and consider the standards and enhancements of the EU Taxonomy.
Group Cultural and Social Initiatives
In respect of the corporate responsibility strategy implemented by the Group, the Bank's Cultural and Social Initiatives Unit is
responsible for designing and implementing actions and initiatives for Society and Culture.
Society
-
Alignment of the Group's actions with key social issues and strengthening of its relations with society
.
Culture
Greek cultural heritage and the business activities that generate mutual benefits for both culture and society.
In this context, the Unit designed and carried out the following actions and initiatives:
International Initiatives
- Women’s Empowerment Principles (“WEPs”) - UN Global Compact - UN Women
Piraeus Bank is the only Greek bank whose CEO, Mr. Christos Megalou, signed the United Nations WEPs, committed to actions
to support women in the workplace, marketplace and society.
-
Bloomberg 2023 GEI
Board of Directors' Report – 31 December 2022
31
Following the commitment undertaken by signing the WEPs, the Company is one of the 484 companies that were included for
the second consecutive year in Bloomberg's GEI 2023. This is a reference index tracking the performance of companies
committed to the transparency of the data they provide and their policy on gender equality issues.
Corporate responsibility actions to promote Gender Equality in society
The EQUALL program
The Group commits, through its actions, to contribute to the formation of a society of equal people. That is why it has created
the EQUALL program that initially comprises the following actions:
- Women Founders and Makers – for the reinforcement of women's entrepreneurship
The 1
st
nd
in February 2023. The program received 1,424 applications for 100 vacancies, with more than 68% of the participants coming
from the Greek regional areas (outside the prefecture of Attica). The 100 beneficiaries received over 76 hours of training.
- Women Back to Work – for women’s return to the labor market
The 1
st
nd
in February 2023. The program receives 575 applications for 100 vacancies, with more than 70% of the participants coming
from the Greek regional areas (outside the prefecture of Attica) and more than 90% of participants accepted into the program
being unemployed or underemployed. The 100 beneficiaries received over 96 hours of training.
- Women in Agriculture – for the reinforcement of women's entrepreneurship in the agricultural sector
st
vacancies, with more than 90% of the participants coming from the Greek regional areas (outside the prefecture of Attica).
- Profession has no Gender – for new generation’s awareness regarding gender stereotypes
The 1
st
nd
from all over Greece, representing 3,152 students, with more than 93% of schools being in remote areas (such as
Alexandroupoli, Drama, Leipsoi, Florina, Veria, etc.). More than 1,224 students discussed "Profession has no Gender" topics
with their mentors.
- Piraeus EQUALL 360°
Aiming at strengthening social equality and women’s equal access to business development, the Bank designed and offers
“Piraeus EQUALL 360°”, a comprehensive bundled products and services package, with preferential pricing and privileges,
exclusively for women entrepreneurs. In September 2022, the segment of women agricultural entrepreneurs was added in
"Piraeus EQUALL 360°". Since the launch of ‘’Piraeus EQUALL 360°’’ in April 2022, 216 women entrepreneurs have acquired it
and €3.1 million in business loans have been disbursed.
- Participation in the "GENERATION 17" initiative to promote UN Sustainable Development Goal #5 - Gender Equality
The Bank participated in the “GENERATION 17” ("Genia 17") initiative for the promotion of the 17 UN SDGs adopting Goal #5 -
Gender Equality. Being the sponsor of Goal #5 – Gender Equality, the Bank created a large-scale mural painted by the
Board of Directors' Report – 31 December 2022
32
internationally renowned street artist, Atek, in a building, housing the Bank services, at 31 Panepistimiou Street in the
Municipality of Athens. The mural highlights the contemporary woman, who, trying to maintain her balance between multiple
roles, gives prominence to her identity and asserts her right to an equal position in society, without being subjected to any
form of exclusion or discrimination. In addition, the Bank has created an informative video and a podcast presenting its actions
and initiatives for Gender Equality.
-
Creation of Inquiry-Based Learning Centres for students living in remote areas of the country
In 2022, the Bank in collaboration with the Union "Together for the Child" designed and implemented the creation of the
innovative Centre for Inquiry-Based Learning at the 10
th
classroom was developed and equipped specifically for science teaching. At the same time, the Bank, through its collaboration
with 100 mentors, created the "Train the Trainer" program, with the aim of instructing the 10
th
teachers for the optimal and effective utilization of the Inquiry-Based Learning Centre. This Centre is the first of a series of
actions of the Bank within the framework of the EQUALL program with the aim of equal access to inquiry learning for students
living in remote areas of the country.
Corporate responsibility actions to promote culture
- Piraeus Culture and Creativity 360°
The Group is strongly committed to supporting Art and Culture, vital pillars of Greece’s social and economic growth. ‘’Piraeus
Culture and Creativity 360°’’ is a comprehensive bundled products and services package with preferential pricing and privileges,
designed especially for the Cultural and Creative businesses (Small and Medium-sized). Since its launch in May 2021, ‘’Piraeus
Culture and Creativity 360°’’ has been acquired by more than 208 Cultural and Creative businesses, over € 3.1 million of
business loans have been disbursed.
-
Bicentennial Actions Program to celebrate the 200
th
Respecting its institutional role and the social responsibility that derives from it, the Group participated in the celebration of
the 200
th
In this context the Group designed and implemented a Bicentennial Actions Program which relates to scientific research,
culture, arts, education and comprises:
●
9 anniversary publications;
●
3 cycles of workshops-lectures;
●
9 podcasts;
●
6 travelling exhibitions;
●
4 artistic productions;
●
4 interactive presentation systems of the National Anthem and the Greek Fighters of 1821.
These activities were designed and implemented in collaboration with the National and Kapodistrian University of Athens, the
National Historical Museum, the General State Archives, the Institute of Technology and Research, the Greek National Opera,
the Takis Sinopoulos Foundation – School of Modern Greek Poetry, the Cultural Foundation of Tinos, the Astronauts Theater
Group, the Studio Bauhaus productions and reputable scientists and academics.
Within the framework of the national celebration of the Bicentennial, the Bank signed a Memorandum of Cooperation with
Board of Directors' Report – 31 December 2022
33
the General Secretariat for Greeks Abroad and Public Diplomacy of the Hellenic Ministry of Foreign Affairs, on promoting its
Bicentennial Actions in the Greek expatriates’ communities around the world.
In order to assess the impact of the Bicentennial Actions Program implemented, the Group applied the International Standard
"Social Return on Investment" (“SROI”) methodology. The resulting SROI ratio equals to 3.2:1, i.e., it is estimated that for every
euro (€ 1) invested in the implementation of the Group's Bicentennial Actions, the value created in society is equivalent to
three point two euros (€ 3.2).
-
Cooperation with the Greek National Opera (“GNO”)
The Group continues its long-standing and creative collaboration with GNO throughout 2022 by sponsoring the performance
"Othello" by Giuseppe Verdi. In addition, it lays the foundations for the connection of the new generation with music and
theater by renewing the sponsorship of the program "3rd bell opera" for the 3rd consecutive year as well as the educational
initiatives "Actions for all the family" comprising 10 workshops with approximately 600 beneficiaries in total (children and
parents).
- Collaboration with Athens Concert Hall
The Group is the exclusive sponsor of the spectacular musical theater performance "Robinson Crusoe" for children and adults.
The respective production of Athens Concert Hall is carried out with the kind sponsorship of Piraeus Bank Group, which
develops actions to support the new generation and culture. During Christmas, the Bank had granted 235 tickets for the
performance to the children of ELEPAP, the "Together for the Children" Union, the "Theotokos" Foundation and the employees
of the Bank.
Museum Network of the Group Cultural Foundation - Pillar of development for the regions of Greece
The Group’s Cultural Foundation has created and is operating a network of nine thematic museums in various regions of
Greece, contributing to the economic growth and prosperity of the country. It promotes the tangible and intangible cultural
heritage of the country and through it the developmental dimension of culture and the formation of relationships of trust at
the local level. At the same time, it undertakes initiatives to increase jobs and create business opportunities for residents of
the regions.
The Museums of the Foundation are "museums without walls", serving local communities, harmoniously integrated into them,
acting as pillars of cultural and economic development. A study carried out by the Foundation for Economic and Industrial
Research in 2019 on the economic and social impact of the operation of Piraeus Bank Group Cultural Foundation (“PIOP”)
Museums on local communities, calculated an increase in tourism expenditure in the respective regions of the country by €
11.8 million and an impact of museum activity on the country's GDP by € 23 million (conservative estimate). These figures are
directly proportional to the number of visitors to the Museums.
The conditions created due to the Covid-19 pandemic in the previous two years significantly affected the operation of the
country's Museums. PIOP readjusted its strategy by initially channelling a large part of its resources into the planning and
implementation of digital and online activities, while subsequently organizing a series of targeted actions with physical
presence. In the 2nd half of 2022, the return to normality and the organization of activities and exhibitions at the PIOP
Museums contributed to a significant increase in visitors, paving the way for a gradual "return" to the visitor numbers of pre
Covid-19 years.
Board of Directors' Report – 31 December 2022
34
Related Party Tran sactions
With reference to the transactions of the Group with related party, such as members of the BoD and the management of the
Group and its subsidiaries, with the Group’s subsidiaries, associates, and joint ventures, these were conducted in usual market
terms and within the normal course of business and were not material in 2022. Detailed information is included in the 2022
Annual Financial Statements in Note 47, which is incorporated herein by reference.
Group Risk Management
RM is a core function of the Group, targeting to an effective and efficient identification, management and monitoring of risks.
Through the Risk and Capital Strategy and the individual RM Policies (Risk), the principles of an integrated risk management
and risk management framework are defined in order to support the achievement of the Group's strategic and business
objectives, as defined by the Board.
The Group is exposed to interest rate risk due to the changes in interest rates on the fair value of fixed rate debt securities. In
order to mitigate this risk the Group enters into Interest Rate Swaps (“IRSs”) and hedges the benchmark interest rate risk
component by entering into IRSs with critical terms that match those of the debt instrument hedged. This hedging objective is
consistent with the Group’s overall interest rate risk management strategy (incorporated herein by reference to Note 4.11 of
the Annual Financial Statements for the year 2022).
Moreover, the Group faces market and liquidity risks incorporated herein by reference to Notes 4.9 and 4.12 of the Annual
Financial Statements for the year 2022.
The RM function is not limited to the activities of the Group Risk Management (“GRM”) and the Chief Credit Officer (“CRO”)
but refers to the processes performed by all 3 lines of defense, based on the assigned responsibilities, in the context of an
enhanced RM.
The Group has established policies, procedures, and adequate mechanisms for RM, at the level of all 3 lines of defense, in order
to identify, manage, monitor and report risks. The procedures in place promote the independence of risk-taking, RM and
control activities.
The broader RM framework at Group level is constantly evolving, taking into account the current economic environment,
business plans, the Bank's historical data, market dynamics, supervisory and regulatory requirements, the Group's Corporate
Governance framework, international best practices and shareholder interests.
In this context, the key driving principles of GRM are described below:
◾
Strategically manage capital and liquidity;
◾
Enhance RM capabilities;
◾
Continuous enhancement of risk governance and control framework;
◾
Shape a strong Risk Culture.
During 2022, GRM continued strengthening of the Group’s risk management framework which interacts with the Group
planning processes in alignment with the in force regulatory framework, the supervisory expectations and the strategic
guidelines/ plan.
Indicatively, 2022 key risk strategic and functional objectives include:
Board of Directors' Report – 31 December 2022
35
ü
Early warning system (“EWS”) development for the efficient performing loan portfolio management;
ü
ECB roadmap on climate-related and environmental risks, including Climate Stress testing;
ü
Compliance with Guidance on Loan Origination and Monitoring;
ü
Credit risk models calibration based on the European Banking Authority (“EBA”) New Definition of Default;
ü
Value at Risk (“VaR ”) methodologies enhancements;
ü
Interest Rate Risk in the Banking Book (“IRRBB”) initiatives;
ü
Operational risk (“OR”) framework and control enhancement.
Key Committees with Risk participation
Board Committees
◾
Risk Committee
◾
Audit Committee
Executive Committees
◾
Executive Committee
◾
ALCO
◾
Provisioning Committee
◾
Resolution Planning Committee
◾
Resolution Committee
◾
Operational Risk Committee
◾
Senior Credit Committee, Recovery Credit Committee and other Credit Committees
◾
Group Planning & Monitoring Committee
◾
ESG &Corporate Responsibility Committee
◾
Data Governance Committee
◾
Whistle Blowing Committee
◾
Risk Models Oversight Committee
◾
Real Estate Committees
The GRM reports to the CRO, with main responsibilities per function for 2022 briefly described below:
CRO’s office| Function main responsibilities:
◾
The function is responsible to manage, coordinate, advice on and monitor various risk initiatives and projects and
consolidate overall view on figures, responses, alignment of stakeholders. Additionally, it undertakes and coordinates
the operations of the BoD Risk Committee’s Secretariat.
Credit Risk Management | Function main responsibilities:
◾
During 2022 GRM organizational chart was modified. Credit Risk Management Unit, having direct reporting line to the
Group’s CRO, was expanded in order to better address all emerging credit risk related issues in the scope of the
Group’s continuous effort to strengthen its RM framework.
◾
Credit Risk Management engages in the early recognition and effective management of Credit Risk through an
integrated framework of policies, methodologies, procedures and systems that allow the development of a profitable
loan portfolio within the acceptable risk profile.
Board of Directors' Report – 31 December 2022
36
◾
It has the responsibility for the planning, specialization and implementation of strategy and policies in credit risk
management issues. It uses the appropriate methods, including the use of models for the provision,
acknowledgement, measurement and monitoring of the said risks aiming at the above-mentioned. Additionally, it has
the responsibility for the provision of information regarding the evolution of the said risks to the responsible
Committees and Group Management on a regular basis.
Several tasks and projects were deployed during 2022 to facilitate and enhance RM practices as presented in Table 1.
Capital Management, Risk Strategy, Market, Liquidity & Asset Liability Management (“ALM”) Risks | Function main
responsibilities:
◾
Capital Management, Risk Strategy, Market, Liquidity & ALM Risks Unit supports the development and
implementation of the Group’s Strategy, aiming at the effective management of risks and balance sheet optimization.
To this end, the unit is responsible for the development and maintenance of the Risk and Capital Strategy as well as
the Risk Adjusted Framework of the Group, in accordance with the Risk Committee and BoD’s directions and guidance.
◾
Additionally, the establishment of dedicated unit aims to manage effectively risks related to ESG.
◾
Moreover, it is responsible for the design and implementation of the Group’s ICAAP and leads the preparation and
execution of regular enterprise-wide stress tests. Further, it is responsible for the coordination and overall
maintenance of the Group’s Recovery Plan.
◾
Also, the function is responsible for the measurement, monitoring and reporting of capital requirements and capital
adequacy ratios of the Group.
◾
The function is responsible for the development of the risk management framework (policies, methodologies, models
and processes) with respect to market, liquidity and ALM and other financial related risks. To that end, the unit deploys
proper methods, including models, that allow the identification, measurement and monitoring of the aforementioned
risks.
◾
Moreover, it is responsible for the design and implementation of the Group’s ILAAP and leads the preparation and
execution of regular enterprise -wide liquidity stress tests.
During 2022, Capital Management, Risk Strategy, Market, Liquidity & ALM Risks unit has undertaken a number of strategic risk
initiatives, as presented in Table 1.
Group Control and Risk Data & Solutions | Function main responsibilities:
◾
Group Control and Risk Data & Solutions unit is responsible for the identification, monitoring and assessment of all
types of risks (credit, market, operational, liquidity, etc.) arising from the Group's activities, through the development,
implementation and evaluation of an adequate Internal Control System (“ICS”), in order to ensure the safe and
efficient operations of the Group and the achievement of its business objectives. Also, the unit is collaborating with
Segment Controllers to accomplish its mission.
◾
It is responsible for the development, implementation, assurance and supervision of the OR Management Framework
(“ORMF”) and the ICS of the Group, with the aim to defend the business objectives and limit the risks undertaken to
the acceptable levels defined by the Management.
◾
The function contributes to the mitigation of risks arising from potential limitations in the development,
implementation or use of the Bank’s models (model risk), by developing/maintaining and implementing a Model
Validation Framework and by contacting independent validations regarding the robustness, accuracy and
effectiveness of the Bank’s models, while contributing to the improvement of models’ quality.
Board of Directors' Report – 31 December 2022
37
◾
Additionally, it has the responsibility for the planning and implementation of independent, ex post/post approval,
regular, qualitative and quantitative review of the application of the approved financing policies and approval
procedures as well as the provisions and write-offs policies, within the framework of the 2nd line of defence, on the
loan portfolio of the Group including the Performing and Non-Performing loans as well as the Factoring and Leasing
subsidiaries.
◾
Finally, the function contributes in supporting, coordinating, initiating and implementing initiatives in the domain of
the risk data management, with the use of risk data analytics and business intelligence tools and methodologies, in
compliance with the Group’s Policies, the regulatory framework and the industry’s best practices.
During 2022, Group Control and Risk Data & Solutions has led in a number of strategic and functional risk initiatives, as
presented in Table 1.
TABLE 1 – KEY INITIATIVES for 2022
Board of Directors' Report – 31 December 2022
38
Function
Key initiatives
Credit Risk
Management
◾
Providing guidance regarding the systemic implementations for asset quality indicators under
the supervisory guidelines of Loan Origination framework
◾
EWS model, framework and infrastructure development project coordination for corporate and
retail loan portfolios
◾
Performed sensitivity scenarios on the Group’s loan portfolio regarding credit risk impact of the
prevailing inflationary pressures and the identification of vulnerable sectors as a result of
macro-environment turbulence
◾
On Site Inspection on International Financial Reporting Standard (“IFRS”) 9 compliance and
implementation
◾
Revision of the credit rating assessment models of the wholesale portfolio (SME, shipping), to
incorporate the new Definition of Default
Risk and Capital
Strategy
◾
Further advance Risk Appetite Framework (“RAF”) introducing additional metrics and limits and
further cascading, reflecting evolving business plan aspirations and risk profile.
◾
EBA Stress Test 2023 preparation – launched preparations for the EBA 2023 Stress Test
◾
Synthetic securitizations – continue to provide guidance and support on the structuring and
execution of major synthetic securitization transactions with regards to SRT
Additional
Liquidity
Monitoring
Market,
Liquidity Risks
◾
Completion of Additional Liquidity Monitoring software upgrade project for IRRBB improving
capabilities
◾
Completion of the enhancement of the Stress Testing Framework
Board of Directors' Report – 31 December 2022
39
Group Control
and Risk Data &
Solutions
◾
Alignment and efficiency improvement of the 3 lines of defense central project of the Control
functions (3 Lines of Defense Control functions alignment & efficiencies).
◾
Enhancement of Information and Communication Technology (“ICT”) risk management in
second line of defense
◾
Implementation of a platform within the OR system for the management of internal control
deficiencies in the ICS, across the Group
◾
Enhancement and maintenance of the Model Validation Framework, including the new
quarterly follow-up process of model validation findings in cooperation with Unit and Segment
Controllers
◾
Enhancement of the IFRS 9 validation reports, regarding the assessment of the Lifetime
Probability of Default and Cure Rate models
◾
Enhancement on infrastructure tasks with emphasis on improving policies and procedures of
Credit Control
◾
Enhancement of Credit Control framework through the design and implementation of a new
evaluation scale (1-4) for its credit reviews
◾
Initiation of the design of Credit Process Analytics for a risk based reporting facilitating
automated controls and identification of material findings, to be utilized by 1
st
nd
defense functions
◾
Initiation of a Senior Credit Committees Charter implementation review (new six-monthly) in
terms of presence, accuracy and management of information provided for decision-making.
◾
Coordination and guidance to the GRM units with regards to determining their risk data
requirements, data definitions, modelling and data availability, as well as Data quality
management.
Prospects and challenges of the Group’s Operations in 2023
Economic growth in Greece remained solid in 2022, with GDP rising 5.9% year on year, despite the undergoing energy crisis in
Europe. Greek GDP growth is underpinned by the structural reforms that have taken place during the past years and a strong
inflow of foreign direct investment in 2022. Greek debt to GDP in 2022 is projected to have one of the largest drops worldwide,
while similar trend is expected to continue in 2023.
On the back of these developments, three major rating agencies have upgraded the Greek sovereign debt rating to BB+, one
notch away from investment grade level, which is expected to be achieved within 2023.
The Greek economy remains on a path of moderate economic expansion into 2023, reflecting the different phase that it finds
itself in the current economic cycle, assisted by its improved resilience and competitiveness.
According to the Winter 2023 Economic Estimates of the European Commission, Greek GDP is expected to grow by 1.2% this
year and accelerate to 2.2% in 2024. Inflation on the other hand is projected to slowdown to 4.5% in 2023 and further to 2.4%
in 2024. The deployment of the RRF in the Greek economy might provide extra upside to growth. The total RRF resources that
have been disbursed or approved amounts to € 11 billion, ranking Greece among the top of the list in the EU.
2022 was another milestone year for the Group, which continues to unlock the value of its franchise, underpinned by the
completion of the Group’s balance sheet clean-up. The Group has delivered strong financial results, outperforming its targets
Board of Directors' Report – 31 December 2022
40
across the board.
In 2022, the Group generated € 0.42 normalized earnings per share. The Group has achieved steady business loan growth, risk-
adjusted profitability, continued cost discipline and accelerated capital build-up.
The enhanced organic capital generation has driven our fully -loaded CET1 ratio to 11.5%, up by approximately 110 bps in the
quarter and by approximately 300 bps in the last 12 months.
The Group’s performing loan portfolio has grown by € 2.7 billion in the full year 2022, with net credit expansion of € 550 million
in the fourth quarter. The remaining NPE book continues to be managed actively, reaching a NPE ratio below 7% at year-end
2022 from 13% a year ago.
Our cost containment efforts continued unabated in 2022, notwithstanding inflationary challenges, and resulted in an
impressive 11% year on year reduction in administrative expenses and 5% year on year reduction in total operating expenses.
We are proud to have recently received an MSCI ESG ‘A’ level rating. At the same time, we have been included in the Bloomberg
Gender Equality Index for the 2nd consecutive year. The Bank is also the only Greek company in the Financial Times list of
Europe’s climate leaders for year 2022, and is the first bank in Greece to have had its 2030 targets validated by the Science
Based Targets Initiative for the reduction of both operational and financed CO2 emissions.
In late January 2023, the Bank communicated its new financial targets for 2023. The key elements comprise a sustainable
return on tangible equity of 10%, further boost to total capital to above 17.3%, and approximately € 1.7 billion net credit
expansion.
With regards to potential risks, the persistence of inflationary pressures is driving major central banks to exert aggressively
restrictive monetary policies. Increasing interest rates are benefiting banks’ currently, as the positive impact from higher loan
spreads outweighs the negative effects stemming from inflation and greater funding costs. However, higher for longer interest
rates may result in economic slowdown and tighter credit expansion, with negative secondary effects on the asset quality of
the banks’ loan portfolios. The potential of new NPE generation would result in an increase of future provisions, burn of capital
buffers, which could materially affect our financial position, capital adequacy and operating results. Therefore, in addition to
maintaining the Group’s balance sheet well positioned to benefit from interest rate increases, management is extremely
mindful of the importance of good credit risk management and will focus on operational efficiency and cost control to navigate
this environment.
The global economy continues to face challenging times ahead. The war in Europe is continuing, Covid-19 is still a threat in
large parts of the world, and considerable pressure continues on households and businesses from rising costs.
Board of Directors' Report – 31 December 2022
41
It is at times like that we must make sure that our strategy embeds a higher standard of operational performance and
demonstrate measurable progress to shareholders. It is only with consistent performance that we can build a track record for
sustainable earnings delivery.
Athens, 16 March 2023
On behalf of the Board of Directors
P.
Handjinicolaou Christos I. Megalou
Board of Directors' Report – 31 December 2022
42
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement of Piraeus Financial Holdings S.A. forms part of the Board of Directors’ Report and
contains the information required by articles 152 and 153 of Greek Law 4548/2018 as at the reporting date of 31 December
2022 and the subsequent period up to the publication date of the Annual Financial Report.
2022 Overview
The Company’s BoD ensures that an appropriate governance model and checks and balances are in place so that the Company
may deliver its ambitious strategic plans while the business is, at all times, resilient and sustainable in the face of a rapidly
changing and challenging environment.
During 2022 and until the publication of the present, the Company has, inter alia:
●
revised its
;
●
revised its Group Compliance Policy, including its conflict of interest framework and the relevant questionnaire which
is now addressed and completed annually not only by BoD members but also by senior executives;
●
focused on ESG issues, working closely with the BoD Ethics and ESG Committee;
●
revised its
●
has adopted a
Bank S.A.;
●
enhanced its relations with shareholders, proxy advisors and institutional investors, holding meetings or providing
them with further information and clarifications, welcoming and responding to their increased interest in corporate
governance issues and evaluating their views.
The main corporate governance goals for 2023 include:
●
the review of several corporate governance documents and policies and the examination of corporate governance
issues at Group level;
●
the continued focus on ESG related topics;
●
the further progress of gender diversity at Board and senior executive level to the extent possible;
●
ensuring the smooth (re)election/ succession of the BoD in light of the end of its term in June 2023
APPLICATION OF INSTITUTIONAL FRAMEWORK AND CORPORATE GOVERNANCE STRUCTURE AND OPERATING
REGULATIONS
The Company, in its capacity as a Société Anonyme listed on the Athens Stock Exchange, in parallel with the provisions of
corporate law and its
, applies the provisions set out in Greek Law 4706/2020 on corporate governance
of sociétés anonymes.
Board of Directors' Report – 31 December 2022
43
In compliance with the provisions of art. 17 of said law, the Company has adopted by a Board resolution, the
issued in June 2021 by the Hellenic Corporate Governance Council and complies with its provisions.
It is noted that the Company, as a financial holding company, authorized as such and supervised by the ECB, applies on a
consolidated basis the special provisions of Greek Law 4261/2014 and of the respective framework.
Furthermore, the Company has drawn up and applies its Internal Regulation. The Internal Regulation, incorporates the
provisions and practices arising from the mandatory institutional framework (especially Greek Law 4706/2020 on corporate
governance, Greek Law 4548/2018 on Sociétés Anonymes, Greek Law 4261/2014 “Access to the activity of credit institutions
and prudential supervision of credit institutions (transposition of Directive 2013/36/EU), repeal of Law 3601/2007, and other
provisions”).
The main objectives of the Internal Regulation are to:
i)
ensure transparency, integrity, functionality and efficiency of the existing system of the Company's corporate governance
and ICS;
ii)
enhance confidence in the Company for domestic and foreign investors, shareholders, employees and customers;
iii)
ensure the Company's continued compliance with the Greek Laws and regulations governing its organization and
operation and its activities;
iv)
develop a self-regulating framework within the Company by establishing rules for its administration, management and
staff, which complement the provisions of the existing regulatory framework and are being established with a view to
enhancing the Company's sound and responsible management and operations.
The organisational structure of the Company complies with the current principles of the institutional framework governing the
operation of listed companies and it is structured in such a way that it meets the needs of the key business sectors in which it
operates. Ensuring an effective organizational structure with a clear definition of the competencies and areas of accountability
of each administrative unit of the Company, constitutes the basis upon which the functions and operations of the Company
are founded. Particular emphasis is given to the setting up of a clear organizational structure with distinct, transparent and
consistent lines of responsibility, the establishment of efficient and detailed procedures for conducting the Company's
operations and of adequate control mechanisms in respect of such procedures, as well as to the identification, management,
monitoring and reporting risks which the Company assumes or may undertake within the framework of its activities.
The Company has developed and aims at continuously improving the ICS, both on a stand alone as well as on a Group level.
The ICS consists of well -documented, detailed control mechanisms and procedures, incorporating best practices of corporate
governance and covering on a continuous basis every activity and transaction of the Company, contributing to its efficient and
safe operation.
Moreover, in the context of being subject to the provisions of Greek Law 3864/2010, as same has been amended in mid-2022,
the Company follows a number of temporary corporate governance practices unique to the greek banking system, including
the presence of an HFSF Representative on the BoD. Further details are outlined in the relevant sections of this Statement
relating to HFSF's role with Piraeus Bank.
I.
MANAGEMENT, ADMINISTRATIVE AND SUPERVISORY BODIES AND COMMITTEES
Board of Directors' Report – 31 December 2022
44
1.
GM of Shareholders
Regarding the shareholders of the Company, as well as the convocation and meeting of shareholder’s GM, according to the
provisions of Greek Law 4548/2018 "
Reform of the law of sociétés anonymes
", the following are applicable:
1.1.
Shareholder
The Shareholders exercise their rights through their participation at the GM. GM resolutions, adopted as prescribed by law,
are also binding on absent or dissenting shareholders. The shareholder status is verified through the direct electronic linkup of
the Company with the records of the Decentralized Securities System (“DSS”).
In case of shares held in omnibus accounts, the capacity of the shareholder vis-à-vis the Company is evidenced through the
registration of the shareholder in the books of the intermediary holding the omnibus account, in line with the legislative
provisions (L.4548/2018, L. 4706/2020 and Regulation (EU) 2018/1212) as well as the Rulebook of the Hellenic Central
Securities Depository.
1.2.
Shareholder structure
The Company’s shareholder structure presents great diversity. The total number of the Company’s common shareholders was
approximately 16,900 in December 2022. The HFSF held 27% of the outstanding common shares (1,250,367,223 of a nominal
value €0.93 each). The remaining 73% is held by the private sector; circa 19% by Paulson & Co, circa 9% by Helikon Investments,
circa 38% by legal entities and circa 7% individuals. Strong international presence is evidenced by the fact that significant part
of free float is held by foreign institutional investors.
The shareholder structure of the Company (for descriptive, non-regulatory purposes) was as follows in December 2022:
1.3.
Categories of GMs
The GM mandatorily convenes at the Company’s seat or in another municipality within the county of the seat or another
neighboring municipality or in the municipality of the Athens Stock Exchange seat, at least once every financial year and within
Board of Directors' Report – 31 December 2022
45
the time limit laid down by the provisions of the Law, as in force. Extraordinary sessions may also be called by:
a) the BoD, whenever so deemed advisable or necessary;
b) requisition of minority shareholders pursuant to paragraph 1 of article 141 of law 4548/2018 (
for more information see
section 1.8 below);
c) the auditor of the Company upon request to the Chairman of the BoD.
1.4.
Competences of the GM
According to article 117 of law 4548/2018, the GM has solely the authority to decide on:
●
Amendments to Company’s articles of association, with share capital increases and reductions being
●
Election of members of the BoD and auditors;
●
Approval of the overall management activities according to article 108 of Law 4548/2018 and discharge of
●
Approval of the annual and any consolidated financial statements;
●
Distribution of the annual profits;
●
Approval of remuneration paid and preliminary approval for remuneration, under article 109 of law
●
Approval of the remuneration policy and the remuneration report under articles 110 and 112 of law
●
Merger, split, conversion, revival, term extension or dissolution of the Company, according to law 4548/2018
●
Appointment of liquidators.
It is noted that not coming under the provisions of the preceding paragraph are the following:
●
Share capital increases or share capital readjustment acts explicitly vested in the BoD under the law, as well as
●
The amendment or harmonization of provisions in the articles of association by the BoD when so explicitly
●
The election of directors in the place of directors who resigned, died or forfeited their office in any other
●
The option to distribute interim dividends pursuant to paragraphs 1 and 2 of art. 162 of Law 4548/2018;
Board of Directors' Report – 31 December 2022
46
●
The option to distribute (under para. 3 of art. 162 of law 4548/2018) profits or voluntary reserves within the
1.5.
Invitation of GM
The invitation of the GM containing the minimum information required by law (including, inter alia, the date, place, time,
agenda, instructions for shareholders’ participation and rights) is published twenty (20) clear days minimum prior to the date
appointed for its session in the Company Record in the General Commercial Register (business registry) as well as at the
Company’ s website. It is also communicated within the said time period in a manner ensuring fast and non-discriminatory
access to it, by means of media which are reasonably reliable for the effective dissemination of the relevant information to
investors.
Every shareholder has the right to receive, upon request, personal notification by e-mail about impending general meeting
sessions ten (10) days minimum prior to the appointed day for the GM session.
1.6.
Participation at the GM
Shareholders having the right to participate and vote in the GM (and the iterative) are those registered at the opening of the
fifth (5) day prior to the date of the GM (Record Date). The said date of record is also applicable in the case of an adjourned or
iterative session, provided such adjourned or iterative session is not more than thirty (30) days from the date of record. If this
is not the case, or if in the case of an iterative GM a new notice is published, persons having shareholder status as at the start
of the third (3) day prior to the day of the adjourned or reiterative GM session may participate at the GM.
The BoD may resolve, in accordance with the articles of association and under the conditions of the law, as in force, that:
●
the GM will not convene at any place but will convene in full with the participation of the shareholders remotely by
electronic means;
●
any shareholder may participate in voting on items on the agenda of the general meeting at a distance by e-mail or
by electronic means, the vote held before the meeting.
Shareholders may participate at the GM in person or by proxy. A shareholder may appoint a proxy for a single or multiple GM
sessions and for a specified period. The proxy votes in accordance with the shareholder’s instructions, if any. A shareholder
may appoint up to three (3) proxies. The appointment of proxy may be freely revoked. The appointment and recall or
substitution of a proxy or representative shall be made in writing or by e-mail message or other electronic means and shall be
submitted to the Company forty -eight (48) hours minimum prior to the date appointed for the GM.
1.7.
Quorum and majority at the GM
The GM is in quorum and validly held on the agenda when at least one fifth (1/5) of the paid-in share capital is represented
thereat.
Qualified quorum of ½ of the paid-in share capital is required in the case of resolutions concerning a change of the nationality,
a change of the business object, increase of shareholders’ obligations, ordinary increase of share capital unless imposed under
the law or effected by means of capitalization of reserves, share capital reduction except when it is in accordance with para. 5
of article 21 of law 4548/2018 or para. 6 of article 49 of law 4548/2018, a change in the manner of appropriation of profits,
merger, split, conversion, revival, term extension or dissolution of the Company, the granting or renewal of power to the BoD
Board of Directors' Report – 31 December 2022
47
for share capital increase, pursuant to para. 1 of art. 24 of law 4548/2018, as well as in all other cases in which the law specifies
that the GM shall adopt resolutions under a qualified quorum and majority.
Required quorum and majority in first and iterative sessions is depicted below:
Quorum
First GM
Iterative session
Ordinary quorum
At least 20% of the paid-in share capital
One share
Qualified quorum
At least 50%
of the paid-in share capital
At least 20%
Majority
First GM
Iterative session
Simple majority
At least 50%
of votes represented+1 share
At least 50% +1 share
Qualified majority
At least 66.67%
of votes represented
At least 66.67%
1.8.
Minority Rights
According to law 4548/2018 and subject to the conditions and the deadlines prescribed by it:
Shareholders representing at least one-twentieth (1/20) of the paid-in share capital of the Company have the right to
:
●
call an extraordinary GM session (specifying the items of the agenda) and set a date for it not being more than forty-
five (45) days from the date such requisition was submitted to the chairman of the BoD;
●
include additional items in the agenda of the GM, already convened;
●
submit draft resolutions on items included in the original or any revised agenda of the GM;
●
request the Chairman of the GM to adjourn, but only once, the adoption of resolutions on all or some of the agenda
items by the GM and fix a new session for deciding on such resolutions, on the date mentioned in the shareholders’ requisition
which may not, however, be later than twenty (20) days from the day of such adjournment;
●
request the BoD to inform the Ordinary GM of the amounts which were paid during the last two-year period by the
Company to each member of the BoD or to the managers of the Company as well as of any benefit provided by the Company
to the above persons for any reason or contract existing between the Company and such persons;
●
demand an open vote at the GM on any agenda item or items;
●
request extraordinary judicial review, if there is suspicion of any action which is contrary to the provisions of law or
the articles of association of the Company or to resolutions adopted by the GM;
●
submit in writing to the BoD a requisition about the exercise of Company of claims pursuant to article 103 of law
4548/2018;
Board of Directors' Report – 31 December 2022
48
●
when forming part of a minority of at least one tenth (1/10) of the share capital of the Company that opposed the
adoption of the relevant resolution by the GM, apply to the competent court within two (2) months as of the GM approval,
requesting a decrease of compensation or benefit paid or decided to be paid to a specific member of the BoD, with the
exception of emolument to BoD members for services rendered to the Company under a special relationship, when under the
existing circumstances it is considered exorbitant as per sound judgment.
Shareholders representing at least one tenth (1/10) of the paid-in share capital of the Company have the right to:
●
request the BoD to provide to the GM information with regard to the progress of the corporate affairs and the status
of the corporate property.
Shareholders representing at least one fifth (1/5) of the paid-in share capital of the Company have the right to:
●
request judicial review if from the whole course of the Company’s affairs or in light of indications in this respect it may
validly be assumed that the management of these affairs is not exercised as dictated by the principles of sound and prudent
administration.
Any shareholder has the right to:
●
request the BoD to provide to the GM specific information regarding the affairs of the Company insofar as such
information concerns the agenda items;
●
receive, upon request, personal notification by e-mail about impending GM sessions ten (10) days minimum prior to
the appointed day for the GM session.
Detailed information on the GM and shareholders rights are available in the Company’s website (
1.9.
GMs of 2022
During 2022, one GM meeting was held. The Annual Ordinary GM, held on 22
nd
July 2022, was conducted remotely in real-time
via teleconference and was attended either in person or by proxy, by shareholders representing 928,354,519 shares
corresponding to 74.25 % of the total 1,250,367,223 shares. All the items of the agenda were approved by the Ordinary GM of
Shareholders.
The said items were the following:
1. Submission and approval of the Annual Financial Report (Company and Group) for the financial year 2021, including the
Annual Financial Statements, along with the relevant Board of Directors’ Report and Statements as well as the Independent
Auditor’s Report;
2. Approval of the overall management activities of the financial year 2021, according to the article 108 of Law 4548/2018 and
release of the statutory auditors from any liability for the year ended 31 December 2021 according to the article 117 par.1 case
(c) of Law 4548/2018;
3. Appointment of statutory auditors for the financial year 2022 and approval of their fees;
Board of Directors' Report – 31 December 2022
49
4. Submission of the annual Audit Committee’s Report pursuant to article 44 para. 1 case i) of Law 4449/2017;
5. Submission of the Independent Non-Executive Directors’ Report, according to article 9 para.5 of Law 4706/2020;
6. Approval of remuneration paid to members of the BoD in respect of the financial year 2021 and approval of advance payment
of remuneration in respect of the financial year 2022 in accordance with article 109 of Law 4548/2018;
7. Submission of the Remuneration Report of the year 2021 for discussion and vote by the GM, according to article 112 of Law
4548/2018;
8. Approval of amendments to the Directors’ Remuneration Policy;
9. Approval of the offsetting of the Company’s “Share premium” account, including a special reserve pursuant to article 4 para.
4a of Codified Law 2190/1920, against the general ledger account 42 “Accumulated losses carried forward”, for the write -off
of an equivalent amount of prior years’ losses according to articles 31 para. 2 and 35 para. 3 of Law 4548/2018, and granting
relevant authorizations to the BoD;
10. Share capital decrease in kind by decreasing the nominal value of each ordinary share by the amount of € 0.02, without
changing the total number of common shares pursuant to article 31 para. 1 of Law 4548/2018 in conjunction with the
provisions of article 17 of law 4548/2018, in order to distribute to the shareholders shares issued by the Cypriot subsidiary
company under the name “SUNRISEMEZZ LTD” held by the Company, with a value corresponding to the value of the Company’s
share capital decrease. Respective amendment of articles 5 and 25 of the Company’s Articles of Association and provision of
relevant authorizations to the Company’s BoD;
11. Granting of permission, as per article 98 para. 1 of Law 4548/2018, to the Members of the BoD and Managers of the
Company, to participate on the BoD or in the management of the Company’s subsidiaries and affiliates;
12. Election of a new Independent Non- Executive Member of the Company’s BoD in replacement of a resigned Member.
The
the Company’s website.
2.
The Board of Directors
2.1.
Composition
In accordance with article 8 of its Articles of Association, as in force today, the Company is managed by a BoD consisting of
nine (9) to fifteen (15) members. Pursuant to Greek Law 4706/2020, the Board consists of executive and non-executive
members. The number of the non-executive members should not be less than one third (1/3) of the total number of members.
Among the non-executive members, at least two (2) should be independent within the meaning of art.9 of the aforementioned
Greek Law. Pursuant to Greek Law 3864/2010, a Representative of the HFSF participates as a Member to the BoD. His
responsibilities are determined in Greek Law 3864/2010 and further illustrated in the Relationship Framework Agreement
(“RFA”).
It is noted that according to the regulatory framework of the Single Supervisory Mechanism (“SSM”) of the ECB, each Member
of the Board is subject to a fit-and-proper assessment by the SSM for the position held.
Board of Directors' Report – 31 December 2022
50
The BoD is elected by the GM of the Shareholders of the Company, which also appoints the independent non-executive
members.
The HFSF’s Representative is appointed by a respective written notice addressed to the Chairman of the Board, following which
the Board proceeds to all necessary actions according to the Company’s Articles of Association and corporate law for the
completion of this appointment, including the required notification to the General Assembly.
The term of office for the members of the Company's BoD is three (3) years and is extended until the annual GM which
convenes following the expiry of their term. The current BoD was elected on the GM held on 26 June 2020 and consequently
its term of office expires on 26 June 2023, to be extended according to the aforementioned.
According to the Company’s Articles of Association, if a Board member resigns, passes away or forfeits his/her office in any
way, or whose office is declared forfeited by resolution of the BoD due to unjustified absence from meetings for three (3)
consecutive months, the Board may continue to manage and represent the Company without replacing the missing members
if the remaining members are at least nine (9). Pursuant to Law 4706/2020, in case of unjustified absence of an independent
member at least two (2) consecutive sessions of the BoD, the Board member is deemed to have resigned. Further provisions
on Board attendance requirements are also included in the Board Attendance Policy.
As at 31 December 2022, and on the date of publication of the 2022 Annual Financial Report, the BoD is composed of the
following thirteen (13) members:
BOARD OF DIRECTORS
George Handjinicolaou
Chairman of the Board, Non-Executive BoD Member
Year of birth: 1953 Nationality: Greek
Member since: November 2016 Chairman since: November 2016
Karel De Boeck
Vice Chairman of the Board, Independent Non-Executive BoD Member, Senior
Independent Director
Year of birth: 1949 Nationality: Belgian
Member since: June 2016 Vice- Chairman since: February 2017
Senior Independent Director since: June 2021
Christos Megalou
CEO, Executive BoD Member
Year of birth: 1959 Nationality: Greek/ British
Member since: March 2017
Board of Directors' Report – 31 December 2022
51
Vassileios Koutentakis
Executive BoD Member
Year of birth: 1963 Nationality: Greek
Member since: May 2020
Venetia Kontogouris
Independent Non-Executive BoD Member
Year of birth: 1951 Nationality: Greek/ American
Member since: June 2017
Francesca Tondi
Independent Non-Executive BoD Member
Year of birth: 1966 Nationality: Italian
Member since: June 2022
Enrico Cucchiani
Independent Non-Executive BoD Member
Year of birth: 1950 Nationality: Italian
Member since: November 2016
David Hexter
Independent Non-Executive BoD Member
Year of birth: 1949 Nationality: British
Member since: January 2016
Solomon Berahas
Independent Non-Executive BoD Member
Year of birth: 1953 Nationality: Greek
Member since: November 2016
Andrew Panzures
Independent Non- Executive BoD Member
Year of birth: 1958 Nationality: British, Canadian, American
Member since: June 2020
Anne Weatherston
Independent Non-Executive BoD Member
Year of birth: 1956 Nationality: British
Member since: June 2020
Alexander Blades
Non-Executive BoD Member
Year of birth: 1970 Nationality: New Zealand
Member since: January 2016
Periklis Dontas
Non-Executive BoD Member, Representative of the HFSF to the BoD pursuant to Greek
Law 3864/2010
Year of birth: 1957 Nationality: Greek
Member since: December 2019
Board of Directors' Report – 31 December 2022
52
62% Independent Non-Executive
(including a Lead Independent
Director)
23% Non-Independent Non-executive
15% Executive
During 2022, the following amendments took place in the composition of the BoD: Mr. Arne Berggren informed the Company
of his intention to resign from the BoD before its regular meeting in June. The Board accepted Mr. Berggren’s resignation. In
substitution of the resigned member, the BoD, in its meeting on 23
rd
June 2022, elected Ms. Francesca Tondi as new
Independent Non- Executive Board Member for the remaining term of the BoD, i.e., until 26 June 2023.
Ms. D. Pallikari served as Corporate Secretary and Secretary of the BoD during the reporting year. She terminated her
cooperation with the Company on 30 December 2022. On 23 February 2023, the BoD appointed Ms Lydia Papadopoulou as
Company Secretary. Mrs. Lydia Papadopoulou has been working with the Group since 2017 offering services in relation to the
ICS, in a series of projects regarding the strengthening of the relevant structures and systems, the 3 lines of defense,
operational risk, regulatory compliance etc. She has served in the past for a number of years as the Secretary of the Audit
Committee and Risk Committee, and as Internal Audit Senior Manager, at another systemic Bank as well as an external auditor
at the EY audit firm in UK and in Greece. In recent years, she provided independent support services to Board Committees of
Growthfund and since 2019 she is the Audit Committee Chair in two entities, independent of the Group. Ms. Papadopoulou
has studied Mechanical Engineering at the National Technical University of Athens (1997), Business Administration (MBA-
Finance) at Imperial College London (1998) and has received the professional certification of Chartered Auditor/Accountant
from the Institute of Chartered Accountants of England & Wales (2001).
Board Skills and Expertise
The BoD of the Company consists of members with international leadership expertise and knowhow and particularly in the
areas of banking restructurings and the reduction of non-performing loans. Moreover, the members of the Board possess in
depth knowledge and experience of the banking market, actively contribute to the improvement of the corporate governance
framework and are driving the respective required amendments whilst participating in the creative debates and the quest for
solutions to the challenges faced by the Company and the Group.
The members have the necessary collective skills and knowledge required by the existing regulatory framework for financial
holding companies. In this way, the systemic stability, the good relationship of the Company with the Regulatory Authorities
and the avoidance of administrative gaps in the operation of the Company and its Group are promoted.
Curriculum Vitaes for the members of the BoD are set out below and also available on the Company’s website.
Board of Directors' Report – 31 December 2022
53
George P. Handjinicolaou, Chairman of
the BoD, Non-Executive Member
Mr. George Handjinicolaou is the Non-Executive Chairman of the BoD of Piraeus
Financial Holdings (and Piraeus Bank S.A.).
He is Chairman, Non-Executive Member of the BoD of ATHEXGroup and BoD
Member of the Hellenic Energy Exchange S.A. as well as Chairman of Piraeus
Bank Group Cultural Foundation. He held the position of Deputy CEO and
Member of the BoD in International Swaps and Derivatives Association in London
for the period 2011-2016. He also held the positions of Vice Chairman, Member
of the Management Committee and the BoD of the Hellenic Capital Market
Commission from 2009 to 2010. In addition, Mr. Handjinicolaou held the position
of Managing Director, Global Head, Debt Emerging Markets and Member of
Global Markets Management Group at Merrill Lynch, New York.
School, Department of Economics (1975), an MBA in Finance (1978) and a PhD
in Finance & Economics (1983) from New York University, Graduate School of
Business Administration.
Karel G. De Boeck, Vice-Chairman,
Independent Non-Executive Member,
Senior Independent Director
Mr. Karel De Boeck is Vice Chairman, Independent Non–Executive Member and
Senior Independent Director of the BoD of Piraeus Financial Holdings (and
Piraeus Bank S.A.), as well as Chairman of the Risk Committee, Vice Chairman of
the Board Ethics & ESG Committee, Member of the Audit Committee and
Member of the Nomination Committee.
He is also a Board Member of LAMIFIL and Willemen Group, Belgium. He held
the position of CEO at Dexia Group, at Dexia NV in Belgium and CEO at Dexia
Credit Local S.A. in France, as well as at Fortis Group in Belgium.
Mr. De Boeck holds a Master’s Degree in Mechanical/Civil Electronic Engineering
(magna cum laude) from KUL in Belgium (1972) and a Master’s Degree in
Economics from KUL in Belgium (1974).
Board of Directors' Report – 31 December 2022
54
Christos I. Megalou, CEO, Executive
Member
Mr. Christos Megalou is an Executive Member of the BoD of Piraeus Financial
Holdings (and Piraeus Bank S.A.), CEO and Chairman of the Group Executive
Committee.
Mr.Megalou, is Chairman of the BoD of Shnappi S.A., A’ Vice Chairman of the
BoD of Association of S.A. and Entrepreneurship and Non-Executive BoD
Member of the Hellenic Bank Association (“HBA”), where he held the position of
Deputy Chairman between 2013 to 2015. Also, he was elected, for two
consecutive runs, Chairman of the HBA in the UK (2010-2013). He is a
distinguished fellow in Global Federation Competitiveness Councils in
Washington, USA and a Non-Executive Board Member of Safe Bulkers Inc.
Mr. Megalou graduated with a BSc of Economics from the Athens University of
Economics in 1981 and holds an MBA in Finance from Aston University in
Birmingham, UK (1982).
Vasileios D. Koutentakis, Executive
Member
Mr. Vasileios Koutentakis is an Executive Member of the BoD of Piraeus Financial
Holdings (and Piraeus Bank S.A.). He is a Member of the Group Executive
Committee, as well as an Executive General Manager, Chief Retail Banking in
Piraeus Bank since 2017.
He is a Member of the BoD of Shnappi S.A.
and of Piraeus Agency Solutions S.A.,
Member of the Executive Committee of the HBA, as well as a Member and HBA
Representative of Liquidity Council of Ministry of Finance and Chairman of
INSEAD NAA in Greece. Also, he is a Member of the BoD at Piraeus Bank Group
Cultural Foundation. He was a Board Member of VISA Hellas from 2004 until
2012.
Mr. Koutentakis holds a Diploma in Electrical Engineering from the National
Technical University of Athens (1987) and an MBA from INSEAD in
Fontainebleau, France (1990).
Board of Directors' Report – 31 December 2022
55
Venetia G. Kontogouris, Independent
Non-Executive Member
Mrs. Venetia Kontogouris is an Independent Non-Executive Member of the BoD
of Piraeus Financial Holdings (and Piraeus Bank S.A.), as well as a Member of the
Nomination Committee and Member of the Board Ethics & ESG Committee.
Also, she is a Member of the BoD at Kaizen Private Equity, as well as Founder and
Managing Director of Venkon Group, LLC. She was Co-Managing Director at
Trident from 1995 to 2011. Mrs Kontogouris is a technology-focused venture
capitalist, with over 20 years of experience. She was responsible for overseeing
management and making key decisions in over 25 companies from the initial
seed invest to the exit strategy.
Mrs. Kontogouris holds a BA from the Northeastern University (1974) and an
MBA from the University of Chicago (1977).
Enrico Tommaso C. Cucchiani,
Independent Non-Executive Member
Mr. Enrico Tommaso Cucchiani is an Independent Non-Executive Member of the
BoD of Piraeus Financial Holdings (and Piraeus Bank S.A.), as well as Vice
Chairman of the Nomination Committee, Member of the Remuneration
Committee and Member the Board Ethics & ESG Committee.
Mr. Cucchiani holds the position of Non-Executive Vice Chairman of the Board of
IllyCaffe, as well as the position of Non-Executive Member of the Board of TGI-
Think Global Investments. He is also Member of the BoD at Bocconi University,
Jarotte Bocconi Foundation, Amici Normale Di Pisa University, Trilateral
Commission and Weizmann Institute.
He served as Member of the Board of RSA Insurance Group from 2014 to 2021,
and held the position of Member of the Executive Board of Allianz Group being
responsible for all business activities in most of Europe, Latin America and Africa.
In addition, he served as Group CEO of Intesa Sanpaolo. Mr. Cucchiani was
appointed Cavaliere del Lavoro, the highest honorary title by the President of
Italy, as well as Bocconi Man of the Year in 2006.
He holds an MBA (Fullbright Fellow) from Stanford Graduate School of Business,
USA and a Dottore in Economia (PhD in Economics) from Bocconi University,
Italy. He has completed his Research Activity on Multinational Corporations at
Harvard Business School, UK.
Board of Directors' Report – 31 December 2022
56
David R. Hexter, Independent Non-
Executive Member
Mr. David Hexter is an Independent Non-Executive Member of the BoD of
Piraeus Financial Holdings (and Piraeus Bank S.A.), as well as Chairman of the
Nomination Committee, Member of the Audit Committee and Member of the
Board Ethics & ESG Committee.
He is an Independent Member of the Supervisory Board of Santander Bank
Polska and Non-Executive Chairman of the Supervisory Board of PENM (Private
Equity New Markets), Copenhagen.
Mr. Hexter held the position of Deputy Vice President of the Banking
Department, as well as Chairman of the Equity Investment Committee and
Member of the Operations Committee at the European Bank of Reconstruction
and Development (1996-2004).
Mr. Hexter holds an MA in Philosophy, Politics and Economics from Oxford
University (1970), an MBA from the Cranfield School of Management (1973), an
MPhil from Birkbeck, University of London (2011) and a PhD from London
University (2016).
Solomon A. Berahas, Independent
Non-Executive Member
Mr. Solomon Berahas is an Independent Non-Executive Member of the BoD of
Piraeus Financial Holdings (and Piraeus Bank S.A.), as well as Vice Chairman of
the Risk Committee and of the Audit Committee, Member of the Remuneration
Committee and Member of the Board Ethics & ESG Committee.
Mr. Berahas is Chairman and Managing Director of the BoD of Tiresias S.A. Bank
Information Systems in Athens. He is also Vice Chairman of the BoD at the
Piraeus Bank Group Cultural Foundation, Member of the BoD at ELEPAP and at
Association of S.A. and Entrepreneurship.
Between 2006 to 2012, Mr. Berahas held the position of Vice Chairman of the
BoD of Eurobank Financial Planning Services.
Mr. Berahas holds a BSc in Industrial Engineering (1976), an MSc in Industrial
Engineering and Management Information Systems (1978) and a DSc in
Operations Research from the Technion Israel Institute of Technology (1981).
Board of Directors' Report – 31 December 2022
57
Andrew D. Panzures, Independent
Non-Executive Member
Mr. Andrew Panzures is an Independent Non-Executive Member of the BoD of
Piraeus Financial Holdings (and Piraeus Bank S.A.), as well as Chairman of the
Remuneration Committee, Member of the Nomination Committee and Member
of the Risk Committee.
Mr Panzures is a Board Member of Interaudi Bank USA/Private Equity Investor
and served as Principal-Senior Portfolio Manager at Graham Capital
Management in the Global Multi Macro-Graham Capital Management LLC Sector
(2011-2016). Between 2009 through 2011, Mr. Panzures was Co-CIO and a
Managing Partner at Medley Macro Fund Management. From 2003 through to
2008, Mr. Panzures held the position of Managing Director and CIO of the
Americas-New York at JPMorgan Chase.
Mr. Panzures graduated from Ontario Scholar in 1977 and from York University’s
Schulich School of Business—BBA Finance in 1981.
Anne J. Weatherston, Independent
Non-Executive Member
Mrs. Anne Weatherston is an Independent Non-Executive Member of the BoD
of Piraeus Financial Holdings (and Piraeus Bank S.A.), as well as Chair of the Audit
Committee and Member of the Risk Committee.
Mrs. Weatherston is also a Board Member of AIB UK, of ALBA Bank as well as a
Board Member and Audit Chair of Mint Payments. She held the positions of
Board Member of Archa Neo – Bank, CIO at Bank of Ireland, Group CIO of
Australia and New Zealand Banking Group and Chief Transformation Officer &
CIO at Energy Australia.
Mrs. Weatherston holds an MA on Archaeology from Glasgow University and an
MBA from Strathclyde University Business School. She has also completed a 4-
year Government scheme (UK program) in IT programming, is a graduate of the
Australian Institute of Directors and Chair mentoring programme and has
completed the Executive Leadership Training from Harvard & London Business
School.
Board of Directors' Report – 31 December 2022
58
Francesca Tondi, Independent Non-
Executive Member
Mrs. Francesca Tondi is an Independent Non-Executive Member of the BoD of
Piraeus Financial Holdings (and Piraeus Bank S.A.), as well as Chair of the Board
Ethics & ESG Committee and Member of the Remuneration Committee and
Audit Committee.
Mrs. Francesca Tondi is also a Non-Executive Board Member of the Unicredit
Group, Milan, Italy, Chair of the ESG Committee and Member of the Internal
Control and Risks Committee (Risk and Audit). She is Global Financial Sector Lead
of Climate Governance Initiative, London, UK and Board Member of the CCFL,
London, UK.
She held the positions of Managing Director, Equities in JP Morgan Securities in
London from 2000 to 2010 and in Morgan Stanley in London from 2010 to 2015.
Mrs. Tondi holds a degree in Business and Economics from Bocconi University,
Italy (1991), she is a Qualified Chartered Accountant (ICAEW equivalent), Italy
(1993) and has completed the Certified Fintech Course of ESCP Business School
in London on 2016.
Alexander Z. Blades, Non-Executive
Member
Mr. Alexander Blades is a Non-Executive Member of the BoD of Piraeus Financial
Holdings (and Piraeus Bank S.A.), as well as Member of the Risk Committee, the
Nomination Committee, the Remuneration Committee and the Board Ethics
&ESG Committee.
Mr. Blades is Member of the BoD of Shnappi S.A. He is also a Partner at Paulson
& Co. Inc., New York since 2009, as well as a Member of the New York State Bar
Association and a barrister and solicitor of the High Court of New Zealand.
Mr. Blades holds a BA (1993) and LLB (1994, Hons) from Victoria University of
Wellington and an LLM from the University of Chicago (1997).
Board of Directors' Report – 31 December 2022
59
Periklis N. Dontas, Non-Executive
Member, HFSF Representative
Mr. Periklis Dontas is a Non-Executive Member of the BoD and the HFSF
Representative under Law 3864/2010 of Piraeus Financial Holdings (and Piraeus
Bank S.A.), as well as a Member of the Risk Committee, Audit Committee,
Remuneration Committee, Nomination Committee and the Board Ethics & ESG
Committee.
He is also an Independent Non-Executive Board Member of FF Group. From 2008
to 2012, Mr. Dontas held the position of Deputy CEO and Executive Member of
the BoD of EFG Eurobank S.A. (Poland). From 2016 to 2018, he was Director of
Risk Consulting and Business Development in KPMG Advisors S.A.
Mr. Dontas has Bachelor of Arts in Economics from The American College of
Greece (1979) and an MA in Economics from Essex University, UK (1981).
Other professional commitments of Board members
Board of Directors' Report – 31 December 2022
60
BOARD MEMBER
(of Piraeus Financial Holdings
S.A. and Piraeus Bank S.A.)
RESPONSIBILITIES IN OTHER
LISTED COMPANIES
RESPONSIBILITIES IN OTHER UNLISTED
COMPANIES
RESPONSIBILITIES IN NON
PROFIT COMPANIES
George Handjinicolaou,
Chairman, Non Executive
Member
HELLENIC EXCHANGES - ATHENS
STOCK EXCHANGE - Chairman,
Non Executive Member
HELLENIC CENTRAL SECURITIES DEPOSITORY
- Chairman, Non Executive Member
PIRAEUS BANK GROUP
CULTURAL FOUNDATION -
Chairman
ATHENS EXCHANGE CLEARING HOUSE
(ATHEXClear) - Chairman, Non Executive
Member
HELLENIC ENERGY EXCHANGE S.A. - BoD
Member
EnEx CLEARING HOUSE SINGLE MEMBER
S.A. (EnExClear) - BoD Member
Christos Megalou, Managing
Director (CEO)
SAFE BULKERS INC. – Non
Executive BoD Member
SHNAPPI S.A. - Chairman
HBA - Non Executive BoD
Member
ASSOCIATION OF S.A. AND
ENTREPRENEURSHIP– A’ Vice
Chairman
Alexander Blades,Non- Executive
Member
SHNAPPI S.A. - BoD Member
David Hexter, Independent Non
Executive Member
SANTANDER BANK POLSKA -
Independent Member of the
Supervisory Board
PRIVATE EQUITY NEW MARKETS -
COPENHAGEN - Non-Executive Chairman of
the Supervisory Board
Karel De Boeck, Vice Chairman,
Independent Non Executive
Member
LAMIFIL NV - Non Executive Board Member
WILLEMEN GROEP NV/SA - Non Executive
Board Member
WILLEMEN CONSTRUCT NV/SA - Non
Executive Board Member
Solomon Berahas, Independent
Non Executive Member
TIRESIAS S.A. - Chairman & Managing
Director
SAFE GROWTH INVESTEMENTS AIFLNP LTD -
Independent Non Executive Member
ELEPAP - Non Executive Member
ASSOCIATION OF SA AND
ENTREPRENEURSHIP –Non
Executive BoD Member
PIRAEUS BANK GROUP
CULTURAL FOUNDATION - Vice
Chairman
Board of Directors' Report – 31 December 2022
61
Enrico Tommaso Cucchiani,
Independent Non Executive
Member
TGI LLP (UK) - Non Executive BoD Member
ILLY CAFFE - Non Executive Vice Chairman
of the Board
BOCCONI UNIVERSITY - BoD
Member
JAVOTTE BOCCONI FOUNDATION -
BoD Member
AMICI NORMALE DI PISA
UNIVERSITY - BoD Member
TRILATERAL COMMISSION - BoD
Member
WEIZMANN INSTITUTE - BoD
Member
Venetia Kontogouri,
Independent Non Executive
Member
VENKON GROUP LLC - Managing
Director
MONTEREY CAPITAL - Non
Executive Director
Periklis Dontas, HFSF
Representative under Law
3864/2010, Non Executive
Member
FF GROUP (under suspension) -
Independent Non Executive BoD
Member
Vasileios Koutentakis, Executive
Member
PIRAEUS AGENCY SOLUTIONS
S.A. - BoD Member
SHNAPPI S.A. - BoD Member
INSEAD NAA – Chairman
PIRAEUS BANK GROUP CULTURAL
FOUNDATION – BoD Member
Andrew Panzures, Independent
Non Executive Member
INTERAUDI BANK USA -
Independent Non Executive BoD
Member
Anne Weatherston, Independent
Non Executive Member
MINT PAYMENTS - Non Executive
BoD Member
AIB UK – Independent Non-
Executive BoD Member
ALBA BANK - Non Executive BoD
Member
Francesca Tondi, Independent
Non Executive Member
UNICREDIT SPA - Non Executive
BoD Member
Below is a table with the number of shares of the Company held by members of the BoD and members of the Group Executive
Committee as at 31 December 2022.
Board of Directors' Report – 31 December 2022
62
BOARD OF DIRECTORS
Number of shares
% of the share capital
George P. Handjinicolaou, Chairman of the BoD, Non-Executive Member
50,000
0.00400
Karel G. De Boeck, Vice-Chairman, Independent Non-Executive Member,
Senior Independent Director
-
-
Christos I. Megalou, CEO, Executive Member (and member of the Group
Executive Committee)
150,446
0.01203
Vasileios D. Koutentakis, Executive Member (and member of the Group
Executive Committee)
4,333
0.00035
Venetia G. Kontogouris, Independent Non-Executive Member
-
-
Solomon A. Berahas, Independent Non-Executive Member
-
-
Alexander Z. Blades, Non- Executive Member
-
-
Arne S. Berggren, Independent Non- Executive Member
-
-
Enrico Tommaso C. Cucchiani, Independent Non-Executive Member
-
-
David R. Hexter, Independent Non-Executive Member
20,000
0.00160
Andrew D. Panzures, Independent Non-Executive Member
-
-
Anne J. Weatherston, Independent Non-Executive Member
-
-
Periklis N. Dontas, Non-Executive Member, HFSF Representative
-
-
GROUP EXECUTIVE COMMITTEE
Gnardellis Theodoros
6,000
0.00048
Margaritis Charalampos
-
-
Board of Directors' Report – 31 December 2022
63
Total
230,779
0.01846
2.2.
Director Suitability Policy
In compliance with article 3 of Law 4706/2020, the Company has adopted by means of a GM resolution on 22 June 2021,
following a BoD proposal upon respective recommendation of the Board Nomination Committee (“NomCo”), the Director
Suitability Policy (the "Policy") which sets the framework and specifies the suitability requirements for election to the BoD.
The Policy takes into consideration the applicable legislative and regulatory framework and aims to describe the general
principles and the criteria for the nomination of BoD members.
For each new nomination, the Company’s business strategy and the overall risk strategy, including the Company’s risk culture,
risk appetite and framework are taken into consideration. To this end, the NomCo outlines the necessary profile/competencies
for each Director having a clear view on the medium-term objectives, challenges and risks and the Company’s succession
planning.
In order for a person to be considered as suitable candidate by the BoD and the NomCo, such person:
i) must meet the suitability criteria (fit and proper) defined in the Policy (reputation, honesty and integrity/ previous
experience/ independence of mind);
ii) should not have any existing or foreseeable conflicts of interest with the Company;
iii) should be able to commit sufficient time to the BoD of the Company depending on the position for which they are
recommended; pursuant to the provisions of the applicable regulatory provisions which are incorporated in the Policy,
Directors may not hold more than one of the following combinations of directorships at the same time: (a) one executive
directorship with two non-executive directorships; and b) four non-executive directorships;
iv) should possess one or more of the knowledge, skills and experience criteria detailed in the Policy. The desired Director
Profile is outlined by a variety of factors, including indicatively skills such as leadership, strategic acumen, communication,
customer and quality-orientation as well as academic qualifications and proven experience in large banking or financial firms,
management of large balance-sheet companies, RM, audit etc.
In addition, depending on the position sought to fill, additional criteria relating, inter alia, to independence, to eligibility under
the HFSF Law and diversity may also apply.
The Company ensures individual and collective suitability at all times. Suitability is monitored on an on-going basis in order to
identify, in the light of any relevant new incident, situations where suitability should be re-assessed (incl. if there is any event
having material impact on the reputation of a Board member or of the Company or materially affecting the suitability of the
individual Board member or the collective suitability, if there is a material change in the business model, risk appetite or risk
strategy or structure of the Company, at individual and group level etc.).
The Policy is reviewed on a biannual basis, or ad-hoc in the event of changes in the legal and/or regulatory framework, in order
Board of Directors' Report – 31 December 2022
64
to be updated as required. Non-material amendments of the Policy are approved by the BoD. In preparing, amending or
reviewing this Policy, the NomCo and the BoD shall take into account recommendations or findings of other Board Committees
and competent departments, especially the internal control functions.
The Director Suitability Policy is available in the Company’s website (
2.3.
Succession Policy for the BoD
The Succession Policy for the BoD (hereinafter “the Policy”) aims to provide a framework and lay out policies which ensure the
stability, continuity and proper integration of the Company’s BoD through the identification and selection of potential
candidates, in the event of permanent, planned or unforeseen departure of any of its members, particularly for Directors
serving in leadership positions (chairmen of the Board and Committees).
The Board succession planning is a continuous forward-looking process. The aim is to make the Board a strategic asset for the
Company and to ensure that the Board always has the talent and experience it needs. The NomCo ensures that a roster of
suitable and interested candidates with different profiles is built up over time and held current. To reduce future risks, a long-
term ambition for the Company is to have a Board with an optimal mix of new Directors, those with medium tenures and those
with long tenures.
The process of succession planning is summarized below.
Identification and evaluation of current and future needs: an internal evaluation of the Board and the principal Committees’
future needs is carried annually by the NomCo. At least every second year, each member is interviewed by the Chairmen of
the BoD and NomCo, in order to get their perspective on important issues relating to succession planning. Additional input
from other stakeholders (e.g. major shareholders and management team) is collected. Additionally, an independent evaluation
of the Board will be held at a minimum every three (3) years from 2020 onwards by an appointed specialist third party.
Profile matrix: the result of the above exercise will be summarized and presented to NomCo in the form of a document in
which required skills, competences and diversity needs are mapped against the Board’s current composition. This document,
in combination with the Directors’ exit plans should form the basis for a long-term recruitment plan and research for new
directors.
Search, selection and appointment: In identifying possible candidates, the NomCo should base its search on the criteria
described in the Policy (which, inter alia, incorporate the fit and proper criteria of HFSF and ECB). The NomCo may use a variety
of internal and external sources for identifying potential candidates. In case of a new appointment, the list of potential
candidates is reviewed by the NomCo with the aim to narrow the search and produce a shortlist. When the shortlisting process
has been finalized, the NomCo should meet with the candidates prior to the final recommendation to the Board. Following
Board approval, meetings with the CEO and other Directors are organized prior to the candidate’s formal appointment.
Diversity and inclusion: The NomCo reviews a broad spectrum of complementary skills, personalities and competencies, when
searching for Non-Executive Directors, considering diversity as one of the factors when recommending for a new appointment.
Board composition and succession planning is about inclusion in terms of skills, knowledge and viewpoints. Traditional
dimensions of diversity, such as race, gender and tenure are important, but the members of the Board should collectively
possess a diverse range of skills, expertise, industry knowledge, business and other experience (inclusion), necessary for the
effective oversight of the Company.
Board of Directors' Report – 31 December 2022
65
Succession planning process for the CEO
The Succession Planning process for the CEO is governed by a separate policy, namely the CEO Succession Planning Policy. Said
process is based, amongst others, on the following principles:
Issues related to the CEO succession should be addressed proactively and therefore the succession plan is an ongoing activity
with a long-term perspective.
Except where the CEO departs unexpectedly, the CEO is an active participant, and it is on his/her responsibility to ensure that
there is an internal process for developing talent for the top executive roles.
The succession planning includes, inter alia, an annual review by NomCo during which the CEO and the Group HR lay out the
forward-looking leadership factors against which the talent should be evaluated as well as an external benchmarking.
The process is partially differentiated depending on whether the departure of the current CEO is planned or unplanned.
In case of anticipated succession, the process briefly includes the following phases:
Identification and evaluation of needs: The process begins with determining the Company’s future strategy, which serves as a
baseline for the type of skills, and experience that is needed from the new CEO in order to meet the Company’s goals.
Selection criteria: The NomCo, in collaboration with the CEO, distills the abovementioned considerations into a set of criteria
that are the most critical for assessing and selecting suitable candidates.
Search and selection: The NomCo should seek to sustain a pool of external and internal talent from which to identify potential
candidates.
Nomination: The NomCo reviews the list of potential candidates and produces a shortlist. Then, the Committee meets
subsequently the potential candidates and assesses them, also examining incompatibilities and disqualifications of legal nature.
Based on the results of the assessment, the NomCo recommends the best candidate to the Board.
In case of an unanticipated succession, the whole process is handled by the NomCo. The NomCo prepares a ready-to use list
of potential candidates from which the Board could choose the individual who can run the Company as an interim CEO (in case
there is no apparent successor identified and immediately available). Preferably, such an interim CEO should be selected from
the pool of internal candidates. In case the Board believes there are no internal candidates there are ready for the position of
the CEO, an external search for a permanent replacement follows.
2.4.
Diversity of the BoD members
Upon suggestion of the Board NomCo, the BoD has adopted the BoD Diversity Policy. The policy is applied in conjunction with
the Director Suitability Policy, as mentioned above and is also considered in the implementation of the Board members and
CEO succession planning.
The Company recognizes and embraces the importance and the benefits of diversity for safeguarding and improving its
competitive advantage and innovation as well as for the achieving maximum team performance and effectiveness. In this
context, when nominating new Board members or top management executives, a combination of elements is taken into
consideration, including inter alia: skills, abilities, qualifications, knowledge, experience, educational background, professional
Board of Directors' Report – 31 December 2022
66
training, professional experience, the gender, the age and other qualities, which may vary depending on the identified
weaknesses and the business or strategy needs of the Company.
All areas of knowledge and experience required for the Company's business activities are covered by the BoD. The Company
has a highly diversified BoD in terms of educational and professional experience backgrounds, bringing in a variety of
perspectives that can be key to an organization's success. Such education and professional backgrounds include indicatively
finance, economics, business administration, mechanical/ electrical engineering, philosophy, politics, law as well as extensive
banking and financial services experience and certifications, training and prior experience in accounting, audit, risk and IT.
In addition, the current BoD is consisted of members of seven (7) different nationalities (Greece, Britain, Italy, New Zealand,
USA, Belgium, Canada).
Having a wide range of perspectives in the boardroom means that the status quo is constantly challenged and critically
reassessed and that information is carefully evaluated. The achieved diversity of the Board members effectively contributes to
the expression of different views, to the avoidance of “group thinking” and to the constructive dialogue between members,
thus succeeding the final decisions to be taken on the basis that the non-executive members of the Board Members exercise
appropriate oversight to the Management.
Due to certain restrictions and difficulties in identifying, attracting and nominating women for Board positions, gender diversity
to the BoD does not currently fully fulfill the Company’s aspirations; however the Company has committed to make effort to
gradually increase the under-represented gender (women) in the BoD to minimum 25%, calculated on the total BoD size by
the end of the year 2023. The Company has already made progress to that direction during 2022, nominating Ms. Tondi as an
independent Non-Executive member and thus achieving a 23% female representation instead of 15% in 2021. The Group also
aspires to increase percentage of women in upper management positions to 35% by 2025 (currently at 32%).
Board of Directors' Report – 31 December 2022
67
2.5.
Operation
The
BoD
, immediately after its election by the GM, forms into body and elects a Chairman and one or more Vice-Chairmen and
Managing or Executive Directors from amongst its members. According to the current legal framework and international best
practices, the Chairman of the Company shall not at the same time serve as Managing/ Executive Director.
The
Chairman
perform his duties, he is substituted by one of the Vice-Chairmen of the Board; they, in turn, are substituted by another
director, appointed by a resolution of the Board. Secretarial duties of the BoD are performed by one of its members or any
other third party appointed by the Board. The Board has assigned the support of its operations of the BoD to a capable,
specialized and experienced Corporate Secretary, who is appointed by it.
The
Senior Independent Director
, appointed by the BoD from amongst its independent non- executive Board members, has
the following duties and responsibilities:
1. lead the Non-Executive Directors and serve as a trusted intermediary for them, when required;
2. support the Chairman and other Directors or shareholders, in exceptional circumstances, to resolve any significant
issues, including any potential conflicts of interest between the Chairman of the Board and the Company;
3. in exceptional circumstances, request for a special meeting of the BoD and define its agenda.
In the exceptional circumstances under paragraph 2 above, the Senior Independent Director may:
●
organize meeting of Non-Executive Directors and reflect their concerns to the Chairman and the CEO;
●
act as intermediary and facilitator between the Non-Executive Directors and the Chairman, as necessary;
●
request that a Board meeting is convened as per paragraph 3 above.
The BoD is convoked by its Chairman or his deputy and convenes at least once a month at the Company’s seat or by
teleconference, in accordance with the provisions of its Articles of Association and of corporate law, as in force. The BoD may
validly convene anywhere in Greece or abroad, where the Company pursues business activities.
Subject to the provisions of art. 5 para.3 of Law 4706/2020 stipulating that sessions of the BoD on the preparation of the
financial statements or on items for the approval of which a decision by the GM by increased quorum and majority according
to Law 4548/2018 is required, are quorate when at least two (2) independent non-executive members are present, the Board
is in a quorum and convenes validly when at least half of its members plus one are present or represented. However, the
Board of Directors' Report – 31 December 2022
68
number of members personally present may never be less than five (5). Fractions are omitted in determining whether a quorum
is achieved. When the BoD convenes by teleconference, the members participating are considered physically present.
Resolutions of the BoD shall be taken by absolute majority of the present and represented members unless otherwise provided
by Greek Law, the Articles of Association and the Regulation of the Company. Drawing up and signing of minutes by all Board
members or their representatives equals a resolution of the BoD, even if no meeting has been held.
2.6.
HFSF role in the Company
Pursuant to the provisions of Greek Law 3864/2010, the HFSF’s Representative in the BoD has the following rights:
a)
to veto any decision of the Company’s BoD:
i) in respect of the distribution of dividends and the remunerations and bonuses policy for the Chairman, the Managing
Director and the other members of the BoD, as well as for those persons holding the position of or exercising the
duties of general managers as well as their deputies when the ratio of NPEs to total loans of the credit institutions, as
calculated according to item (ii) of case g of paragraph 2 of article 11 of Commission Implementing Regulation (EU)
2021/451 of 17 December 2020, exceeds 10%; it is noted that this provision is not currently applicable to the
Company;
ii) in respect of decisions to amend the articles of association, including the increase or decrease of capital or the
provision of relevant authorization to the BoD, merger, division, conversion, revival, extension of the duration or
dissolution of the Company, transfer of assets, including the sale of subsidiaries, or for any another issue requiring an
increased majority in accordance with the provisions of Law 4548/2018 and which decision is likely to significantly
affect the HFSF's participation in the share capital of the Company;
b)
to request an adjournment of a Board meeting for three (3) business days in order to receive instructions from the CEO
of HFSF. This right may be exercised until the end of the relevant BoD meeting;
c)
to convene the BoD of the Company;
In exercising his rights, the HFSF Representative shall respect the Company’s business autonomy.
The BoD held sixteen (16) meetings during the year 2022.
The following table presents the percentage of the Board and Committees members’ participation in the respective meetings
for the reporting period.
Board of Directors' Report – 31 December 2022
69
Board Of Directors
Risk Committte
Nomination
Committee
Remuneration
Committee
Audit Committee
Board Ethics & ESG
Committee
Average participation
93%
99%
93%
100%
100%
95%
Total number of meetings
16
12
6
8
15
4
Name
Attendance
Meetings
Attendance
Meetings
Attendance
Meetings
Attendance
Mee
tings
Attendance
Meetings
Attendance
Meetings
George Handjinicolaou
100%
16/16
-
-
-
-
-
-
-
-
100%
2/2
Karel De Boeck
100%
16/16
92%
11/12
100%
6/6
-
-
100%
15/15
100%
4/4
Christos Megalou
100%
16/16
-
-
-
-
-
-
-
-
-
-
Vasileios Koutentakis
100%
16/16
-
-
-
-
-
-
-
-
-
-
Venetia Kontogouris
88%
14/16
-
-
67%
4/6
-
-
-
-
100%
4/4
Arne Berggren
1
100%
7/7
-
-
75%
3/4
100%
4/4
-
-
100%
2/2
Enrico Cucchiani
100%
16/16
-
-
100%
6/6
100%
8/8
-
-
75%
3/4
David Hexter
100%
16/16
-
100%
6/6
-
-
100%
15/15
75%
3/4
Solomon Berahas
2
100%
16/16
100%
12/12
-
-
100%
8/8
100%
15/15
100%
4/4
Anne Weatherston
100%
16/16
100%
12/12
-
-
-
-
100%
15/15
-
-
Andrew Panzures
3
100%
16/16
100%
12/12
100%
2/2
100%
8/8
100%
7/7
-
-
Francesca Tondi
4
100%
9/9
-
-
-
-
100%
4/4
100%
8/8
100%
2/2
Alexander Blades
100%
16/16
100%
12/12
100%
6/6
100%
8/8
-
-
100%
4/4
Periklis Dontas
100%
16/16
100%
12/12
100%
6/6
100%
8/8
100%
15/15
100%
4/4
1.
A
.
Berggren
: resigned in June 2022 from the BoD
2.
S
.
Berahas
: was appointed Vice-Chair of the Audit Committee on 23 June 2022
3.
A
.
Panzures
: was appointed Chairman of the Remuneration Committee and member of the NomCo on 23 June 2022 and ceased to be Vice-Chair of the Audit
Committee
4.
F. Tondi:
was appointed member of the Audit Committee, the Remuneration Committee and Chair of the Board Ethics and ESG Committee on 23 June 2022
Board of Directors' Report – 31 December 2022
70
2.7.
Roles and Responsibilities
Pursuant to Article 15 of the Company's Articles of Association, the BoD represents the Company and is authorized to resolve,
without restriction, on any issue relating to the Company's management, administration of its property and the pursuit of its
business objectives in general. The BoD may not resolve on issues, which in accordance with the Greek Law and the Articles of
Association, fall within the exclusive responsibility of the GM.
Under Article 16 of the Company's Articles of Association, the Company is represented by its BoD, which may delegate authority
relating to the representation of the Company and also the exercise of all or some of its powers or responsibilities, except
those requiring collective action, to one or more persons whether members of the BoD or not, setting out the extent of the
powers conferred upon them. Under the above provisions of the Articles, the Board determines the system for representing
the Company and the limits within which the authorized representatives can act.
The Company's Internal Regulation states that the prime obligation and duty of the Board Members is the continuous pursuit
of enhancing the Company's long-term economic value and the protection of the general corporate interests. The BoD is
responsible for drawing up and adopting a detailed Business Strategy extending for at least one year defining clear business
objectives, both for the Company itself and for the Group. The Internal Regulation further outlines on the role and
responsibilities of the BoD as a whole as well as of execut ive, non-executive and independent non-executive members.
Principal activities and significant issues considered during 2022
In the performance of its duties for 2022, the Company’s BoD
inter alia
:
In relation to Corporate Governance issues
●
prepared and convoked the Annual GM of Shareholders held on 22 July 2022 and approved the respective documentation;
●
was updated on the internally conducted annual evaluation of the Board and the BoD Committees’ results;
●
was updated on the results of the annual review of the independence of Board Members and confirmed that all
Independent BoD members meet the independence requirements of the law;
●
performed the annual CEO’s evaluation for 2021 and the mid-year CEO’s evaluation for 2022;
●
was updated on the progress of the Board Succession Plan exercise;
●
approved amendments in the Director’s Remuneration Policy, the
BoD’s Remuneration for the years 2021/2022.
In relation to Audit and Compliance issues, the BoD approved the following:
●
the update of the Group Compliance Policy;
●
The BoD was also updated on the progress of the special audits of the Internal Audit Unit (“IAU”).
Board of Directors' Report – 31 December 2022
71
In relation to RM issues, the BoD approved the following:
●
the Capital and Liquidity Adequacy Statements (“CAS”/ “LAS”) for 2021 as well as the ICAAP and ILAAP 2021;
●
the Group Risk and Capital Strategy & the RAF for 2021;
●
the annual review of the Company’s Recovery Plan.
In relation to corporate actions and granting authorizations the BoD approved the following:
●
the synthetic securitization transaction of performing mortgages loans (‘’ERMIS M’’ transaction);
●
the VES for 2022.
In relation to business monitoring, financial information, Company’s policies and relevant updates the BoD approved the
following:
●
the 2021 annual financial statements and the 2022 interim financial statements;
●
the Group annual budget for 2023;
●
the NPE Plan for the years 2022-2024 & the Group Business Plan for 2022-2025.
The BoD was also updated on the assignment of non-audit services to the Company’s statutory auditors.
2.8.
Induction and Training of Board members
Aiming to ensure that new members of the BoD are provided with all the information and training necessary to enable them
to contribute appropriately to the operations of the BoD from the time of their election and to the accomplishment of its
mission, the Company has adopted a Board Induction and Training Policy. In this context, it implements an induction procedure
for newly elected/ appointed Board members aiming to facilitate the Board members’ understanding of the Group and the
Company’s structure, business model, risk profile, governance arrangements and the role of the member(s) within them.
Upon the election of a new member by the GM of Shareholders or appointment by the BoD, a letter of congratulations and
welcome is addressed to her/him by the Company Secretary, accompanied by a detailed induction pack (a living document
which provides them with a wide range of information about the Company and the Board, comprising of material such as the
articles of association, the internal regulation, information on the obligations deriving from their membership, the Board
meetings schedule for the year etc.).
Prior to attending their first Board meeting, members are welcomed by the Chairman of the Board and meet with the CEO and
the top executive management of the Company, with the opportunity to ask questions with reference to the Company and its
operations. New members are also briefed on issues the BoD is dealing with at the moment or will be looking at in the future.
In case of multiple new memberships, induction day seminars are organized and attended by the new members.
Following the fit and proper suitability assessment the new members are submitted to, it is expected and recognized that they
possess sufficient knowledge, experience and expertise to fulfill their role. Nevertheless, they are not necessarily experts in all
disciplines, business areas or governance aspects. Therefore, training is a key driver of continued board effectiveness and an
Board of Directors' Report – 31 December 2022
72
ongoing commitment of Board members and the Company.
The Company makes available the financial and human resources to implement proper induction and training programs and
encourages initiatives aiming to improve the collective or individual skills, knowledge or competence of Board members on an
ongoing or ad-hoc basis. The Corporate Secretary, in collaboration with the Group HR, is responsible for producing the annual
training schedule. The NomCo sponsors and oversees the training schedule for the members of the Board, on an ongoing basis.
In addition, regular presentations by management and staff to the Board and Committees are performed in order to educate
or keep them informed on changes within the Company or on legal, regulatory, market and industry requirements and
standards. Personalised educational programs may be designed and implemented, where needed.
In addition, once a year, Board members attend (one-day/two days) Strategy Seminars where top executive management
presents the results, goals, challenges faced by the organization.
During 2022, taken into consideration the market trends and needs as well as the previous Board self-assessment outcomes,
the training initiatives for the BoD members were focused on topics related to the ways technology is reshaping the banking
and financial services landscape, and were conducted by subject matter expert companies from abroad.
2.9.
Assessment of the BoD
According to the Company’s “Self-Assessment Policy for the BoD, Board members and Board Committees”, taking into
consideration relevant provisions of the Suitability Policy and other related Policies of the Board, the applicable regulatory
provisions and best practices on corporate governance, the BoD, assisted by the NomCo, conducts a self- assessment exercise
on an annual basis in order to, inter alia, identify strengths, weaknesses and training needs, to promote accountability of the
Board and its members in the performance of their duties and to improve effectiveness.
The scope and the criteria of the assessment are defined by the NomCo and include, without limitation, the structure
(composition, diversity, skillset, experience etc.), dynamics and operation (meeting frequency and procedures, availability and
adequacy of information etc.), understanding and contribution to the Company’s operations, level of candor, impartiality,
transparency and other behaviors within the Board. The specific parameters and criteria may vary each year depending on the
aspects on which emphasis is placed each time.
The NomCo deliberates on the format, content and methodology to be adopted for the assessment, including the engagement
of external consultants to submit recommendation or to conduct the assessment in whole or in part, the use of questionnaires
and/or interviews and/or alternative methodologies. The Chairman of the Board has a leading role, which entails the evaluation
and processing of the outcome.
The conclusions of the self-assessment are summarized by the NomCo in a report together with any recommendation or
changes the Committee deems appropriate. A brief summary of the results is also included in the annual Corporate Governance
Statement.
2022 BoD self assessment
In January 2023, the Company appointed Nestor Advisors, a global advisory firm specializing in corporate governance,
sustainability and organizational design, to support the self-assessment exercise for the BoD of the Group for the 2022 period.
All Board members took part in the Board self- assessment exercise by completing a questionnaire covering a large scope of
evaluation themes such as strategy, risk governance, internal control, strategic HR issues, sustainability and stakeholder
Board of Directors' Report – 31 December 2022
73
engagement, BoD nomination and composition, BoD functioning and dynamics, BoD Secretariat support, Information flows,
Chair performance, BoD interaction with management and effectiveness of all BoD Committees.
The results of the aforementioned BoD self-assessment exercise indicate that the BoD is perceived to function well. BoD
members are committed to their role, work well together and provide appropriate oversight. Among the strengths highlighted
by the assessment are included the highly efficient cooperation between the CEO and the BoD, the excellent execution of his
duties by the Chairman, the acknowledgement that the CEO is appropriately empowered to execute the strategy and agenda
agreed by the BoD, the good and open communication lines between the BoD and the senior management, the smooth
operation of the BoD Committees and their effective role in supporting the BoD.
Considering areas of further improvement, the BoD members focused on remuneration and the retention and attraction of
talent, succession planning, ESG and gender diversity.
2.10.
Board Remuneration
Board members’ remuneration is approved by the Annual GM of Shareholders, upon respective recommendation of the BoD
(non-executive members) following proposal by the Remuneration Committee. The proposal is formulated taking into
consideration market practice, international best practice, the legal and regulatory framework applicable to the Company as
well as the Directors’ Remuneration Policy which sets the principles and describes the elements and governance of
remuneration paid to BoD members. It is reminded that according to the provisions of Law 3864/2010, the Company was not
permitted until (and including) the reporting year 2022 to award any variable remuneration to BoD members and senior
executive management.
The Annual GM of Shareholders held on 22 July 2022: a) approved (by 100%) the remuneration paid to members of the BoD in
respect of 2021 and gave preliminary approval for remuneration to be paid for the year 2022, b) casted a positive vote (99.37%)
for the
R
,
in accordance with the provisions of article 112 of Law 4548/2018. Said report
provides detailed information on the remuneration of the members of the BoD and is available in the Company’s website and
finally c) approved (by 99.95%) the proposed amendments to the Directors’ Remuneration Policy. The revised Policy is available
in the Company’s
.
2.11.
Committees
Aiming to constantly improve the effectiveness of the management of the Company and the Group, responsibilities for certain
areas requiring expert competence have been delegated to BoD or Executive Committees.
3.
Board of Directors Committees
●
Audit Committee
On 31 December 2022, and on the date of the publication of the 2022 Annual Financial Report, the composition of the Audit
Committee is as follows:
Board of Directors' Report – 31 December 2022
74
AUDIT COMMITTEE
Anne Weatherston
Chairman, Independent Non-Executive BoD Member
Member since: July 2020, Chair since: July 2021
Solomon Berahas
Vice-Chairman, Independent Non-Executive BoD Member
Member since: February 2017
Karel De Boeck
Member, Independent Non-Executive BoD Member
Member since: August 2016
David Hexter
Member, Independent Non-Executive BoD Member
Member since: August 2016
Francesca Tondi
Member, Independent Non-Executive BoD Member
Member since: June 2022
Periklis Dontas
Member, Non-Executive BoD Member, HFSF Representative pursuant to Law
3864/2010
Member since: December 2019
83% Independent Non-Executive
17% Non-independent
During 2022, the following changes were made to the composition of the Committee: On 23 June 2022, Mr. Andrew Panzures
ceased to be a member and Mrs. Francesca Tondi was elected as a new member. On the same day, Mr. Solomon Berahas was
designated as Vice Chairman of the Committee.
Governance- Operation
The Audit Committee is comprised of Non-Executive members of the Board, the majority of which are independent within the
meaning of the provisions of Greek Law 4706/2020. The HFSF Representative participates as a member in the Audit Committee,
with full voting rights. The operation of the Committee is governed by article 44 of Greek Law 4449/2017, as amended by Greek
Law 4706/2020, the respective notices, explanations and recommendations of the Supervisory Authorities and additionally by
its Terms of Reference.
It is noted that the Chair of the Audit Committee Mrs. Anne Weatherston is an Independent Non-Executive member of the BoD
and has, inter alia, extended experience in Internal Audit and Finance within the meaning of Greek Law 4449/2017. The
Committee as a whole possesses appropriate competence and experience for the effective performance of its duties.
The Chief Financial Officer (“CFO”), Head of Internal Audit, Compliance and Risk Officer, Group Controller, Senior Advisor on
Internal Control and Audit matters and other Executives of Senior Management are invited to attend the Audit Committee
meetings. The Group’s statutory auditors are invited to attend all meetings. The Audit Committee Chair maintained regular
contact with the audit partner throughout the year.
Board of Directors' Report – 31 December 2022
75
Based on its Terms of Reference, the Audit Committee meets at least four (4) times a year, of each calendar quarter and
extraordinarily, if the circumstances so require.
In 2022, the Audit Committee convened fifteen (15) times and all its decisions were taken unanimously based on the thorough
examination of supporting material and further clarifications provided during these meetings by the competent managerial
officers, statutory auditors and other experts. Members’ attendance rates in the Committee meetings are depicted in the
Members Participation in the BoD and the respective Committees’ table above. It is noted that the statutory auditors attended
all Audit Committee’s meetings following respective request.
Role and responsibilities
The main duties of the Audit Committee are:
●
Supervising and evaluating of the drafting processes of the annual and interim financial statements of the Group and the
Company prior to their publication;
●
Supervising of the audit and review of the Group and the Company's annual financial statements and mid-year interim
financial information conducted by the statutory auditors and cooperation with the statutory auditors on a regular basis;
●
Ensuring the independence of the statutory auditors in accordance with applicable Greek Laws;
●
Proposing to the Board the selection of statutory auditors and whenever deemed appropriate, proposing their
replacement or rotation; conducting the tender procedure for the appointment of the auditors in accordance with article
16 of Regulation (EU) no. 575/2014 in conjunction with article 44 of Greek Law 4449/2017;
●
Monitoring and annual evaluation of the adequacy and effectiveness of the ICS of the Group and the Company;
●
Evaluating the work of the Internal Audit, focusing on issues related to the degree of its independence, the quality and
scope of its audits, the priorities determined by changes in the economic environment, the systems and in the level of
risks and the overall efficiency of its operation;
●
Determining the scope and appointing the latest every three years, an external audit firm, other than the statutory
auditors to assess the adequacy of the ICS;
●
Monitoring and evaluating on an annual basis the work of the Compliance function.
How the Committee discharged its responsibilities during 2022
Regarding Financial Statements and relevant notifications, the Audit Committee:
●
Reviewed the Group and the Company’s critical accounting estimates and judgments and their application to the Group
and the Company's quarterly interim financial statements as well as annual financial statements;
●
Reviewed the quarterly interim financial statements and annual financial statements prior to their publication, discussing
and asking for clarifications on the accounting standards implemented and suggested to the Board their approval;
●
Met regularly with Management and the statutory auditors to discuss any changes in accounting policies, critical
Board of Directors' Report – 31 December 2022
76
accounting estimates, one-off items impacting the financial statements and any other significant issues;
●
management when preparing the financial statements;
●
Was updated regularly and reviewed financial reporting issues that could significantly affect the annual and interim
financial statements, prior to their publication.
Regarding
External Audit,
●
Reviewed the statutory auditor's audit plan and methodology for the interim review and the annual audit, the extended
independent auditor’s report and audit findings;
●
Ensured appropriate rotation of the statutory auditors after five (5) consecutive years and pre-approved the appointment
of Deloitte as the Group’s statutory auditor for the financial year 2022;
●
Reviewed and proposed to the Board the fees for audit and permissible non-audit services to Deloitte for the year ended
31 December 2022, as disclosed in Note 49 of the Annual Financial Statements;
●
Considered Deloitte independent. Deloitte, in accordance with professional ethical standards, provided the Audit
Committee with written confirmation of its independence for the financial year 2022;
●
Was updated on the impact on Deloitte’s audit plan and audit approach, in relation to climate related risks, cyber risk and
supply chain disruption risk.
Regarding
Internal Control System,
●
Promoted the continuous strengthening of the ICS as a strategic priority for the BoD and Management of the Group and
the Company, as well as the procedure for the development and integration of the appropriate internal control
mechanisms, with the objective of the further improvement of the operational risks that the Group face in its operations;
●
Assessed the effectiveness of the ICS and the developments affecting it. In order to carry out its assessment, the Audit
Committee discussed with Management the internal control deficiencies as well as the implementations of remediation
actions, following recommendations of the internal and statutory auditors as well as the Supervisory Authorities;
●
Approved the audit scope of the project "Assessment of the adequacy of the ICS in accordance with the BoG Governor's
Act 2577/2006" and the appointment of the firm of external auditors to carry out this assessment;
●
Was updated on the performance of the Company’s subsidiary, JSC Ukraine.
Regarding
Internal Audit Unit,
the Audit Committee:
●
Monitored the implementation of the Internal Audit Annual Action Plan for year 2022 and concluded that the Internal
Audit was effective;
●
Was notified of the Internal Audit Annual Action Plan for year 2023, staff related issues and budget. Pre-approved its
implementation and submitted it for further approval to the BoD;
Board of Directors' Report – 31 December 2022
77
●
Was notified on the significant audit findings (regular and special audits) and Management’s responses in relation to the
timing and activities of remediation plans.
Regarding
Compliance Function,
the Audit Committee:
●
Monitored the implementation of the Compliance Annual Action Plan for year 2022 and concluded that Compliance
function was effective;
●
Was notified of the Compliance Annual Action Plan for year 2023, pre -approved its implementation and submitted it for
approval to the BoD;
●
Reviewed and approved the updated Piraeus Financial Holdings Compliance Policy;
●
Reviewed and approved the updated Conflict of Interests questionnaire.
Information on the current composition of the Audit Committee, its operation and responsibilities are available on the
Company’s website.
The Annual Audit Committee’s Report pursuant to article 44 par. 1 (case i) of Law 4449/2017 will be published together with
the Annual Financial Report (to which is incorporated by reference) and will be available in the Company’s website.
●
Risk Committee
On 31 December 2022 and on the date of publication of the 2022 Annual Financial Report the composition of the Risk
Committee is as follows:
Board of Directors' Report – 31 December 2022
78
RISK COMMITTEE
Karel De Boeck
Chairman, Independent Non-Executive BoD Member, Senior Independent Director
Chairman since: August 2016
Solomon Berahas
Vice Chairman, Independent Non-Executive BoD Member
Vice Chairman since: June 2021 | Member since: February 2017
Andrew Panzures
Member, Independent Non-Executive BoD Member
Member since: July 2020
Anne Weatherston
Member, Independent Non-Executive BoD Member
Member since: June 2021
Alexander Blades
Member, Non-Executive BoD Member
Member since: February 2017
Periklis Dontas
Member, Non-Executive BoD Member, HFSF Representative
Member since: December 2019
67% Independent Non Executive
33% Non-Independent
Governance - Operation
The Risk Committee consists of non-executive BoD members appointed by the BoD. The number of Committee Members
cannot be lower than three (3) and cannot exceed 40% (rounded to the nearest integer number) of the total number of the
BoD members. The majority of the Members (rounded to the nearest integer number and excluding the HFSF Representative)
should meet the criteria for the independence of Board Members, in accordance with greek legislation. The Representative of
the HFSF participates as a Member in the Risk Committee with full voting rights.
The Chairman of the Committee is appointed by the BoD. The capacity of the BoD’s Chairman is incompatible with the capacity
of the Risk Committee’s Chairman, while the Chairman of the Risk Committee cannot be the Chairman of Piraeus Financial
Holdings’ Audit Committee at the same time.
The Chairman of the Risk Committee, Mr. Karel De Boeck has, inter alia, extended experience in RM. The Members of the Risk
Committee should possess adequate knowledge and previous experience in the financial services and banking industry, with
at least one member having solid risk and capital management experience, as well as familiarity with the local and international
regulatory framework.
The Risk and Compliance Officer has been designated as the Executive Secretary by the BoD. She is independent, reports
directly to the Risk Committee and is subject to audit by the Internal Audit.
The Committee convenes, upon its Chairman’s invitation, on a monthly basis and exceptionally when this is deemed necessary.
Board of Directors' Report – 31 December 2022
79
In order to fulfill its duties, the Risk Committee held twelve (12) meetings during 2022.
The mission of the Risk Committee is,
inter alia,
●
The Company and its Group has a well-defined Risk & Capital Strategy and RAF in line with its business goals as well
as with the available human and technical resources. The risk appetite of the Company and the Group is articulated
and clearly communicated in a set of quantitative and qualitative statements, including specific limits for the material
risks;
●
All risks connected to the activity of the Company and the Group are effectively identified, assessed, measured,
controlled, mitigated and monitored;
●
The RM and control framework in place, including policies, methods and tools, complies with Risk & Capital Strategy
and Risk Appetite as well as with regulatory and supervisory requirements.
Roles and Responsibilities
For the achievement of its goal, the Committee undertakes,
inter alia,
●
Monitors, assesses and provides update to the BoD with respect to the compliance with supervisory requirements,
the risk profile and the adherence to the approved risk appetite limits and early warning levels of the Company and
the Group;
●
Evaluates the adequacy and effectiveness of the RM & control framework to ensure that it remains comprehensive,
adequate and proportionate to the nature, extent and complexity of the Company and its Group current activities;
●
Oversees (jointly with the Audit Committee) and provides update to the BoD with respect to the implementation
progress of the major initiatives related to operational risk as well as internal control enhancements.
How the Risk Committee discharged its responsibilities during 2022
●
Evaluated and made recommendations to the BoD in respect to major risk related to strategic/priority actions that
required the approval of the latter, including, indicatively and not exhaustively, the:
-
2022 Risk and Capital Strategy and RAF;
-
NPE Plan 2022-2024;
-
Securitization Transactions;
●
Assessed the adequacy and effectiveness of the operational risk and control framework and relevant policies;
●
Obtained an overview and provided update to the BoD on the 2022 Company’s Risk Annual Plan;
●
Obtained an overview and provided update to the BoD on Company’s Risk reports regarding the evolution and profile
of the key risks undertaken, the Risk Identification Annual Report, the Operational Risk and Control Assessment and
Effectiveness and the respective results at a Company level;
Board of Directors' Report – 31 December 2022
80
●
Evaluated and provided recommendation to the BoD when required, in respect to the development, documentation,
re-assessment and monitoring of the:
-
Implementation process of the 2021 ICAAP and CAS and of the 2021 ILAAP and LAS;
-
2022 Recovery Plan;
-
2021 Pillar III Regulatory Capital Disclosures;
●
Evaluated, and provided recommendation to the BoD in respect to the annual revision of risk related policies and
documents, including indicatively, the RAF, the ICAAP Framework, the ILAAP Framework, the Stress Testing
Framework, Pillar III Disclosures Policy, SRT Policy and Operational Risk Policies.
More information on the current composition of the Committee, its operation and responsibilities is available on the
Company’s website.
●
Remuneration Committee
On 31 December 2022 and on the date of the publication of the 2022 Annual Financial Report, the composition of the
Remuneration Committee is as follows:
Board of Directors' Report – 31 December 2022
81
REMUNERATION COMMITTEE
Andrew Panzures
Chairman, Independent Non-Executive BoD Member
Vice Chairman since: June 2021 & Chairman since: June 2022
Francesca Tondi
Member, Independent Non-Executive BoD Member
Member since: June 2022
Enrico Cucchiani
Member, Independent Non-Executive BoD Member
Member since: March 2017
Solomon Berahas
Member, Independent Non-Executive BoD Member
Member from: February 2017 to September 2017 and reappointed as a Member since:
July 2020
Alexander Blades
Member, Non-Executive BoD Member
Member since: August 2016
Periklis Dontas
Member, Non-Executive BoD Member, HFSF Representative
Member since: December 2019
67% Independent Non-Executive
33% Non- Independent
During 2022, the following changes were made to the composition of the Committee: On 23 June 2022, Mr. Andrew Panzures
was appointed Chairman of the Committee, role which was previously held by Mr. Arne Berggren who resigned from the BoD.
On the same day, Mrs. Francesca Tondi was elected member of the Committee.
Governance - Operation
According to its Terms of Reference, the Remuneration Committee is appointed by the BoD of the Company and consists of at
least three (3) members of the BoD, while the total number of its members should not exceed 40% of the BoD Members
including the HFSF Representative who participates with full voting rights. The majority of the members must be independent.
The Committee, as a body, should have knowledge, expertise and professional experience in remuneration related issues, RM
and control activities. At least one (1) member of the Committee should also be a member of the Risk Committee to oversee
alignment of the Remuneration Policy with the Company's Risk and Capital Strategy.
The Remuneration Committee shall meet at the invitation of the Chairman whenever he/she deems it necessary for the
execution of its remit, but no less than four (4) times in each calendar year. Resolutions may only be adopted when a quorum
of at least half of its members are present. Resolutions of the Committee are adopted by majority vote of the members present.
The Remuneration Committee held eight (8) meetings during 2022. Members’ attendance rates in the Committee meetings
are depicted in the Board Members Participation in the BoD and the respective Committees table above.
Board of Directors' Report – 31 December 2022
82
Roles and Responsibilities
The mission of the Remuneration Committee is to design, monitor the implementation and periodically review the Group’s
remuneration policy, in accordance with the applicable legislative and regulatory framework and the alignment with the
Company’s strategic goals. In the execution of its duties, the Remuneration Committee takes into account the RAF of the
Company, the long-term interests of shareholders, investors and other stakeholders. In the scope of Remuneration Committee
is also included the monitoring of an implementation framework that objectively evaluates performance and is directly linked
to the determination of the remuneration of employees, the implementation of the Company´s talent management and
succession planning policies as well as the implementation of strategies with the purpose of building a Corporate Culture that
will support the Company´s objectives and vision.
The Remuneration Committee
, inter alia
:
●
Reviews annually the Group's Remuneration Policy;
●
Evaluates on a regular basis the remuneration of Executive and Non-Executive BoD Members as well as the senior
executive management;
●
Makes a recommendation to the BoD, on an annual basis, regarding the remuneration of Executive and Non-Executive
BoD members for the coming period;
●
Assesses the compliance of proposed variable remuneration schemes to current legislation as well as their consistency
with the Company´s RAF and strategies;
●
Assesses whether the proposed remuneration packages for senior executives of the Company´s independent control
functions are compliant with the Group´s remuneration policy;
●
Regularly monitors pay equality and presence of discrimination based on gender, age or Bank of origin;
●
Reviews and proposes to the Board the goals and objectives relevant to the CEO compensation and evaluate the CEO’s
performance in light of these goals and objectives.
How the Remuneration Committee discharged its responsibilities during 2022
●
Reviewed and recommended to the BoD the annual Variable Incentive Scheme;
●
Reviewed and recommended to the BoD the 2022 VES of the Group;
●
Reviewed and recommended to the BoD for approval the Annual Remuneration Report for 2021;
●
Reviewed and recommended to the BoD for approval the amendment of Directors’ Remuneration Policy, in order to
be submitted to the Annual GM of Shareholders;
●
Reviewed and recommended to the BoD for approval the BoD’s remuneration for 2021 and advance payment of 2022
remuneration, in order to be submitted to the Annual GM of Shareholders;
●
Reviewed the Committee's 2022 Activity Report & Annual Plan for 2023.
Board of Directors' Report – 31 December 2022
83
More information on the current composition of the Committee, its operation and responsibilities is available on the
Company’s website.
●
Nomination Committee
On 31 December 2022 and on the date of the publication of the 2022 Annual Financial Report, the composition of the BoD
Members Nomination Committee is as follows:
NOMINATION COMMITTEE
David Hexter
Chairman, Independent Non-Executive BoD Member
Member from February 2016 to July 2020|Chairman since: June 2021
Enrico Cucchiani
Vice-Chairman, Independent Non-Executive BoD Member
Member since: February 2017
Venetia Kontogouris
Member, Independent Non-Executive BoD Member
Member since: July 2020
Andrew Panzures
Member, Independent Non-Executive BoD Member
Member from July 2020 to July 2021 and reappointed since: June 2022
Karel De Boeck
Member, Independent Non-Executive BoD Member, Senior Independent Director
Ex officio Member since: December 2021
Alexander Blades
Member, Non-Executive BoD Member
Member since: February 2016
Periklis Dontas
Member, Non-Executive BoD Member, HFSF Representative
Member since: December 2019
71% Independent Non-Executive
29% Non- Independent
During 2022, the following changes were made to the composition of the Committee: On 23 June 2022, Mr. Arne Berggren
ceased to be a member following his resignation from the BoD and Mr. Andrew Panzures was elected member of the
Committee.
Governance - Operations
The NomCo is comprised of at least three (3) Members of the BoD. All members are non-executive with the majority being
independent non-executive. The HFSF Representative is a member of the Committee with full voting rights. The Senior
Independent Director serves as an ex officio member of the NomCo.
Board of Directors' Report – 31 December 2022
84
The NomCo ensures that the BoD possesses, as a body, adequate knowledge and experience in at least the main activities of
the Company in order to be able to exercise oversight over all its functions, either directly or indirectly through the various
BoD Committees set up mandatorily or at the discretion of the Company.
The Committee convenes as required on a need-to-meet basis but at least twice every calendar year. The quorum necessary
for holding a meeting is at least 2/3 of the total number of Committee members including the HFSF Representative. Decisions
of the Committee are taken with the majority of the members present or represented at the meeting.
The NomCo held six (6) meetings during 2022. Members’ attendance rates in the Committee meetings are depicted in the
Board Members Participation in the BoD and the respective Committees table in section 2.5.
Roles and Responsibilities
The NomCo is responsible for performing the duties set out in Greek Law and its Terms of Reference.
NomCo is,
inter alia,
●
Identify and nominate suitable candidates to be proposed by the Board to the GM for election or re-election or as
replacements for Board positions which become vacant;
●
Establish a candidate’s “independence” in the context of Greek corporate law and relevant EBA guidelines;
●
Review at least annually the structure, size and composition (including the aggregate skillset, knowledge,
independence, experience and diversity) of the Board and of its Committees, and make recommendations to the
Board with regard to any adjustments that are deemed necessary;
●
Design the succession planning for the Board and top executive management in order to ensure Board and
Management continuity;
●
Adopt and periodically review a Nomination Criteria Policy for Board members;
●
Adopt a Diversity Policy for Board members and review it on a biannual basis;
●
Conduct an annual assessment of the effectiveness of the Board and its Committees; also ensure that an annual
performance evaluation is conducted for the CEO and the other Board executives which will be reported to the Board;
●
Evaluate the independence of the incumbent non-executive Board members once a year;
●
Adopt, periodically review and monitor the application of an Induction and Training Policy for Board members;
●
Oversee the induction and training programs for members of the Board.
How the NomCo discharged its responsibilities during 2022
●
Performed the self-evaluation process of the BoD and its Committees for 2021 and reviewed its results;
●
Reviewed and ensured that no conflicts of interest exist between the Company and the BoD;
Board of Directors' Report – 31 December 2022
85
●
Assessed the independence criteria for Board Members;
●
Assigned to a specialized consulting firm the search for new candidates to fill vacancies in the BoD taking into
consideration the strengthening of Boards skills and the enhancement of its diversity;
●
Recommended for approval to the BoD amendments of the composition of the Board and its Committees (namely
changes of Chairmanship of certain Committees and members’ changes in certain Committees), due to the
replacement of a resigned Member by a new one;
●
Reviewed the Succession Planning process of the Board Committees’ composition and discussed in detail the
succession planning of the Board Committees and the optimal Board size;
●
Conducted and completed the CEO’s Evaluation for 2021 and the CEO’s Mid-Year Assessment for 2022;
●
Recommended for approval by the BoD the nomination of a candidate to replace a resigned Independent non-
executive Member of the BoD;
More information on the current composition of the Committee, its operation and responsibilities is available on the
Company’s website.
●
Board Ethics and ESG Committee
As of 31 December 2022 and on the date of publication of 2022 Annual Financial Report, the Committee’s composition was
the following:
Board of Directors' Report – 31 December 2022
86
BOARD ETHICS AND ESG COMMITTEE
Francesca Tondi
Chair of the Committee, Independent Non-Executive BoD Member
Member since: June 2022 Chair since: June 2022
Karel De Boeck
Member, Independent Non-Executive BoD Member
Member since: October 2021
David Hexter
Member, Independent Non-Executive BoD Member
Member since: October 2021
Venetia Kontogouris
Member, Independent Non-Executive BoD Member
Member since: October 2021
Solomon Berahas
Member, Independent Non-Executive BoD Member
Member since: October 2021
Enrico Cucchiani
Member, Independent Non-Executive BoD Member
Member since: October 2021
Alexander Blades
Member, Non-Executive BoD Member
Member since: October 2021
Periklis Dontas
Member, Non-Executive BoD Member, HFSF Representative
Member since: October 2021
75% Independent Non-Executive
25% Non- Independent
During 2022, the following changes were made to the composition of the Committee: on 23 June 2022 Mrs. Francesca Tondi
was appointed Chair and Mr. Arne Berggren ceased to be a member of the Committee following his resignation as a Member
of the BoD.
Governance – Operation
The Committee consists of Non-Executive Board Members and Independent Non-Executive Board Members. The HFSF
Representative is a member of the Committee with full voting rights in accordance with the provisions of Law 3864/2010.
Group General Counsel is present in the meetings. Depending on the items of the agenda and, if deemed necessary, other
Group Executives may be present.
The Committee convenes following the Chairman's invitation, as many times as required necessary for the fulfillment of its
mission and at least quarterly.
The Committee meets with a quorum of at least half of its members (any decimal number is rounded to the next integer) and
Board of Directors' Report – 31 December 2022
87
decides by a majority of 2/3 of the present members.
Roles and Responsibilities
The main objective of the Committee is to support the Board and Board Committees by proactively setting, monitoring,
supporting and overseeing policies and strategies applied by Management, aiming at generating right values and culture, so
that the Company operates with moral integrity.
The Board Ethics and ESG Committee has,
With regard
to Ethics related policies
:
●
Makes recommendations to the Board with respect to any revisions to the Company's Code of Conduct;
●
Is informed by Compliance, of significant revisions to the Conflict of Interest Policy and on matters of policies
regarding:
-
the fair treatment of customers (products and services design and suitability, sales processes, transparency of fees);
-
compliance with laws and regulations;
-
Politically Exposed Persons;
-
Related party transactions.
With regard to
Sound Governance
●
Reviews cases of alleged misconduct, relating to Board and Executive Committee members;
●
Provides advice and makes recommendations to the BoD and Management on ethical matters;
●
Provides advice to the NomCo on cases of conflicts of interest involving BoD members;
●
Is informed by Group Internal Audit (“GIA”) on matters regarding the Whistleblowing framework;
●
Is updated periodically on the Complaints and Grievances procedures, so as to encourage the fair treatment of
customers and the proper conduct of business.
With regard to
Corporate Social Responsibility
, community, environmental related topics:
●
Makes recommendations to the Board and/or relevant Board Committees with respect to the Strategy and policies
for the above matters;
●
Is updated on the action plans and their progress by the pertinent Management Committee;
●
Supports the NomCo, if requested, in the evaluation of the knowledge, competence and experience of the Board
Members in the area of ESG risks, in its assessment of the collective suitability of such members and to further arrange
the education of the Board Members in relation to all the above;
●
Oversees the process for the preparation of the Annual Sustainability and Business Report and makes
recommendations to the Board regarding the approval of the final report;
Board of Directors' Report – 31 December 2022
88
●
Promotes best practices and ethical behavior considering interests of customers, personnel and society.
How the Board Ethics and ESG Committee discharged its responsibilities during 2022
●
Was updated on Project Proteus related to the Roadmap on Environment and Climate Risks including Climate Risk
Stress Test;
●
Was informed on the 2021 ESG actions of the organization;
●
Was updated on the definition of the methodology and framework for adopting a Net-Zero strategy;
●
Was updated on the new ESG regulatory disclosure requirements for the organization’s climate-related agenda as
well as on an ESG ratings impact analysis;
●
Was updated on the actions implemented in order to enhance Piraeus Bank’s impact on Society and Culture; and on
program “EQUALL” (society of equal people);
●
Was informed on Piraeus Bank’s positioning in the energy transition in Greece.
More information on the current composition of the Committee, its operation and responsibilities is available on the
Company’s website.
●
Group Executive Committee
On the date of the publication of the 2022 Annual Financial Report, the composition of the Group Executive Committee is as
follows:
Board of Directors' Report – 31 December 2022
89
GROUP EXECUTIVE COMMITTEE
Christos Megalou
Chairman, Managing Director, CEO
Vassilios Koutentakis
Member, Executive Board Member, Executive General Manager, Chief Retail
Banking – Piraeus Bank
Theodoros Gnardellis
Member, Executive General Manager, Group CFO – Piraeus Bank
Charalampos Margaritis
Member, General Manager, Group Chief Operating Officer (“COO”) – Piraeus
Bank
Following a respective BoD resolution, Athanasios Arvanitis, Executive General Manager, Group Chief Treasurer –
Piraeus Bank, Eleni Vrettou, Executive General Manager, Chief Corporate & Investment Banking – Piraeus Bank,
Georgios Georgopoulos, Executive General Manager, Group Chief HR Officer – Piraeus Bank, George Kormas, Executive
General Manager, Group Chief Real Estate – Piraeus Bank, Emmanouil Bardis, Executive General Manager, Group Chief
Credit Officer – Piraeus Bank, Konstantinos Paschalis, General Manager, CFO – Piraeus Bank, Ioannis Stamoulis, Group
Chief Risk Officer – Piraeus Bank ceased to be members of the Group Executive Committee on 24 February 2022.
On 22 February 2023, the Company announced the termination of its cooperation with Mr. Mavrogiannis., former Group
Chief Operating Officer (Piraeus Bank). Following BoD’ decision of 23 February 2023, Mr Margaritis, Group COO, was
appointed member of the Committee.
Governance- Operation
The Group Executive Committee consists of senior executives of the Group and is chaired by the CEO, Executive Member of
the BoD.
In order for the Group Executive Committee to reach a decision, a quorum of at least 50% of its members present in person
either at the meeting location or at another location via teleconferencing is required. Decisions are taken with a 2/3 majority
of the members present and represented.
Roles and Responsibilities
Authorised by the BoD, the Group Executive Committee has, inter alia, the following responsibilities, which it may delegate or
assign to administrative Committees, Committee Members or Company executives:
●
Monitors the implementation of both the Business Plan of the Company and the Group and makes the necessary decisions
for achieving the Plans' goals;
●
Establishes the directions of the budget and proposes the Annual Budget to the BoD;
●
Approves the introduction of new and significant changes to existing products and services of the Company, as well as
restructuring products, and defines their pricing policy before they are made available to clients;
●
Approves the marketing strategy and monitors its implementation and effectiveness;
Board of Directors' Report – 31 December 2022
90
●
Approves the Group's technological infrastructure strategy;
●
Approves HR programs (voluntary departure, fees, insurance and other contributions);
●
Sets, within the range of its own approval limits, the approval limits of the Company's Management Committees and
executives.
More Information on the current composition of the Group Executive Committee and short Curriculum Vitaes of its members
(excluding those of Mr. Megalou and Mr. Koutentakis which are mentioned in a previous section of this Statement) are set out
below and also available on the Company’s website.
Board of Directors' Report – 31 December 2022
91
Theodoros Gnardellis, Executive General
Manager
Mr. Theodore Gnardellis (born 1975) joined Piraeus Bank in 2018. He is
Executive General Manager - Group CFO. He has also served as Deputy
General Manager, PLU Strategy (2018-2019).
In the past, he served as Chief Strategy and Transformation Officer at NN
Group, Greece (2017-2018), Head of Strategy & Transformation at Emirates
Islamic Bank, Un. Arab Emirates (2013-2017), Chief of Staff, First Deputy
Group Chief Executive Officer at Bank of Cyprus, Greece (2010-2013),
Associate Partner (2009-2010), Engagement Manager (2007-2009) and
Associate (2005-2007) at McKinsey & Company, Greece, Aquatics Results
Manager, Olympic Games, Athens 2004 at ATOS Origin, Greece, (2002-2004),
Senior Associate Consultant, Mars & Co Consulting at MARS & Co, Gr. Britain
(2001-2002) and IT Engineer at the Ministry of Development (1999-2000).
He holds a MEng in Computer Engineering & Informatics from the University
of Patras, Greece (1998) and an MBA from the Imperial College, UK (2001).
Charalambos Margaritis, General Manager
Mr Charalampos Margaritis (born 1972) joined Piraeus Bank in 2020. He is
General Manager – Group COO. He also served as Group CIO (2020 – 2022).
He is Member of the Hellenic Banking Association Coordinating Committee
of Payments – Operations & Digital Works.
In the past he served as Solutions Delivery Manager at Datamedia (1997 -
2003), Head of Enterprise Applications Delivery at Unisystems (2003 - 2008),
Head of Group IT Architecture at Eurobank EFG, (2008 - 2013), Head of
Enterprise Architecture and Analytics at Commercial Bank of Qatar (CBQ)
(2013 - 2016), Chief Technology Officer at Commercial Bank of Dubai (CBD)
(2016 - 2018) and Chief Information Officer at Commercial Bank of Dubai
(CBD) (2018 - 2020).
Mr Margaritis was also Member of the UAE Banking Federation IT Committee
(2018-2020).
He holds a B.Sc. in Physics, University of Athens, Greece and a B.Sc. in Physics,
Thesis titled “Superconductivity computer modeling”, University of
Portsmouth, UK. He also holds an M.Sc. in Communication Systems &
Networks, University of Athens, Greece and he has done a Research towards
a Ph.D. titled “Security framework for extended enterprises”, University of
Athens.
4.
Internal Control System
The Group has developed and continuously improves a sound ICS. The development and continuous improvement of the ICS
is a key objective of the BoD and the Senior Management.
ICS is a set of recorded and documented control mechanisms and processes that integrates best practices of corporate
Board of Directors' Report – 31 December 2022
92
governance and covers on an ongoing basis every activity and transaction, contributing to the organization’s pursuit of
objectives. It provides reasonable assurance that the Group will maintain efficient and effective operations, contain risks to
acceptable low levels, safeguard its assets, produce reliable financial reporting and comply with applicable laws and
regulations.
Management is responsible for establishing and maintaining an adequate and effective internal control system within the
Group as well as relevant procedures and practices. Management also monitors systematically the adequacy and effectiveness
of the existing ICS and implements promptly any actions required for a sustainable response to and mitigation of Inherent risk,
while at the same time takes care of the development and enhancement of the ICS on a Group and a Company level. Moreover,
with appropriate early warning systems, Management monitors the consistent application of the ICS in the Units, as well as
the full compliance of all concerned parties with the principles and objectives of the ICS.
The Management has decided to adopt COSO (Committee of Sponsoring Organizations) framework for an effective and sound
ICS which incorporates five key components that are integral to the risk and control environment:
●
Control Environment;
●
Risk Assessment;
●
Control Activities;
●
Information and Communication and
●
Monitoring.
Other standards, such as PCAOB (Public Company Accounting Oversight Board) and COBIT (Control Objectives for Information
and Related Technologies) can be used as guidance in implementing specific controls.
The establishment of the ICS aims at:
●
the consistent implementation of the business strategy of the Company and the Group with effective use of existing
resources;
●
the identification and management of risk exposures and potential risks;
●
ensure the completeness and reliability of the data, which are necessary for the preparation of reliable financial
statements in accordance with IFRS and generally for the accurate and timely determination of the financial position of
the Company and the Group;
●
the compliance with legislative and regulatory framework governing the operations of the Company and the Group;
●
conduct periodic and/or occasional audits by the relevant Units of the Group Internal Audit to establish consistent
application of prescribed rules and procedures by all business Units of the Company and the Group.
Under the current institutional framework, the ICS is supported by an integrated communications and Management
Information System, also by inter-complementary mechanisms, forming an integrated system for controlling and auditing the
Company and its Group organizational structure and operations.
The Audit Committee of the Company has an enhanced role as to the financial reporting. For more information, refer to the
relevant section of this Statement.
Board of Directors' Report – 31 December 2022
93
The ICS is reviewed on a regular basis. The Audit Committee of the Company monitors and evaluates on a yearly basis the
adequacy and effectiveness of the ICS at a Company and at Group level, based on the relevant data and information of the GIA
Unit (“GIAU”), Compliance and the findings and observations of the statutory auditors and supervisory authorities.
Periodically and at least every three years, upon recommendation of the Audit Committee, an independent chartered public auditor, other
than the Group and the Company’s external statutory auditor, is appointed to assess the adequacy of the ICS.
ICS assessment by an independent third party
In March 2023, Grant Thornton presented to the Audit Committee members the scope, findings and methodology followed for
their assessment of the adequacy of the ICS of the Company for the period from 17 July 2021 to 31 December 2022 in
accordance with the BoG Governor’s Act 2577/9.3.2006 (“the BoG Act”). Based on the work performed, there were no
indications that the ICS, at the given time of the assessment, was not in compliance with all material aspects of the
requirements of the BoG Act. Furthermore, nothing has come to Grant Thornton’s attention, which would lead to the
conclusion that material weaknesses exist with respect to the ICS adequacy of the Company, as of 31 December 2022.
Group Internal Audit
The Internal Audit function within the Group is carried out exclusively by the GIAU of the Company with the support of Group
Internal Audit of Piraeus Bank (“GIA-PB”). The IAUs Officers which operate in the Group's subsidiaries in Greece and abroad as
well as the GIA-PB have their own Charters, which are in alignment with the Group’s Charter and adapted to the respective
legal and regulatory requirements.
The main mission of GIAU is to provide reasonable, objective and independent assurance regarding the adequacy and the
effectiveness of the Group’s ICS. Moreover, it contributes to the protection and enhancement of the economic value of the
organization as well as the accomplishment of its objectives by bringing a systematic and professional approach to evaluate
and improve the effectiveness of governance, RM, and control processes.
GIAU exercises high supervision of GIA-PB’s activity, while is overall responsible for the entire Internal Audit function of the
Company and the rest of its subsidiaries. In this respect, GIAU and GIA-PB are responsible for supervising and coordinating the
activity of the IAUs of their Group's subsidiaries respectively.
The Head of GIAU (Chief Audit Officer - “CAO”) reports periodically to the Senior Management and the Audit Committee the
conformance of the Unit with the Code of Ethics and the Standards. CAO reports functionally to the BoD through the Audit
Committee and administratively to the CEO.
GIAU:
●
Is administratively independent from other Group units and abstains from any executive and operational responsibilities;
●
Occupies full-time and exclusive staff, which does not subordinate to any other Group unit.
GIAU assesses, inter alia, whether:
●
The risks related to the achievement of the strategic objectives are identified and managed;
Board of Directors' Report – 31 December 2022
94
●
The established policies and procedures are consistent with the Group’s risk strategy as well as the Management’s
decisions;
●
The staff actions comply with the established policies, procedures and the general corporate governance framework, as
well as regulatory and legislative framework in force;
●
Operations are carried out effectively and (if auditable) efficiently;
●
The control mechanisms as well as the reports produced by Business Units, Control Units, RM and Compliance are
adequate, effective and of the proper quality;
●
Financial or non-financial information and the data used to identify, measure, analyze, classify, and report it are reliable,
accurate and complete;
●
Resources and assets are used safely.
GIAU also provides recommendation on the prevention and detection of fraud.
The CAO issues reports to the auditable units, incorporating the audit results and findings resulting from the audits performed,
integrating the corrective actions for strengthening the control environment and the corporate governance framework, as well
as improving the effectiveness of RM processes. The audit reports are appropriately communicated to the Senior Management.
In addition, the CAO submits reports at least every three (3) months to the Audit Committee which include the significant
findings and the remedial actions within its duties and the Audit Committee presents to the BoD along with its comments.
The
Audit Committee
, the BoD and the Senior Management ought to safeguard:
●
The independence of the Internal Audit and the resolution of any issue related to its independence;
●
The provision of adequate and prompt updated information to the Internal Audit through relevant procedures and
mechanisms, especially in case of significant problems and emergencies;
●
The adequacy of the internal control tools and risk assessment methods of GIAU, considering the size, nature, scope and
complexity of Group as well as the risks associated with Group’s business model, activities and culture.
The
Internal Auditors:
●
Have unimpeded access to all activities, units and sites, as well as to any data and information (documents, records,
business emails, accounts, portfolios, systems, applications etc.) of the Group;
●
May communicate unimpededly with any executive, body and staff of the Group using all available means (e.g. meeting,
email, conference call, video conference);
●
May request and receive from any source (e.g. staff, systems, physical archives etc.) all information and explanations
required for carrying out their audit mission using all available means. In the case of highly confidential or sensitive
information, only the CAO is notified.
Board of Directors' Report – 31 December 2022
95
The BoD, the Audit Committees and the Senior Management of the Group’s subsidiaries ensure that the required information
is provided immediately to the Internal Auditors by the individual units.
Upon invitation by the Management, the Internal Auditors may participate during various individual stages in the development
of policies, procedures and information systems and significant internal projects may in general provide their consultation on
the ongoing improvement and establishment of a sufficient ICS. The results after their participation in any similar projects shall
not be considered as auditing.
The planning of audit engagements is the outcome of a risk assessment process. Additionally, the Audit Cycle, within which
the audit areas are covered depending on the significance of the respective risk, is determined. Also, the Audit Cycle is approved
and amended only by decision of the BoD of the Company, following the recommendation of the Audit Committee.
Based on the Audit Cycle, the GIAU drafts an Annual Action Plan, giving priority to high-risk areas, which shall be approved by
the BoD of Company following the recommendation of the Audit Committee.
The Annual Audit Plan incorporates the subsidiaries that are going to be covered within the reference year, the annual audit
targets, the scheduled audit engagements on Group's activities and on critical outsourced activities, the needs in terms of audit
staff, the transportation costs, the training plan and the related costs, the assessment on the coverage of the Group's activities
according to the significance of the respective risks as well as the budget. The Annual Audit Plan should also take into account
the execution of unforeseen engagements following respective requests by the regulatory authorities, the Audit Committee
and the Senior Management as well as any other reason that may be deemed valid by the CAO. The Company expects from
GIAU staff to demonstrate good faith, sound judgment and due diligence while exercising their duties.
Internal Auditors ought to comply with the Company’s Code of Conduct and the International Standards for Internal Auditors.
The strict adherence to the operational framework contributes to the achievement of Internal Audit function’s consistency,
cohesion, stability and reliability.
Internal Auditors are expected to apply and uphold the following principles:
●
Integrity
●
Objectivity
●
Confidentiality
●
Competency
Risk and Compliance at the Company
Risk Management
The Company places particular emphasis on the effective monitoring and management of risk, at Company and Group level
with a view to maintain stability and continuity in its operations. In this context, the competent bodies of the Group regularly
monitor and assess the Group Business Strategy by defining, monitoring and managing risk and distinguish transactions and
customers by level of risk. The Group competent bodies determine the appropriate maximum acceptable limits of risk-taking
overall by each type of risk, refining each of these limits; set limits for discontinuing loss-making activities and take other
corrective actions.
Board of Directors' Report – 31 December 2022
96
The Company also assures the establishment and implementation of reliable, effective and comprehensive policies and
procedures in order to assess and maintain on an ongoing basis the amount, composition and distribution of its equity, that
the Group management each time deems adequate for the cover of the level and nature of risk it undertakes or might
undertake. The Company’s RM internally reviews these policies and procedures on a regular basis to ensure that they remain
comprehensive, adequate and proportionate to the nature, extent and complexity of the Group’s current activities.
The Company’s
Risk Officer
provides unbiased risk oversight and update on the level and the management of risks, the compliance with the adopted risk
policies, the risk assessment results, the functioning of the RM and response processes to the identified risks and the results
of the risk monitoring process. The Company’s Risk Officer is designated by the BoD as the Executive Secretary of the Risk
Committee.
Compliance
The
Company’s Compliance
legal and regulatory framework. The Company’s
Compliance Officer
Committee of the Company to which he/she provides unbiased compliance oversight, update on the latest changes of the
regulatory framework, on the level and the management of the compliance risk, the adopted internal policies implementation
status, the level of the Compliance Annual Plan and Policy implementation. He/she is selected by the Senior Management,
possesses sufficient knowledge and experience and has unrestricted access to all data and information necessary to carry out
his/her duties.
The
●
The establishment and the implementation of the appropriate procedures and policies, the preparation of the Annual
Compliance Plan and the regular monitoring of the level of its implementation in order to achieve the timely and
continued compliance of the Company with the current regulatory framework provisions and the provisions of the
Compliance Policy;
●
The assurance that the Company and its subsidiaries comply with the applicable legal and regulatory framework that
governs the preventing of the use of the financial system for money laundering and terrorist financing;
●
The provision of information and update to the Audit Committee and BoD on compliance issues through its quarterly and
ad hoc reports;
●
The assurance that the Company’s staff is continuously informed on developments related to the regulatory framework
and the policies related to their duties, by establishing appropriate procedures, updates and training programs in
collaboration with the Group HR;
●
The monitoring, identification and effective management of compliance risks and the assessment of non-compliance risks.
5.
Other governance issues
5.1
IT security risks
The Group and the Company face significant IT security risks (including cyber security) from the growing dependence on
information and integrated information systems. The growing systems’ interfaces with clients and third parties, the ongoing
Board of Directors' Report – 31 December 2022
97
organizational and technological changes imposed by business needs, the daily appearance of new technological and other
internal and external factors, create a critical threat environment.
Information and telecommunication Systems are critical components for the achievement of the Group’s and the Company’s
business objectives and strategies and decisively contribute to the implementation and management of its business functions.
The use of networks and systems creates several risks, especially in regards to security of the data being routed. In order to
protect confidentiality and ensure availability and integrity of data and systems, the Group has designed and implemented a
strict and comprehensive Information Security Framework aiming to govern its IT assets. The Information Security Framework,
which is applied to the whole Group wherever applicable, also ensures that the appropriate compliance and regulatory
requirements are implemented and their efficiency and effectiveness is closely monitored.
In order to minimize the aforementioned risks and protect its IT assets, management has designed and implemented strong IT
security controls in order to create peripheral protection in a multi-layer architecture. These controls include but are not limited
to the following areas:
●
Design, development, implementation and monitoring of an Information Security Framework;
●
IT Security Strategy and Policy;
●
Regular awareness and train ing campaigns (including e-learning programs) on cyber security issues to all personnel;
●
Developing and testing of a Security Incident Response Mechanism;
●
Performance of periodic Risk Assessment and Data Classification on Information Assets;
●
Performance of a large number of penetration tests and vulnerability assessments;
●
Continuous review and monitoring of the effectiveness of security controls;
●
Strict User Access Management policies and procedures over applications, operating systems and databases;
●
Implementation of a Centralized User Access Management Provisioning System (IdM);
●
Implementation of special security mechanisms in order to manage, log and monitor, privileged access rights;
●
Periodic user access reviews;
●
Change Management processes governing changes to applications and systems;
●
Use of a sophisticated Security Operations Centre (“SOC”) which is monitoring system logs on a 24/7 basis;
●
Anti DDoS protection system;
●
Internal and external Firewalls;
●
IDS and IPS systems;
●
Network Segmentation;
Board of Directors' Report – 31 December 2022
98
●
Web Applications Firewalls;
●
AntiVirus and AntiSpam systems;
●
Web filtering and internet access control systems;
●
Maintenance of international security standards and certifications (such as PCI DSS and ISO 27001).
In addition to the above, the Group has an effective Disaster Recovery Plan activated in case of catastrophic events as well as
an Alternative Computer Center that can support, if required, the full operation of the Group. The Disaster Recovery Plan is
tested on a regular basis.
5.2
ESG governance
BoD:
into account all risks, including climate-related and environmental risks and the implications of the transition to a more
sustainable economy as well as exercising effective oversight of same. In discharging the aforementioned responsibilities, it is
supported by the BoD Committees which report regularly to the BoD on issues related to their responsibilities.
Audit Committee:
the Annual Report. It monitors the effectiveness of the internal control and risk management systems and of the Internal Audit
function, also with respect to ESG-related issues (e.g. fraud, whistleblowing, violence and harassment, etc.).
Risk Committee:
future risk strategy and risk appetite, taking into account all types of risks (including climate and environmental, social and
governance risks), in order to ensure that they are in line with the business strategy, objectives, corporate culture and values
of the Group. The Committee has responsibility to oversee the implementation of the Group’s risk strategy and the
corresponding limits set and to review a number of possible scenarios, including stressed scenarios, to assess how the Group’s
risk profile would react to external and internal events. In 2022, the Risk Committee reviewed the 2022 Risk Identification
Report/Inventory, including the Group’s strategic approach on the front of climate-related and environmental risks and
opportunities. It subsequently approved the 2022 Risk & Capital Strategy | RAF.
Remuneration Committee:
Responsible for ensuring that the Group remuneration policy is consistent with the objectives of
the Group’s business and risk strategy, including environmental, social and governance risk-related objectives, corporate
culture and values and long-term interests of the Group. The Committee has responsibility for aligning executive directors’ and
senior management’s remuneration with strategic priorities, including in relation to climate and sustainability matters. In 2022,
following respective proposal of the Remuneration Committee to the BoD, an amended version of the Directors’ Remuneration
Policy was approved by the 2022 Annual GM of Shareholders. The amendments concerned, inter alia, the addition of ESG
considerations in remuneration practices.
Board Ethics and ESG Committee:
issues relevant to the Group’s business activities and for supporting the Group in maintaining its position as a reference leader
in ethical and ESG (environment, society, governance) issues. The Committee works closely, also by holding joint sessions, with
the other Board Committees for ESG issues which are also related to their mandate. It is furthermore supported in its work by
respective management committees of the Group, namely the ESG and Corporate Responsibility Committee of Piraeus Bank.
In 2022, the Committee, in a joint session with the BoD Risk Committee, was presented with Project Proteus related to the
Board of Directors' Report – 31 December 2022
99
Roadmap on Environmental & Climate Risks. For the discharge of responsibilities of the Committee in 2022, refer to the
respective section of this Statement.
Piraeus Bank
and ESG Committee which is only established at the parent company.
ESG special governance arrangements and related actions for the reporting year at Piraeus Bank include:
●
On a monthly basis, a risk appetite monitoring report (CRO Statement Appendix | RAF Monitoring) is submitted to Piraeus
Bank’s BoD Risk Committee, including ESG and climate-related indicators established in the 2022 RAF;
●
A special sub-section “ESG Risks” has been created in the structure of Piraeus Bank’s Risk Committee agendas, reflecting
the importance and the frequency these issues are expected to have in the BoD Risk Committee’s work;
●
.
ESG and Corporate Responsibility Committee (Piraeus Bank):
management commitment to ESG purpose, the ESG and Corporate Responsibility Committee was established in August 2022
at Piraeus Bank. The Committee is chaired by the Group’s CEO and is composed by all members of Piraeus
of Group Cultural and Social Initiatives. The composition of the Committee, reflects the prominent role the management of
the Group is expected to play in shaping the Group’s approach to managing sustainability issues and integrating the Climate
&ESG criteria into Piraeus Bank's strategy, recognizing that this is a key factor in ensuring long-term success and reflecting the
fact that these issues are becoming materially relevant to the Group as well as to key stakeholders, such as clients, shareholders
and regulators.
The new Committee will be the management level “mirror” of the BoD Committee for ESG & Ethics matters, aiming to ensure
the existence of a holistic Group ESG and Corporate Responsibility strategy plan with tangible and defined medium and long-
term goals.
The purpose of this Committee is to promote and monitor Responsible and Sustainable Banking by adopting ESG criteria that
combine growth and economic performance with culture, social well -being and environmental sustainability. The Committee
ensures the existence of a holistic ESG strategy plan for the Group, with axes:
●
the energy transition;
●
the zero balance of CO2 emissions (net zero);
●
the strengthening and promotion of culture;
●
the support of women, children and young people, as well as vulnerable social groups in matters of education,
employment and social stereotypes;
●
the promotion of governance principles with an emphasis on diversity and inclusion.
Specifically, the Committee assesses, approves, recommends and monitors:
Board of Directors' Report – 31 December 2022
100
●
the corporate responsibilities and ESG policies and strategies that harmonise the Group’s governance and business
decisions with the UN SDGs;
●
actions that contribute to the regulatory requirements on climate and environmental risks and to the reduction of the
environmental footprint of both the Group and its clients / partners;
●
the implementation of the Group’s values and the creation of a culture that strengthens the role of employees in achieving
the Principles of Responsible Banking;
●
programmes, collaborations, initiatives that promote culture and boost social cohesion;
●
actions that reinforce transparency, meritocracy and corporate responsibility and strengthen the Group’s extroversion.
In this context, it monitors Corporate Responsibility & ESG issues and informs and/or makes recommendations to the BoD ESG
and Ethics Committee of the Company.
The Committee meets regularly at least on a quarterly basis and on an extraordinary basis whenever required at the invitation
of its Chairman.
More information on ESG related issues are/will be included in the Company’s Sustainability Report and other ESG disclosures.
6.
Information provided pursuant to Directive 2004/25/EU of the European Parliament and Council
The information of Directive 2004/25/EU of the European Parliament and Council, required pursuant to para.1 d) of art. 152
of Greek Law 4548/2018 are included in the Explanatory Report to the Annual GM of the Shareholders, which is a special
section of the BoD’s Report.
7.
Information according to article 10 of Law 4961/2022 on “Emerging information and communication technologies,
strengthening digital governance and other provisions”
Data ethics is about the responsible and sustainable use of data. Ethical data management involves transparency and
accountability in decisions and processes involving the use of data, as well as promoting the values of respect, integrity, and
justice.
The principles that define the use of data within the Group from an ethical point of view and aim to promote a healthy and
ethical data culture within the Group and outside it, in business relationships, are summarized below:
●
The Group takes all necessary steps to comply with the provisions of the current legislation on the protection of
banking secrecy and the personal data it collects and processes (e.g., data resulting from the drawing up of a contract, financial
behavior data, CCTV images, telephone conversations, etc.);
●
All customer and employee information is used to carry out the purposes for which it was collected and processed or
for other reasons permitted by law;
●
The Group shall legally process personal data, provided that processing:
-
is necessary for servicing, supporting and monitoring business transactions and proper execution of any agreements
Board of Directors' Report – 31 December 2022
101
between the data subject and the Company/Group;
-
is necessary in order for the Group to comply with any legal obligations or for the purposes of the legitimate interests
pursued by it;
-
is necessary for the performance of a task carried out in the public interest, in the context of the current legislative
and regulatory framework;
-
is based on prior explicit consent of the data subject, if processing is not based on any of the aforementioned legal
processing bases;
●
During systems and processes designing, ensures that data is used in a responsible manner and is aware of the effects
that the use of data may have on employees, customers, shareholders, and society;
●
The Company/Group, in compliance with the current legislative framework, has taken all the necessary actions,
applying the appropriate technical and organizational measures for the legal observance, processing and safe keeping of the
personal data file, committing to ensure and protects in every way the processing of personal data from loss or leakage,
alteration, transmission or their unlawful processing in any other way;
●
All employees of the Group are obliged to protect the personal data of the customers from other people's use and to
protect their interests;
●
In case of outsourcing of activities to third parties by the Group, all necessary measures are taken, in accordance with
the current legislative framework, to protect the data subjects during the processing of their personal data;
●
With the exception of the cases in which the legal conditions for the possibility of providing information concerning
them to third parties are met, employees demonstrate due diligence and the required confidentiality when using information
that comes to their knowledge at any stage of the provision of their services, before, during or after the termination of the
contractual relationship and take every reasonable and feasible measure to legally and securely maintain the information, in
accordance with the applicable legislation.
Athens, 16 March 2023
Non-Executive
Chairman of BoD
Managing Director (CEO)
Executive BoD Member
George P. Handjinicolaou
Christos I. Megalou
Board of Directors' Report – 31 December 2022
102
EXPLANATORY REPORT
This explanatory report of the BoD of the Company is addressed to the Ordinary GM of its Shareholders and contains detailed
information on the matters of paragraph 7 of article 4 of Greek Law 3556/2007 with reference date the 31 December 2022.
1.
Structure of the share capital of the Company
On 31 December 2022 the Company’s share capital amounted to one billion one hundred sixty- two million eight hundred
forty-one thousand five hundred seventeen Euros and thirty-nine cents, (€ 1,162,841,517.39) divided into one billion two
hundred fifty million three hundred sixty-seven thousand two hundred twenty-three (1,250,367,223) ordinary registered
voting shares with a nominal value of ninety-three cents of Euro (€ 0.93) each. The ordinary shares of the Company are
dematerialized and listed on the Athens Stock Exchange.
Subject to the provisions of Greek Law 3864/2010 setting forth special rights and restrictions for the ordinary shares held by
the HFSF (see details below under 4 and 5), each ordinary share of the Company incorporates all the rights and obligations
stipulated by Greek Law and its Articles of Association, and especially:
•
The right to participate and vote in the GM of shareholders;
•
The right to receive dividend from the Company’s annual profits;
•
The right to receive a pro rata share of the Company’s net liquidation proceeds or all or part of the nominal value of any
shares in the event of a total or partial redemption of the Company’s share capital pursuant to a relevant resolution of the
GM of the Company’s shareholders. The GM of the shareholders retains all of its rights during the liquidation procedure;
•
A pre-emptive right in each increase of the Company’s share capital in cash and issuance of new shares unless the GM
resolves otherwise;
•
The right to receive prior to the Ordinary GM copies of the Annual Financial Report.
2.
Restrictions on the transfer of shares of the Company
Transfer of the Company’s ordinary shares is carried out as prescribed by Greek Law. The Company’s Articles of Association do
not impose any restrictions in respect thereof.
The disposal of the shares held by the HFSF is subject to the provisions of art. 8 of Greek Law 3864/2010, as in force (codified
text of the law is available in HFSF’s website, https://hfsf.gr/en/how -we-decide/hfsf-law-as-in-force/).
3.
Significant direct and indirect shareholdings within the meaning of Greek Law 3556/2007
On 31 December 2022 the HFSF directly held a total of 337,599,150 ordinary shares of the Company representing 27% of the
total voting rights of the Company.
Furthermore, on 31 December 2022:
•
Mr. John A. Paulson held indirectly through Paulson & Co. Inc., a company controlled by him, 232,758,919 common
registered shares with equal voting rights, corresponding to 18.62% of the Company’s total common shares. Paulson & Co.
Inc. is the investment manager of the funds that hold directly the shares in the Company and as manager it exercises the
voting rights on behalf of the funds.
Board of Directors' Report – 31 December 2022
103
•
Helikon Investments Limited held indirectly through Helikon Long Short Equity Fund Master ICAV:
- 54,373,407 voting rights attached to an equal number of common, registered, voting, dematerialized shares (i.e. 4.348%
of the total voting rights of the Company) and
- 29,607,188 (i.e. 2.368% of the total voting rights of the Company) and 33,271,381 (i.e. 2.661% of the total voting rights
of the Company) voting rights deriving from financial instruments (cash settled equity swap), according to ar. 11 para. 1b) of
law 3556/2007, as in force, with expiration dates 4 February 2025 and 4 November 2024 respectively.
As a result, the voting rights held indirectly by Helikon Investments Limited, deriving from common shares and financial
instruments (cash settled equity swap), amount in total to 117,251,976 or 9.377% of the total voting rights of the Company.
Pursuant to the records kept by the Company, as at 31 December 2022 no other shareholder (individual or legal person) holds
on an individual basis (directly or indirectly) more than 5% of the total number of ordinary shares of the Company.
4.
Shares granting special control rights
With the exception of the ordinary shares held by the HFSF, which carry the rights arising from the provisions of Greek Law
3864/2010 and the RFA between the Company, Piraeus Bank S.A. and the HFSF, there are no shares of the Company granting
special control rights to their holders.
The ordinary shares held by the HFSF in the share capital of the Company carry the special rights of Article 10 of Greek Law
3864/2010, as amended and in force, including:
•
the right of the HFSF to be represented with one member on the BoD. The Representative of the HFSF has the right:
a)
to veto any decision of the Company’s BoD:
i) in respect of the distribution of dividends and the remunerations and bonuses policy for the Chairman, the Managing
Director and the other members of the BoD, as well as for those persons holding the position of or exercising the
duties of general managers as well as their deputies when the ratio of NPEs to total loans of the credit institution, as
calculated according to item (ii) of case g of paragraph 2 of article 11 of Commission Implementing Regulation (EU)
2021/451 of 17 December 2020, exceeds 10%. It is noted that this provision is not currently applicable to the
Company;
ii) in respect of decisions to amend the articles of association, including the increase or decrease of capital or the
provision of relevant authorization to the BoD, merger, division, conversion, revival, extension of the duration or
dissolution of the Company, transfer of assets, including the sale of subsidiaries, or for any another issue requiring an
increased majority in accordance with the provisions of Law 4548/2018 and which decision is likely to significantly
affect the HFSF's participation in the share capital of the Company;
b)
to request an adjournment of a Board meeting for three (3) business days in order to receive instructions from the CEO
of HFSF. This right may be exercised until the end of the relevant BoD meeting ;
c)
to request that the BoD of the Company is convened
•
the right to access the books and records of the Company through executives and consultants of its choice for the purposes
of the effective disposal of the shares or other financial instruments it holds in the Company;
The HFSF ensures that, in exercising their rights, the HFSF and the HFSF Representative shall respect the Company’s business
autonomy and independence in the decision making of the Company.
Board of Directors' Report – 31 December 2022
104
5.
Restrictions on Voting Rights
The Company’s Articles of Association do not impose restrictions on the voting rights or the exercise periods of voting rights
attached to its ordinary shares .
6.
Shareholders’ Agreements
The Company is not aware of any agreements between its shareholders regarding restrictions in the transfer of the Company’s
ordinary shares or the exercise of the voting rights attaching to such shares.
7.
Rules regarding the appointment and replacement of Board members and amendments to the Articles of Association
The rules set out in the Company’s Articles of Association regarding members’ appointment and replacement, as well as
amendments of the provisions of the Articles of Association, do not deviate from the corresponding provisions of Greek Law
4548/2018 and Greek Law 4706/2020. BoD members are elected from the GM of Shareholders. Pursuant to art. 10 para. 2 of
Greek Law 3864/2010, the HFSF is represented with one member on the BoD of the Company with the aforementioned rights.
The appointment or replacement of the members of the BoD or the renewal of their term of office is subject to their suitability
assessment by the SSM pursuant to Law 4261/2014 and respective legislation.
Provisions related to the appointment and replacement of members of the BoD are also included in the Internal Corporate
Governance and Operating Regulation of the Company as well as the related Policies of the BoD (see relevant sections of the
Corporate Governance Statement).
8.
Authority of the BoD to issue new or to acquire own shares
Pursuant to the provisions of Greek Law 4548/2018 and its Articles of Association, the Company may increase its share capital
by virtue of a resolution of the GM of Shareholders or of the BoD.
On 7 April 2021, the Extraordinary GM of the Shareholders of the Company authorized, according to article 24 para. 1 of Law
4548/2018, the BoD to resolve, with the quorum and majority required by law, the increase of the share capital of the Company
by an amount that cannot exceed three times the paid up capital on the date of delegation of these powers to the BoD, namely
up to € 14,959,064,952 with the issuance of new common registered voting shares, and to determine the specific terms and
time plan of the increase in accordance with the applicable provisions of Law 4548/2018. The BoD may exercise the above
power once or partially in several transactions. The above authorisations are valid for three (3) years.
In addition, the abovementioned Extraordinary GM granted authorization to the BoD of the Company to establish a five (5)
year stock option plan in accordance with the provisions of article 113 para.4 of Law 4548/2018 to executives and employees
of the Company and its affiliated companies, within the meaning of article 32 of law 4308/2014, in the form of stock option
rights (stock options), by increasing the share capital with the issuance of new shares and to determine, without prejudice to
the provisions of the Law 3864/2010, the terms of the stock options, at its discretion, in accordance with the provisions of
article 113 of Law 4548/2018. The authorization is valid for five (5) years from the resolution of the GM. The maximum nominal
value of all shares that may be awarded through the plan which may be established by the BoD will correspond to 1.5% of the
paid-up share capital of the Company on the date of the establishment of the plan by the BoD of the Company. As at the date
of the publication of the present report, there is no active stock option plan.
According to paragraph 1 of article 16C of Greek Law 3864/2010, during the period of participation of the HFSF in the share
Board of Directors' Report – 31 December 2022
105
capital of the Company, the Company is not permitted to acquire own shares without the approval of the HFSF.
9.
Significant agreements which enter in force, are amended or terminated in the event of change of control following a
public takeover bid
There are no significant agreements of the Company, which come into force, are amended or terminated upon a change of
control of the Company following a public takeover bid.
10.
Agreements between the Company and members of its BoD or its staff providing for compensation in the event of
resignation or dismissal without good reason or termination of their term of office or employment due to a public offer
Contracts with BoD members, reviewed on a case-by-case basis, may enclose explicit clauses for the provision of specific
severance payments approved by the GM of Shareholders. Moreover, contracts with BoD members may be terminated for
good reason, without any severance payment due and with no minimum prior notice. In all cases, severance payments are in
compliance with regulatory restrictions.
It is noted that the 2020 Annual GM of Shareholders approved the Company’s Severance Policy, which applies to the senior
management of the Company, and to the executive members of the BoD and provides for severance payments related to the
early termination of an employment contract in good terms, based on their tenure in the Group.
There are no agreements between the Company and the members of its BoD or its staff which provide for their compensation
in the event of their departure as a result of a public takeover bid.
Non-Executive
Chairman of BoD
Managing Director (CEO)
Executive BoD Member
George P. Handjinicolaou
Christos I. Megalou
Board of Directors' Report – 31 December 2022
106
ALTERNATIVE PERFORMANCE MEASURES (“APMs”) AT GROUP LEVEL
In addition to the financial information that is reported under IFRS, this BoD Annual Report contains also financial metrics that
constitute alternative performance measures which aim to follow the guidelines of APMs issued by the European Securities
and Markets Authority (“ESMA ”) on 5 October 2015 and are in force since 3 July 2016. According to the ESMA definition, a
non-IFRS financial measure is a metric that measures historical or future financial performance, financial position or cash flows
but which excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure.
The below APMs provide a basis for transparent monitoring and comparison of the Group’s periodic financial performance and
results of operations through metrics which although are commonly used to convey the management’s view to the end user,
however they are not explicitly defined under IFRS.
The definitions laid out hereinafter through these non-IFRS measures should be considered as supplemental in nature and not
as a substitute to the IFRS measures and should not be used for comparability purposes with other companies.
No
APM
APM Definition – Calculation –Relevance of use
FY 2021
FY 2022
1
Earnings per share
(“EPS”) normalized
Normalized EPS are calculated by taking the Νet profit
normalized (defined hereinunder) adjusted for AT1 capital
instrument coupon payment for the period (/) total number
of shares outstanding at the end of the period.
Relevance of use: Profitability metric
0.13
0.42
2
Financial Assets
The sum of: financial assets at FVTPL, financial assets
mandatorily at FVTPL, loans and advances to customers
measured mandatorily at FVTPL, financial assets at FVTOCI,
debt securities at amortised cost
Relevance of use: Standard banking terminology
12,754
12,523
3
Loans to Deposits
Ratio (LDR) –
(Seasonally Adjusted)
Seasonally Adjusted Net Loans over (/) Deposits
Relevance of use: Liquidity metric
63.3%
61.5%
4
Net Profit normalized
Normalized net profit is the profit/ (loss) attributable to the
equity holders of the parent minus (-) extraordinary net fee
income, minus (-) extraordinary other income, minus (-)
extraordinary share of profit / (loss) of associates and joint
ventures plus (+) extraordinary expenses, plus (+)
extraordinary impairments related to NPE securitizations
and sales, defined at any given period.
Relevance of use: Profitability metric
190
577
5
Non-Performing
Exposures (NPEs)
Include: a) loans measured at amortised cost classified in
stage 3; plus (+) b) Purchased or originated credit impaired
(POCI) loans measured at amortised cost that continue to be
credit impaired as of the end of the reporting period; plus
(+) c) loans to customers mandatorily measured at fair value
through profit or loss that are credit impaired as of the end
4,915
2,624
Board of Directors' Report – 31 December 2022
107
No
APM
APM Definition – Calculation –Relevance of use
FY 2021
FY 2022
of the reporting period.
Relevance of use: Asset quality – credit risk metric.
6
NPE Ratio
NPEs over (/) gross loans grossed up with PPA adjustments
Relevance of use: Asset quality – credit risk metric
12.7%
6.8%
7
NPE (Cash) Coverage
Ratio
ECL allowance grossed up with PPA adjustment over (/)
NPEs
Relevance of use: Asset quality – credit risk metric
40.1%
54.1%
8
Other Assets
Balancing Item: equals (=) Total Assets minus (-) Net Loans
minus (-) Financial Assets
Relevance of use: Standard banking terminology
30,514
25,771
9
Other Income
Balancing item: equals (=) Total net Income minus (-) Net
Interest Income minus (-) Net Fee and Commission Income
and income from non-banking activities
Relevance of use: Profitability metric
682
744
10
Other Liabilities
Balancing Item: equals (=) Total Liabilities minus (-) Due to
Banks minus (-) Customer Deposits
Relevance of use: Standard banking terminology
3,679
3,786
11
Recurring Operating
Expenses
Operating expenses minus (-) Extraordinary expenses
Relevance of use: Efficiency metric
(867)
(828)
12
Total Regulatory
Capital (fully loaded)
Total capital, as defined by Regulation (EU) No 575/2013
13.38%
16.40%
13
CET1 Capital Ratio
(fully loaded)
CET1 capital, as defined by Regulation (EU) No 575/2013
Relevance of use: Capital position regulatory metric
8.63%
11.54%
No
APM Component
APM Definition – Calculation
1
31/12/2021
31/12/2022
1
Deposits or
Customer Deposits
Due to Customers
55,442
58,372
2
Due to Banks
Amounts owed to Banks
14,865
6,922
3
ECL Allowance
grossed up with PPA
adjustment
ECL allowance for impairment losses on loans
and advances to customers at amortised cost
(1,971)
(1,421)
4
Gross Loans grossed
up with PPA
adjustment
Loans and advances to customers at amortised
cost before ECL allowances for impairment on
loans and advances to customers
38,492
38,787
Board of Directors' Report – 31 December 2022
108
No
APM Component
APM Definition – Calculation
1
31/12/2021
31/12/2022
5
Net Loans
Loans and advances to customers at amortised
cost
36,521
37,367
6
Seasonally Adjusted
Net Loans
Net loans and advances to customers at
amortised cost and mandatorily measured at
FVTPL minus (-) OPEKEPE seasonal funding
facility of € 1,474 million as at 31 December
2021 and € 1,517 million as at 31 December
2022. The OPEKEPE seasonal agri loan refers to
loan facility related to subsidies provided to the
beneficiaries
35,124
35,901
(1)
Relevance of use: Standard Banking terminology
No
APM Component
APM Definition – Calculation – Relevance of use
FY 2021
FY 2022
1
Impairment Charges
ECL Impairment Losses on loans and advances to
customers at amortised costs plus (+) Other
credit-risk related expenses on loans and
advances to customers at amortised cost.
Relevance of use: Standard banking terminology
(4,284)
(615)
2
Net Results - Net Profit
Profit / (loss) for the period from continuing
operations attributable to shareholders of the
Parent
Relevance of use: Profitability metric
(3,007)
899
3
Extraordinary expenses
Extraordinary items include voluntary redundancy
costs € 25 million for 2021 booked in staff costs,
while for 2022 they include € 57 million voluntary
redundancy costs booked in staff costs and € 4
million extraordinary depreciation charges
related to the carve-out and sale of the cards
merchant acquiring business unit transaction in
Q1.22 booked in administrative expenses.
Relevance of use: Efficiency metric
(25)
(61)
4
Extraordinary other
income
In 2021 extraordinary other income related with
(i) gains from GGBs exchange amounting to € 387
million, (ii) gains from the sale of sovereign bonds
from the debt securities portfolio classified at
amortised cost amounting to € 91 million, (iii) gain
from the partnership for the management of non-
core equity participations amounting to € 185
million and were booked in Net gains/ (losses)
from financial instruments measured at FVTPL. In
2022 extraordinary other income related with (i)
the gain from the disposal of the merchant
acquiring business in Q1.22, amounting to € 282
million, (ii) non-recurring gain from fixed income
portfolio of € 391 million and were booked in Net
gains/ (losses) from financial instruments
663
672
Board of Directors' Report – 31 December 2022
109
No
APM Component
APM Definition – Calculation – Relevance of use
FY 2021
FY 2022
measured at FVTPL.
Relevance of use: Profitability metric
5
Extraordinary net fee
income
In 2021 extraordinary net fee income related with
acquiring fees of € 39 million related with the
cards merchant acquiring business unit that has
been carved-out
In 2022 extraordinary net fee income related with
acquiring fees of € 6 million related with the cards
merchant acquiring business unit that has been
carved-out
Relevance of use: Profitability metric
39
6
6
Extraordinary Share of
profit/ (loss) of associates
and joint ventures
In 2022 € 26 million related with the sale of RES
infrastructure booked in associates’ income
Relevance of use: Profitability metric
0
26
7
Extraordinary
impairments
In 2021, € 3,874 million impairment charges
related with the NPE reduction plan
In 2022, € 320 million impairment charges related
with the NPE reduction plan
Relevance of use: Standard banking terminology
3,874
320
8
Operating Expenses
(Opex)
Total operating expenses
Relevance of use: Efficiency metric
(892)
(889)
The BoD’ Report contains financial information and measures as derived from the Group and the Company’s Annual Financial Statements for the year ended
31 December 2021 and 31 December 2022, which have been prepared in accordance with IFRSs, as endorsed by the EU. Additionally, it contains financial data
which is compiled as a normal part of our Financial Statement Closing Process and management information systems. For instance, financial items are
categorized as foreign or domestic on the basis of the jurisdiction of organization of the individual Group entity whose separate financial statements record
such items.
Moreover, it contains references to certain measures which are not defined under the IFRSs. These measures are non-IFRS financial measures. A non-IFRS
financial measure is a measure that measures historical or future financial performance, financial position or cash flows but which excludes or includes amounts
that would not be so adjusted in the most comparable IFRS measure. Management believes that the non-IFRS financial measures used, presents a more
meaningful analysis of the Group’s financial condition and results of operations. However, the non-IFRS financial measures presented are not a substitute for
IFRS measures.
TRUE TRANSLATION FROM THE ORIGINAL IN GREEK
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Piraeus Financial 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 Piraeus Financial Holdings S.A. (the
Company), which comprise the separate and consolidated statement of financial position as at 31 December 2022, and the
separate and consolidated statements of income and comprehensive income, changes in equity and cash flows for the year
then ended, including a summary of significant accounting policies and other explanatory notes.
In our opinion, the accompanying separate and consolidated financial statements present fairly, in all material respects, the
separate and consolidated financial position of Piraeus Financial Holdings S.A. and its subsidiaries (the Group) as at 31
December 2022 and 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 (IFRSs), as endorsed by the European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as they have been incorporated into the
Greek legislation. Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the
Audit of the Separate and Consolidated Financial Statements” section of our report. We have been independent of the
Company and the Group during the whole period of our appointment, in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), as incorporated into the Greek legislation
and the ethical requirements in Greece, relevant to the audit of the separate and consolidated financial statements. We have
fulfilled our ethical requirements in accordance with the applicable legislation and the abovementioned Code of Ethics. 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 judgement, were of most significance in our audit of the separate
and consolidated financial statements of the current year. These matters and the assessed risks of material misstatements
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.
Deloitte Certified Public
Accountants S.A.
3a Fragkokklisias & Granikou str.
Marousi Athens GR 151-25
Greece
Tel: +30 210 6781 100
www.deloitte.gr
Key audit matters
How our audit addressed the Key audit matters
Allowance for expected credit losses (ECL) for loans and advances to customers at amortized cost
Loans and advances to customers at amortized cost of the Group
amounted to 37,367 million as at 31 December 2022, (€ 36,521 million as
at 31 December 2021) and allowance for expected credit losses
amounted to € 1,385 million, as at 31 December 2022 (€ 1,864 as at 31
December 2021).
Measurement of ECL on loans at amortized cost is considered a key audit
matter as the determination of assumptions used especially for Retail and
Corporate loans involves critical Management judgments and accounting
estimates with inherent risk, high level of subjectivity, and complexity.
The most significant Management judgements and accounting estimates,
relate to:
• The timely identification of exposures with significant increase in credit
risk and credit impaired exposures
• The determination of credit risk parameters, such as Loss Given Default
(LGD), Probability of Default (PD) and the Exposure at Default (EAD) as
well as the modelling assumptions and data used to build and run the
credit risk models (“models”).
• Assumptions of expected future cash flows of individually assessed
credit impaired exposures, including assessment approach, valuation of
collaterals, and the time to liquidate the collaterals.
• The inputs and the assumptions used to determine the macroeconomic
factors, the scenarios and scenario weights used to estimate the impact
of the multiple economic scenarios.
• The Identification and valuation of post model adjustments made by
Management to include any impact not captured by the models.
Management has provided further information about principles and
accounting policies for determining the ECL on loans and advances to
customers at amortized cost and management of credit risk in Notes
2.4.18, 3.1, 3.2, 4.1, 4.2, 4.3, 4.4 and 23 to the consolidated financial
statements.
Based on our risk assessment and following a risk-based approach,
we have evaluated the impairment methodologies applied and
assumptions made by Management in relation to this key audit
matter, and we performed, inter alia, the following audit
procedures:
●
With the support of our financial risk modelling specialists
where appropriate, we assessed the design and implementation
of relevant internal controls over the ECL estimate including the
controls around:
-
the incorporation of the model’s outcome within the
relevant systems and the calculation of the ECL estimate
-
the significant assumptions used in the ECL models
-
model monitoring and model validation
-
governance and review of post model adjustments
-
the determination of staging criteria and staging allocation
-
the selection of macro-economic scenarios and probability
weightings.
-
accuracy and completeness of data used in the credit risk
models.
●
We assessed the design and tested the operating effectiveness
of relevant controls over the ECL measurement of credit
impaired loans assessed on an individual basis which included
the controls around the determination of the appropriate
approach and the controls around the estimation of the
expected future cash flows.
●
With the support of our financial risk modelling specialists we:
-
assessed the appropriateness of the Group’s IFRS9
impairment methodologies,
-
assessed the appropriateness of the criteria used to allocate
loans to stages in accordance with IFRS9. On a sample basis
tested the timely identification of exposures with significant
increase in credit risk and credit impaired exposures,
-
inspected model code and reperforming the calculation of
certain components of the credit risk models (including
stage allocation),
-
assessed the methodology, the reasonableness and
appropriateness of the macroeconomic variables, scenarios
and weightings used in the models and compared them to
macroeconomic variables included in a variety of external
market sources.
●
We further performed substantive procedures to test the
accuracy and completeness of critical data used in the models
by agreeing a sample of ECL calculation data points to relevant
systems or documentation.
●
Οn a sample basis we assessed whether, the approach used in
the measurement of impairment for the individually assessed
credit impaired exposures is appropriate, and we tested the
reasonableness of
Key audit matters
How our audit addressed the Key audit matters
Allowance for expected credit losses (ECL) for loans and advances to customers at amortized cost -
Continued
significant assumptions used, including valuation of collaterals
(where we also made use of our real estate specialists), time
to liquidate collaterals, and the estimation of the discounted
future cash flows.
●
We evaluated the post model adjustments, made by
Management at year end in response to current economic
conditions.
Given the complexity and granularity of the related disclosures,
we further assessed their completeness and accuracy in
accordance with the provisions of the relevant accounting
standards.
Key audit matters
How our audit addressed the Key audit matters
Recoverability of Deferred Tax Asset (DTA)
The Group has recognized deferred tax assets of €5,974 million as at 31
December 2022, (€ 6,070 million as at 31 December 2021).
The recognition and measurement of the deferred tax asset is considered
a key audit matter as it involves a high degree of judgment in making
estimates relating to the existence of future taxable profits, which are
complex and subjective due to their forward-looking nature.
The most significant estimates and areas with increased level of
management judgement include:
-
The Revenue, ECL and Cost forecasts included in the annual budget
and the three-year business plan.
-
Forward looking information and Management projections used to
extend the period covered under the 3-year business plan to the
time when the deferred tax asset can be utilized for tax purposes.
-
Adjustments required for the conversion of accounting profits to
taxable profits.
Management has provided further information about the deferred tax
asset in Notes 2.4.32, 3.2, 4.17, 16 and 39 to the consolidated financial
statements.
Based on our risk assessment, we evaluated the method used to
determine the amount of deferred tax
asset recognized and examined the budgets prepared and
significant assumptions made by
Management relating to the future taxable profits.
Our examination included, inter alia the following audit
procedures:
●
We assessed the design and implementation of the relevant
internal controls over the preparation and approval of
budgets and forecasts, including the internal controls over the
significant assumptions, inputs, calculation and
methodologies used for this purpose.
●
We compared previous budgets to actual results, to evaluate
the forecasting ability of Management.
●
We compared the significant assumptions used by
Management in the deferred tax asset recoverability exercise
with the approved budget and the 3-year business plan for
consistency and performed a sensitivity analysis.
●
We assessed whether significant assumptions used beyond
the business plan period were reasonable in the context of
the long-term economic outlook.
●
We assessed the appropriateness of the adjustments made by
Management to convert anticipated accounting profits into
taxable profits, considering the tax legislation currently in
force.
We evaluated the adequacy of the disclosures in the financial
statements including the appropriateness of the assumptions
disclosed.
Carrying value of Investment in Piraeus Bank (Company only)
The Company’ Investment in Subsidiaries amount to €5,558 million as at
31 December 2022, (€ 5,539 million as at 31 December 2021).
Investment in Subsidiaries is presented at cost in the Company financial
statements unless there are indicators of impairment, in which case it is
presented at cost less impairment.
Management estimated the recoverable amount in its investment in
Piraeus Bank S.A. using the Value in Use (“VIU”) which is higher than the
fair value less cost to sell. Management’s assessment resulted in a
carrying value of €5,504 million as at 31 December 2022 (€ 5,504 million
as at 31 December 2021).
The calculation of VIU is dependent on certain key assumptions around
the future cash flows which have been forecasted using the Group’s 3-
year business plan, the discount rates and the terminal growth rates.
These assumptions are judgmental and require management to make
estimates which are subjective due to their forward-looking nature.
The most significant estimates and areas with greater level of
management judgement include:
-
The Revenue, ECL and Cost forecasts
-
Regulatory capital requirements
-
Long term growth rates and
Based on our risk assessment, we evaluated the methodology
applied and assumptions made by Management in relation to
this key audit matter, and we performed, inter alia, the following
audit procedures:
●
We assessed the design and evaluated the implementation of
the relevant internal controls over the preparation and review
of the forecasts, and the significant assumptions, the inputs,
the methodology and the calculations, used in the VIU model.
●
We compared previous budgets to actual results, to evaluate
the forecasting ability of Management.
●
We evaluate the reasonableness of certain key assumptions
and considerations made when developing the estimated
future cash flows.
●
With the assistance of our fair valuation specialists we:
-
Evaluated the appropriateness of the discount rate
and of the terminal growth rate used
Key audit matters
How our audit addressed the Key audit matters
Carrying value of Investment in Piraeus Bank (Company only) -
Continued
-
Discount rates
Management has provided further information in Notes 3.2 and 26
to the
financial statements.
-
Assessed whether the methodology over
management’s calculation of the VIU is compliant
with the requirements of the IFRS
We evaluated the adequacy of the disclosures in the financial
statements including the appropriateness of the assumptions
disclosed.
Information Technology General Controls and controls over financial reporting
The Group’s financial reporting processes are highly dependent on
Information Technology (“IT”) systems supporting automated accounting
and reconciliation procedures, thus leading to a complex IT environment,
pervasive in
nature and in which a significant number of transactions are processed
daily, across numerous locations.
This is a key audit matter since it is important that controls over access
security, cyber risks, system change control and datacenter and network
operations, are designed and
operate effectively to ensure complete and accurate financial records
and information.
Management has provided further information about General
Information Technology Controls under the header “Internal Control
System and Risk Management” and “Other Governance Issues” in Section
C of the Corporate Governance Statement for the year 2022
Based on our risk assessment, we have tested the design and
operating effectiveness of General Information Technology
Controls (GITCs) relevant for financial reporting. Our assessment
included the evaluation of user access over applications,
operating systems and databases, the process followed over
changes made to information systems, as well as the evaluation
of datacenter and network IT operations. In summary, our key
audit activities included, among others, testing of:
●
User access provisioning and de provisioning process.
●
Privileged access to applications, operating systems and
databases.
●
Periodic review of user access rights.
●
Change management process over applications, operating
systems and databases (i.e. user request, user acceptance
testing and final approval for promotion to production).
●
Datacenter and network operations.
Other Information
Management is responsible for the other information. The other information, included in the Annual Financial Report prepared in
accordance with Law 3556/2007, comprises the Board of Directors’ Annual Report, referred to in the section “Report on Other Legal and
Regulatory Requirements”, the Statement by the Members of the Board of Directors, the Explanatory Report of the Board of Directors and
the Corporate Governance Statement but does not include the separate and consolidated financial statements and our auditor’s report
thereon.
Our opinion on the separate and consolidated financial statements does not cover the other information and we will 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 in this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the separate and consolidated financial statements
Management is responsible for the preparation and fair presentation of the separate and consolidated financial statements in accordance
with IFRSs, as endorsed by the European Union, and for such internal control as Management 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, Management 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 Management 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 (article 44 of Law 4449/2017) of the Company is responsible for overseeing the Company’s and 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 auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs, as these have been
incorporated into 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, as these have been incorporated into Greek legislation, we exercise professional judgment and
maintain professional scepticism 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 Group’s internal control.
●
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by Management.
●
Conclude on the appropriateness of Management’s 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
Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the 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 auditor’s report.
However, future events or conditions may cause the Company and 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 the separate and consolidated financial statements. We are responsible for the direction, supervision and
performance of the Company and 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 controls 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 impair 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 year and are therefore the key audit matters.
Report on Other Legal and Regulatory Requirements
1)
Board of Directors’ Annual Report
Taking into consideration that Management is responsible for the preparation of the Board of Directors’ Annual Management
report which also includes the Corporate Governance Statement, according to the provisions of paragraph 5 of article 2 of Law
4336/2015 (part B) we note the following:
a)
The Board of Directors’ report includes the Corporate Governance Statement which provides the information required by
article 152 of Law 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 paragraph 1 (cases c and d) of article 152 of Law 4548/2018 and its content is consistent
with the accompanying separate and consolidated financial statements for the year ended 31 December 2022.
c)
Based on the knowledge we obtained during our audit of the Company and the Group and its environment, we have not
identified any material inconsistencies in the Board of Directors’ Annual 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 referred to in Article 11 of the European Union (EU) Regulation 537/2014.
3)
Non-audit Services
We have not provided to the Company and the Group any prohibited non-audit services referred to in Article 5 of EU Regulation
537/2014.
The allowed non-audit services provided to the Company and the Group during the year ended 31 December 2022 have been
disclosed in Note 49 to the separate and consolidated financial statements.
4)
Appointment
We were appointed as statutory auditors for the first time by the Annual General Assembly of shareholders of the Company
(former Piraeus Bank S.A.) on 28 June 2017. Our appointment has been, since then, uninterrupted renewed by the Annual General
Assembly of shareholders of the Company for 6 consecutive years.
5)
The Company retains an Internal Regulation according to the provisions of article 14 of Law 4706/2020.
6)
Assurance Report on European Single Electronic Format reporting
We have examined the digital file of Piraeus Financial Holdings S.A. (hereinafter the Company or/and the Group), prepared in
accordance with the European Single Electronic Format (ESEF), defined by the Commission Delegated EU Regulation 2019/815 as
amended by EU Regulation 2020/1989 (“ESEF Regulation”), which include the separate and consolidated financial statements of
the Company and the Group for the year ended 31 December 2022 in XHTML format as well as the XBRL file
(M6AD1Y1KW32H8THQ6F76-2022-12-31-el.zip) with the appropriate tagging on these consolidated financial statements, including
the explanatory notes (Notes in the financial statements).
Regulatory Framework
The ESEF digital files are prepared in accordance with the ESEF Regulation, and the Interpretation Announcement 2020/C 379/01 of the
European Commission dated 10 November 2020, as provided by L.3556/2007 and the relevant announcements of the Hellenic Capital
Market Commission and the Athens Stock Exchange (the “ESEF Regulatory Framework”). In summary this Regulatory Framework includes,
inter alia, the following requirements:
- Annual financial statements shall be prepared in XHTML format
- In regards to the consolidated financial statements prepared in accordance with International Financial Reporting Standards,
financial information included in the consolidated Balance Sheet, Income statement and total comprehensive income, statement of changes
in equity and statement of cash flows as well as financial information included in the explanatory notes shall be tagged with XBRL mark-up
(“XBRL tags” and “block tag”) in accordance with ESEF Taxonomy, as currently in force. The technical specifications of ESEF, including the
related taxonomy, are included in ESEF Regulatory Technical Standards.
Regulatory requirements included in ESEF Regulatory Framework consist an appropriate basis for the purpose of expressing a conclusion that
provides reasonable assurance.
Responsibilities of Management and Those Charged with Governance
Management is responsible for the preparation and submission of these separate and consolidated financial statements of the Company and
the Group for the year ended 31 December 2022, in accordance with the requirements set by the ESEF Regulatory Framework and for such
internal controls that Management determine are necessary to enable the preparation of the digital files that are free from material
misstatement, whether due to fraud or error.
Auditor’s responsibilities
Our responsibility is to design and perform this assurance procedure in accordance with the decision 214/4/11-02-2022 of the board of
Hellenic Accounting and Auditing Oversight Board (HAASOB) and the “Guidelines in connection with the procedures and the assurance
report of the certified auditors on the ESEF reported of Issuers with listed shares in the Hellenic capital market” dated 14/02/2022 as issued
by the Institute of Certified Public Accountants (the “ESEF Guidelines”) in order to obtain reasonable assurance about whether the separate
and consolidated financial statements of the Company and the Group, prepared by Management in accordance with ESEF, comply in all
material respects with the ESEF Regulatory Framework, as currently in force.
In conducting this work, we have complied with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants (IESBA Code), as incorporated into the Greek legislation and additionally we have complied with ethical requirements regarding
independence, in accordance with Law 4449/2017 and EU Regulation No 537/2014.
The assurance work performed, is limited to the items included in the ESΕF Guidelines and has been performed in accordance with the
International Standard on Assurance Engagements 3000 “Assurance engagements other than audits or review of historical financial
information”. Reasonable assurance is a high level of assurance but is not a guarantee that this work will always detect a material
misstatement when it exists relating to the compliance with the requirements of ESEF Regulatory Framework.
This document has been prepared by Deloitte Certified Public Accountants Societe Anonyme.
Deloitte Certified Public Accountants Societe Anonyme, a Greek company, registered in Greece with registered number 0001223601000 and its registered office at
Marousi, Attica, 3a Fragkokklisias & Granikou str., 151 25, is one of the Deloitte Central Mediterranean S.r.l. (“DCM”) countries. DCM, a company limited by guarantee
registered in Italy with registered number 09599600963 and its registered office at Via Tortona no. 25, 20144, Milan, Italy is one of the Deloitte NSE LLP geographies.
Deloitte NSE LLP is a UK limited liability partnership and member firm of DTTL, a UK private company limited by guarantee.
DTTL and each of its member firms are legally separate and independent entities. DTTL, Deloitte NSE LLP and Deloitte Central Mediterranean S.r.l. do not provide services
to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.
Conclusion
Based on the procedures performed and the evidence obtained, we conclude that the separate and the consolidated financial
statements of the Company and the Group for the year ended 31 December 2022 prepared in XHTML format as well as the XBRL file
(M6AD1Y1KW32H8THQ6F76-2022-12-31-el.zip) with the appropriate tagging on these consolidated financial statements, including the
explanatory notes, are prepared in all material respects in accordance with the requirements of ESEF Regulatory Framework.
Athens, 20 March 2023
The Certified Public Accountant
Alexandra
V.
Kostara
Reg. No. SOEL: 19981
Deloitte Certified Public Accountants S.A.
3a Fragoklissias & Granikou Str.
151 25 Maroussi
Reg. No. SOEL: Ε120
Piraeus Financial Holdings Group – 31 December 2022
120
The notes on pages 127 to 350 form an integral part of the Financial Statements
Income Statement
€ Million
Note
Group
Company
Year ended
Year ended
31/12/2022
31/12/2021
31/12/2022
31/12/2021
As
reclassified
As
reclassified
CONTINUING OPERATIONS
Interest and similar income
6
106
160
Ιnterest expense and similar charges
6
(339 )
(375 )
(69)
(78)
NET INTEREST INCOME
37
82
Fee and commission income
7
44
43
Fee and commission expense
7
(87 )
(106 )
(30)
(36)
NET FEE AND COMMISSION INCOME
14
7
Income from non-banking activities
8
-
0
Dividend income
47.2
53
26
Net gains/ (losses) from financial instruments measured at fair value through profit or
loss ("FVTPL")
9
(8)
(1)
Net gains/ (losses) from financial instruments measured at fair value through other
comprehensive income ("FVTOCI")
10
-
-
Net gains/ (losses) from derecognition of financial instruments measured at amortised
cost
(34 )
-
(0)
Net gains/ (losses) from loss of control over subsidiaries/ disposal of associates and
joint ventures
26
-
-
Net other income/ (expenses)
11
(3 )
(1)
(3)
TOTAL NET INCOME
94
111
Staff costs
12
(446 )
(405 )
(3)
(3)
Administrative expenses
13
(337 )
(377 )
(5)
(15)
Depreciation and amortisation
27, 28
(106 )
(110 )
(0)
(0)
Net gain/ (losses) from sale of property and equipment and intangible assets
(1 )
-
-
TOTAL OPERATING EXPENSES
(889 )
(892 )
(8)
(18)
PROFIT/ (LOSS) BEFORE PROVISIONS, IMPAIRMENT AND OTHER CREDIT-RISK
RELATED EXPENSES
86
94
ECL impairment (losses)/ releases on loans and advances to customers at amortised
cost
4
(472 )
(4,131 )
11
(1,518)
Οther credit-risk related expenses on loans and advances to customers at amortised
cost
15
(142 )
(153 )
-
(11)
Impairment (losses)/releases on other assets
31
(47 )
-
(10)
ECL impairment (losses)/ releases on debt securities measured at FVTOCI
44
(11 )
-
-
Impairment on subsidiaries and associates
26
(2 )
(23 )
-
(1,597)
Impairment of property and equipment and intangible assets
27, 28
(4 )
(13 )
(0)
-
Impairment on debt securities at amortised cost
(4 )
(19 )
6
(4)
Other provision (charges)/ releases
37
(13 )
-
(0)
Share of profit/ (loss) of associates and joint ventures
26
-
-
PROFIT/ (LOSS) BEFORE INCOME TAX
(2,691 )
103
(3,046)
Income tax benefit/ (expense)
16
(140 )
(316 )
0
0
PROFIT/ (LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS
(3,007 )
103
(3,046)
DISCONTINUED OPERATIONS
Profit/ (loss) after income tax from discontinued operations
14
(7 )
-
-
PROFIT/ (LOSS) FOR THE PERIOD
(3,014 )
103
(3,046)
From continuing operations
Profit/ (loss) attributable to the equity holders of the parent
(3,007 )
-
-
Non controlling interest
(2 )
(1 )
-
-
From discontinued operations
Profit/ (loss) attributable to the equity holders of the parent
(7 )
-
-
Non controlling interest
-
-
Earnings/ (losses) per share attributable to the equity holders of the parent (in €):
From continuing operations
- Basic & Diluted
17
(3.50 )
-
-
From discontinued operations
Piraeus Financial Holdings Group – 31 December 2022
121
The notes on pages 127 to 350 form an integral part of the Financial Statements
- Basic & Diluted
17
(0.01 )
-
-
Total
- Basic & Diluted
17
(3.51 )
-
-
Piraeus Financial Holdings Group – 31 December 2022
122
The notes on pages 127 to 350 form an integral part of the Financial Statements
Statement of Comprehensive Income
€ Million
Note
Group
Company
Year ended
Year ended
31/12/2022
31/12/2021
31/12/2022
31/12/2021
CONTINUING OPERATIONS
Profit/ (loss) for the year (A)
(3,007 )
103
(3,046)
Other comprehensive income/ (expense), net of tax:
Items that may be reclassified subsequently to profit or loss
Change in reserve from debt securities measured at FVTOCI
18
(129 )
(105 )
-
-
Change in currency translation reserve
18
(9 )
-
-
Items that will not be reclassified subsequently to profit or loss
Change in reserve from equity instruments measured at FVTOCI
18
(32 )
(0)
-
Change in property revaluation reserve
18
-
-
Change in reserve of actuarial gains/ (losses)
18
(0 )
-
-
Other comprehensive expense, net of tax (B)
18
(101 )
(132 )
(0)
0
Total comprehensive income/ (expense), net of tax (A)+(B)
(3,140 )
103
(3,046)
- Attributable to the equity holders of the parent
(3,139 )
-
-
- Non controlling interest
(2 )
(1 )
-
-
DISCONTINUED OPERATIONS
Profit/ (loss) for the year
(7 )
0
0
Total comprehensive income/ (expense), net of tax
(7 )
0
0
- Attributable to the equity holders of the parent
(7 )
-
-
- Non controlling interest
-
-
Piraeus Financial Holdings Group – 31 December 2022
123
The notes on pages 127 to 350 form an integral part of the Financial Statements
Statement of Financial Position
€ Million
Note
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
ASSETS
Cash and balances with Central Banks
19
-
-
Due from banks
20
45
50
Financial assets at FVTPL
22
0
0
Financial assets mandatorily measured at FVTPL
22
-
9
Derivative financial instruments
21
-
-
Reverse repos with customers
-
-
Loans and advances to customers at amortised cost
23
0
0
Loans and advances to customers mandatorily measured at FVTPL
-
26
Financial assets measured at FVTOCI
24
2
0
Debt securities at amortised cost
25
796
757
Investment property
29
-
-
Investments in subsidiaries
26
-
-
5,558
5,539
Investments in associated undertakings and joint ventures
26
-
-
Property and equipment
28
1
0
Intangible assets
27
0
0
Tax receivables
38
12
20
Deferred tax assets
39
-
-
Other assets
31
44
26
Assets held for sale
30
-
-
Assets from discontinued operations
14
-
-
TOTAL ASSETS
6,457
6,428
LIABILITIES
Due to banks
32
-
-
Due to customers
33
0
0
Derivative financial instruments
21
-
-
Debt securities in issue
34
-
-
Other borrowed funds
35
936
934
Current income tax liabilities
-
-
Deferred tax liabilities
39
0
1
Retirement and termination benefit obligations
40
0
0
Provisions
37
0
0
Liabilities held for sale
-
-
Other liabilities
36
55
54
Liabilities from discontinued operations
14
-
-
TOTAL LIABILITIES
992
989
EQUITY
Share capital
43
1,163
1,188
Share premium
43
3,555
18,112
Οther equity instruments
600
600
Less: Treasury shares
43
(0 )
(2 )
-
-
Other reserves and retained earnings
44
(14,110 )
147
(14,460)
Capital and reserves attributable to the equity holders of the parent
5,465
5,439
Non controlling interest
-
-
TOTAL EQUITY
5,465
5,439
TOTAL LIABILITIES AND EQUITY
6,457
6,428
Piraeus Financial Holdings Group – 31 December 2022
124
Statement of Changes in Equity
Group
Note
Attributable to equity shareholders of the parent entity
€ Million
Share
Capital
Share
Premiu
m
Contingen
t
Convertibl
e
Bonds
Other
equity
instrume
nts
Treasury
shares
Currency
Translation
Reserve
Reserve from
financial
assets at
FVTOCI
Property
revaluatio
n reserve
Other
reserves
Non-
taxed
reserves
Retained
earnings
Total
Non
controll
ing
interest
Total
Opening balance as at 1/1/2021
(1 )
(59 )
(10,980 )
Reclassification due to change in the presentation of non-
taxed reserves (1)
(351 )
Opening balance as at 1/1/2021 (as reclassified) (1)
(1 )
(59 )
(11,331 )
Other comprehensive income/ (expense), net of tax
18
(137 )
(0 )
(132 )
(132 )
Loss, net of tax for the year
(3,014 )
(3,014 )
(1 )
(3,014 )
Total comprehensive income/ (expense) for the year
(137 )
(3,014 )
(3,146 )
(1 )
(3,147 )
Conversion of Cocos into ordinary shares
(2,040 )
(353 )
(27 )
(27 )
Share capital increase, net of issue costs
Reduction of par value per share
(4,936 )
Share capital decrease in kind
(63 )
(63 )
(63 )
AT1 capital instrument, net of issue costs
(8 )
Payment to the holders of AT1 capital instrument
(26 )
(26 )
(26 )
(Purchases)/ sales of treasury shares
(1 )
(0 )
(1 )
(1 )
Transfer between reserves and retained earnings
(1 )
Transfer of the accumulated reserve from equity securities
measured at FVTOCI to retained earnings upon disposal
Disposals and movements in participating interests
(90 )
(86 )
Balance as at 31/12/2021
(2 )
(54 )
(14,669 )
Opening balance as at 1/1/2022
(2 )
(54 )
(14,669 )
Other comprehensive income/(expense), net of tax
18
(9 )
(106 )
(101 )
(0 )
(101 )
Profit/ (loss), net of tax for the year
(2 )
Total comprehensive income/ (expense) for the year
(9 )
(106 )
(2 )
Share capital decrease in kind
43
(25 )
(25 )
(25 )
Offset of share premium by writing-off accumulated losses
43
(14,557 )
Payment to the holders of AT1 capital instrument
(53 )
(53 )
(53 )
(Purchases)/ sales of treasury shares
Transfer between reserves and retained earnings
(1 )
Transfer of the accumulated reserve from equity securities
measured at FVTOCI to retained earnings, upon disposal
(1 )
(1 )
(1 )
Disposals and movements in participating interests
(1 )
(6 )
(7 )
Balance as at 31/12/2022
(0 )
(63 )
Piraeus Financial Holdings Group – 31 December 2022
125
Company
Note
Share
Capital
Share
Premium
Contingent
Convertible
Bonds
Other equity
instruments
Other
reserves
Non-taxed
reserves
Retained
earnings
Total
€ Million
Opening balance as at 1/1/2021
2,620
13,075
2,040
0
96
0
(11,123)
6,708
Reclassification due to change in the presentation of Non-taxed reserves (1)
0
0
0
0
0
351
(351)
0
Opening balance as at 1/1/2021 (as reclassified) (1)
2,620
13,075
2,040
0
96
351
(11,474)
6,708
Loss, net of tax for the year
-
-
-
-
-
-
(3,046)
(3,046)
Total comprehensive expense for the year
0
0
0
0
0
0
(3,046)
(3,046)
Conversion of CoCos into ordinary shares
2,366
-
(2,040)
-
-
-
(353)
(27)
Share capital increase, net of issue costs
1,200
101
-
-
-
-
-
1,301
Reduction of par value per share
(4,936)
4,936
-
-
-
-
-
0
Share capital decrease in kind
(63)
-
-
-
-
-
-
(63)
AT1 capital instrument, net of issue costs
-
-
-
600
-
-
(8)
592
Payment to the holders of AT1 capital instrument
-
-
-
-
-
-
(26)
(26)
Balance as at 31/12/2021
1,188
18,112
0
600
96
351
(14,908)
5,439
Opening balance as at 1/1/2022
1,188
18,112
0
600
96
351
(14,908)
5,439
Profit, net of tax for the year
-
-
-
-
-
-
103
103
Total comprehensive income for the year
0
0
0
0
0
0
103
103
Share capital decrease in kind
43
(25)
-
-
-
-
-
-
(25)
Offset of Share premium by writing-off accumulated losses
43
-
(14,557)
-
-
-
-
14,557
0
Payment to the holders of AT1 capital instrument
-
-
-
-
-
-
(53)
(53)
Balance as at 31/12/2022
1,163
3,555
0
600
96
351
(301)
5,465
(1)
As of 31 December 2022, the Group and the Company have proceeded to the change in the presentation of certain types of reserves, after taking into account their
nature and purpose in accordance with the applicable legal and tax framework in Greece. In particular, reserves of € 351 million mainly relating to dividends and
gains from the sale of participations, which were previously included within retained earnings, are presented in category “Non-taxed reserves”. Comparative
information has been reclassified in order to align with the aforementioned changes in the presentation of non-taxed reserves and retained earnings.
.
Piraeus Financial Holdings Group – 31 December 2022
126
The notes on pages 127 to 350 form an integral part of the Financial Statements
Cash Flow Statement
€ Million
Note
Group
Company
Year ended
Year ended
31/12/2022
31/12/2021
As
reclassified
31/12/2022
31/12/2021
As
reclassified
Cash flows from operating activities
Profit/ (Loss) before income tax
(2,697 )
103
(3,046)
Adjustments to profit/ (loss) before income tax:
Add: provisions and impairment
(17)
3,129
Add: depreciation and amortisation charge
0
0
Add: retirement benefits and cost of voluntary exit scheme
12
0
1
Net (gain)/ losses from valuation of financial instruments measured at FVTPL
(15 )
1
1
Net (gain)/ losses from financial instruments measured at FVTOCI
(111 )
(87 )
-
-
(Gains)/ losses from investing activities
(401 )
(210 )
(53)
(26)
Accrued interest from investing and financing activities
69
77
Cash flows from operating activities before changes in operating assets and liabilities
104
135
Changes in operating assets and liabilities:
Net (increase)/ decrease in cash and balances with Central Banks
(568 )
(1 )
-
-
Net (increase)/ decrease in financial instruments measured at FVTPL
(353 )
-
0
Net (increase)/ decrease in financial assets mandatorily measured at FVTPL
(38 )
7
(4)
Net (increase)/ decrease in debt securities at amortised cost
(2,328 )
(4,443 )
(32)
(65)
Net (increase)/ decrease in amounts due from banks
(171 )
-
-
Net (increase)/ decrease in loans and advances to customers
(1,773 )
(1,108 )
(0)
(164)
Net (increase)/ decrease in reverse repos with customers
-
-
Net (increase)/ decrease in other assets
(159 )
2
131
Net increase/ (decrease) in amounts due to banks
(8,016 )
-
-
Net increase/ (decrease) in amounts due to customers
-
-
Net increase/ (decrease) in other liabilities
(92 )
(69 )
0
52
Net cash flow from operating activities before income tax payment
(6,893 )
81
85
Income tax paid
(10 )
(3 )
-
-
Net cash inflow/ (outflow) from operating activities
(6,903 )
81
85
Cash flows from investing activities
Purchases of property and equipment
(98 )
(79 )
(0)
(0)
Proceeds from disposal of property and equipment and intangible assets
-
-
Purchases of intangible assets
27
(71 )
(48 )
-
(0)
Proceeds from disposal of assets held for sale other than loans and advances to customers
-
-
Purchases of financial assets at FVTOCI
(2,001 )
(4,471 )
-
(0)
Proceeds from disposal of financial assets at FVTOCI
-
-
Acquisition of subsidiaries net of cash and cash equivalents
(102 )
(19)
(1,717)
Subscription of AT 1 capital instrument
-
(595)
Proceeds from disposal of subsidiaries, net of cash and cash equivalents disposed
-
-
Acquisition, establishment and participation in share capital increases of associates and joint ventures
(0 )
(2 )
-
(0)
Proceeds from disposal of associates
-
-
Dividends received
53
26
Net cash inflow/ (outflow) from investing activities
33
(2,286)
Cash flows from financing activities
Expenses directly attributable to the conversion of CoCos into ordinary shares
(27 )
-
(27)
Net proceeds from the issue of ordinary shares
0
1,301
Proceeds from the issue of AT 1 capital instrument
-
592
Repayment of AT 1 capital instrument
(53 )
(26 )
(53)
(26)
Proceeds from issue of debt securities and other borrowed funds
-
-
Repayment of debt securities and other borrowed funds
(470 )
-
-
Interest paid on debt securities and other borrowed funds
(91 )
(72 )
(66)
(50)
Proceeds from sales of treasury shares
-
-
Purchases of treasury shares
(25 )
(10 )
-
-
Repayments of lease liabilities
(26 )
(33 )
(0)
-
Net cash inflow/ (outflow) from financing activities
(292 )
(119)
1,790
Effect of exchange rate changes on cash and cash equivalents
(35 )
(0)
(0)
Net increase/ (decrease) in cash and cash equivalents (Α)
(6,467 )
(5)
(412)
Cash and cash equivalents at the beginning of the year (B)
50
462
Cash and cash equivalents at the end of the year (A) + (B)
46
45
50
As of 31 December 2022, the Group has changed the presentation of proceeds from disposal of loan portfolios. In particular, proceeds of € 216 million (31 December 2021: € 254 million) have been reclassified
from cash flows from investing activities (line item “Proceeds from disposal of assets held for sale”), to cash flows from operating activities (line item “Net (increase)/ decrease in loans and advances to customers”).
Piraeus Financial Holdings Group – 31 December 2022
127
1 General information
Η
225501000, was established in 1916 and its shares are registered and have been listed on the Main Market of the Athens Stock
Exchange since 1918.
financial holding company, it is subject to the relevant provisions of Law 4261/2014 as amended and in force and it is directly
supervised by the European Central Bank (“ECB”).
equivalents (“FTEs”), of which 54 FTEs refer to operations that are planned to be disposed.
Apart from the ATHEX General Index, Piraeus Financial Holdings S.A. is a constituent of other major indices as well, such as
FTSE/ATHEX (Large Cap, Βanks, ESG Index), FTSE (Emerging Markets, Med 100), MSCI (Emerging Markets, Greece), Stoxx (All
Europe TMI, Emerging Markets, Balkan), S&P (Global, Greece BMI), FTSE4Good, Bloomberg Gender Equality, Solactive (ISS ESG
EM Net Zero Pathway Index, ISS EM Carbon Reduction & Climate Improvers index), CDP Carbon Disclosure Project and Science
Based Targets initiative (“SBTi”).
The Board of Directors (“BoD”) of Piraeus Financial Holdings S.A.,
on 16 March 2023, the date that the separate and
consolidated financial statements of Piraeus Financial Holdings S.A. (the Company and the Group) for the period ended 31
December 2022 (the ‘’Annual Financial Statements”) were authorized for issue
, consists of the following members:
Piraeus Financial Holdings Group – 31 December 2022
128
George P. Handjinicolaou
Chairman of the BoD, Non-Executive Member
Karel G. De Boeck
Vice-Chairman of the BoD, Independent Non-Executive Member
Christos I. Megalou
Managing Director & Chief Executive Officer (“CEO”), Executive BoD
Member
Vasileios D. Koutentakis
Executive BoD Member
Venetia G. Kontogouris
Independent Non-Executive BoD Member
Francesca. A. Tondi
Independent Non-Executive BoD Member
Enrico Tommaso C. Cucchiani
Independent Non-Executive BoD Member
David R. Hexter
Independent Non-Executive BoD Member
Solomon A. Berahas
Independent Non-Executive BoD Member
Andrew D. Panzures
Independent Non-Executive BoD Member
Anne J. Weatherston
Independent Non-Executive BoD Member
Alexander Z. Blades
Non-Executive BoD Member
Periklis N. Dontas
Non-Executive BoD Member, Hellenic Financial Stability Fund (“HFSF”)
Representative under Law 3864/2010
According to the Company's articles of association and the current regulatory framework, the members of the Company's
Board of Directors are elected by the general meeting of its shareholders and may be re-elected. The term of the members of
the Board of Directors may not exceed three (3) years and may be extended until the first ordinary general meeting convened
after such term has elapsed. Pursuant to Greek Law 3864/2010, a representative of the HFSF participates in the Board of
Directors. If a member of the Board of Directors is replaced, then according to the law, the respective replacement applies
solely to the remaining term of the member being replaced. Pursuant to the Annual General Shareholders’ Meeting Resolution
on 26 June 2020, the term of the current Board of Directors expires on 26 June 2023.
The Annual Financial Report, in accordance with the European Single Electronic Format (“ESEF”), is available on the web site
of Piraeus Financial Holdings S.A. at
2 Basis of preparation and significant accounting policies
2.1 Basis of preparation
Piraeus Financial Holdings Group – 31 December 2022
129
The Annual Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”),
as endorsed by the European Union (the “EU”) at the time of preparing these financial statements.
Euro, rounded to the nearest million (unless otherwise stated) for ease of presentation. Any differences between the amounts
presented in the primary financial statements and the relevant amounts presented in the accompanying notes, are due to
rounding. Where necessary, the comparative figures have been reclassified (refer to Νote 50) to conform to changes in current
period’s presentation.
The Annual Financial Statements have been prepared under the historical cost convention, except for financial assets held at
fair value through profit or loss (“FVTPL”) or at fair value through other comprehensive income (“FVTOCI”) as presented in the
statement of financial position and the relevant notes, derivative financial instruments and investment property, which have
been measured at fair value.
The preparation of financial statements in conformity with IFRSs requires the use of critical accounting estimates and
judgements that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as at
the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The
areas where critical judgements and estimates are significant to the Annual Financial Statements, are disclosed in Note 3.
2.2 Going concern
Conclusion
Management has made an assessment on the Group’s ability to continue as a going concern. Management’s assessment
considered the Group’s principal business risks deriving mainly from the macroeconomic environment in combination with the
Group’s strategy, its liquidity and capital position. The following were taken into consideration:
a) the solid economic growth in 2022, and the prospects for a sustainable rate of growth of Gross Domestic Product (“GDP”)
in the medium term, taking also into account the deployment of the Recovery and Resilience Facility (“RRF”) funds to the
Greek economy, the continued recovery of the residential and commercial real estate prices, despite of the high level of
inflation and energy prices;
b) the Group’s effective liquidity risk management leading to a robust liquidity position as evident by the Liquidity Coverage
Ratio (“LCR”) as of 31 December 2022 (refer to the Liquidity section below), as well as Management’s assessment of the
impact of stress test scenarios, within the Internal Capital Adequacy Assessment Process (“ICAAP”) and Internal Liquidity
Adequacy Assessment Process (“ILAAP”) framework, on the Group’s liquidity position and on mandatory liquidity ratios ;
c) the capital adequacy of the Group, which exceeded the Overall Capital Requirement (“OCR”) (refer to the Capital
Adequacy section below) -including Pillar II Guidance (“P2G”) - and the Minimum Requirement for own funds and Eligible
Liabilities (“MREL”) ratio of Piraeus Bank Group, which exceeded the Intermediate Guidance of 19.08% effective from 1
January 2023. It is estimated that for the next 12 months the Group’s capital adequacy ratios and the MREL ratio will
remain higher than the required minimum reg ulatory levels;
d) the geopolitical developments, specifically the Russia / Ukraine conflict, and the Group’s operations in Ukraine, which
comprise a financial institution, namely JSC Piraeus Bank ICB, and investments in real estate assets which represent
approximately 0.2% of the total consolidated assets of the Company as of 31 December 2022;
Piraeus Financial Holdings Group – 31 December 2022
130
e)
the net profit attributable to the equity holders of the parent Company, which recovered significantly in 2022 and
amounted to € 899 million, compared to a loss of € 3,007 million in 2021 and the Non performing exposures (“NPE”) ratio
dropping to 6.8% as at 31 December 2022 from 12.7% as at 31 December 2021.
Based on the analysis performed, Management has concluded that that there are no material uncertainties which would cast
significant doubt over the ability of the Group and the Company to continue to operate as a going concern for a period of 12
months from the date of approval of the Annual Financial Statements For this reason the Group continues to adopt the going
concern basis of accounting for preparing the financial statements.
Macroeconomic environment
Despite rising inflationary pressures and the strong uncertainty linked to the geopolitical developments and the energy crisis,
the Greek economy grew at a solid pace in 2022, with real GDP increasing by 5.9% on an annual seasonally adjusted basis -
largely driven by the positive contribution of the private consumption and investments – while the nominal GDP growth rate
reached double digits at 14.5%. During the same period the unemployment rate declined further to 12.6%, down by 2.7
percentage points compared to the same period a year ago, while employment growth rate reached on average 6.6% on an
annual non - seasonally adjusted basis. However, strong inflationary pressures were a key feature of 2022, both in the global
markets and in Greece. In 2022, the headline national inflation (Consumer Price Index/ “CPI”) reached 9.6% and the harmonized
inflation (“HICP”) reached 9.3%. The Greek government in order to battle the effects of inflation and support the real economy,
undertook a series of fiscal interventions during the course of 2022. These took the form of subsidies of electricity consumption
of households and businesses, increase of the heat allowance and extension of the eligible population, subsidies to the gas
prices, and other tax cuts and subsidies for the low pensioners and weak households.
Enhanced surveillance of Greece ended on 20 August 2022 and the first post-program surveillance (“PPS”) report was released
on 22 November 2022. In February 2023, the European Commission (“EC”) released its Winter Interim Forecast which lifted
the outlook for growth and slightly lowered the inflationary projections. For 2023, both the EC and the Ministry of Finance
expect that inflationary pressures will remain strong - albeit less intense - and that the real GDP growth rate will decelerate.
However, the EC estimates that the growth rate will rebound to 2.2% in 2024. Τhe labor market will show resilience and the
unemployment rate will remain unchanged.
Ministry of Finance
1
EC
2 3
2022
2023
2022
2023
2024
Real GDP growth rate (%)
5.6
1.8
5.5
1.2
2.2
Inflation (HICP, %)
9.7
5.0
9.3
4.5
2.4
Unemployment Rate
12.7
12.6
12.6
12.6
12.1
1.
Ministry of Finance, 2023 Budget introductory report, November 2022
2.
Real GDP growth rate & Inflation (HICP, %) as per EC, European Economic Forecast, Winter 2023 Institutional paper 194, February 2023
3.
Unemployment rate as per EC, PPS Report, Greece, Autumn 2022 institutional paper 191, November 2022
Piraeus Financial Holdings Group – 31 December 2022
131
Based on the 2023 Budget introductory report the headline general government deficit (European System of Accounts/ “ESA”
definition) will narrow from 7.5% of GDP in 2021 to 4.1% of GDP in 2022, which corresponds to a primary deficit of 1.6% of
GDP in 2022. The headline deficit is expected to decrease further to 2.0% of GDP in 2023, bringing the primary balance to a
surplus of 0.7% of GDP. The general government debt to GDP ratio is expected to fall sharply from 194.5% of GDP in 2021 to
168.9% of GDP in 2022, and to remain on a downward trajectory (159.3% of GDP in 2023), supported by the nominal GDP
growth rate and the move into a primary surplus position in 2023.
The implementation of the RRF plan, both for its grant component, as well as the private-sector investments through the loan
facility, is a key factor for the sustainable growth potentials. Greece stands to benefit from a total envelope of € 30.16 billion
(€ 17.43 billion in grants and € 12.73 billion in loans) under the RRF, 25% of which have already been disbursed in pre-financing
and the first regular instalment in April 2022
11
. On 25 November 2022 the EC endorsed a positive preliminary assessment of
Greece's second payment request from RRF for € 3.6 billion, submitted at end-September
12
.
The main risk factors affecting the developments of the Greek economy, the domestic banking sector in general and the Group
in particular related to the ongoing impacts of geopolitical challenges and Russia’s war against Ukraine, the deterioration of
supply and demand imbalances, the turmoil in global energy markets and the maintenance of high inflationary pressures
resulting in lower purchasing power, the volatility of the supply chain and the uncertainty in markets, as well as delays in policy
decisions during the Greek election period.
Specifically, for the Russia-Ukraine crisis, the Group has developed and implemented, in accordance with the Group’s
Compliance Policy provisions, all the necessary measures in order to address the restrictive measures imposed by specific
organizations / authorities [i.e. EU, US Treasury (OFAC), United Nations (“UN”), French Ministry of Economics and Finance
(MINEFI)].
Therefore, a potential slow and weak economic recovery, along with persistently high inflation, could potentially have a
negative effect on the quality of the Group’s loan portfolio, and subsequently to its profitability and capital adequacy.
Management closely monitors the developments and assesses periodically the impact that these might have on the Group’s
operations and financial performance. The Group invests in business and technical controls to help prevent, detect and mitigate
cyber threats. The Group’s ability to detect and respond to attacks through round-the-clock security operations center
capabilities help to reduce the impact of attacks.
Liquidity
As at 31 December 2022, Group’s deposits increased by 5.3% compared to 31 December 2021, to € 58.4 billion, mainly due to
the significant increase of private sector deposits.
The ECB’s Governing Council decided to its meetings held in July, September, October, and December 2022 and again in January
2023 to raise the key ECB interest rates by 50, 75, 75, 50 and 50 basis points, respectively. As a result, the main refinancing
rate currently stands at 3.00% and the Deposit Facility Rate (“DFR”) at 2.50%. This recent development has the potential of
adversely affecting cost of funding.
11
12
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In 2020, as a response to Covid-19 pandemic’s effects on the European economy, the ECB announced easing off the conditions
for Targeted Longer Term Refinancing Operations (“TLTRO”), in order to leverage its use by credit institutions. The Group,
between 2019 and 2022, has drawn an amount of € 14.5 billion of TLTRO funding. During 2022, the Group repaid an amount
of € 9 billion of TLTRO funding, out of the previously outstanding amount of € 14.5 billion, an action that did not affect the
Group’s LCR. As of 31 December 2022, the Group’s funding under TLTRO auctions amounted to € 5.5 billion. Funding from the
interbank market stood at € 0.3 billion as at 31 December 2022, stable compared to 31 December 2021.
Regarding the maturity profile of the aforementioned TLTRO funding, an amount of € 2.0 billion matures in 2023 and the rest
in 2024. The Group has the capacity to repay the upcoming TLTRO maturities due to the ample position of € 9.7 billion in cash
and balances with central banks.
The Group’s balance sheet deleveraging, coupled with the medium-term customer deposits restoration trend, alongside the
active markets access through Tier 2 issuances (in 2019 and early 2020), as well as Additional Tier 1 (“ΑΤ1”) Capital instrument,
a Green Senior Preferred Bond issued in 2021 and a Senior Preferred Bond issued in November 2022, improved the Group’s
funding mix, and increased its high-quality liquid assets (“HQLA”) buffer. As at 31 December 2022, the Group’s LCR stood at
201% (thus, almost double than the regulatory requirement of 100%).
Based on the Group’s most recent ILAAP assessment, both the LCR and Net Stable Funding Ratio (“NSFR”) ratios are expected
to remain above minimum regulatory thresholds throughout the next 12 months.
Capital adequacy
The Group’s Basel III Common Equity Tier 1 (“CET1”) ratio as at 31 December 2022 stood at 13.04%, while the total regulatory
capital ratio (TCR) stood at 17.82% as at the same date. The Group’s fully loaded CET1 and TCR ratios stood at 11.54% and
16.40%, respectively as at 31 December 2022.
Following the conclusion of the Supervisory Review and Evaluation Process (“SREP”), the ECB informed the Group of its OCR,
valid for 2023. According to the decision, the Group would have to maintain an OCR of 14.50%, which includes: (a) the minimum
Pillar I total capital requirements of 8.00% as per article 92(1) of Regulation 575/2013/EU; (b) the additional Pillar II capital
requirement of 3.00% as per article 16(2) of Regulation 1024/2013/EU; (c) the fully loaded Capital Conservation Buffer (“CCB”)
of 2.50% as per Regulation 575/2013/EU, and (d) the fully loaded Other Systemically Important Institutions (“O-SII”) capital
buffer of 1.00% under Greek Law 4261/2014.
Refer to Note 4.16 for further details on the Group’s capital adequacy.
2.3 Adoption of International Financial Reporting Standards
The following amendments and annual improvements to existing IFRSs, effective from 1 January 2022, have been issued by
the International Accounting Standards Board (“IASB”) and endorsed by the EU as of the date the Annual Financial Statements
were issued.
Amendments to Accounting Standards
IFRS 3 (Amendment) “Business Combinations”.
for Financial Reporting without changing the accounting requirements for business combinations .
Piraeus Financial Holdings Group – 31 December 2022
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IAS 16 (Amendment) “Property, Plant and Equipment”.
plant and equipment of amounts received from selling items produced while the company is preparing the asset for its
intended use. Instead, such sale proceeds and related cost are recognised in profit or loss.
IAS 37 (Amendment) “Provisions, Contingent Liabilities and Contingent Assets”.
company includes when assessing whether a contract is loss making.
Annual Improvements 2018-2020
IAS 1 (Annual Improvement) “Presentation of Financial Statements”.
paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on
the parent’s date of transition to IFRSs.
IFRS 9 (Annual Improvement) “Financial Instruments”.
the ‘10 percent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability.
IFRS 16 (Annual Improvement) “Leases”.
example the illustration of the reimbursement of leasehold improvements by the lessor.
The adoption of the amendments and annual improvements did not have any material impact on the Group and the Company’s
annual financial statements.
Amendments to standards that have been issued by the IASB and have been endorsed by the EU, but they are not effective
in 2022 nor have they been early adopted by the Group and the Company:
IAS 1 (Amendment) “Presentation of Financial Statements” and IFRS Practice Statement 2:
Disclosure of Accounting Policies.
The amendments to IAS 1 require companies to disclose their material accounting policy information rather than their
significant accounting policies. The amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept
of materiality to accounting policy disclosures.
IAS 8 (Amendment) “Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates”.
The amendment introduces the definition of accounting estimates and includes other amendments to IAS 8 to help entities
distinguish changes in accounting estimates from changes in accounting policies.
IAS 12 (Amendment) “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction”.
applied to transactions that occur on or after the beginning of the earliest comparative period presented. It also, at the
beginning of the earliest comparative period presented, recognizes deferred tax for all temporary differences related to leases
and decommissioning obligations and recognizes the cumulative effect of initially applying the amendment as an adjustment
to the opening balance of retained earnings (or other component of equity, as appropriate) at that date.
The Group and the Company have not early adopted the above amendments, however it is not expected any material impact
on the Group and the Company’s financial statements.
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134
Amendments to standards that have been issued by the IASB but they have not yet been endorsed by the EU, and therefore
they have not been adopted by the Group and the Company:
IAS 1 (Amendment) “Classification of Liabilities as Current or Non-current
”.
The amendment aims to promote consistency in
applying the requirements by helping companies determine whether, in the statement of financial position, debt and other
liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one
year) or non-current.
2.4 Significant accounting policies
2.4.1 Consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries (including
structured entities), which are entities controlled by the Company. Control is achieved, if and only if, the Company has a) power
over the subsidiaries b) exposure, or rights to variable returns from its involvement with the subsidiaries and c) the ability to
use its power over the subsidiaries to affect Company’s returns.
Income and expenses and other comprehensive income of subsidiaries acquired or disposed of during the year are included in
the consolidated income statement and in the consolidated statement of comprehensive income, respectively, from the
effective date of acquisition and up to the effective date of disposal, as appropriate. Profit/ (loss) for the period and total
comprehensive income/ (expense) of subsidiaries are attributed to the owners of the Company and to the non-controlling
interests, even if these results in the non-controlling interests are of a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line
with those adopted by the Group. All intra-group transactions, balances, income and expenses are eliminated in full on
consolidation
.
2.4.2 Intragroup distributions in kind by the distributing entity
Distribution of non-cash financial assets to entities within the Group, which are scoped out from IFRIC 17, is recognised directly
in equity, at the book value of the assets being distributed. Specifically, in cases where the distribution refers to a previously
unrecognised asset (e.g. because the derecognition requirements of IFRS 9 were not met prior to the distribution), the amount
to be accounted for directly in equity is determined based on the carrying amount of the on balance sheet assets derecognised
and the value of the rights and obligations created as a result of the distribution, in accordance with the recognition and
measurement requirements of the applicable standards.
2.4.3 Non-controlling interests
Non-controlling interests are measured on the date of acquisition either at their proportionate interest of the recognised
amounts of the acquirer’s net assets or at fair value. The choice of measurement is made on a transaction-by-transaction basis.
Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial
recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income/ (expense)
is attributed to non- controlling interests even if this results in the non-controlling interests having a deficit balance.
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2.4.4 Loss of control over a subsidiary or a business
When the Group loses its control over a subsidiary or a business, the profit or loss on disposal is calculated as the difference
between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill) and liabilities of the subsidiary or business disposed of, and non-
controlling interests, if any. For assets of the subsidiary or business carried at fair value with the related cumulative gain or loss
recognised in other comprehensive income, the amounts previously recognised in other comprehensive income are accounted
for as if the Company had directly disposed of the relevant assets (i.e. reclassified to the income statement or transferred
directly to retained earnings as specified by applicable IFRSs). The fair value of any investment retained in the former subsidiary
at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9
Financial Instruments or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled
entity.
The Group applies IFRS 10 on contributions of subsidiaries that meet the business definition, into associates. On this basis such
contributions are measured at fair value and any resulting gain or loss arising from loss of control over the former subsidiary is
recognised in the income statement.
2.4.5 Associates
Associates are all entities over which the Group has significant influence, but not a controlling interest. Significant influence is
generally presumed when the Group holds, directly or indirectly, more than 20% of the voting rights, unless it can be clearly
demonstrated that this is not the case. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered in assessing whether the Group has significant influence.
Investments in associates are accounted for by applying the equity method of accounting. Under the equity method of
accounting, the investment is initially recognised at cost.
Goodwill arising on the acquisition of an associate is included in the
carrying amount of the investment (net of any accumulated impairment loss).
increased or decreased by the proportionate share of the associate’s post-acquisition profits or losses (recognised in the
Group’s consolidated income statement) and movements in reserves (recognised in reserves), based on their most recent
available financial information at each reporting period. Dividends received from the associate during the year reduce the
carrying value of the investment. Unrealised gains and losses on transactions between the Group and its associates are
eliminated to the extent of the Group’s interest in the associate. Where necessary, the associate’s financial statements used
in applying the equity method are adjusted to ensure consistency with the accounting policies adopted by the Group.
2.4.6 Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net
assets of the arrangement. The Group recognises its interest in a joint venture as an investment and accounts for that
investment using the equity method (refer to Note 2.4.5).
2.4.7 Investments in subsidiaries, associates and joint ventures in the separate financial statements
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136
In the separate financial statements, investments in subsidiaries, associates and joint ventures are initially and subsequently
measured at cost less impairment.
2.4.8 Impairment of investments in subsidiaries, associates and joint ventures
The Group and the Company assess whether there is any indication that an investment in a subsidiary, associate or joint
venture may be impaired. If any such indication exists, the recoverable amount of the investment is estimated. Where the
carrying amount of an investment is higher than its estimated recoverable amount, it is written down to its recoverable
amount.
The Group and the Company, in the context of the impairment assessment of the carrying amount of its investments in
subsidiaries, associates or joint ventures, have defined both quantitative and qualitative triggers. The qualitative triggers are
related to companies’ financial changes, forward-looking developments in the countries and / or economy sectors in which
they operate, changes in management etc.
An impairment loss recognised in prior years can be reversed only if there has been a change in the assumptions used to
determine the recoverable amount of the investment since the last time an impairment loss was recognized. In this case, the
carrying amount of the investment is increased to its recoverable amount and this increase is the reversal of the impairment
loss.
2.4.9 Foreign Currency translations
Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency that best reflects
the economic substance of the underlying events and circumstances relevant to that entity ("the functional currency"). The
Financial Statements are presented in millions of Euro (€), which is the functional currency of the Company.
Transactions and balances
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 and from the translation
of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Translation
differences on non-monetary financial assets are a component of the change in their fair value and are recognised in the
income statement for equity securities held for trading, or in other comprehensive income for equity securities classified as
FVTOCI. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
Group companies
When preparing the consolidated financial statements, assets and liabilities of foreign entities are translated at the exchange
rates prevailing at the reporting date, while income and expense items are translated at average rates for the reporting period.
Differences resulting from the use of closing and average exchange rates and from revaluing a foreign entity’s opening net
asset balance at closing rate are recognised directly in foreign currency translation reserve within other comprehensive income.
When a monetary item forms part of a reporting entity’s net investment in a foreign operation and is denominated in a currency
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other than the functional currency of either the reporting entity or the foreign operation, the exchange differences that arise
in the separate financial statements of both companies are reclassified to other comprehensive income upon consolidation.
2.4.10 Interest income and expense
Interest income and expense for all interest-bearing financial instruments are recognised in “interest and similar income” and
“interest expense and similar charges” in the income statement using the effective interest rate method. The effective interest
rate discounts any estimated future payment or proceeds throughout the life of a financial instrument or until the next date
of interest reset, in order for the present value of all future cash flows to be equal to the carrying amount of the financial
instrument, including any fees or transaction costs incurred. Fees and direct costs relating to financial instruments measured
at amortised cost are deferred and amortised to interest income or expense over the life of the instrument using the effective
interest rate method.
Ιn particular, the following apply for financial assets:
•
For those financial assets classified within Stage 1 or Stage 2, interest income is calculated by applying the effective
interest rate to the gross carrying amount of the financial asset.
•
For those financial assets classified within Stage 3, interest income is calculated by applying the effective interest rate to
the amortised cost of the financial asset.
•
For purchased or originated credit impaired (“POCI”) financial assets interest income is calculated similar to the Stage 3
loans and by applying the credit adjusted effective interest rate of the financial asset. The credit adjusted effective interest
rate is the rate that, at initial recognition, discounts the estimated future cash flows (including credit losses) to the
amortised cost of the POCI financial asset.
2.4.11 Fees and commission income and expense
The Group applies the following five step model to all contracts with customers, except for lease arrangements and financial
instruments:
•
Identification of the contract(s) with the customer;
•
Identification of the performance obligations in the contract;
•
Determination of the transaction price;
•
Allocation of the transaction price to the performance obligations; and
•
Recognition of revenue when the performance obligation is satisfied.
As such, the Group recognises revenue when a performance obligation is satisfied, that is when control of the services or goods
is transferred to the customer.
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Fees and commission income/ expense are recognised over time when the relevant services are provided. For instance, fee
income on asset management services and on real estate management services is recognised as the service is being rendered
to the customer.
Loan syndication fees are recognised as income when the syndication has been completed and the Group retains no part on
the loan package for itself or retains part at the same effective interest rate with the other participants. Fees and commissions
arising from negotiating or participating in the negotiation of a transaction for a third party, such as the arrangement of the
acquisition of shares or other securities or the purchase or sale of businesses, are recognised at a point in time when the
transaction is completed. Fees on the execution of transactions (e.g. sales and brokerage commissions) are recognised upon
completion of the transaction.
2.4.12 Dividend income
Dividend income is recognised when the right to receive payment is established.
2.4.13 Financial assets at FVTPL or mandatorily at FVTPL and loans and advances to customers mandatorily at FVTPL
Financial assets at FVTPL
Financial assets measured at FVTPL are all financial assets that do not meet the criteria of being measured at either amortised
cost or FVTOCI. The changes in fair value of such financial assets are recognised in the income statement, in line “net gains/
(losses) from financial instruments measured at FVTPL
”.
Financial assets mandatorily at FVTPL
Equity instruments are measured mandatorily at FVTPL unless the Group and the Company irrevocably elect to measure at
FVTOCI.
Debt securities measured mandatorily at FVTPL are exposures for which the contractual terms do not give rise on specified
dates to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding (SPPI Fail).
Loans and advances to customers mandatorily at FVTPL
Loans and advances to customers mandatorily at FVTPL are credit exposures for which the contractual terms do not give rise
on specified dates to cash flows that are SPPI on the principal amount outstanding (SPPI Fail).
2.4.14 Sale and repurchase agreements and securities lending
Securities sold subject to repurchase agreements (repos) are reclassified in the statement of financial position as a pledged
asset when the transferee has the right by contract to sell or repledge the collateral; the liability part of the agreement is
included in amounts “Due to banks” or “Due to customers”, as appropriate. Securities purchased under agreements to resell
(reverse repos) are recorded as “Reverse repos with customers”. “Reverse repos with customers” are carried at amortised cost
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using the effective interest rate method.
The difference between sale and purchase price of the aforementioned securities is treated as interest and accrued over the
life of the agreements using the effective interest method.
Securities transferred to counterparties by the Group are presented in the statement of financial position as assets, in the case
that the Group retains substantially all the risks and rewards of ownership of these securities.
Securities transferred to the Group by counterparties are not recognised in the statement of financial position, except in the
case of counterparty’s bankruptcy. If the securities are sold to a third party, the Group recognises the consideration received
as well as the corresponding obligation to return the securities, at fair value in the statement of financial position.
2.4.15 Investment Securities measured at FVTOCI
Debt securities
A financial asset is measured at FVTOCI if both of the following conditions are met:
•
The asset is held within a business model in which assets are managed to achieve a particular objective by both collecting
contractual cash flows and selling assets (“Hold to Collect and Sell”) and
•
The contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount
outstanding.
A Hold to Collect and Sell business model applies when the Group has made a decision that both collecting contractual cash
flows and selling financial assets are integral to achieving the objective of the business model. In order to determine whether
this is so, Management considers:
•
If the business model will typically involve greater frequency and value of sales than a Hold to Collect (“HTC”) model,
•
If there are various objectives that may be consistent with this type of business model, such as to:
-
manage everyday liquidity needs;
-
maintain a particular interest yield profile; or
-
match the duration of the financial assets to the duration of the financial liabilities that those assets are funding.
The financial assets, after initial recognition, are measured at FVTOCI with any unrealised gains/ losses recorded directly in
other comprehensive income, until these financial assets are derecognised. On the date of derecognition (upon the sale or
collection of the asset), the cumulative fair value gains/ losses are reclassified from equity to profit or loss. The Group
recognises in the income statement, interest income using the effective interest rate method, expected credit losses (“ECL”),
foreign exchange gains and losses and any modification gains or losses.
Effectively from September 2022, debt securities issued by corporations and financial institutions are acquired by the Group
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solely for HTC purposes and therefore, classified at amortised cost unless they fail the SPPI test.
Equity instruments
At initial recognition, the Group and the Company may make an irrevocable election to present in other comprehensive income
subsequent changes in the fair value of an investment in an equity instrument within the scope of IFRS 9 that is not held for
trading. This election is made on a “one to one” basis.
Furthermore, equity instruments that are measured at FVTOCI are not subject to any impairment and any accumulated gains
and losses recognised in other comprehensive income, which are not subsequently reclassified to the income statement, but
may be reclassified within equity (to the retained earnings).
Only dividend income on such equity instruments is recognised in the income statement, unless the dividend clearly represents
a recovery of part of the cost of the investment. Dividends are recognised in profit or loss only when:
a)
the Group’s and the Company’s right to receive payment of the dividend is established;
b)
it is probable that the economic benefits associated with the dividend will flow to the Group and the Company; and
c)
the amount of the dividend can be measured reliably.
All other gains and losses (including those relating to foreign exchange) are recognised in other comprehensive income.
2.4.16 Derivative financial instruments
Derivative financial instruments mainly include currency and interest rate swaps, forward rate agreements, futures and options
(both written and purchased). Derivatives are initially recognised in the statement of financial position at fair value on the date
when the Group engages into the contract (i.e. trade date) and subsequently remeasured at fair value through profit or loss.
Derivatives are classified as assets when their fair value is positive or as liabilities when their fair value is negative. Where the
Group enters into derivative instruments used for trading purposes, realised and unrealised gains and losses are recognised in
the income statement. Changes in the fair values of derivative financial instruments are included in line item “net gains/ (losses)
from financial instruments measured at FVTPL”. A derivative may be embedded in another financial instrument, known as
“host contract”. If the host is any contract other than a financial asset, the embedded derivative is bifurcated from its hos t and
treated as a separate derivative, provided that its risks and economic characteristics are not closely related to those of the host
contract, the embedded derivative actually meets the accounting definition of a derivative and the host contract is not carried
at fair value with unrealised gains and losses reported in the income statement. If the host contract is a financial asset, the
entire hybrid instrument is measured either at amortised cost or fair value.
2.4.17 Hedge accounting
The Group has elected to continue applying hedge accounting under IAS 39, as permitted by IFRS 9. A hedge accounting
relationship is established by the Group, only if all of the following criteria are met:
•
at inception of the hedge, there is formal designation and documentation of the hedging instrument, hedged item,
hedging objective, strategy and relationship;
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•
the hedge is expected to be highly effective in offsetting the risk in the hedged item throughout the hedging period. A
hedge is considered to be highly effective when the Group achieves offsetting changes in fair value between 80 percent
and 125 percent for the risk being hedged; and
•
the hedge is highly effective on an ongoing basis.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for
which the effective interest method is used, is amortised to profit or loss over the period to maturity. The amortisation is based
on the recalculated effective interest rate at the date the amortisation commences. The unamortised adjustment to the
carrying amount of a non-interest bearing hedged item is recognised immediately in the income statement.
2.4.18 Loans and advances to customers at amortised cost
Loans and advances to customers include financial assets measured at amortised cost for which both of the following
conditions are met:
i.
the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual
cash flows; and
ii.
the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI on the principal amount
outstanding (SPPI pass).
Loans and advances to customers at amortised cost drawn down by the Group and the Company are initially recognised at fair
value (plus any transaction costs) and measured subsequently at amortised cost using the effective interest rate method.
Interest on loans and advances to customers is included in the income statement and is reported within line item “Interest and
similar income”.
Debt instruments that are contractually linked instruments in the form of collateralized loan obligations (“CLO”) are carried at
amortised cost provided that a) the instrument itself meets both conditions for amortised cost measurement, b) the underlying
assets qualify for amortised cost accounting, and c) the exposure to credit risk inherent in the CLOs is equal or less than then
exposure to credit risk of the underlying pool of financial instruments. Contractually linked instruments are presented within
loans and advances to customers at amortised cost, if no active market exists for that asset at the time of purchase.
Senior notes held by the Group, which are issued under securitization of loans, are presented within loans and advances to
customers provided that both conditions for amortised cost measurement are met.
Τhe Group and the Company recognise an ECL impairment on loans and advances to customers at amortised cost when it is
estimated that it will not be in a position to receive all payments due, as defined by the contract of the loan. The amount of
the ECL allowance for impairment on loans and advances to customers at amortised cost is the difference between all
contractual cash flows that are due in accordance with the contract and all the cash flows that the entity expects to receive
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discounted at the original effective interest rate of the loan (or credit-adjusted effective interest rate for POCI financial assets).
At each reporting date, an impairment loss equal to 12-month ECL (allocated to Stage 1) is recognised for all financial assets
for which there is no significant increase in credit risk (“SICR”) since initial recognition. For financial assets:
a.
that there is a significant increase in credit risk since their initial recognition (allocated to Stage 2);
b.
that are credit impaired (allocated to Stage 3); and
c.
that are POCI,
an impairment loss equal to lifetime ECL is recognised.
Protection fees payable by the Group to protection sellers in the context of synthetic securitizations are presented within line
item “other credit-risk related expenses on loans and advances to customers at amortised cost”.
Default Definition
The Group and the Company apply the European Banking Authority (“EBA”) NPE definition. In accordance with the Group’s
and the Company’s Impairment Policy, a financial asset is considered as credit impaired and is classified into Stage 3 when it is
classified as NPE.
The definition of default is assessed:
•
On a contract level for retail portfolio.
•
On an obligor level for non-retail portfolios.
The determination of a significant increase in credit risk takes into account many different factors and varies per portfolio type.
The main criteria considered in making this determination are the following:
•
Primary criteria
-
significant increase in the probability of default (“PD”) of the financial instrument at the reporting date, compared to
the one calculated at the initial recognition date, based on certain absolute [300-650 basis points (“bps”), depending
on the portfolio segment] or relative (200%) thresholds. The aforementioned thresholds are the same as last year.
•
Secondary criteria
-
existence of forbearance;
-
behavioral flags (i.e. monitoring the maximum delinquency bucket for the last 12 months);
-
existence of default event over the last 12 months;
-
watch list.
•
Backstop
-
the Group and the Company apply the IFRS 9 presumption that a SICR has occurred when the financial asset is more
than 30 days-past-due and all such exposures are classified in Stage 2.
•
Additional criteria due to high energy prices and inflation
Piraeus Financial Holdings Group – 31 December 2022
143
-
In 2020, the Group and the Company introduced additional SICR criteria, without relaxing any of the existing
thresholds, in order to effectively allocate the exposures affected by the pandemic. The additional criteria considered
probabilities of default, industry characteristics and pre-pandemic performance. As of 31 December 2022, the
aforementioned criteria have been revised in order to include sectors vulnerable to high energy prices and inflation
(refer to Note 3.2).
Key Impairment Modeling Concepts
ECL is a function of the PD, Exposure at Default (“EAD”) and Loss Given Default (“LGD”) and is estimated by incorporating
forward-looking economic information and through the use of experienced credit judgement to reflect factors not captured in
models.
The Group considers as individually significant, facilities to Corporate and Individual customers that satisfy all of the following
criteria:
The aggregate exposure at debtor level at the period end reporting date exceeds the amount of € 1 million or the equivalent in
foreign currency.
The exposures are classified as NPE.
The result of the individual assessment is further adjusted by incorporating the effect of macroeconomic scenarios determined
on the basis of the estimates of the collective projection models.
The collective impairment assessment is carried out on all loans classified in Stages 1 and 2 as well as Stage 3 provided that
they have not been individually assessed. Loans and advances to customers at amortised cost are grouped on the basis of
similar credit risk characteristics (i.e. arrears bucket, industry sector, business/ product segment, and other relevant factors).
These characteristics are indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the
assets being evaluated.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised (such as an improvement of the debtor's credit rating), the previously
recognised impairment loss is reduced and the gain is recognised in the income statement.
Forborne loans are defined as exposures arising from loan agreements that have been subject to forbearance measures. The
measures are considered as a concession of the Group and the Company to a borrower who is facing or is about to face financial
difficulties in fulfilling its financial obligations. Forbearance may involve modification of contractual terms and conditions and/
or refinancing of debts.
Forborne loans are tested for impairment in accordance with the IFRS 9 Impairment policy for loans and advances to customers
at amortised cost as described above.
2.4.19 Modification of financial assets
When the contractual cash flows of a financial asset are renegotiated or otherwise modified and the renegotiation or
modification does not result in the derecognition of that financial asset in accordance with IFRS 9, the Group and the Company
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recalculate the gross carrying amount of the financial asset and recognise a “modification gain or loss” in the income statement.
The gross carrying amount of the financial asset shall be recalculated as the present value of the renegotiated or modified
contractual cash flows that are discounted at the financial asset’s original effective interest rate (or credit-adjusted effective
interest rate for purchased or originated credit-impaired financial assets). Any costs or fees incurred adjust the carrying amount
of the modified financial asset and are amortised over the remaining term of the modified financial asset.
2.4.20 Derecognition of financial assets
A financial asset is derecognised when:
•
the contractual rights to the cash flows from the asset expire; or
•
the Group and the Company transfer the financial asset and the transfer qualifies for derecognition.
The term “financial asset” is used to refer to either the whole, or a part, of a financial asset (or the whole or a part of a group
of similar financial assets).
T
he contractual rights to the cash flows from that asset have expired when for example:
•
a loan receivable is repaid;
•
a purchased option expires unexercised.
The Group and the Company transfer a financial asset if, and only if, are either:
•
transfer the contractual rights to receive the cash flows of the financial asset; or
•
retain the contractual rights to receive the cash flows of the financial asset, but assume a contractual obligation to pay
the cash flows on to one or more recipients.
If substantially all the risks and rewards of ownership of the financial asset are transferred, the financial asset must be
derecognised and any rights and obligations created or retained in the transfer must be recognised separately as assets or
liabilities.
It is a business practice, to proceed with restructuring of debt instruments particularly but not always when debtors are in
financial difficulties. When the restructuring results in a substantial modification to the terms of a loan due to financial distress
of the debtor or the restructuring takes place solely on the basis of a commercial renegotiation, the loan is derecognised. For
financial distress restructurings, the Group has defined derecognition criteria such as: change of debtor, change of currency
denomination, introduction of a conversion to equity option to the modified contract and consolidation of different types of
contracts.
On derecognition of a financial asset in its entirety, the difference between:
•
the carrying amount of the asset as at the date of the derecognition; and
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•
the consideration received (i.e. any new asset originated/received less any new liability assumed)
is recognised in the income statement as a “Derecognition gain or loss”.
2.4.21 Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired.
If an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of the
existing liability are substantially modified, such an exchange or substantial modification is treated as a derecognition of the
original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in
the income statement.
2.4.22 Intangible assets
Software
Costs associated with the acquisition of software programs, which will probably generate economic benefits to the Group for
more than one year, are recognised as intangible assets. Expenditure that enhances or extends the performance of computer
software programmes beyond their original specifications or software upgrade expenses are added to the original cost of the
software, as long as they can be measured reliably.
Subsequent to initial recognition, software is measured at cost less accumulated amortisation and accumulated impairment
loss. Software is amortised on a straight - line basis and based on its useful life, which is from 2 to 11 years.
At the end of each reporting period, the Group reviews the carrying amounts of computer software to determine whether
there is any indication of impairment, i.e. whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. Whenever the recoverable amount is less than the carrying amount, software is impaired to its recoverable
amount.
Costs associated with maintaining the performance of the computer software programmes are recognised as an expense in
the profit or loss as incurred.
Software is derecognised when:
(a) it is disposed; or
(b) when no future economic benefits are expected from use or disposal of the software.
The gain or loss on the disposal of software is defined as the difference between the net proceeds of the sale, if any, and the
net book value of the software.
Other intangible assets
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Other intangible assets are initially recognised at cost when it is expected that future economic benefits will be realised from
their use. The cost of the intangible asset also includes every directly attributable cost which is required for the full
implementation, production and asset's proper operation. Some examples of directly attributable costs are:
The staff cost which is directly identified and attributed to the development of a particular intangible asset,
Payments to outside vendors and collaborators, which are attributed to the intangible asset.
Subsequent to initial recognition, other intangible assets are measured at cost less accumulated amortisation and accumulated
impairment loss. These assets are amortised in a period of 5-10 years, depending on the useful life of each asset, on a straight-
line basis. The useful life of other intangible assets is reviewed by the Group annually.
At the end of each reporting period, the Group reviews the carrying amounts of other intangible assets to determine whether
there is any indication of impairment i.e. whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. Whenever the recoverable amount is less than their carrying amount, other intangible assets are impaired
to their recoverable amount.
Other intangible assets are derecognised when:
(a) they are disposed; or
(b) when no future economic benefits are expected from their use or disposal.
The gain or loss on disposal of the intangible asset is defined as the difference between the net proceeds of the sale, if any,
and the net book value of the intangible asset.
2.4.23 Property and equipment
The Group holds property and equipment for use in the supply of services or for administrative purposes. Property and
equipment includes: land, own-use buildings, leasehold improvements, furniture and other equipment, right of use assets and
transportation means.
Property and equipment are initially measured at cost, which includes all costs necessary to bring an asset into operating
condition.
Property and equipment are subsequently measured at historical cost less accumulated depreciation and accumulated
impairment loss. Historical cost includes expenditure that is directly attributable to the acquisition of the items. At the end of
each reporting period, the Group reviews the carrying amounts of property and equipment to determine whether there is any
indication of impairment, i.e. whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount
is greater than its estimated recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to
sell and the value in use.
Subsequent costs are included in the asset's carrying amount or are recognised as a separate asset, as appropriate, 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
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measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which
they incur.
Depreciation on property and equipment is calculated using the straight-line method based on the estimated useful lives and
taking into account their residual values. The Group conducts an assessment of the estimate for the useful lives and the residual
values of the property and equipment on an annual basis.
Depreciation of property and equipment begins when it is available for use and ceases when it is derecognised. In the case
where the asset is idle or retired from active use, it continues to be depreciated until it has been fully depreciated. The useful
lives per fixed asset category is as follows:
Computer hardware
3-5 years
Leasehold improvements
the shorter of useful life and lease term
Furniture and other equipment
5-10 years
Means of transportation
6-9 years
Own-use buildings
25-40 years
Land
is not depreciated
Right of use assets are depreciated according to the asset category in which they belong.
An own-occupied property is derecognised and its carrying amount is written-off, according to the provisions of IAS 16, upon
disposal or when no future economic benefits are expected to flow to the Group. Property may be disposed through sale or
lease agreement (as lessor) or donation. The gain or loss on disposal of own-occupied property is defined as the difference
between the sale price (less cost to sell) and the carrying value of the property as at the date of the disposal. Such gain or loss
is recognised in the income statement.
2.4.24 Investment property
Property that is held for long-term rental yields or for capital appreciation is recognised as investment property in the Group’s
statement of financial position. Investment property includes freehold land, freehold buildings or parts of buildings, land and
buildings held under leases.
A property interest that is held by the Group as a lessee is classified and accounted for as investment property if and only if
the definition of investment property is met according to IFRS 16 “Leases”.
Investment property is initially recognised at cost including related transaction costs.
After initial recognition, investment property is carried at fair value, as this is assessed by independent valuers. Fair value is
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based on active market prices or is adjusted, if necessary, for any difference in the nature, location and condition of the specific
asset. Additionally, fair value measurement takes into account the Group’s ability to generate economic benefits by using the
asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best
use.
The following valuation methods are used:
Comparative Method. According to this method, the valuation is based on the conclusions drawn from research and collection
of information about other comparable properties.
Income Approach. This method calculates the fair value of each property based on the capitalized value of the present lease.
Cost Approach. This method calculates the fair value of each property based on the cost of replacement of each property or
its exploitation.
Residual Method. This method is based on the highest price a willing buyer would pay for a plot of land, in order to use it and
then operate it.
The above mentioned valuation methods are used by independent valuers in the context of the fair valuation of investment
property. The fair value of investment property that is not estimated by valuers, is determined using a methodology based on
valuations that have been carried out.
Investment property that is being redeveloped for continuing use as investment property, or for which the market has become
less active, continues to be measured at fair value. Fair values of investment properties reflect current lease income, as well
as assumptions for future leases, taking into account current market conditions.
Pursuant to the provisions of IAS 40 “Investment Property”, subsequent expenses are recognised in the carrying amount of the
property only when it is probable that future economic benefits associated with the property will flow to the Group and its
cost can be measured reliably. Improvement and maintenance costs are recognised in the income statement during the year
in which they incur.
Changes in fair value are recognised in the 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 new deemed cost.
Property that is being constructed or developed for future use as investment property is classified as property and equipment
and stated at cost until construction or development is complete, at which time it is reclassified and subsequently accounted
for as investment property.
An investment property is derecognised from the statement of financial position upon disposal. An investment property may
be disposed of through a sale or lease agreement. Gains or losses arising from investment property withdrawal or disposal is
calculated as the difference between the net disposal proceeds and the carrying amount of the investment property on the
date of the disposal. Such difference is recognised in the income statement.
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2.4.25 Non-current assets held for sale (“HFS”) and Discontinued operations
The Group classifies a non-current asset as HFS if its carrying amount will be recovered principally through a sale transaction
rather than through continuing use. For this to be the case, the following conditions must be met:
a)
the non-current asset must be available for immediate sale at its present condition;
b)
its sale is highly probable;
c)
the appropriate level of management is committed to a plan to sell;
d)
an active programme to locate a buyer and complete the plan has been initiated;
e)
the non-current asset must be actively marketed for sale at a price that is reasonable in relation to its current fair value;
and
f)
the sale of the non-current asset must qualify as a completed sale within 12 months from the date of classification in the
HFS category.
Assets HFS are measured at the lower of their carrying amount and fair value less costs to sell. Assets HFS are not depreciated.
Gains/ losses from sale of these assets are recognised in the income statement.
A discontinued operation of the Group, refers to a clearly distinguished business operation of the Group that either has been
disposed of or is classified as HFS and:
•
represents a separate major line of business or geographical area of operations;
•
is part of a single coordinated plan to dispose of a separate major line of business or geographi cal area of operations; or
•
is a subsidiary acquired exclusively with a view to resale.
Assets and liabilities from discontinued operations are presented in a separate line in the statement of financial position and
are not offset. Similarly, profit or loss after tax from discontinued operations is also presented in separate line in the income
statement.
2.4.26 Inventory property
Inventory property includes land and buildings acquired by the Group through auctions for the full or partial recovery of their
receivables. These properties are included in “Other Assets” in the statement of financial position.
Inventory property includes land and buildings acquired that do not meet the requirements of IAS 40, as well as property
owned by the Group’s subsidiaries that are sold in the context of their normal course of business. Inventory property is
accounted for according to IAS 2 “Inventories” and are measured at the lower of cost and net realisable value. The cost of the
inventory property is determined using the weighted average cost method. The net realisable value is the estimated selling
price, less any expenses necessary to conclude the sale.
Inventory property is derecognised from the statement of financial position at its disposal. The gain/ loss resulting from the
disposal of the inventory property is determined as the difference between the net realisable value and the carrying amount
of the property. This difference is recognised in the income statement.
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2.4.27 Leases
Α. The Group is the Lessee
The Group and the Company following the provisions of IFRS 16 at the inception of a contract, assess whether the contract is
or contains a lease based on whether the Group and the Company have the right to control the use of an identified asset for a
period of time in exchange for a consideration and obtain substantially all the economic benefits from the use of the asset.
At the commencement of the lease, the Group and the Company recognise a right-of-use asset (“RoU”) representing their right
to use the underlying asset and a lease liability representing their obligation to make lease payments.
Under IFRS 16, the Group and the Company recognise right of use assets and lease liabilities for all their lease contracts that
fulfil the definition of a lease.
The Group and the Company applying IFRS 16 for all leases:
a)
recognise lease liabilities in the statement of financial position;
b)
recognise right-of-use assets in the statement of financial position;
c)
recognise depreciation of right-of-use assets and impairment based on IAS 36 “Impairment of Assets” in the income
statement;
d)
recognise finance cost on lease liabilities; and
e)
separate the total amount of cash paid into a principal portion (presented within financing activities) and finance cost
(presented within operating activities) in the cash flow statement.
The initial measurement at cost of the RoU assets comprises of:
a)
the amount of the initial measurement of the lease liability;
b)
any lease payments made less any lease incentives received;
c)
any initial direct costs; and
d)
an estimate of costs to be incurred in dismantling and removing the underlying asset, restoring the site on which it is
located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
Regarding the subsequent measurement and derecognition, the Group follows the accounting policies and accounting
treatment applied for the other assets accounted for in the same asset category as the RoU.
The lease liabilities are initially measured at the present value of the future lease payments using the incremental borrowing
rate. Subsequently, the lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications
(which does not constitute a different lease contract). The Group and the Company derecognise the lease liability from the
statement of financial position when, and only when, it is extinguished—i.e. when the obligation specified in the contract is
discharged or cancelled or expired.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (below € 5,000), the Group and the
Company recognise a lease expense on a straight-line basis over the lease term as permitted by IFRS 16.
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Β. The Group is the Lessor
Operating leases
In case that the Group is the lessor under an operating lease (with a third party), the leased assets are stated and carried in the
statement of financial position like the other -non leased assets- of similar nature. Lease income of the Group is recognised
over the term of the lease by using the straight line method or other systemic method considered as appropriate.
Finance leases
In case that the Group is the lessor under a finance lease (with a third party), the present value of the lease payments is
recognised as a receivable in the statement of financial position. The difference between the gross receivable and the present
value of the receivable is recognised as unearned finance income. Rental receipts are separated and reduce the balance of the
lease receivable.
2.4.28 Cash and cash equivalents
For the purpose of cash flow statement, cash and cash equivalents are defined as short-term, highly liquid investments that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Cash and cash equivalents comprise balances with less than three (3) months maturity from the date of acquisition such as:
cash, unrestricted cash and balances with Central Banks, trading securities and due from banks. Mandatory reserves with the
Central Bank are not available for everyday use by the Group and therefore, these are not included in balances with less than
three months maturity.
2.4.29 Provisions
A provision is recognised when:
a)
the Group has a present legal or constructive obligation as a result of past events;
b)
it is probable, that an outflow of resources will be required to settle the obligation; and
c)
the amount of the obligation can be reliably estimated.
If any of the aforementioned conditions are not met, no provision is recognised.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a rate
that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in
the provision due to passage of time is recognised as expense in the income statement.
The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation as of
the balance sheet date. The amount of the provisions raised is reassessed at each reporting date.
2.4.30 Financial guarantee contracts
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Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a
loss that incurs because a specified debtor failed to make payments when due, in accordance with the terms of a debt
instrument. Such financial guarantees are issued by banks, financial institutions and other bodies on behalf of customers to
secure loans, overdrafts and other banking facilities.
Financial guarantees are initially recognised at fair value on the date the guarantee was given. Subsequent to initial recognition,
the Group’s liabilities under such guarantees are measured at the higher of: a) the initial measurement, less amortisation
calculated to recognise in the income statement the accrued fee income earned on a straight -line basis over the life of the
guarantee and b) the amount of the provision determined through the ECL calculation.
Any change in the liability relating to guarantees is recognised in the income statement, in the period in which it arises.
Any costs or fees paid by the Group or the Company, which are incremental and directly attributable transaction costs to obtain
a freestanding financial guarantee or a debt asset with embedded financial guarantee features that is not measured at FVTPL,
are capitalized and amortised over the life of the instrument with the effective interest method.
2.4.31 Employee benefits
Α. Funded post-employment benefit plans
The funded pension schemes operated by the Group and the Company are financed through payments to grouped insurance
contracts or social security funds. The Group’s and the Company’s pension obligations relate both to defined contribution plans
as well as defined benefit plans.
The Group and the Company pay fixed contributions to Social Security Funds (state owned administered pension funds),
grouped insurance contracts, and have no legal or constructive obligation to pay additional contributions, if the Funds or the
insurance companies do not hold sufficient assets to pay all employees the related benefits. Thus, these schemes are classified
as Defined Contribution plans. The regular employee’s contributions constitute net periodic costs for the year in which they
are due and as such, they are recognised in the income statement under “Staff costs”.
Defined benefit plans are pension plans that define the level of benefits to be provided, usually as a function of one or more
factors such as years of service, age and compensation.
The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value
of the obligation at the balance sheet date, less the fair value of the plan assets. The Group’s and the Company’s benefit policy
for the indemnities aligns with the IFRIC decision of IAS 19 fact pattern concerning the method of attributing benefits to
periods of service. According to the specific fact pattern, for those employees that are entitled to a lump sum benefit payment
only upon retirement and that the retirement benefit depends on the length of employee service prior to retirement (capped
to sixteen years of consecutive years of service), the retirement benefit is attributed to each of the last sixteen years of service
prior to the retirement age.
The defined benefit obligation is calculated annually by independent qualified actuaries using the projected unit credit method.
Actuarial gains and losses
Actuarial gains and losses are recognised directly to the equity of the Group and the Company, when they arise. These actuarial
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gains and losses are not recycled to the income statement.
Past service costs
Past service cost is the change in the present value of the defined benefit obligation resulting from a plan amendment or
curtailment. This cost is recognised directly to the income statement, when the plan amendment or curtailment occurs.
Β. Non-funded post-employment benefit plans
The Group and the Company provide non-funded defined benefit plans to its employees on retirement. The requirements for
full vesting of benefit entitlements usually include the fulfilment of the conditions for normal retirement or the completion of
a minimum service period.
The expected costs of these benefits are accounted for using a methodology similar to that for funded defined benefit pension
plans. These obligations are valued annually by independent qualified actuaries.
2.4.32 Income tax
Income tax
Income tax benefit/ (expense) represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from “profit/ (loss) before tax” as
reported in the income statement because of items of income or expense that are taxable or deductible in other years and
items that are never taxable or deductible. The Company’s current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the statement of
financial position and the corresponding tax bases used in the computation of taxable profit, to the extent that is probable that
taxable profits in the foreseeable future will be available against which such temporarily differences can be utilized.
Deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than
in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting
profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of
goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only
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recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of
the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is
settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of
the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in
which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively.
2.4.33 Debt securities in issue, hybrid capital and other borrowed funds
The liabilities from the issuance of the debt securities, hybrid capital and other borrowed funds are recognised initially at fair
value, net of incurred issuance costs.
After initial recognition, the debt securities and hybrid capital are subsequently accounted at amortised cost. Any difference
between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the
period of the securities using the effective interest rate method.
If the Group and the Company purchase their own debt securities issued, these are removed from the statement of financial
position, and the difference between the carrying amount of the liability and the consideration paid is included in the income
statement.
2.4.34 Other financial liabilities measured at amortised cost
Other financial liabilities such as deposits from banks and from customers are measured at fair value upon initial recognition
and subsequently are measured at amortised cost.
2.4.35 Securitization
The Group securitises financial assets. These assets are purchased by special purpose entities which in turn issue bonds to
investors. The Group consolidates special purpose entities when it controls these entities or holds main part of their risks. In
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such case, the bonds issued under the securitization of financial assets are presented in the statement of financial position at
their amortised cost, unless the securities issued are owned by the Group.
2.4.36 Share capital
Incremental costs directly attributable to the issue of share capital decrease equity.
Dividends on ordinary shares are recognised as a liability during the period in which they are approved by the Annual General
Meeting of the Company’s Shareholders. Interim dividends are recognised as a deduction in the Company's equity when
approved by the Board of Directors.
The cost of acquisition of treasury shares (including any attributable incremental transaction costs) is presented as a reduction
in equity, until the treasury shares are cancelled or disposed of. The gains or losses from the sale of treasury shares are included
directly in equity.
The number of treasury shares held by the Group does not reduce the number of shares issued. Treasury shares held by the
Company are not eligible to receive cash dividends.
2.4.37 Related party transactions
Related parties of the Group and the Company include:
a)
Members of the Company Board of Directors and the Executive Committee, the Group Chief Internal Auditor, the Group
Chief Compliance Officer and the CEOs of the significant subsidiaries, collectively “key management personnel” of the
Company;
b)
close family members of key management personnel;
c)
entities having transactions with the Company, that are controlled or jointly controlled by the key management personnel
and their close family members;
d)
the Company’s subsidiaries;
e)
the Company’s associates and the subsidiaries of its associates;
f)
the Company’s joint ventures and the subsidiaries of its joint ventures; and
g)
the HFSF which holds ordinary shares in the share capital of the Company and benefits from the special rights stated in
article 10 of Law 3864/2010, as amended and in force.
2.4.38 Fiduciary activities
The Group provides custody services to third parties for a wide range of financial instruments. These services include
safekeeping of securities, clearing and settlement of securities transactions in the Greek market and abroad, execution of
corporate actions, income collection, etc., on behalf of individuals, companies and institutional investors. The Group receives
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fee income for providing these services. Trust assets are not assets of the Group and are not recognised in the financial
statements. The aforementioned services give rise only to operational risk, as the Group does not guarantee these investments
and therefore does not bear any credit risk.
2.4.39 Segment reporting
The CEO, supported by the Group Executive Committee members, is considered the Chief Operating Decision Maker for the
purposes of identifying the Group’s reportable segments. All inter-company transactions between business segments are
undertaken on an arm’s length basis and inter-segment transactions and balances are eliminated within each relevant
segment.
2.4.40 Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position when,
and only when, the Group has a legally enforceable right to set off the recognised amounts and intends either to settle on a
net basis or to realise the asset and settle the liability simultaneously.
3 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described in Note 2, Management has made judgements and
estimates that affect the carrying amount of assets and liabilities, income and expense. The estimates and associated
assumptions are based on historical experience and other factors that are considered relevant and are reviewed on an ongoing
basis. Judgements and estimates that may result in an adjustment in the figures described above, are presented below.
Changes to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that
period. The Group believes that the judgements, estimates and assumptions used in the preparation of the Annual Financial
Statements are appropriate.
3.1 Critical judgements in applying the Group’s accounting policies
The following are the critical judgements, apart from those involving estimations (which are referred separately below), that
Management has made in the process of applying the Group’s accounting policies and that have the most significant effect on
the amounts recognized in the Annual Financial Statements.
Significant increase in credit risk (SICR):
asset subject to ECL allowance, based on qualitative and quantitative criteria that include significant Management judgement.
Refer to Notes 3.2 and 4.2 for further information on the criteria applied.
Segmentation of financial assets with similar credit risk characteristics:
credit risk characteristics for the purposes of assessing both SICR and measuring ECL allowance on a collective basis. Exposures
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are grouped based on their type and credit risk rating or score. The different segments aim to capture differences in PDs, as
well as recovery rates in the event of default. The grouping of exposures is reviewed on a quarterly basis in order to ensure
that the groups remain homogeneous in terms of their response to the identified similar credit risk characteristics. As far as it
concerns SICR, the Group considers the date of initial recognition, as well as remaining maturity for each individual exposure.
Selection and calibration of the ECL models:
applied in identifying the most appropriate model for each type of asset, as well as for determining the assumptions used in
these models. The complexity of the models, as well as dependency to other model-based inputs, are high therefore any
changes in inputs and data (e.g. internal credit ratings, behavioral scores etc.), as well as new or revised models, may materially
affect the ECL allowance.
Valuation of investment and inventory properties:
The carrying amount of investment property and the net realizable value
of inventory property are measured at fair value. Fair value is estimated on an annual basis, by independent professional
appraisers for the entirety of individually significant and a sample of non-individually significant properties. The Bank defines
a property as individually significant, if its carrying amount exceeds € 5 million. The total carrying amount of the individually
significant properties as of 31 December 2022 was € 0.9 billion. The fair value of properties not assessed by independent
appraisers, is determined using extrapolation techniques. The total carrying amount of investment and inventory properties
not individually valued by independent appraisers for the Group as of 31 December 2022 is € 0.6 billion and € 1.0 billion
respectively. Had a different threshold been applied for defining individually significant properties, or a different extrapolation
technique on non-individually significant properties, the carrying amount of the said properties may have been significantly
different.
Impairment assessment of the Company’s equity shareholdings in Group companies:
in its investments in subsidiaries, associates and joint ventures in its separate financial statements, as described in Note 2.4.8.
The Company performs its assessment based on specific indicators (e.g. market capitalization, multiples etc.) and thresholds,
which Management believes are reasonable and supportable in the existing market environment. However, had other criteria
or thresholds been applied, the impairment assessment conclusion and measurement may have been different.
Assessment of control over investees:
Management exercises judgement to assess if the Group controls another entity
including structured entities. The assessment of control or loss of control is carried out according to the Group’s accounting
policies and the applicable accounting framework. Management’s assessment of control takes into account the structure of
the transaction, the contractual arrangements and whether the Group directs the substantive decisions that affect the returns.
Assessment of changes in business model and reclassification of debt securities:
As disclosed in note 25, in the third quarter
of 2022, following the acquisition of Iolcus Investments AIFM (“Iolcus”) and the discontinuation of the Economics & Investment
Strategy unit which was approved by Executive Committee, the Group’s business model for managing debt securities issued
by corporates and financial institutions changed. This formal change in business activities of the Group prompted a
reassessment of the classification of the portfolio of debt securities issued by corporates and financial institutions under the
reclassification requirements of IFRS 9. Under IFRS 9, the Group is required to reclassify financial assets if the Group changes
its business model for managing those financial assets. IFRS 9 explains that such changes are expected to be infrequent,
determined by an entity’s senior management as a result of external or internal changes significant to the entity’s operations,
demonstrable to external parties and will occur only when an entity either begins or ceases to perform an activity that is
significant to its operations. Management has judged that the significant changes in the Group’s activities explained in Note
25 met the conditions of IFRS 9 that requires reclassification of the affected assets from fair value through other comprehensive
income to amortised cost. Given the limited guidance on reclassifications in IFRS 9 and the significant impact of the
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reclassification (increase in closing equity by € 82 million on before tax basis), management’s conclusion regarding the
reclassification represents a significant accounting judgement affecting the financial statements from 1 October 2022.
3.2 Key sources of estimation uncertainty
The assumptions and key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the
carrying amounts recognized in the Annual Financial Statements within the next financial year, are discussed below.
.
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ECL Key drivers Scenario
31/12/2022
31/12/2021
%
%
Real GDP growth
Optimistic
6.5
7.3
Base
4.2
5.6
Pessimistic
2.1
4.0
Unemployment rates
Optimistic
10.2
11.3
Base
12.2
12.9
Pessimistic
14.1
14.3
Price index (Residential)
Optimistic
8.6
7.2
Base
6.7
6.1
Pessimistic
4.9
4.9
Price index (Non residential)
Optimistic
5.5
5.4
Base
3.4
4.1
Pessimistic
1.4
2.7
Following the recession of the Greek economy in 2020 attributable to the Covid-19 pandemic, economic activity recovered in
2021 and is expected to recover further in 2022-2025. The solid foundations that have been created through stimulating
demand, increasing employment, boosting exports, increasing savings funds, combined with the benefit from the utilization of
European resources, the implementation of the reforms included in the National Recovery and Resilience Plan, the
rationalisation of budget surpluses and the relaxation of Greece’s fiscal consolidation requirements provide credible prospects
for rapid economic recovery and sustainable growth. The unemployment rate is expected to be lower in the coming years,
despite the impact of the Covid-19 pandemic, as well as the current turnoil in global energy markets ad inflation, reflecting the
fact that the labor market is progressively improving in recent years and employment is following a steady growth path. Both
residential and non-residential (offices) price indices are continuing to follow a highly positive path for the next four years.
The Russia-Ukraine war may have an impact on Greek economic activity and inflation through higher energy and commodities
prices, contraction of international trade and lower household and business confidence. However, the extent of these effects
will depend on the manner of the war progressing, as well as the impact of current and future sanctions. The uncertainty about
the scale and time horizon of the resulting economic consequences is expected to resolve in the upcoming future, depending
on the evolution of the war. However, the rapid recovery of the Greek economy from the pandemic is also indicative of the
improved resilience of the economy to shocks. The economic growth of 2023 depends on the developments in the supply and
demand imbalances, the turmoil in global energy markets and the maintenance of high inflationary pressures resulting in lower
purchasing power, the geopolitical developments, the volatility of the supply chain and the uncertainty in markets, as well as
delays in policy decisions during the Greek election period.
As at 31 December 2022, the Group’s forecasts of the aforementioned economic variables across, for each scenario for 2022
and 2023 are the following:
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ECL Key drivers Scenario
2022
2023
Optimistic
Base
Pessimistic
Optimistic
Base
Pessimistic
Real GDP growth
8.3
5.8
4.1
5.4
3.6
1.9
Unemployment rates
12.0
13.2
14.1
10.7
12.4
14.2
Price index (Non residential)
4.8
3.4
2.1
4.7
2.8
0.9
Price index (Residential)
8.9
7.9
7.0
8.5
6.7
5.0
Estimation of credit risk parameters on collective ECL assessment:
The ECL calculations are based on input parameters, i.e.
EAD, PDs, LGDs, and Credit Conversion Factors (“CCFs”) etc. incorporating Management’s view about the future. The Group
also determines a) the links between macroeconomic scenarios and economic inputs, such as unemployment levels and
collateral values, and b) the effect on risk parameters. Forecasting of the risk parameters incorporates a number of explanatory
variables, such as GDP, unemployment rate etc., which are used as independent variables for optimum predictive accuracy.
Refer to Note 4.2 for more details, including an analysis of the key sources of estimation uncertainty.
Estimation of ECL on collectively assessed defaulted exposures
: Under the current economic circumstances, the Group
acknowledges additional volatility on expected recoveries from defaulted exposures. Additional losses of € 39 million have
been considered to account for the aforementioned volatility.
Assessment of ECL on an individual basis:
For loans that are assessed for impairment on an individual basis, the Group takes
into account all available evidence on a case-by-case basis and the ECL measurement is determined by using a discounted cash
flow methodology. The expected cash flows are based on Management’s estimates as at the reporting date, reflecting
reasonable and supportable assumptions and projections of future recoveries, based on a variety of factors, such as business
plans and available cash flows, liquidation of collateral in cases it is likely that the recovery of the outstanding amount will
include liquidation of the collateral, the fair value of the collateral at the time of expected liquidation, the costs of obtaining
and selling the collateral etc. The ECL allowance is very sensitive to the assumptions used in the estimate. There could be a
wider range of possible inputs on any individually assessed lending exposure. As a result, it is not practicable to meaningfully
quantify ranges of potential outcomes for this type of ECL allowance, because of the diverse nature and circumstances related
to these inputs and the wide range of uncertainties involved.
Recognition of deferred tax asset (“DTA”):
at each reporting period. The recognition of a DTA relies on Management’s assessment of the probability and sufficiency of
future taxable profits to absorb tax losses, future settlement of existing taxable temporary differences and ongoing tax planning
strategy. In the absence of a history of taxable profits, the most significant uncertainty relates to expected future profitability
and to the applicability of tax planning strategy. The aforementioned assessment is performed by applying:
a)
the prevailing tax legislation related to offsetting of tax losses carried forward with taxable profits generated in future
periods (e.g. five years). Following the addition of par.3A to article 27 of Greek Law 4172/2013 (Greek Income Tax
Code – “ITC”) under Greek Law 4831/2021, the tax amortization of crystallized tax losses from write-offs and disposals
of loans that have occurred after 1 January 2016, from 1 January 2021 and onwards can be carried forward for
offsetting over a period of 20 years. Refer to Note 16 for further information; or
b)
article 27A of the ITC, as currently in force, which allows credit institutions, under certain conditions, and from 2017
onwards to convert DTAs arising from (a) private sector involvement (“PSI”) losses, (b) accumulated provisions for
credit losses recognized as at 30 June 2015, (c) losses from final write off or the disposal of loans and (d) accounting
write offs, which will ultimately lead to final write offs and losses from disposals, to a receivable (Tax Credit) from the
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Greek State. Refer to Note 16 for further information .
Fair valuation of real estate properties:
prices for similar properties, adjusted as necessary for condition and location, or by reference to recent transactions updated
to reflect current economic conditions. Discounted cash flow techniques may be employed to calculate fair value where there
have been no recent transactions, using current external market inputs such as market rents and interest rates. The fair value
measurements are carried out by appropriately qualified independent professional appraisers who consider information from
various sources, such as: (a) current prices in an active market for properties of different nature, condition or location (or
subject to different lease or other contracts), adjusted to reflect those differences, (b) recent prices of similar properties in less
active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred
at those prices, and (c) discounted cash flow projections based on reliable estimates of future cash flows, derived from the
terms of any existing leases and other contracts, and (where possible) from external evidence such as current market rents for
similar properties in the same location and condition, and using discount rates that reflect current market assessments of the
uncertainty in the amount and timing of the cash flows. The fair valuation of real estate properties has a high degree of
uncertainty involved, with a wide range of possible outcomes on all properties based on their grouping for valuation purposes,
hence it is not practicable to meaningfully quantify ranges of potential outcomes to changes in the various inputs utilized in
the fair value measurement.
As described in Νote 2.2, the speed of recovery, the deterioration of supply and demand imbalances, the turmoil in global
energy markets and the maintenance of high inflationary pressures resulting in lower purchasing power, the volatility of the
supply chain and the uncertainty in markets will be decisive factors affecting the Greek economy, the banking sector and the
Group in particular. Further, geopolitical developments and specifically the Russia / Ukraine conflict in the beginning of 2022
and a potential resurgence of migration flows and the impact in the world economy remain an additional source of uncertainty.
Management closely monitors the developments and assesses periodically the impact that these might have on the Group’s
operations and financial performance.
Provisions
The Group establishes provisions in its financial statements for which it believes it is probable that a loss will incur in the future
and the amount of the loss can be reasonably estimated. Τhese provisions are derived from the best estimate of the outflow
required to settle the present obligation. This estimate is determined by Management after taking into account experience
from relevant transactions and in some cases expert reports. At each reporting date, provisions are revisited in order to reflect
the best estimates of the obligation .
Held-for sale classification
Sunrise III portfolio
: The uncertainty relating to the outcome of the regulatory approval process, that affects the Group’s intent
to execute the aspired sale of the portfolio through securitization, has been significantly reduced during the second quarter of
2022, following the substantial completion of Piraeus Bank’s (the “Bank”) three synthetic securitizations i.e., shipping,
mortgages, loans to small and medium and large enterprises and other loans that aim to enhance the capital position of the
Group. On this basis, the aforementioned portfolio was classified as held for sale and its carrying amount was written down to
fair value less cost to sell. During the fourth quarter of 2022, Piraeus Bank securitized the Sunrise III portfolio and entered into
definitive agreements for the sale of 95% of the Mezzanine and Junior Notes. The completion of the NPE securitization
transaction is subject to the ordinary terms and approvals by the competent authorities. The ECL impairment charge recognised
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162
in the Consolidated Income Statement for the year ended 31 December 2022, as a result of the aforementioned write-down
of its carrying amount, stood approximately to € 115 million.
Solar portfolio:
Scheme (“HAPS”). The Group’s stake in the joint securitized portfolio is € 329 million. During the second quarter of 2022, the
transaction progressed significantly. Management assessed and concluded that the IFRS 5 criteria are met. Therefore, the said
portfolio has been classified as held for sale and its carrying amount was written down to fair value less cost to sell. The ECL
impairment charge recognised in the Consolidated Income Statement for the year ended 31 December 2022, as a result of the
aforementioned write-down of portfolios’ carrying amount, stood at € 70 million.
Impairment measurement of the Company’s investment in Piraeus Bank
As of 31 December 2022, the Company estimated the recoverable amount of its investment in Piraeus Bank based on a value-
in-use calculation, which requires the use of estimates. The impairment test resulted to a recoverable amount of € 5,505
million, which approximated the carrying amount of the investment, therefore, no impairment loss was recognised or reversed
during the year ended 31 December 2022. While Management believes that the assumptions applied were appropriate, a
combination of reasonably possible changes in such assumptions could have resulted in impairment charges. A 0.5% increase
in the discount rate or a 0.5% decrease in the long-term growth rate applied would result in an impairment loss of € 94 million
and € 138 million, respectively.
4 Financial Risk Management
4.1 Risk Management Framework
Effective risk management is a key factor of the Group’s Risk Management Framework (“RMF”) in order to deliver sustainable
returns to its shareholders. Management allocates substantial resources to improving its policies, processes, methods and
infrastructure to ensure compliance with best international practices and the guidelines of the Basel Committee for Banking
Supervision. The identification and management of risks arising from the Group’s activities is a priority in the development of
its business strategy. In this regard, a framework for prudent risk management has been established.
Management has adopted practices regarding risk management governance, taking into account all relevant guidelines and
regulatory requirements, as set by the Basel Committee on Banking Supervision, the EBA, the ECB, the Bank of Greece (“BoG”)
and the Hellenic Capital Markets Commission (“HCMC”), including any decision of the competent authorities supervising the
Group’s subsidiaries.
The responsibility for the development and oversight of the risk management framework lies with the BoD. The BoD ensures
the development of an appropriate risk management framework, including strategy and policies, by setting acceptable risk
limits, while shaping an appropriate internal environment, so that every employee of the Group, is aware of the nature of the
risks associated with its duties. In particular, the BoD has established the Risk-Committee whose primary role is to oversee risk
management across the Group.
Risk Committee
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The Risk Committee is responsible for exercising the duties specified in its charter, in order to assist the BoD in its duties
concerning the:
•
existence of an appropriate strategy for the risks undertaken and the definition of the risk appetite statements and
limits, as well as the supervision of their implementation,
•
establishment of principles and rules that will govern risk management with regards to the identification, assessment,
measurement, monitoring, control and mitigation of risks,
•
development of the risk management framework RMF and the incorporation of appropriate risk management policies
and controls during the business decision-making process,
•
Group compliance through strict and reliable procedures with respect to the regulatory framework for risk
management functions,
The Risk Committee was established by a BoD decision in accordance with the requirements of BoG Governors’ Act No.
2577/9.3.2006. The Risk Committee comprises non-executive members of the BoD, who possess the appropriate
knowledge, skills and specialization, in order to comprehend and monitor the risk management strategy of the Group. The
Chairman of the Risk Committee is appointed by the BoD and must possess significant experience in commercial banking
and preferably in risk and capital management, as well as familiarity with the local and international regulatory framework.
The representative of the HFSF participates in the Risk Committee, with full voting rights.
The Risk Committee’s mission is to ensure that:
•
the Group has a well defined Group Risk & Capital Strategy and Risk Appetite Framework in line with its business goals
as well as with the available human and technical resources. The risk appetite of the Group is articulated and clearly
communicated in a set of quantitative and qualitative statements, and specific limits, for the material risks;
•
all risks connected to the activity of the Group are effectively identified, assessed, measured, controlled, mitigated
and monitored; and
•
the risk management and control framework in place, including policies, methods and tools, complies with Risk &
Capital Strategy and Risk Appetite as well as regulatory and supervisory requirements.
The Risk Committee convenes, upon its Chairman’s invitation, as many times as considered necessary in order to accomplish
its mission, but not less than once a month. Each member of the Risk Committee is entitled to request the convocation of the
Risk Committee in writing for the discussion of specific issues.
Group Risk Management
Group Risk Management is an independent unit in relation to other units of the Group and the Bank, which have revenue
generating activities and/or are accountable for transactions. The unit carries out Risk Management and Credit Risk Control
responsibilities, in accordance with the BoG Governor’s Act 2577/9.3.2006 and Greek Law 4261/2014.
Group Risk Management is responsible for the design, development and implementation of the Group’s policies on risk
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management and capital adequacy in accordance with the directions of the Board of Directors, which covers the full range of
Group and Bank’s activities for all types of risk. Group Risk Management is subject to review by Group Internal Audit as to the
adequacy and effectiveness of the risk management framework (policies, methodologies and procedures).
The Group’s Chief Risk Officer (“CRO”) is the Head of Group Risk Management, and is appointed by the BoD upon
recommendation and endorsement of the Risk Committee. CRO’s appointment or replacement is communicated to BoG and
SSM. The CRO participates in all major Executive Committees, including the Group Executive Committee, and has a dual
reporting line to the Risk Committee and the Group’s CEO, with direct access to the Chairman of the Risk Committee, whenever
deemed necessary.
The current structure of Group Risk Management allows for an organized approach to risk management in a consistent,
balanced and integrated manner. In addition, the revised structure is better aligned with the Group’s strategic targets, including
the profitable and sustainable business model, optimization of capital allocation, strengthening of risk monitoring and controls
and adoption of superior governance standards as well as meeting the regulatory demands and oversight.
Taking into consideration the overall mission and objectives of Group Risk Management, a 3-pillar structure was established,
with clear and discrete functional areas and responsibilities, and comprised by:
•
Credit Risk Management
•
Capital Management & Risk Strategy, Market, Liquidity & ALM Risks
•
Group Control & Risk Data & Solutions
Furthermore, in alignment with the Bank-wide implementation of the Internal Control System Enhancement initiative, the
Segment Controller role was established with a discrete reporting line to CRO (segment Head).
The key responsibilities of Group Risk Management are as follows:
•
develop, evaluate, and recommend to the CRO, amendments with respect to the risk management framework for the
Group’s activities, according to international best practices as well as legal, regulatory and supervisory requirements.
Ensure that the framework is reviewed at least annually or ad hoc in case there are (a) changes in Group’s strategy or
business model, or (b) changes in the regulatory framework, business environment or/and in the macroeconomic
conditions. In particular, Group Risk Management develops the strategy, policies and procedures in relation to the:
•
identification, assessment, measurement, management/control, monitoring and reporting of potential and actual risk
exposures,
•
establishment, allocation and monitoring of appropriate risk limits (e.g., credit, market, liquidity and operational risks)
in cooperation with the relevant committees and units of the Group,
•
capital management objectives,
•
monitor the implementation of the risk management framework, including the risk and capital strategy, along with
the regulatory requirements and the guidelines of Management,
•
monitor the adherence to the approved risk appetite framework on an ongoing basis,
•
oversee the alignment of the Risk and Capital Strategy with the Business Plan, Restructuring Plan, Funding Plan,
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Budget, ICAAP, ILAAP and Recovery Plan,
•
develop, conduct, monitor and report the Group’s ICAAP and ILAAP,
•
produce and report the capital adequacy requirements under Pillar I (e.g. credit, market and operational risks),
•
document and report the capital adequacy and risk management regulatory disclosures under Pillar III,
•
supervise the development and harmonization of the subsidiaries' risk management frameworks with the Group’s risk
management framework and practices,
•
develop awareness about risk exposure, promote risk management culture and support in risk matters all units across
the Group,
•
participate in the development of the Group and the Bank’s Credit Policy, which is approved with the consent of Group
Risk Management,
•
lead and coordinate the design and execution of Group-wide solvency stress tests. Exercise periodic and/or temporary
stress tests with base and adverse scenarios tailored to the nature and scope of the operations of the Group for all
types of risk,
•
establish and validate loan impairment models (compliant with the IFRS 9 framework),
•
develop risk-based pricing models,
•
assess new products and activities or significant changes to existing ones prior to their introduction,
•
Monitor the new production profile and communicate the results to the Bank’s Business Units.
Group Risk Management comprises the following Units:
Credit Risk Management
Credit Risk Management is responsible for the development of the risk management framework (policies, methodologies,
models and processes) with respect to credit risk. To that end, the unit deploys proper methods, including models, that allow
the identification, measurement and monitoring of the aforementioned risks. Furthermore, Credit Risk Management produces
risk-related information (reporting) to Management, corresponding Committees as well as to the supervisory authorities.
Following the Covid-19 outbreak, Credit Risk Management developed and led a series of initiatives targeting to assess and
effectively manage the credit impact, attributable to the pandemic, in the Group’s loan portfolio. Such initiatives indicatively
comprise:
-
Development of Covid-19 related reporting infrastructure to timely monitor and assess evolution;
-
Analysis to assess financial resilience per economic sector;
-
Engagement in the development of policies, processes and supportive products accommodating EBA related
guidance;
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-
Design along with key stakeholders the lending and underwriting strategy for 2022.
Capital Management & Risk Strategy, Market, Liquidity & ALM Risks
Capital Management & Risk Strategy, Market, Liquidity & ALM Risks supports the development and implementation of the
Group’s Strategy, aiming at the effective management of risks and balance sheet optimization. To this end, the unit is
responsible for the development and maintenance of the Risk and Capital Strategy, as well as Risk Appetite Framework of the
Group, in accordance with the Risk Committee and BoD’s directions and guidance.
Moreover, it is responsible for the design and implementation of the Group’s ICAAP and leads the preparation and execution
of regular enterprise -wide stress tests. Further, it is responsible for the coordination and overall maintenance of the Group’s
Recovery Plan.
Finally, Capital Management & Risk Strategy, Market, Liquidity & ALM Risks is responsible for the measurement, monitoring
and reporting of capital requirements and capital adequacy ratios of the Group.
Group Control & Risk Data & Solutions
Group Control & Risk Data & Solutions is responsible for the identification, monitoring and assessment of all types of risks
(credit, market, operational, liquidity, etc.) arising from the Bank’s activities, through the development, implementation and
evaluation of an adequate internal control system, in order to ensure the efficiency and the soundness of the Bank’s operations
and the achievement of its business objectives. Furthermore, the unit is collaborating with Segment Controllers to accomplish
its mission.
In addition, Group Control & Risk Data & Solutions is responsible for the development and implementation of an effective
operational risk management framework (policies, methodologies and procedures) based on the Group's Risk and Capital
Strategy and regulatory requirements.
Moreover, the Unit is responsible for the development and implementation of the credit risk review and assessment of the
Group's loan portfolio. More specifically, it systematically reviews and assesses credit exposures, limits and undertaken risks
at borrower (or Group of borrowers) level as well as adherence to the Group’s Credit Policy. Moreover, it reviews and monitors
the credit process through sampling. In order to accomplish a targeted and effective review focusing on high risk borrowers,
Credit Control is further broken down in two (2) sub-units, namely Performing Assets, and Troubled Assets.
Finally, Group Control & Risk Data & Solutions, via the Model Validation Unit, is responsible to conduct independent
assessments of the Bank’s models in order to validate their robustness, accuracy and effectiveness. The scope of validation
includes credit risk, operational risk, market risk, liquidity and interest rate risk models as well as other models used by the
Bank. The assessments are prioritized in the context of the Annual Model Validation Plan, which is approved by the Risk Model
Oversight Committee. The Model Validation Unit submits the results of its validation activities, including respective findings
and recommendations to the Risk Model Oversight Committee for approval.
Segment Controller
The Segment Controller is responsible to embed a culture of operational risk management and ensure the design and
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implementation of an effective internal control system within the segment of his/her responsibility, aiming at the achievement
of operational excellence and remediation of control deficiencies in the segment. Furthermore, the Segment Controller
reviews, supplements and comments on unit Controllers’ operational risk assessment.
In addition, the Segment Controller provides regular and ad hoc reporting to the CRO (segment Head) concerning operational
risk profile of the segment and remediation actions to address underlined risk and control issues.
CRO Office
The CRO Office manages operational aspects of Group Risk Management. In addition, the unit serves as the Risk Committee’s
Secretariat and facilitates in discharging its responsibilities.
Risk Culture
A formal Risk Culture Program has been launched under the supervision of the CRO, channeling the Group’s commitment to
enhance risk awareness and fine tune the balance between risk taking and required returns. The Risk Culture Program is
sponsored by the CEO and a cross-functional Steering Committee comprised of senior Management members, who monitor
its implementation.
The scope of the Risk Culture Program is to exemplify the desired behaviors and routines that reinforce solid judgement about
risk taking and encourage ethical conduct towards all stakeholder groups. The Group has taken a number of actions to
safeguard that any risk-taking activities beyond its risk appetite are identified, assessed, escalated, and addressed in an
effective and timely manner. Efforts so far focused on redefining processes, systems, and frameworks linked to an augmented
governance and enhancement of risk awareness. The next phase is to anchor the desired behaviors and routines to establish
a strong risk culture where sound risk taking is promoted, emerging risks are addressed, and all employees conduct business
in a legal and ethical manner.
Committees
Market Scenarios Steering Committee:
and probability weights proposed by the Bank’s Economics and Investments Strategy Unit. In addition, it reviews and approves
temporary adjustments on the credit risk parameters.
Provisioning Committee:
on loans and advances to customers at amortised cost of the Bank and the Group, where required. The ECL measurement is
estimated based on the relevant policies and procedures for exposures assessed on either an individual or collective basis.
The Provisioning Committee is, also, mandated to periodically, and at least annually, review the policies and methodologies
(parameters, scenarios, weighting of scenarios etc.) applied to all Group entities according to the Impairment Policy in
estimating ECL.
Finally, the Provisioning Committee is responsible for:
a)
Reviewing and approving material or following approval bodies’ disagreement, request for exceptions / overrides
addressed by the Business Units’ Heads (NPE Unit, Credit Risk, etc.),
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b)
Reviewing and approving requests for accounting write-off, provided they meet specific criteria, as defined in the
Debt Forgiveness & Accounting Write -Off Policy.
Risk Models Oversight Committee:
responsible for the appropriate implementation of the Model Management and Governance Framework, as well as the review
and approval of model related issues.
In particular, RMOC reviews and approves the Model Development Framework, the development of new models, as well as
the use and potential removal/replacement of existing ones.
It also reviews and approves the Model Validation Framework, the Annual Model Validation Plan and the model validation
assessments submitted by the Model Validation Unit and monitors adherence to the agreed timetable for implementation of
remediating actions.
4.2 Credit Risk
Credit risk is defined as the potential risk that a debtor or counterparty of the Group will fail to meet its obligations in
accordance with agreed terms and conditions.
Credit risk is the most significant risk for the Group and therefore its effective monitoring and persistent management is a top
priority for senior management. The continuous development of infrastructure, systems and methodologies aiming at
quantification and evaluation of credit risk is a prerequisite for timely and efficiently supporting Management and the business
units in relation to the decision-making, the policy formulation and the fulfillment of supervisory requirements. The Group’s
exposure to credit risk mainly arises from corporate and retail credit, various investments, over the counter (“OTC”)
transactions, derivatives, as well as from transactions’ settlement. The amount of risk associated with such credit exposures
depends on various factors, including general economic conditions, market developments, debtor’s financial condition,
amount/type/duration of exposure and the existence of collaterals and guarantees.
The implementation of the credit policy, that describes the principles of the Group’s credit risk management, ensures effective
and uniform credit risk monitoring and control. Management applies a uniform policy and practice with respect to the credit
assessment, approval, renewal and monitoring procedures. All credit limits are reviewed and / or renewed, at least annually,
and the responsible approval authorities are determined, based on the size and the category of the total credit risk exposure
undertaken by the Group for each borrower or group of connected borrowers (one obligor principle).
Management has established a credit quality review process to provide early identification of potential changes in the
creditworthiness of counterparties, including regular collateral revaluations. Counterparty limits are established by the use of
a credit risk classification system, which assigns a risk rating to each counterparty. Risk ratings are subject to regular revision.
The credit quality review aims to allow Management assessing the potential loss as a result of the risks to which it is exposed
and consequently to take timely corrective actions.
Analysis of Concentration Risk
Concentration risk may arise from various types of portfolio incomplete diversification, such as the concentration risk on large
borrowers, economic sectors, geographical areas and types of collateral, and is being monitored on a regular basis.
Piraeus Financial Holdings Group – 31 December 2022
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In addition to monitoring of supervisory limits, the Group has set internal limits within the Risk Appetite Framework, which are
reassessed annually.
Country Risk
Country risk reflects the risk arising from macro-economic instability, social events or political uncertainty in a country,
including nationalization, expropriation of assets and debt restructuring, affecting the Group and the Company’s earnings
and/or capital. It includes sovereign, transfer and political risks.
Management has established internal country limits within the Risk Appetite Framework, which are revised annually.
Counterparty Credit Risk
Counterparty credit risk (“CCR”) is defined as the risk that the counterparty to a transaction could default before the final
settlement of the transaction's cash flows. It refers to derivative instruments, repurchase transactions, securities or
commodities lending or borrowing transactions, long settlement transactions and margin lending transactions.
For the effective management of CCR, Management has in place procedures and guidelines for defining, reviewing and
monitoring credit limits as well as concentration limits set on a counterparty rating basis. Limits are set either in nominal
amounts or risk units (credit equivalent), depending on the transaction and they are revised at least annually. The monitoring
of counterparty credit limits’ utilization is monitored on a daily basis.
As far as credit risk mitigation techniques are concerned, Management has in place comprehensive and enforceable legal
contracts with its counterparties such as International Swap Derivatives Association Agreement (ISDA), Credit Support Annex
(CSA) and Global Master Repurchase Agreement (GMRA) enabling also the effectiveness of CCR management. A GMRA permits
the netting of both rights and obligations that arise from derivative transactions that have been performed under such a master
agreement upon the counterparty’s default, resulting in a single net claim. Moreover, in order to mitigate settlement risk and
under specific transactions and conditions covered within master agreements, payment netting is performed. In order to
monitor settlement exposures, Management has set Daily Settlement Limits per counterparty.
Derivative Financial Instruments
Credit risk arising from derivatives is, at any time, limited to those with positive fair values, as recorded on the Statement of
Financial Position. In the case of credit derivatives, the Group is also exposed to, or protected from, the risk of default of the
underlying entity referenced by the derivative. However, to reflect potential losses, the Group applies portfolio-based
adjustments for credit risk.
With gross-settled derivatives, the Group is also exposed to settlement risk, being the risk that the Group fulfils its obligation,
but the counterparty fails to deliver the counter value.
Definition of Credit Impaired Exposures / Default
From 1 January 2021 and onwards the Group applies and is fully compliant with the new Definition of Default (hereinafter
“DoD”) regulatory requirements issued by EBA (EBA/GL/2016/07) aiming at the convergence of the default definitions for
accounting and regulatory purposes (IFRS 9, EBA and CRR guidelines). The requirements for the new DoD are stipulated in
Article 178 (“Default of an obligor”) of the Regulation (EU) No 575/2013 (Capital Requirements Regulation – CRR), as well as in
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the Guidelines and Regulatory Technical Standards issued by the EBA on the application of the definition of default. The Group
has aligned the definition of default for financial reporting purposes with the definition of NPE used for regulatory reporting.
Thus, in accordance with the Group and the Bank’s Impairment Policy a financial asset is considered as credit impaired and is
classified into Stage 3 when it is classified as NPE. Under the new definition of default, the terms NPE, Defaulted and Impaired
are aligned.
This constituted a change in an accounting estimate as per IAS 8.
The new DoD applies to all the entities of the Group, considering local regulations and specific characteristics of each
jurisdiction. In line with the relevant regulatory requirements and the guidelines for the identification of default, the Group
implements both an objective indicator (past due criterion), as well as a set of quantitative and qualitative unlikeliness to pay
indicators to capture indications where the obligor is considered by the Group as unlikely to pay its credit obligations in full.
More specifically, a default is considered to have occurred with regard to a particular obligor when either or both of the
following two events have taken place:
●
Past Due Criterion: The obligor is past due for more than 90 consecutive days on any material credit obligation to the
Group,
●
Unlikeliness to Pay: The Group considers that the obligor is unlikely to repay its obligations in full, without recourse
by the Group to actions such as realizing security, based on the criteria that the Group has specified
In principle, the definition of default is applied at the contract level for the retail portfolio and at the obligor level for the non-
retail portfolio.
In order for an exposure classified as defaulted to return to a non-defaulted status, the behavior of the contract for the retail
portfolio or the obligor for the non-retail portfolio is monitored for a pre-defined period of time (i.e. probation period) within
which the exposure continues to be classified in default status. If the Group considers that for a previously defaulted exposure
no trigger of default continues to apply at the end of the probation period, then a return to a non-defaulted status takes place.
Credit Rating Models (PDs)
Reliable credit risk measurement is a top priority within the Group and the Bank’s Risk Management Framework. The
continuous development of infrastructure, systems and methodologies aimed at quantifying and evaluating credit risk is an
essential precondition in order to timely and efficiently support Management and the business units in relation to decision-
making, policy formulation and the fulfillment of supervisory requirements.
The Group and the Bank operate their internal rating models. More specifically, they run separate models for its corporate
portfolios in which its customers are rated from 1 to 19 using internal grades. The models incorporate both qualitative and
quantitative information and, in addition to information specific to the borrower, utilize supplemental external information
that could affect the borrower's behavior. For the Retail Portfolio the Group and the Bank run Credit Rating (Scoring) Models
that incorporate demographic/behavioral/credit bureau information. These information sources are first used to determine
the PDs within the existing regulatory default definition framework. For ECL calculation the PDs are adjusted to incorporate
forward-looking information and classification of the exposures, by staging. This is repeated for each economic scenario as
appropriate.
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A) Lending Portfolio
The following are performed at a counterparty level, for credit risk measurement and monitoring purposes related to the
Group’s and the Bank’s loans and advances to customers at amortised cost:
•
The customer’s creditworthiness and the probability of default on its contractual obligations is systematically
assessed,
•
The Group and the Bank’s probability of potential recovery, in the event of the debtor defaulting on its obligations is
estimated, based on existing collateral, guarantees provided and curing levels.
Management assesses the creditworthiness of its borrowers and estimates the probability of default on their obligations by
applying credit rating models appropriate to their special characteristics and features taking into account various historical,
current and forward looking information.
Corporate Lending
All Corporate lending customers are assigned to credit rating grades, which correspond to different levels of credit risk and
relate to different default probabilities. Each rating grade is associated with specific customer relationship policy/guidelines.
Each category of the credit rating scale corresponds either to a specific guideline or policy of the Bank as far as the relationship
with the business borrowers is concerned and is presented in the relevant chapter of the Credit Policy Manual. The rating scale
for business borrowers consists of 19 rating grades that correspond to borrowers that have not defaulted on their contractual
obligations. The below table presents, the Group and the Bank’s policy mapped to each rating scale:
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RATING
CREDITWORTHINESS
GUIDELINE OR
POLICY RULE
1-6
Very Strong
Develop relationship
GUIDELINES
7-10
Strong
Develop relationship
11-12
Good
Develop relationship
13-14
Satisfactory
Careful development of the relationship with adequate collaterals or
maintain relationship
15-16
Weak
Careful development of the relationship or maintain relationship with
unsecured risk less than 30%
POLICY RULES
17-19
Poor
Probable classification as watch list / Limit relationship or Terminate
relationship
The Group uses distinct credit rating models, according to the type of operations and the size.
More specifically:
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Credit Category
Rating System
Rating Scale
Business Lending
RA for Corporate customers that keep “C” category accounting books and have
a turnover more than € 2.5 million
19-grade
RA for Corporate customers that keep “C” category accounting books and have
a turnover up to € 2.5 million
19-grade
Small Business Lending Scorecard (small business or personal companies)
Score
Agricultural Lending Scorecard for agricultures (small business or personal
companies)
Score
Specialised Lending
Project Finance PD Scorecard
19-grade
Object Finance (Shipping) Scorecard
19-grade
Manual Rating
19-grade
Manual Rating is applied for customers that no other available rating system can be applied: these are customers with no
financial data (i.e. newly established companies, Special Purpose Vehicles - SPVs) or brokerages and insurance companies. In
exceptional cases, manual rating is used as a rating override, when based on Relationship Officers’ view, the rating does not
represent the creditworthiness of the borrower.
Business Rating Models incorporate the following information in order to quantify the client risk:
•
Historical financial information that includes realized results, solvency ratios, liquidity ratios and any other relevant
ratios to measure the client's financial performance.
•
Any publicly available information on the clients from external parties. This includes credit bureau information.
•
Any other objective data on the quality and management capabilities of the Bank-financed company, related to its
performance
The complexity and granularity of the rating techniques varies based on the exposure of the Group and the Bank and the
complexity and size of the customer. For the small business loans, as well as the agricultural loans, Behavioral Scorecards are
being used. The Behavioral Scorecards are based exclusively on historical data of client behavior regarding the Bank’s products
and are the result of the implementation of statistical analysis. They are tailored specifically to the Bank’s clients and are
customized on a product and delinquency bucket basis.
These models combine financial and statistical analysis together with the expert judgement of responsible officers. Whenever
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possible, these models are tested by benchmarking against externally available information.
Borrowers are rated when their credit limit is initially determined and thereafter re-rated on at least an annual basis. The
ratings are also updated in cases where there is available information that may have a significant impact on the level of credit
risk.
Retail Lending
Regarding the retail credit portfolio, there are scorecards of client credit assessment in the Retail Banking portfolio covering
different stages of the credit cycle, as follows:
1.
Application Scorecards
The Application Scorecards are exclusively based on historical data of applications and behavior and are the result of the
implementation of statistical analysis. They are tailored specifically to the Group and the Bank’s clients and are customized on
a product and purpose basis. Thus, we have five products - based application scorecards and three purpose - based application
scorecards in mortgage/ housing loans.
2.
Behavioral Scorecards
The Behavioral Scorecards are exclusively based on historical data of client behavior regarding the Bank’s products and are the
result of the implementation of statistical analysis. They are tailored specifically to the Bank’s clients and are customized on a
product and days past due basis. There are 8 behavioral scorecards in total.
3.
Internal Bureau Scorecard
There is also one scorecard evaluating the Group’s and the Bank’s clients’ behavior in the market at the moment of the loan
application. This scorecard is exclusively based on historical data and is also the result of the implementation of statistical
analysis. It is tailored specifically to the Group and the Bank’s clients and is not customized on a product basis.
4.
Overall Application Scorecards
These are scorecards which are part of the origination process and combine in essence the above three scorecards. Thus, when
a client submits an application, his application score, his behavior score, his bureau score and his Teiresias bureau score are
taken into account. These are five scorecards which are customized on a product - category basis, are based on historical data
of applications and behavior and are the result of the implementation of statistical analysis.
The aforementioned internal models comprise the basic factors which are used as inputs in PD models for the total retail
Banking portfolio and for the business Banking portfolio as well.
5.
Credit Bureau Scoring
In addition, the Group and the Bank have used the credit bureau scoring model of Teiresias S.A., which takes into account the
total exposure of borrowers in the Greek market. The usage of this particular model has improved the performance of the
existing models.
The policy that is taken into account in the approval process and determine the willingness as well as the ability of the applicant
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to fulfill his obligations is also based on a range of credit criteria (apart from the aforementioned credit scoring models), such
as:
•
Age/Citizenship/Profession
•
Minimum Income Level
•
Monthly Disposable Income (MDI)
•
Loan to Income Ratio (LTI)
•
Credit history of the customer
•
Maximum Unsecured Exposure
•
Maximum levels of loan-to-value (LTV) (for collateralized loans) combined with the purpose of the loan
•
Collaterals and Guarantees provided
•
Maximum limits per Product
Macro-economic models
A set of macro-economic models is used for the calculation of forward -looking lifetime probability of default (PD) projections
for all portfolios. The models combine exposure/portfolio idiosyncratic characteristics with projections of specific macro-
economic variables to produce adjustments to the spot obligor/exposure PDs that take into account forward looking
conditions. Forward -looking PDs are used for the purposes of IFRS9 provision calculation, pricing, ICAAP, stress testing, etc.
Moreover, challenger macro-economic models have been developed for the business portfolio that have as an input the Gross
Value Added (GVA) macro instead of the GDP. These models incorporate industry specific sensitivity and produce
complementary information for the same purposes the traditional macro PD models are used for.
Management regularly validates and tests the predictive ability of the creditworthiness evaluation of rating models (Wholesale
and Retail), thus ensuring its potential for accurately depicting credit risk and allowing for the timely implementation of
measures addressing potential problems.
Recovery based on existing collateral, security and guarantees
Along with the assessment of the counterparties’ creditworthiness, rating evaluation and during the process of setting and
reviewing credit limits, Management estimates the recovery rate related to the exposure in the event the debtors default on
their contractual obligations. The estimation of the recovery rate is based on the type of credit as well as the quality of any
collateral/ security. According to standard practice, the lower the rating of a borrower, the greater the collateral/ security
required, so that the recovery rate is as high as possible in case of borrower’s default on their contractual obligations to the
Group and the Bank.
Exposure at Default
EAD is equal to the on-balance sheet exposure of the defaulted account on the date of default. Thus, it is equal to the sum of
the on-balance sheet exposure of the account on the observation date and any additional amounts that are drawn until the
date of default. A transformation commonly used is the CCF which is equal to the ratio of “Balance at default” minus “Balance
at observation point” over the undrawn amount at observation point (Limit at observation – Balance at observation).
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Loss Given Default
LGD is defined as the ratio of economic loss during the recovery period to the exposure at default. LGD is cash flow oriented
and all costs are included and properly discounted with the Effective Interest Rate from the recovery date until the date of
default for its computation.
Self cure rate models
13
Recoveries are also taken into account and they can be of different types:
•
Cash recoveries could be considered cash flows from customer, from guarantor, from cured facilities, from security
(eligible collateral/guarantee), from debt sale.
•
Non-cash recoveries could be considered repossessions.
For the complete LGD estimation additional inputs are used:
•
Cures via Modification: Cure Rate level of accounts that have changed to non-defaulted status via the implementation
of a Modification.
•
Loss given non-cure: Incurred loss from cases that the Group and the Bank have not managed to cure.
•
Loss given modification: Incurred losses due to the type of modification that was offered to the client.
Lending Portfolio Quality
The Lending Portfolio according to its quality is segmented on the following categories for both retail and corporate portfolio:
•
Strong
-
Retail: Stage 1 Loans and advances to customers at amortised cost that are in Bucket 0
-
Corporate: Stage 1 Loans and advances to customers at amortised cost that have rating less or equal to 14
•
Recommended
-
Retail: Stage 1 Loans and advances to customers at amortised cost that are in Bucket 1
-
Corporate: Stage 1 Loans and advances to customers at amortised cost that have rating more than 14
•
Substandard
-
Retail: Stage 2 Loans and advances to customers at amortised cost
-
Corporate: Stage 2 Loans and advances to customers at amortised cost
•
Default
-
Retail: Stage 3 Loans and advances to customers at amortised cost
13
For Non-retail portfolios the cure rate models include both self-cure rate and via modification probability estimates.
Piraeus Financial Holdings Group – 31 December 2022
177
-
Corporate: Stage 3 Loans and advances to customers at amortised cost
Unrated corporate loans that belong to Stage 1 are segmented according to their bucket.
The segmentation presented above is highly correlated with the PD levels of each portfolio (among the categories the PD levels
differ).
Significant Increase in Credit Risk
The assessment of SICR is key element in establishing the point of switching between the requirement to measure an allowance
based on 12-month or life time ECL (excluding POCI financial asset for which refer to the paragraph “Purchased or Originated
Credit Impaired” below). If, following this assessment, a significant increase in credit risk occurs, the Group and the Bank
recognize a loss allowance amount equal to the ECL over the lifetime of that financial asset.
To perform this assessment, the Group and the Bank compare the risk of a default occurring on the financial asset as at the
reporting date with the risk of a default occurring on the financial asset as at the date of initial recognition.
The Group and the Bank's objective is to capture this SICR prior to the financial asset being treated as credit impaired.
The allocation between stages is based on the criteria presented below:
•
If at the reporting date, the loan is in NPE status, it is allocated to “Stage 3” and lifetime ECL is calculated.
•
If at the reporting date a SICR was monitored against the credit risk at the initial recognition date, the loan is allocated
to “Stage 2” and lifetime ECL is calculated.
•
The remainder of the loans are allocated to “Stage 1” and ECL is calculated for the next 12 months.
The quantitative and qualitative criteria based on which the Group and the Bank assesses whether there is a significant increase
in credit risk for an exposure are outlined below.
Corporate and Retail Lending Portfolio
•
Primary criteria
-
significant increase in the PD of the financial asset at the reporting date compared to the one calculated at the
initial recognition date, based on certain absolute (300-650 basis points (“bps”) depending on the portfolio
segment) or relative (200%) thresholds. The aforementioned thresholds are the same as last year.
•
Secondary criteria
-
existence of forbearance
-
behavioral flags (monitoring the maximum delinquency bucket for the last 12 months)
-
existence of default event over the last 12 months based on the Defaulted exposures as the identification of the
latter is based on the EBA NPE Default Definition
Piraeus Financial Holdings Group – 31 December 2022
178
-
watch list
•
Backstop
-
30 days past due or more
•
Additional criteria due to high energy prices and inflation
-
In 2020, the Group introduced additional SICR criteria, without relaxing any of the existing thresholds, in order to
effectively allocate the exposures affected by the pandemic. The additional criteria considered probabilities of
default, industry characteristics and pre-pandemic performance. As of 31 December 2022, the aforementioned
criteria have been revised in order to include sectors vulnerable to high energy prices and inflation (Refer to Note
3.2).
Criteria for assessing ECL allowance of loans and advances to customers at amortised cost on an individual
or collective basis
Individually Assessed
In order to better assess the expected risk, the Group and the Bank prepare a list of accounts for which an individual assessment
will be performed. Assessment at individual level is performed for loans and advances to customers at amortised cost identified
as individually significant, which satisfy all of the following criteria:
•
They are extended to borrowers whose total loan exposure at the period end reporting date exceeded the amount of
€ 1 million or the equivalent in foreign currency for the Bank. Lower thresholds have been established for the
subsidiaries.
•
The exposures are classified as NPE as per the Group’s Credit Policy.
Apart from individually significant loans, additional exposures may be individually assessed, irrespectively of their level of
exposure, at the discretion of the Bank’s Provisioning Committee.
Description of the ECL Calculation (Individual)
ECL is defined as the difference between all contractual cash flows that are due in accordance with the contract and all the
cash flows expected to be received (i.e., all cash shortfalls), discounted at the original EIR (or credit-adjusted EIR for POCI
financial assets). All contractual cash flows of the loan and cash flows resulting from the sale of collateral or other credit
enhancements are considered.
According to IFRS9, probability weighted scenarios are taken into account over the expected life of the financial instrument in
the estimation of the ECL allowance.
The individual assessment consists of an evaluation of the amount and timing of the cash flows for each particular exposure.
Calculation of ECL under the individual assessment is defined as below:
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Where:
•
IFRS Outstanding Balance:
•
Present Value of the Recoverable Amount:
of the expected future cash flows, related either to cash recoveries from the obligor or to cash proceeds from the
liquidation of loans’ collaterals, discounted to their present value at the loan’s original effective interest rate (EIR).
•
𝑷
𝒊
: the probability-weight of each scenario, under which the ECL amount is calculated
Collectively Assessed
The Collective Assessment is applied to all other facilities i.e. those allocated in Stages 1 and 2, as well as to those in Stage 3
which have not been subject to an individual assessment. For the segmentation of the exposures refer to Note 3.1.
Description of the ECL Allowance Calculation (Collective)
For the calculation of the ECL allowance on a collective basis, statistical methods are used, based on credit risk parameters.
The equation used for the measurement of Lifetime ECL, for all portfolios, is depicted below:
𝐿𝐸𝐶𝐿
=
∑
(
∑
𝑃
𝐷
𝑡
𝑖
×𝐿𝐺𝐷
𝑡
𝑖
×𝐸𝐴𝐷
𝑡
×𝐷𝐹
𝑡
𝑇
𝑡
)
𝑖
𝑃
𝑖
Where:
•
Time to Maturity (T)
: Remaining time until the maturity of the loan.
•
Probability of Default (PD)
: This parameter expresses the probability of default of a financial instrument. Loans and
receivables classified as Stage 1 are calculated using the 12-month PD, while those classified in Stage 2 are calculated
based on PDs over the life of the facility. For Stage 3, PD=1.
•
Loss Given Default (LGD)
: This parameter defines the "expected" credit loss that arises in the event of default of a
financial instrument. It is expressed as a percentage of the exposure, which if multiplied by the exposure, gives the
amount of the Group and the Bank's loss at the time of the default.
•
Exposure at Default (EAD)
: This parameter defines the exposure value in the event of a default of a financial
instrument. The EAD is based on the following formula:
𝐸𝐴𝐷
𝑡
=
(
𝑂𝑛−𝐵𝑎𝑙𝑎𝑛𝑐𝑒 𝑆ℎ𝑒𝑒𝑡 𝐸𝑥𝑝𝑜𝑠𝑢𝑟𝑒
)
𝑡
+
(
𝑂𝑓𝑓−𝐵𝑎𝑙𝑎𝑛𝑐𝑒 𝑆ℎ𝑒𝑒𝑡 𝐸𝑥𝑝𝑜𝑠𝑢𝑟𝑒
)
𝑡
∙𝐶𝐶𝐹
𝑡
Piraeus Financial Holdings Group – 31 December 2022
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•
Credit Conversion Factor (CCF)
:
This parameter converts off-balance sheet items, such as undrawn exposures, to
equivalent On-Balance Sheet credit exposures.
•
Discount Factor in t (DFt)
: Factors used to discount an expected loss to a present value at the reporting date. (Effective
Interest Rate – EIR)
•
Probability weighted outcome (Pi)
: the probability-weight of each scenario, under which the ECL amount is calculated.
The Group and the Bank measure ECL of a financial asset, taking into account multiple possible outcomes. Under the collective
assessment, the Group and the Bank applies three alternative scenarios, with their impact being incorporated in the risk
parameters of the ECL model. Subsequently, the relevant probability weights are applied in the ECL allowance under each
scenario, leading to the probability-weighted ECL allowance.
The Economics and Investments Strategy Unit is responsible for the calculation of alternative macroeconomic scenarios
(forecasts of future economic conditions that confirm the forward -looking concept of the process), including the projections
of relevant macroeconomic variables and the corresponding probability weights, used in the impairment calculation.
Calculation of expected future cash flows for Corporate lending portfolio
The following debtors’ specific element are considered for the assessment of future cash flows of Corporate lending portfolio:
●
Ongoing operating cash flows
: The operating cash flows of the obligor or guarantor, which are ongoing and eligible
to use for the debt repayment.
•
Existing collateral and guarantees
: The current value of the obligor’s existing collaterals and guarantees as well as
their eligibility to liquidate are assessed under a forced liquidation scenario or under a scenario of voluntary surrender
or sale.
•
Binding Repayment or Settlement Agreements
: Any additional debt restructuring or settlement agreements made
between the Group and the Bank and the Obligor are also taken into consideration.
•
Additional Information received by the Account Officer
: Any additional and reliable information available to the
Account Officer regarding the borrower’s ability to meet contractual obligation regarding its debt to the Group and
the Bank is taken account of.
•
Personal Guarantees of the obligor:
the value of personal guarantees in favor of the obligor may be taken into consideration. Usage of such personal
guarantees in the individual assessment is subject to the assessment of the Bank’s review levels during the impairment
assessment process.
•
Special Administration or Reconciliation Process via Art.106, Greek law 3588/2007:
through the Special Administration or Reconciliation Process via Art.106
The calculation of the expected future cash flows is carried out in accordance with the following two approaches, which are
defined in following sub-sections: The Going Concern Approach and Gone Concern Approach.
Piraeus Financial Holdings Group – 31 December 2022
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Going Concern Approach
Under a “going concern” scenario, the debtor/ guarantor is able to generate cash flows that can be used to repay the financial
debt to all creditors. The Group and the Bank are considering different approaches depending on the specific borrower when
applying the going-concern assumption in determining the cash flows to be received from the operations of the borrower, as
well as from the realization of Non-Core collaterals in cases where this is applicable:
•
The estimated future cash flows based on the updated financial statements of the debtor / guarantor.
•
In restructuring cases, the restructuring plans and the resulting changes to the structure of the entity
•
Estimations consider potential investments that are necessary to maintain future cash flows (CAPEX)
•
When cash flows are based on the realisation of some assets of the debtor, the Group and the Bank estimate the
expected selling price in order to reflect the future expected cash flows derived from the sale of assets less the
estimated costs associated with the realization. Collateral may be exercised to the extent it does not influence
operating cash flows. In addition, where a “two-step” approach is used (i.e. period by period analysis followed by an
estimation of the terminal value), a “gone concern” approach can also be assumed for the second step, involving the
liquidation of collaterals.
Based on the previous information, the ECL allowance will be measured as the difference between the asset’s carrying amount
and the estimated future cash flows discounted at the financial asset’s original effective interest rate.
Additionally, the Group, in alignment with the ECB guide on how institutions are expected to consider C&E risks has planned
initiatives that are presented in Note 2.2.
Gone Concern Approach
ECL allowance
is measured
on a “gone concern” basis when Management determines that the operating cash flows of the debtor
cease and collateral is exercised, including any other collections that Management determines as recoverable.
This could be the case when one or a combination of the below takes place:
•
Future operating cash flows of the debtor are estimated to be low or negative, or / and
•
Exposure is significantly collateralized, and this asset is central to cash flow generation, or / and
•
There is a very significant degree of uncertainty surrounding the estimation of the future cash flows, or / and
•
Insufficient information is available to perform a going concern analysis.
The sale proceeds from collateral execution are adjusted for liquidation costs and market discounts where applicable.
Consideration of market valuations, expectation on collateral liquidation strategy (consensual vs. non-consensual forced) and
underlying legal framework is taken in order to determine market price discount that may need to be applied as well as time
to sell assumptions.
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Write-offs
The Group and the Bank write-off debt against the ECL allowance in cases of:
•
irrecoverable claims, meaning the claims for which i) all required legal actions, foreclosure procedures and recovery
collection efforts against the borrower, co-borrowers or guarantors have been exhausted; ii) it is considered that the
continuation of in court or out-of-court legal actions are not expected to lead to a positive outcome for the Bank; iii)
the recovery cost is economically less favorable compared to the benefit,
•
uncollectable claims, meaning the claims resulting from the difference between the IFRS claim and the sum of the
operating cash flows, expected to be received and the cash flows resulting from the liquidation of the
collateral/security as well as of any other unencumbered assets of all involved parties.
The Group and the Bank proceed to forbearance - resolution and closure treatments with debt forgiveness when it is proven
the optimum treatment against other alternative forbearance - resolution and closure treatments, within the framework of
managing borrowers with financial difficulties.
The Provisioning Committee approves accounting write-offs while the BoD or other authorized bodies approve debt
forgiveness requests.
The contractual amount of loans that were written off during 2022 and are still subject to enforcement activity is € 148 million
as at 31 December 2022. The comparative figure for the prior reporting period is € 475 million.
B) Debt securities and other short term Treasury products
The Group and the Bank recognizes impairment allowances on debt securities and other short-term Treasury products that are
measured at amortised cost or at FVTOCI.
The amount of ECL recognized as an impairment loss allowance depends on the extent of credit deterioration since initial
recognition. The assessment of significant deterioration is key in establishing the point of switching between the requirement
to measure an allowance based on 12-month ECL and one that is based on lifetime ECL. The approach of recognizing
impairment is based on the following allocation to Stages:
•
Stage 1: Contains instruments that have not deteriorated significantly in credit quality since initial recognition or have
low credit risk at the reporting date.
The Group and the Bank follow the ‘low risk simplification’, according to which, if a financial instrument has low credit
risk, it is assumed that no significant increases in credit risk have occurred. The Group and the Bank consider that all
investment grade instruments are low risk instruments; hence, they are allocated to Stage 1.
At stage 1, 12-month ECL is recognized. For instruments with a residual maturity of less than 12 months, ECL is
calculated for the remaining period until maturity.
•
Stage 2: Contains instruments that have deteriorated significantly in credit quality since initial recognition. At Stage 2,
lifetime ECL is recognized.
Piraeus Financial Holdings Group – 31 December 2022
183
•
Stage 3: Contains instruments that have incurred an actual default (impaired). At Stage 3, lifetime ECL is recognized.
For the assessment of significant credit risk deterioration of non-investment grade instruments and the allocation from Stage
1 to Stage 2 (and vice versa), the Group and the Bank rely on the following two independent conditions: a) external credit
rating downgrade (upgrade) since the acquisition date or b) increase (decrease) in the 12-month PD since the acquisition date.
In case where an external credit rating is not available, the Group and the Bank use the internal rating evaluation.
As a parallel staging process, the Group and the Bank also monitor the bond market credit singular evolution. Any increase in
credit spreads above an indicative spread threshold since initial recognition, triggers an internal review process of the affected
instruments’ current staging in order to assess if the observed change of the credit spread reflects an actual change in credit
risk expectations.
Default Definition
A debt security or other short-term Treasury product is considered as defaulted and consequently allocated to Stage 3, when
it has been assigned a ‘Default’ rating by an external credit rating agency. Furthermore, if the issuer or counterparty has
additional obligations with the Bank and is in default in one of these obligations, then based on the cross-contamination rule,
the instrument will be assigned to Stage 3.
Expected Credit Loss Estimation
The Group and the Bank use the following key elements to measure ECL for debt securities:
●
PD
: Can be classified in the following two categories:
-
12-month PD, which corresponds to the estimated PD occurring within the horizon of the next 12 months and is used
to compute 12-month ECL for stage 1 allocation
-
Lifetime PD, which expresses the estimated PD occurring over the remaining life of the financial asset and is used to
calculate the lifetime ECL for Stage 2 allocation. For stage 3 allocation, PD = 100% is used.
•
LGD:
default. The LGD assumption depends on the type of the issuer, level of seniority and the presence of collateral.
•
EIR:
•
EAD:
instrument. The Bank follows a forward amortizing cost approach to calculate EAD. The EAD is estimated assuming
that cash flows occurring in all future time periods will not be received and in return, the Bank will receive a recovery
amount. EAD is the sum of the discounted cash flows as of the reporting date, using the EIR of the transaction.
The Group and the Bank do not utilize any internal models for estimating the PDs, LGDs or any of the staging criteria used for
the ECL calculation of debt securities and other short-term Treasury products. As primary methodology for the staging and ECL
calculation, the Bank relies on the assessment of external rating agencies and the published rating-mapped PDs. This approach
assumes a single “average” economic state scenario, which represents the average of all possible outcomes under different
scenarios of macroeconomic conditions.
Piraeus Financial Holdings Group – 31 December 2022
184
The assessment of SICR for debt securities is performed through an automated process. Any other assessment relating to SICR
and which leads to different outcome in terms of stage allocation as defined above, will need to be approved by the
Provisioning Committee at each reporting date.
Purchased or originated credit impaired
Purchased or originated credit impaired financial assets (“POCI assets”) are financial assets that are credit-impaired on initial
recognition. In contrast to credit-impaired financial assets, the corresponding assessment for POCI-assets is performed at initial
recognition instead of subsequent periods.
For POCI asset, the amortised cost will always reflect its lifetime ECL. POCI assets remain in POCI category for their entire
lifetime and are not assessed for stage allocation or any stage transfers, therefore, any POCI assets that have ceased to be
credit impaired as of the end of the reporting period are still presented within this category for classification purposes in Note
4.3.1 and Note 6.
Analysis of inputs to the ECL model under multiple economic scenarios
The Economics and Investments Strategy Unit of the Group and the Company produces forecasts for the possible evolution of
macroeconomic variables, such as GDP, unemployment rate, inflation rate, House Price Index and Commercial real estate index
that affect the level of ECL of loan portfolios under multiple economic scenarios. When estimating the ECLs, the Management
considers three scenarios and each of these are associated with different PDs and LGDs (Optimistic – Base – Pessimistic).
Management has assigned the following weights in each scenario: 60% base scenario (31 December 2021: 90%), 20% optimistic
(31 December 2021: 5%) and 20% pessimistic (31 December 2021: 5%). When relevant, the assessment of multiple economic
scenarios also incorporates how defaulted loans are expected to be recovered, including the probability that the loans will
cure. Further information is presented in Note 3.2.
Differentiation in the models for the ECL calculation due to high energy prices and inflation
The Group did not change structurally any of the existing models which are used in the ECL calculation. All the model inputs,
as per the normal process, have been reassessed during the year in order to capture any recent changes including the effects
of high energy prices and inflation, where appropriate.
Multiple scenarios on the allowance
Management assesses and considers the sensitivity of the Group’s ECL allowance on loans and advances to customers at
amortised cost, against reasonably possible changes in Greece’s real GDP growth, compared to the forward-looking scenarios
utilised in the ECL measurement as of 31 December 2022. The sensitivity analysis was performed assuming a “favorable” and
an “adverse” shift in the three (3) forward-looking scenarios for GDP by 1 percentage point, thus affecting the full GDP growth
trajectory. A complete re-estimation of all modelled macroeconomic variables was performed taking under consideration the
aforementioned “favorable” and “adverse” variations of the original forward -looking scenarios, since GDP plays a pivotal role
in the modelling of all other macroeconomic variables.
The following tables include the ECL impact as of 31 December 2022 and 2021, for each of the alternative scenarios assumed.
The impact should be read in the context of the sensitivity analysis as a whole, in conjunction with the narrative disclosures
provided above.
Piraeus Financial Holdings Group – 31 December 2022
185
Alternative scenario assumed as at 31/12/2022
(Group)
ECL impact
Stage 1
Stage 2
Stage 3
Total
Higher GDP (+1%)
(3)
(9)
(13)
(25)
Lower GDP (-1%)
20
Alternative scenario assumed as at 31/12/2021
(Group)
ECL impact
Stage 1
Stage 2
Stage 3
Total
Higher GDP (+1%)
(4)
(10)
(14)
(28)
Lower GDP (-1%)
28
The Company has no loans and advances to customers at amortised cost as at 31 December 2022 and 2021.
.
4.3 Credit Risk Management
Maximum exposure to credit risk before collateral held or other credit enhancements
The following table represents the maximum credit risk exposure of the Group and the Company as at 31 December 2022 and
2021, without taking account of any collateral held or other credit enhancements attached. For on-balance sheet assets, the
exposures set out below are based on net carrying amounts as reported in the Statement of Financial Position.
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Due from banks (Note 20)
750
1,344
45
50
Derivative financial instruments (Note 21)
1,830
591
0
0
Financial assets at fair value through profit or loss (Note 22)
528
886
0
0
Loans and advances to customers at amortised cost (Note 23)
37,367
36,521
(0)
(0)
Debt securities at FVTOCI (Note 24)
796
2,299
0
0
Debt securities at amortised cost (Note 25)
10,844
9,200
796
757
Assets held for sale (Note 30)
400
428
0
0
Other assets (Note 31)
2,098
2,198
44
26
Credit commitments (Note 42)
6,527
4,856
0
0
Total
61,139
58,323
884
833
The below tables show the gross amounts of the Group and the Company’s credit exposures, per staging, for financial
instruments at amortised cost or at FVTOCI and other financial assets, as well as the off-balance credit exposures.
Piraeus Financial Holdings Group – 31 December 2022
186
Group
Stage 1
Stage 2
Stage 3
POCI
Total
31/12/2022
Collective
Individual
Collective
Individual
Due from banks
750
0
-
-
-
-
750
Loans and advances to customers at amortised cost
31,932
3,797
799
1,478
595
186
38,787
Retail Lending
5,763
2,040
526
47
394
5
8,774
Mortgages
4,551
1,677
306
20
319
5
6,879
Consumer, Personal and Other
876
263
172
27
71
0
1,409
Credit Cards
336
99
48
0
3
-
485
Corporate and Public Sector Lending
26,169
1,757
273
1,431
202
181
30,013
17,778
536
6
654
67
34
19,076
6,776
1,221
267
772
132
147
9,313
1,615
0
0
5
2
-
1,623
Debt securities measured at FVTOCI
796
(0)
-
-
-
-
796
Debt securities at amortised cost
10,867
11
-
-
-
-
10,878
Other assets - Financial assets
1,107
52
(0)
211
-
0
1,370
Total on balance sheet credit exposures
45,453
3,859
799
1,689
595
187
52,581
Financial guarantees
4,550
37
202
-
-
-
4,789
Letters of credit
114
-
0
-
-
-
114
Irrevocable undrawn credit commitments
1,536
78
3
0
6
-
1,624
Total off balance sheet credit exposures
6,200
116
204
0
6
0
6,527
Group
Stage 1
Stage 2
Stage 3
POCI
Total
31/12/2021
Collective
Individual
Collective
Individual
Due from banks
1,344
-
-
-
-
-
1,344
Loans and advances to customers at amortised cost
28,007
5,126
1,055
3,287
714
302
38,492
Retail Lending
5,806
2,271
608
68
431
6
9,189
Mortgages
4,647
1,803
366
38
336
6
7,195
Consumer, Personal and Other
837
352
191
30
92
0
1,502
Credit Cards
322
115
50
0
4
-
491
Corporate and Public Sector Lending
22,202
2,855
447
3,219
283
297
29,303
15,304
1,171
15
1,415
63
50
18,018
5,353
1,684
432
1,799
217
247
9,732
1,545
0
1
5
2
-
1,553
Debt securities measured at FVTOCI
2,277
22
-
-
-
-
2,299
Debt securities at amortised cost
9,219
-
-
-
-
-
9,219
Other assets - Financial assets
893
41
2
212
-
-
1,149
Total on balance sheet credit exposures
41,740
5,190
1,057
3,499
714
302
52,503
Financial guarantees
3,444
96
224
-
-
-
3,764
Letters of credit
41
1
0
-
-
-
42
Irrevocable undrawn credit commitments
936
107
-
0
7
-
1,050
Total off balance sheet credit exposures
4,421
204
224
0
7
0
4,856
Piraeus Financial Holdings Group – 31 December 2022
187
Company
Stage 1
Stage 2
Stage 3
POCI
Total
31/12/2022
Collective
Individual
Collective
Individual
Due from banks
45
-
-
-
-
-
45
Loans and advances to customers at amortised cost
0
0
0
0
0
0
0
Retail Lending
0
0
0
0
0
0
0
Mortgages
-
-
-
-
-
-
0
Consumer, Personal and Other
-
-
-
-
-
-
0
Credit Cards
-
-
-
-
-
-
0
Corporate and Public Sector Lending
0
0
0
0
0
0
0
-
-
-
-
-
-
0
-
-
-
-
-
-
0
-
-
-
-
-
-
0
Debt securities measured at FVTOCI
-
-
-
-
-
-
0
Debt securities at amortised cost
819
-
-
-
-
-
819
Reverse repos with customers
-
-
-
-
-
-
0
Other assets - Financial assets
18
-
-
11
-
-
29
Total on balance sheet credit exposures
882
0
0
11
0
0
892
Financial guarantees
-
-
-
-
-
-
0
Letters of credit
-
-
-
-
-
-
0
Irrevocable undrawn credit commitments
-
-
-
-
-
-
0
Total off balance sheet credit exposures
0
0
0
0
0
0
0
Company
Stage 1
Stage 2
Stage 3
POCI
Total
31/12/2021
Collective
Individual
Collective
Individual
Due from banks
50
-
-
-
-
-
50
Loans and advances to customers at amortised cost
0
0
0
0
0
0
0
Retail Lending
0
0
0
0
0
0
0
Mortgages
-
-
-
-
-
-
0
Consumer, Personal and Other
-
-
0
-
-
-
0
Credit Cards
-
-
-
-
-
-
0
Corporate and Public Sector Lending
0
0
0
0
0
0
0
-
-
-
-
-
-
0
-
-
-
-
-
-
0
-
-
0
-
-
-
0
Debt securities measured at FVTOCI
-
-
-
-
-
-
0
Debt securities at amortised cost
786
-
-
-
-
-
786
Reverse repos with customers
-
-
-
-
-
-
0
Other assets - Financial assets
11
-
-
-
-
-
11
Total on balance sheet credit exposures
848
0
0
0
0
0
848
Financial guarantees
-
-
-
-
-
-
0
Letters of credit
-
-
-
-
-
-
0
Irrevocable undrawn credit commitments
-
-
-
-
-
-
0
Total off balance sheet credit exposures
0
0
0
0
0
0
0
4.3.1 Loans and advances to customers at amortised cost
For credit risk management purposes, the Group monitors its credit risk exposure on all acquired loans and advances to
customers at amortised cost on a gross basis, i.e. the exposure at default is grossed up with the unamortised purchase price
allocation adjustment as of the reporting date (the “PPA adjustment”).
Piraeus Financial Holdings Group – 31 December 2022
188
For the purposes of this disclosure, gross carrying amount is defined as the amortised cost, before adjusting for any loss
allowance, grossed up with the PPA adjustment. Similarly, the ECL allowance for impairment losses presented in the following
tables includes the PPA adjustment. As such, the gross carrying amount and ECL allowance for impairment losses presented
below does not reconcile to Note 23.
The Company has no loans and advances to customers at amortized cost as at 31 December 2022 and 2021.
Loans and advances to customers at amortised cost for the Group as at 31 December 2022 and 2021 are summarised as follows:
Piraeus Financial Holdings Group – 31 December 2022
189
Group
Stage 1
12-month ECL
Stage 2
Lifetime ECL
Stage 3
Credit impaired
Lifetime ECL
POCI
Credit impaired
Lifetime ECL
Total
31/12/2022
Mortgages
Gross carrying amount
4,551
1,677
327
324
6,879
Less: ECL Allowance for impairment losses
(3)
(20)
(48)
(15)
(86)
Total Mortgages
4,548
1,657
278
309
6,793
Consumer, Personal and Other loans
Gross carrying amount
876
263
199
71
1,410
Less: ECL Allowance for impairment losses
(6)
(28)
(116)
(13)
(163)
Total Consumer, Personal and Other loans
870
236
83
58
1,247
Credit Cards
Gross carrying amount
336
99
48
3
485
Less: ECL Allowance for impairment losses
(1)
(5)
(41)
(3)
(50)
Total Credit Cards
334
94
6
0
435
Retail Lending
Gross carrying amount
5,763
2,040
573
399
8,774
Less: ECL Allowance for impairment losses
(11)
(53)
(206)
(31)
(300)
Total Retail Lending
5,752
1,987
367
368
8,475
Large Corporate Lending
Gross carrying amount
17,778
536
660
102
19,076
Less: ECL Allowance for impairment losses
(12)
(5)
(325)
(20)
(363)
Total Large Corporate Lending
17,766
531
335
81
18,713
SMEs Lending
Gross carrying amount
6,776
1,221
1,039
279
9,314
Less: ECL Allowance for impairment losses
(14)
(62)
(581)
(97)
(754)
Total SMEs Lending
6,762
1,159
458
182
8,560
Public Sector Lending
Gross carrying amount
1,615
0
5
2
1,623
Less: ECL Allowance for impairment losses
(0)
0
(4)
(0)
(4)
Total Public Sector Lending
1,615
0
2
2
1,619
Corporate and Public Sector Lending
Gross carrying amount
26,169
1,757
1,704
383
30,013
Less: ECL Allowance for impairment losses
(26)
(68)
(910)
(117)
(1,121)
Total Corporate and Public Sector Lending
26,143
1,689
794
265
28,892
Loans and advances to customers at
amortised cost
Gross carrying amount
31,932
3,797
2,277
782
38,787
Less: ECL Allowance for impairment losses
(37)
(120)
(1,115)
(148)
(1,421)
Total Loans and advances to customers at
amortised cost
31,895
3,677
1,162
633
37,367
Piraeus Financial Holdings Group – 31 December 2022
190
Group
Stage 1
12-month ECL
Stage 2
Lifetime ECL
Stage 3
Credit impaired
Lifetime ECL
POCI
Credit impaired
Lifetime ECL
Total
31/12/2021
Mortgages
Gross carrying amount
4,647
1,803
404
341
7,195
Less: ECL Allowance for impairment losses
(3)
(21)
(36)
(12)
(72)
Total Mortgages
4,643
1,782
368
329
7,123
Consumer, Personal and Other loans
Gross carrying amount
837
352
222
92
1,503
Less: ECL Allowance for impairment losses
(17)
(35)
(101)
(22)
(174)
Total Consumer, Personal and Other loans
820
317
120
70
1,328
Credit Cards
Gross carrying amount
322
115
50
4
491
Less: ECL Allowance for impairment losses
(1)
(5)
(40)
(3)
(48)
Total Credit Cards
321
111
10
1
443
Retail Lending
Gross carrying amount
5,806
2,271
676
436
9,189
Less: ECL Allowance for impairment losses
(21)
(60)
(177)
(36)
(295)
Total Retail Lending
5,785
2,210
498
400
8,893
Large Corporate Lending
Gross carrying amount
15,304
1,171
1,430
113
18,017
Less: ECL Allowance for impairment losses
(38)
(22)
(460)
(13)
(533)
Total Large Corporate Lending
15,266
1,148
970
100
17,484
SMEs Lending
Gross carrying amount
5,353
1,684
2,231
465
9,733
Less: ECL Allowance for impairment losses
(31)
(93)
(870)
(147)
(1,141)
Total SMEs Lending
5,322
1,592
1,361
317
8,593
Public Sector Lending
Gross carrying amount
1,545
0
5
2
1,553
Less: ECL Allowance for impairment losses
(1)
(0)
(0)
(0)
(2)
Total Public Sector Lending
1,544
0
5
2
1,551
Corporate and Public Sector Lending
Gross carrying amount
22,202
2,855
3,666
580
29,303
Less: ECL Allowance for impairment losses
(69)
(115)
(1,330)
(160)
(1,675)
Total Corporate and Public Sector Lending
22,132
2,740
2,336
420
27,628
Loans and advances to customers at
amortised cost
Gross carrying amount
28,007
5,126
4,342
1,016
38,492
Less: ECL Allowance for impairment losses
(91)
(175)
(1,508)
(197)
(1,971)
Total Loans and advances to customers at
amortised cost
27,917
4,950
2,834
820
36,521
Piraeus Financial Holdings Group – 31 December 2022
191
Stage 1 exposures presented under note line “Large corporate lending” include CLOs with a gross carrying amount of € 502
million as of 31 December 2022 (31 December 2021: € 93 million). The corresponding ECL, for both years is immaterial. Refer
also to Note 23.
4.3.2 Credit quality per loan portfolio and industry
The tables below present the credit quality per loan portfolio and industry, inclusive of the value of collateral for the Group’s
and the Company’s gross carrying amount of loan and advances to customers at amortised cost as at 31 December 2022 and
2021.
Group
Company
31/12/2022
Strong
Recommended
Substandard
Default
Value of
collateral
Strong
Recommended
Substandard
Default
Value of
collateral
Retail Lending
5,704
59
2,356
655
7,133
0
0
0
0
0
Mortgages
4,517
34
1,939
389
6,551
-
-
-
-
-
Consumer,
Personal and
Other
858
18
317
216
581
-
-
-
-
-
Credit Cards
329
7
100
50
1
-
-
-
-
-
Corporate Lending
22,630
1,952
1,948
1,860
13,050
0
0
0
0
0
Large Corporate
16,941
839
611
685
6,940
-
-
-
-
-
SMEs
5,689
1,113
1,337
1,175
6,110
-
-
-
-
-
Public Sector
1,609
6
2
5
1,566
0
0
0
0
0
Greece
1,609
6
2
5
1,566
-
-
-
-
-
Total
29,944
2,017
4,306
2,521
21,749
0
0
0
0
0
Group
Company
31/12/2021
Strong
Recommended
Substandard
Default
Value of
collateral
Strong
Recommended
Substandard
Default
Value of
collateral
Retail Lending
5,725
80
2,589
794
7,397
0
0
0
0
0
Mortgages
4,601
46
2,055
493
6,774
-
-
-
-
-
Consumer,
Personal and
Other
810
27
419
247
622
-
-
-
-
-
Credit Cards
314
7
116
53
1
-
-
-
-
-
Corporate Lending
19,322
1,381
3,000
4,047
11,799
0
0
0
0
0
Large Corporate
14,694
610
1,253
1,460
6,120
-
-
-
-
-
SMEs
4,629
771
1,747
2,587
5,680
-
-
-
-
-
Public Sector
1,537
8
2
5
1,484
0
0
0
0
0
Greece
1,537
8
2
5
1,484
-
-
-
-
-
Total
26,585
1,469
5,592
4,846
20,680
0
0
0
0
0
The tables below show the Group’s ageing analysis of past dues and the classification of gross exposures per loan category,
into stages, inclusive of the corresponding value of collateral:
Piraeus Financial Holdings Group – 31 December 2022
192
Group
Gross loans and advances to customers at amortised cost
31/12/2022
Current
1-30 days
31-90 days
91-180
days
181-365
days
365+ days
Denounced
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Retail Lending
8,080
174
79
69
87
132
155
8,774
5,763
2,040
573
399
8,774
Mortgages
6,501
98
53
48
56
45
78
6,879
4,551
1,677
327
324
6,879
Consumer, Personal and
Other
1,158
59
22
17
26
61
66
1,410
876
263
199
71
1,410
Credit Cards
420
16
5
3
5
25
11
485
336
99
48
3
485
Corporate Lending
25,268
1,608
180
32
82
441
780
28,390
24,554
1,757
1,699
381
28,390
Large Corporate
17,888
809
43
0
58
207
71
19,076
17,778
536
660
102
19,076
SMEs
7,380
798
136
32
25
234
709
9,314
6,776
1,221
1,039
279
9,314
Public Sector
1,617
0
0
0
0
0
5
1,623
1,615
0
5
2
1,623
Greece
1,617
-
-
-
-
0
5
1,623
1,615
0
5
2
1,623
Total
34,965
1,781
259
102
169
573
939
38,787
31,932
3,797
2,277
782
38,787
Value of collateral
19,491
1,108
199
85
117
296
453
21,749
16,930
2,981
1,272
567
21,749
Piraeus Financial Holdings Group – 31 December 2022
193
Group
Gross loans and advances to customers at amortised cost
31/12/2021
Current
1-30 days
31-90 days
91-180
days
181-365
days
365+ days
Denounced
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Retail Lending
8,497
210
67
61
96
128
130
9,189
5,806
2,271
676
436
9,189
Mortgages
6,829
130
40
40
61
41
54
7,195
4,647
1,803
404
341
7,195
Consumer, Personal and
Other
1,248
62
22
18
30
63
60
1,503
837
352
222
92
1,503
Credit Cards
420
18
5
4
4
24
16
491
322
115
50
4
491
Corporate Lending
23,351
1,323
217
83
285
934
1,558
27,751
20,657
2,855
3,661
578
27,751
Large Corporate
16,688
616
59
5
140
382
128
18,017
15,304
1,171
1,430
113
18,017
SMEs
6,663
706
158
77
146
553
1,430
9,733
5,353
1,684
2,231
465
9,733
Public Sector
1,547
0
0
0
0
0
5
1,553
1,545
0
5
2
1,553
Greece
1,547
-
0
0
-
0
5
1,553
1,545
0
5
2
1,553
Total
33,395
1,533
284
143
381
1,063
1,692
38,492
28,007
5,126
4,342
1,016
38,492
Value of collateral
17,621
992
197
113
284
599
874
20,680
13,965
3,594
2,381
740
20,680
The tables below show the Group’s ECL allowance, per loan category, based on past dues and staging:
Piraeus Financial Holdings Group – 31 December 2022
194
Group
ECL allowance for impairments on loans and advances to customers at amortised cost
31/12/2022
Current
1-30 days
31-90 days
91-180
days
181-365
days
365+ days
Denounced
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Retail Lending
88
13
9
12
19
77
81
300
11
53
206
31
300
Mortgages
39
2
3
4
4
10
24
86
3
20
48
15
86
Consumer, Personal and
Other
41
10
5
6
11
43
47
163
6
28
116
13
163
Credit Cards
8
2
1
2
4
23
10
50
1
5
41
3
50
Corporate Lending
253
16
7
8
50
248
536
1,117
26
68
906
117
1,117
Large Corporate
153
1
0
0
44
118
47
363
12
5
325
20
363
SMEs
100
15
7
8
6
130
488
754
14
62
581
97
754
Public Sector
0
0
0
0
0
0
3
4
0
0
4
0
4
Greece
0
-
-
-
-
0
3
4
0
0
4
0
4
Total
341
29
16
20
69
325
620
1,421
37
120
1,115
148
1,421
Group
ECL allowance for impairments on loans and advances to customers at amortised
31/12/2021
Current
1-30 days
31-90 days
91-180
days
181-365
days
365+ days
Denounced
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Retail Lending
127
11
6
9
19
64
59
295
21
60
177
36
295
Mortgages
45
2
1
2
5
5
13
72
3
21
36
12
72
Consumer, Personal and
Other
75
8
4
6
11
39
32
174
17
35
101
22
174
Credit Cards
7
1
1
2
2
21
14
48
1
5
40
3
48
Corporate Lending
433
37
11
14
57
322
800
1,674
69
115
1,330
160
1,674
Large Corporate
298
10
1
5
46
123
51
533
38
22
460
13
533
SMEs
135
28
10
8
11
199
750
1,141
31
93
870
147
1,141
Public Sector
1
0
0
0
0
0
0
1
1
0
0
0
1
Greece
1
-
0
0
-
0
0
1
1
0
0
0
1
Total
561
48
17
23
76
387
859
1,971
91
175
1,508
197
1,971
Piraeus Financial Holdings Group – 31 December 2022
195
The tables below present the credit quality per loan portfolio and industry:
Group
Gross loans and advances to customers at amortised cost
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Collective
Individual
Collective
Individual
Retail Lending
5,763
2,040
526
47
393
6
8,774
Corporate and Public
Sector Lending
26,169
1,757
273
1,431
202
181
30,013
Financial corporations
7,280
39
2
11
7
3
7,344
Manufacturing/
Handicraft
3,388
325
45
231
21
22
4,032
Construction
539
225
25
99
12
13
914
Real Estate Companies
770
35
3
247
15
22
1,093
Project Finance
2,182
5
1
9
-
-
2,198
Wholesale and retail trade
2,563
351
84
223
25
27
3,272
Shipping Companies
2,141
62
2
2
0
-
2,206
Coastline/ Ferries
Companies
124
-
0
99
-
-
223
Hotels
1,772
296
10
172
67
27
2,345
Agriculture
493
34
23
20
7
-
577
Energy
854
25
2
30
15
12
938
Transports
and Logistics
456
97
13
142
2
-
709
Other industries
1,991
260
63
140
29
55
2,539
Public sector
1,615
0
0
5
2
-
1,623
Total
31,932
3,797
799
1,478
595
187
38,787
Piraeus Financial Holdings Group – 31 December 2022
196
Group
Gross loans and advances to customers at amortised cost
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Collective
Individual
Collective
Individual
Retail Lending
5,806
2,271
608
68
430
6
9,189
Corporate and Public
Sector Lending
22,202
2,855
448
3,218
283
297
29,303
Financial corporations
6,695
5
4
440
5
6
7,155
Manufacturing/
Handicraft
2,569
633
81
517
34
55
3,889
Construction
574
144
41
278
20
13
1,071
Real Estate Companies
710
105
4
425
14
57
1,316
Project Finance
1,852
5
1
72
2
3
1,936
Wholesale and retail trade
2,240
420
123
371
38
54
3,245
Shipping Companies
1,946
3
1
31
0
-
1,980
Coastline/ Ferries
Companies
118
-
1
103
-
-
222
Hotels
963
782
24
404
72
47
2,292
Agriculture
362
64
37
86
16
1
565
Energy
640
48
7
40
1
-
735
Transports
and Logistics
402
94
19
252
4
1
773
Other industries
1,588
553
106
193
75
58
2,573
Public sector
1,545
1
1
5
2
-
1,553
Total
28,007
5,126
1,056
3,286
714
303
38,492
Piraeus Financial Holdings Group – 31 December 2022
197
Group
ECL allowance for impairments on loans and advances to customers at amortised cost
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Collective
Individual
Collective
Individual
Retail Lending
11
53
177
28
30
1
300
Corporate and Public
Sector Lending
26
68
120
790
24
94
1,121
Financial corporations
2
0
2
11
0
2
18
Manufacturing/
Handicraft
3
13
19
102
5
11
154
Construction
1
7
13
61
2
8
92
Real Estate Companies
1
1
1
110
0
11
125
Project Finance
2
1
0
7
-
-
11
Wholesale and retail trade
4
22
39
156
6
14
242
Shipping Companies
1
0
1
1
0
-
3
Coastline/ Ferries
Companies
0
-
0
67
-
-
67
Hotels
2
3
3
38
1
3
48
Agriculture
1
3
8
9
1
-
23
Energy
4
2
1
20
1
5
34
Transports
and Logistics
1
2
6
108
1
-
118
Other industries
4
12
27
95
6
39
183
Public sector
0
(0)
0
3
0
-
4
Total
37
120
298
818
54
95
1,421
Piraeus Financial Holdings Group – 31 December 2022
198
Group
ECL allowance for impairments on loans and advances to customers at amortised cost
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Collective
Individual
Collective
Individual
Retail Lending
21
60
155
22
36
0
295
Corporate and Public
Sector Lending
69
115
165
1,165
45
115
1,675
Financial corporations
7
0
2
101
0
1
112
Manufacturing/
Handicraft
13
26
29
141
5
18
232
Construction
4
6
16
107
4
6
143
Real Estate Companies
2
3
3
159
1
14
182
Project Finance
1
0
0
52
0
-
54
Wholesale and retail trade
12
30
53
199
11
28
334
Shipping Companies
1
-
1
15
0
-
16
Coastline/ Ferries
Companies
0
-
0
30
-
-
31
Hotels
3
6
4
9
1
3
26
Agriculture
2
4
10
32
4
0
53
Energy
11
7
3
8
0
-
30
Transports
and Logistics
1
3
8
157
1
1
172
Other industries
10
29
37
154
17
44
291
Public sector
1
0
0
0
0
-
2
Total
91
175
321
1,187
81
115
1,971
Piraeus Financial Holdings Group – 31 December 2022
199
Group
Loans and advances to customers at amortised cost
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Collective
Individual
Collective
Individual
Retail Lending
5,752
1,987
349
19
363
4
8,475
Corporate and Public
Sector Lending
26,143
1,689
153
642
178
88
28,892
Financial corporations
7,278
39
1
0
7
1
7,326
Manufacturing/
Handicraft
3,385
312
26
129
16
11
3,878
Construction
538
218
13
38
10
5
822
Real Estate Companies
769
34
2
137
14
11
968
Project Finance
2,180
4
1
2
-
-
2,187
Wholesale and retail trade
2,558
330
45
67
18
13
3,031
Shipping Companies
2,140
62
0
1
0
-
2,204
Coastline/ Ferries
Companies
124
-
0
32
-
-
156
Hotels
1,771
294
8
135
66
24
2,297
Agriculture
492
31
14
11
6
-
554
Energy
850
23
1
10
14
6
904
Transports
and Logistics
455
95
7
33
1
-
591
Other industries
1,987
248
36
45
23
16
2,355
Public sector
1,615
0
0
1
2
0
1,619
Total
31,895
3,677
501
660
541
92
37,367
Piraeus Financial Holdings Group – 31 December 2022
200
Group
Loans and advances to customers at amortised cost
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Collective
Individual
Collective
Individual
Retail Lending
5,785
2,210
452
46
394
5
8,893
Corporate and Public
Sector Lending
22,132
2,740
283
2,053
238
182
27,628
Financial corporations
6,688
4
1
339
5
6
7,044
Manufacturing/
Handicraft
2,556
607
52
376
28
37
3,657
Construction
570
138
25
171
16
8
928
Real Estate Companies
707
102
2
267
13
43
1,134
Project Finance
1,850
5
1
20
2
3
1,882
Wholesale and retail trade
2,227
390
70
172
27
26
2,911
Shipping Companies
1,945
3
0
16
0
-
1,964
Coastline/ Ferries
Companies
118
-
1
73
-
-
191
Hotels
959
776
20
395
71
44
2,265
Agriculture
360
60
26
54
12
1
512
Energy
629
41
4
31
1
-
706
Transports
and Logistics
401
91
11
95
3
0
601
Other industries
1,578
524
69
39
58
14
2,282
Public sector
1,544
0
0
5
2
0
1,551
Total
27,917
4,950
735
2,099
632
188
36,521
The tables that follow show the credit quality, per staging, of each loan category, for the Group as at 31 December 2022, and
2021, inclusive of value of collateral.
Mortgages
Piraeus Financial Holdings Group – 31 December 2022
201
Group
Mortgages - Internal rating grade
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
4,517
-
-
-
4,517
Recommended
34
-
-
-
34
Substandard
-
1,677
-
262
1,939
Default
-
-
327
62
389
Total Gross Balance
4,551
1,677
327
324
6,879
Strong
3
-
-
-
3
Recommended
0
-
-
-
0
Substandard
-
20
-
3
22
Default
-
-
48
13
61
Total ECL Allowance
3
20
48
15
86
Total Balance
4,548
1,657
278
309
6,793
Value of collateral
4,378
1,586
290
298
6,551
Group
Mortgages - Internal rating grade
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
4,601
-
-
-
4,601
Recommended
46
-
-
-
46
Substandard
-
1,803
-
252
2,055
Default
-
-
404
90
493
Total Gross Balance
4,647
1,803
404
341
7,195
Strong
3
-
-
-
3
Recommended
0
-
-
-
0
Substandard
-
21
-
4
25
Default
-
-
36
8
44
Total ECL Allowance
3
21
36
12
72
Total Balance
4,643
1,782
368
329
7,123
Value of collateral
4,436
1,671
354
313
6,774
Piraeus Financial Holdings Group – 31 December 2022
202
Consumer, Personal and Other Lending
Group
Consumer, Personal and Other Lending - Internal rating grade
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
858
-
-
-
858
Recommended
18
-
-
-
18
Substandard
-
263
-
54
317
Default
-
-
199
18
216
Total Gross Balance
876
263
199
71
1,410
Strong
6
-
-
-
6
Recommended
0
-
-
-
0
Substandard
-
28
-
5
33
Default
-
-
116
8
124
Total ECL Allowance
6
28
116
13
163
Total Balance
870
236
83
58
1,247
Value of collateral
403
95
50
33
581
Group
Consumer, Personal and Other Lending - Internal rating grade
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
810
-
-
-
810
Recommended
27
-
-
-
27
Substandard
-
352
-
67
419
Default
-
-
222
25
247
Total Gross Balance
837
352
222
92
1,503
Strong
16
-
-
-
16
Recommended
0
-
-
-
0
Substandard
-
35
-
13
48
Default
-
-
101
9
110
Total ECL Allowance
17
35
101
22
174
Total Balance
820
317
120
70
1,328
Value of collateral
394
133
60
35
622
Credit Cards
Piraeus Financial Holdings Group – 31 December 2022
203
Group
Credit Cards - Internal rating grade
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
329
-
-
-
329
Recommended
7
-
-
-
7
Substandard
-
99
-
0
100
Default
-
-
48
3
50
Total Gross Balance
336
99
48
3
485
Strong
1
-
-
-
1
Recommended
0
-
-
-
0
Substandard
-
5
-
0
5
Default
-
-
41
3
44
Total ECL Allowance
1
5
41
3
50
Total Balance
334
94
6
0
435
Value of Collateral
1
0
0
0
1
Group
Credit Cards - Internal rating grade
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
314
-
-
-
314
Recommended
7
-
-
-
7
Substandard
-
115
-
0
116
Default
-
-
50
3
53
Total Gross Balance
322
115
50
4
491
Strong
1
-
-
-
1
Recommended
0
-
-
-
0
Substandard
-
5
-
0
5
Default
-
-
40
3
43
Total ECL Allowance
1
5
40
3
48
Total Balance
321
111
10
1
443
Value of Collateral
1
0
0
0
1
Large Corporate
Piraeus Financial Holdings Group – 31 December 2022
204
Group
Large Corporate - Internal rating grade
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
16,941
-
-
-
16,941
Recommended
837
2
-
-
839
Substandard
-
534
10
67
611
Default
-
-
650
35
685
Total Gross Balance
17,778
536
660
102
19,076
Strong
9
-
-
-
9
Recommended
3
0
-
-
3
Substandard
-
5
0
2
7
Default
-
-
325
19
344
Total ECL Allowance
12
5
325
20
363
Total Balance
17,766
531
335
81
18,713
Value of collateral
6,135
391
355
60
6,940
Group
Large Corporate - Internal rating grade
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
14,694
-
-
-
14,694
Recommended
610
0
-
-
610
Substandard
-
1,171
8
75
1,253
Default
-
-
1,422
38
1,460
Total Gross Balance
15,304
1,171
1,430
113
18,017
Strong
33
-
-
-
33
Recommended
5
-
-
-
5
Substandard
-
22
0
2
24
Default
-
-
460
11
471
Total ECL Allowance
38
22
460
13
533
Total Balance
15,266
1,148
970
100
17,484
Value of collateral
4,747
612
679
83
6,120
SME
Piraeus Financial Holdings Group – 31 December 2022
205
Group
SME - Internal rating grade
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
5,689
-
-
-
5,689
Recommended
1,086
27
-
-
1,113
Substandard
-
1,194
37
106
1,337
Default
-
-
1,002
173
1,175
Total Gross Balance
6,776
1,221
1,039
279
9,314
Strong
10
-
-
-
10
Recommended
4
0
-
-
4
Substandard
-
62
33
2
98
Default
-
-
547
95
642
Total ECL Allowance
14
62
581
97
754
Total Balance
6,762
1,159
458
182
8,560
Value of Collateral
4,452
909
573
177
6,110
Group
SME - Internal rating grade
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
4,629
-
-
-
4,629
Recommended
725
47
-
-
771
Substandard
-
1,638
17
92
1,747
Default
-
-
2,214
373
2,587
Total Gross Balance
5,353
1,684
2,231
465
9,733
Strong
24
-
-
-
24
Recommended
7
1
-
-
8
Substandard
-
92
8
3
102
Default
-
-
862
145
1,007
Total ECL Allowance
31
93
870
147
1,141
Total Balance
5,322
1,592
1,361
317
8,593
Value of collateral
2,908
1,178
1,284
310
5,680
Public Sector
Piraeus Financial Holdings Group – 31 December 2022
206
Group
Public Sector - Internal rating grade
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
1,609
-
-
-
1,609
Recommended
6
-
-
-
6
Substandard
-
0
-
2
2
Default
-
-
5
-
5
Total Gross Balance
1,615
0
5
2
1,623
Strong
0
-
-
-
0
Recommended
0
-
-
-
0
Substandard
-
0
-
0
0
Default
-
-
4
-
4
Total ECL Allowance
0
0
4
0
4
Total Balance
1,615
0
2
2
1,619
Value of collateral
1,562
-
4
0
1,566
Group
Public Sector - Internal rating grade
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Strong
1,537
-
-
-
1,537
Recommended
8
-
-
-
8
Substandard
-
0
-
2
2
Default
-
-
5
0
5
Total Gross Balance
1,545
0
5
2
1,553
Strong
1
-
-
-
1
Recommended
0
-
-
-
0
Substandard
-
0
-
0
0
Default
-
-
0
0
0
Total ECL Allowance
1
0
0
0
2
Total Balance
1,544
0
5
2
1,551
Value of collateral
1,479
0
5
-
1,484
As at 31 December 2022 and 2021 the Group and the Company have not granted any Public Sector lending outside Greece.
Piraeus Financial Holdings Group – 31 December 2022
207
An analysis of changes in the gross carrying amount and the corresponding ECL allowance for impairment losses in relation to
the Group’s Retail lending portfolio for 2022 is as follows:
Group
Retail Lending - Movement in gross carrying amounts
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount as at 1/1/2022
5,806
2,271
676
436
9,189
Transfer (to)/ from Held for Sale
(1)
(2)
(120)
(23)
(146)
New assets originated or purchased
609
37
0
4
649
Other debits to the Gross Balance /
(Repayments)
(902)
(258)
(42)
(22)
(1,224)
Assets sold
-
-
-
-
0
Assets derecognised (excluding write offs)
-
-
-
-
0
Transferred from Stage 1 to Stage 2
(1,115)
1,115
0
Transferred from Stage 1 to Stage 3
(14)
14
0
Transferred from Stage 2 to Stage 1
1,177
(1,177)
0
Transferred from Stage 2 to Stage 3
(240)
240
0
Transferred from Stage 3 to Stage 1
-
-
0
Transferred from Stage 3 to Stage 2
206
(206)
0
Change in the present value of the allowance
206
78
21
11
316
Write-off of interest recognised from change in the present
value of the allowance
(0)
(0)
(8)
(1)
(9)
Write-offs
(11)
(1)
(3)
(8)
(23)
FX differences and other movements
9
10
2
2
22
Gross carrying amount as at 31/12/2022
5,763
2,040
573
399
8,775
Piraeus Financial Holdings Group – 31 December 2022
208
Group
Retail Lending - Movement in ECL allowance
Stage 1
Stage 2
Stage 3
POCI
Total
ECL allowance as at 1/1/2022
21
60
177
36
295
Transfer (to)/ from Held for Sale
(0)
(1)
(67)
(13)
(82)
Transferred from Stage 1 to Stage 2
(3)
3
0
Transferred from Stage 1 to Stage 3
(0)
0
0
Transferred from Stage 2 to Stage 1
24
(24)
0
Transferred from Stage 2 to Stage 3
(20)
20
0
Transferred from Stage 3 to Stage 1
-
-
0
Transferred from Stage 3 to Stage 2
27
(27)
0
ECL impairment charge/ (release) for the year (P&L)
(26)
0
72
(1)
46
ECL impairment charge for new financial assets originated or
purchased (P&L)
0
0
0
-
0
Recoveries of amounts previously written-off (P&L)
-
-
(0)
-
(0)
Change in the present value of the allowance
0
0
9
1
10
Write-off of interest recognised from change in the present
value of the allowance
(0)
(0)
(8)
(1)
(9)
Write-offs
(11)
(1)
(3)
(8)
(23)
Financial assets derecognised
-
-
-
-
0
Disposals of loans and advances
-
-
-
-
0
FX differences and other movements
6
8
34
15
63
ECL allowance as at 31/12/2022
11
53
205
31
299
An analysis of changes in the gross carrying amount and the corresponding ECL allowance for impairment losses in relation to
the Group’s Retail lending portfolio for 2021 is as follows:
Piraeus Financial Holdings Group – 31 December 2022
209
Group
Retail Lending - Movement in gross carrying amounts
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount as at 1/1/2021
6,506
2,656
4,868
3,454
17,483
Transfer (to)/ from Held for Sale
(32)
(147)
(2,324)
(1,946)
(4,449)
New assets originated or purchased
527
19
0
-
546
Other debits to the Gross Balance /
(Repayments)
(882)
(232)
(52)
(79)
(1,245)
Assets sold
(26)
(365)
(1,870)
(1,011)
(3,271)
Assets derecognised (excluding write offs)
-
-
-
-
0
Transferred from Stage 1 to Stage 2
(1,409)
1,409
0
Transferred from Stage 1 to Stage 3
(30)
30
0
Transferred from Stage 2 to Stage 1
959
(959)
0
Transferred from Stage 2 to Stage 3
(546)
546
0
Transferred from Stage 3 to Stage 1
0
(0)
0
Transferred from Stage 3 to Stage 2
360
(360)
0
Change in the present value of the allowance
178
69
77
56
381
Write-off of interest recognised from change in the present
value of the allowance
(0)
(0)
(39)
(27)
(67)
Write-offs
(6)
(3)
(197)
(9)
(215)
FX differences and other movements
21
9
(3)
(1)
26
Gross carrying amount as at 31/12/2021
5,806
2,271
676
436
9,189
Piraeus Financial Holdings Group – 31 December 2022
210
Group
Retail Lending - Movement in ECL allowance
Stage 1
Stage 2
Stage 3
POCI
Total
ECL allowance as at 1/1/2021
25
83
1,832
1,361
3,300
Transfer (to)/ from Held for Sale
(1)
(8)
(913)
(901)
(1,823)
Transferred from Stage 1 to Stage 2
(5)
5
0
Transferred from Stage 1 to Stage 3
(1)
1
0
Transferred from Stage 2 to Stage 1
24
(24)
0
Transferred from Stage 2 to Stage 3
(42)
42
0
Transferred from Stage 3 to Stage 1
0
(0)
0
Transferred from Stage 3 to Stage 2
44
(44)
0
ECL impairment charge/ (release) for the year (P&L)
10
199
1,021
608
1,839
ECL impairment charge for new financial assets originated or
purchased (P&L)
0
0
0
-
0
Recoveries of amounts previously written-off (P&L)
-
-
(0)
-
(0)
Change in the present value of the allowance
0
0
38
27
65
Write-off of interest recognised from change in the present
value of the allowance
(0)
(0)
(39)
(27)
(67)
Write-offs
(6)
(3)
(197)
(9)
(215)
Financial assets derecognised
-
-
-
-
0
Disposals of loans and advances
(7)
(132)
(1,038)
(618)
(1,796)
FX differences and other movements
(18)
(62)
(524)
(404)
(1,008)
ECL allowance as at 31/12/2021
21
60
177
36
295
As of 31 December 2022, the gross carrying amount and the corresponding ECL for impairment losses in relation to the
Company’s Retail lending portfolio is nil.
Αn analysis of changes in the gross carrying amount and the corresponding ECL allowance for impairment losses in relation to
the Company’s Retail lending portfolio for 2021 is as follows:
Piraeus Financial Holdings Group – 31 December 2022
211
Company
Retail Lending - Movement in gross carrying amounts
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount as at 1/1/2021
21
349
1,889
1,028
3,287
Transfer (to)/ from Held for Sale
-
-
-
-
0
New assets originated or purchased
-
-
-
-
0
Other debits to the Gross Balance /
(Repayments)
3
(20)
5
(24)
(36)
Assets sold
(26)
(365)
(1,870)
(1,011)
(3,271)
Assets derecognised (excluding write offs)
-
-
-
-
0
Transferred from Stage 1 to Stage 2
(4)
4
0
Transferred from Stage 1 to Stage 3
(1)
1
0
Transferred from Stage 2 to Stage 1
7
(7)
0
Transferred from Stage 2 to Stage 3
(68)
68
0
Transferred from Stage 3 to Stage 1
(0)
0
0
Transferred from Stage 3 to Stage 2
103
(103)
0
Change in the present value of the allowance
0
4
29
18
52
Write-off of interest recognised from change in the present
value of the allowance
(0)
(0)
(16)
(11)
(27)
Write-offs
(0)
(0)
(3)
(0)
(3)
FX differences and other movements
(0)
(0)
(0)
(0)
(1)
Contribution to the new credit institution
-
-
-
-
0
Gross carrying amount as at 31/12/2021
0
0
0
0
0
Piraeus Financial Holdings Group – 31 December 2022
212
Company
Retail Lending -Movement in ECL allowance
Stage 1
Stage 2
Stage 3
POCI
Total
ECL allowance as at 1/1/2021
0
7
607
420
1,035
Transfer (to)/ from Held for Sale
-
-
-
-
0
Transferred from Stage 1 to Stage 2
(0)
0
0
Transferred from Stage 1 to Stage 3
(0)
0
0
Transferred from Stage 2 to Stage 1
1
(1)
0
Transferred from Stage 2 to Stage 3
(7)
7
0
Transferred from Stage 3 to Stage 1
-
-
0
Transferred from Stage 3 to Stage 2
13
(13)
0
ECL impairment charge/ (release) for the year
(P&L)
7
118
445
203
773
Change in the present value of the allowance
0
0
15
11
26
Write-off of interest recognised from change in the
present value of the allowance
(0)
(0)
(16)
(11)
(27)
Write-offs
(0)
(0)
(3)
(0)
(3)
Financial assets derecognised
-
-
-
-
0
Disposals of loans and advances
(7)
(132)
(1,038)
(618)
(1,796)
FX differences and other movements
(0)
2
(4)
(5)
(8)
ECL allowance as at 31/12/2021
0
0
0
(0)
0
An analysis of changes in the gross carrying amount and the corresponding ECL allowance for impairment losses in relation to
the Group’s Corporate and Public sector lending portfolio for 2022 is as follows:
Piraeus Financial Holdings Group – 31 December 2022
213
Group
Corporate and Public Sector Lending - Movement in gross carrying
amounts
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount as at 1/1/2022
22,202
2,855
3,666
580
29,303
Transfer (to)/ from Held for Sale
(2)
30
(610)
(121)
(704)
Intercompany loans (recognized)/ derecognized due to
change in Group’s perimeter
(75)
-
5
-
(70)
Contribution to Associates
-
-
(421)
-
(421)
New assets originated or purchased
6,864
166
35
5
7,069
Other debits to the Gross Balance /
(Repayments)
(3,585)
(581)
(314)
(72)
(4,551)
Assets sold
-
-
(62)
(2)
(64)
Assets derecognised (excluding write offs)
(830)
-
(4)
-
(834)
Transferred from Stage 1 to Stage 2
(1,708)
1,708
0
Transferred from Stage 1 to Stage 3
(32)
32
0
Transferred from Stage 2 to Stage 1
2,715
(2,715)
0
Transferred from Stage 2 to Stage 3
(116)
116
0
Transferred from Stage 3 to Stage 1
60
(60)
0
Transferred from Stage 3 to Stage 2
328
(328)
0
Debt for equity exchange
-
-
(44)
-
(44)
Change in the present value of the allowance
569
85
94
23
771
Write-off of interest recognised from change in the present
value of the allowance
(0)
(2)
(56)
(13)
(71)
Write-offs
(0)
(0)
(380)
(19)
(399)
FX differences and other movements
(7)
(2)
35
1
28
Gross carrying amount as at 31/12/2022
26,169
1,757
1,704
383
30,013
Piraeus Financial Holdings Group – 31 December 2022
214
Group
Corporate and Public Sector Lending - Movement in ECL allowance
Stage 1
Stage 2
Stage 3
POCI
Total
ECL allowance as at 1/1/2022
69
115
1,330
160
1,675
Transfer (to)/ from Held for Sale
(1)
15
(295)
(71)
(351)
Intercompany loans (recognized)/ derecognized due to change
in Group’s perimeter
(0)
2
2
Contribution to Associates
(92)
(92)
Transferred from Stage 1 to Stage 2
(11)
11
0
Transferred from Stage 1 to Stage 3
(0)
0
0
Transferred from Stage 2 to Stage 1
63
(63)
0
Transferred from Stage 2 to Stage 3
(13)
13
0
Transferred from Stage 3 to Stage 1
0
(0)
0
Transferred from Stage 3 to Stage 2
30
(30)
0
ECL impairment charge/ (release) for the year (P&L)
(135)
(32)
564
41
437
ECL impairment charge for new financial assets originated or
purchased (P&L)
1
0
-
-
1
Recoveries of amounts previously written-off (P&L)
-
-
(12)
-
(12)
Change in the present value of the allowance
0
1
31
9
41
Write-off of interest recognised from change in the present
value of the allowance
(0)
(2)
(56)
(13)
(71)
Write-offs
(0)
(0)
(380)
(19)
(399)
Financial assets derecognised
(2)
-
-
-
(2)
Disposals of loans and advances
-
-
-
(1)
(1)
Changes to contractual cash flows due to modifications not
resulting in derecognition
(0)
(0)
1
(0)
1
Debt for equity exchange
-
-
(15)
-
(15)
FX differences and other movements
44
5
(153)
12
(93)
ECL allowance as at 31/12/2022
26
68
910
117
1,121
In November 2022, Piraeus Bank contributed into Strix Holdings LP, two bond loans of total gross carrying amount and ECL of
€ 421 million and € 92 million, respectively, in exchange for additional limited partnership interests. Refer to Note 26B for
further information.
Regarding the movement in gross carrying amounts the “transfer to/from assets held for sale” of € 850 million mainly refers
to the portfolios Sunrise III and Solar.
Regarding the movement in ECL allowance, line item “transfer (to)/from assets held for sale” of € 433 million mainly refers to
portfolios Sunrise III and Solar. Amount of € 227 million in line item “ECL impairment charge/ (release) for the year (P&L)”
relates to the ECL recognised during the year upon classification of the aforementioned portfolios as held for sale. Accordingly,
the respective ECL related to the said HFS portfolios is deducted from line item “FX differences and other movements”. Refer
to Note 30 for further information of the aforementioned portfolios.
For the purposes of this disclosure (both for movement in gross carrying amounts and ECL allowance), transfers are deemed
to have occurred at the end of the previous reporting period prior to the “held for sale” classification, therefore the balances
Piraeus Financial Holdings Group – 31 December 2022
215
quoted in the aforementioned paragraphs reflect the gross carrying amounts and ECL allowance of Sunrise III and Solar held
for sale portfolio as of 31 March 2022.
During the year ended 31 December 2022 a loss of € 19 million has been recognised in Group’s Income Statement (31
December 2021: gain € 3 million) due to derecognition of loans and advances to customers at amortised cost, in the context
of either sale transactions or debt to equity exchanges.
An analysis of changes in the gross carrying amount and the corresponding ECL allowance for impairment losses in relation to
the Group’s Corporate and Public sector lending portfolio for 2021 is as follows:
Group
Corporate and Public Sector Lending - Movement in gross carrying
amounts
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount as at 1/1/2021
14,561
2,754
11,469
3,262
32,045
Transfer (to)/ from Held for Sale
(0)
(34)
(4,821)
(1,493)
(6,349)
Intercompany loans (recognized)/ derecognized due to
change in Group’s perimeter
59
-
-
-
59
New assets originated or purchased
7,468
127
11
-
7,606
Other debits to the Gross Balance /
(Repayments)
67
(609)
(345)
(77)
(964)
Assets sold
(6)
(15)
(2,421)
(990)
(3,433)
Assets derecognised (excluding write offs)
-
-
(148)
(23)
(172)
Transferred from Stage 1 to Stage 2
(2,108)
2,108
0
Transferred from Stage 1 to Stage 3
(60)
60
0
Transferred from Stage 2 to Stage 1
1,488
(1,488)
0
Transferred from Stage 2 to Stage 3
(492)
492
0
Transferred from Stage 3 to Stage 1
7
(7)
0
Transferred from Stage 3 to Stage 2
418
(418)
0
Debt for equity exchange
-
-
(21)
-
(21)
Change in the present value of the allowance
448
92
292
99
931
Write-off of interest recognised from change in the present
value of the allowance
(0)
(1)
(211)
(71)
(283)
Write-offs
(0)
(0)
(310)
(139)
(449)
FX differences and other movements
280
(5)
46
13
334
Gross carrying amount as at 31/12/2021
22,202
2,855
3,666
580
29,303
Piraeus Financial Holdings Group – 31 December 2022
216
Group
Corporate and Public Sector Lending - Movement in ECL allowance
Stage 1
Stage 2
Stage 3
POCI
Total
ECL allowance as at 1/1/2021
83
174
4,651
1,697
6,605
Transfer (to)/ from Held for Sale
0
(11)
(1,951)
(826)
(2,788)
Transferred from Stage 1 to Stage 2
(11)
11
0
Transferred from Stage 1 to Stage 3
(1)
1
0
Transferred from Stage 2 to Stage 1
34
(34)
0
Transferred from Stage 2 to Stage 3
(47)
47
0
Transferred from Stage 3 to Stage 1
1
(1)
0
Transferred from Stage 3 to Stage 2
49
(49)
0
ECL impairment charge/ (release) for the year (P&L) (as
reclassified)
(74)
33
1,902
438
2,298
ECL impairment charge for new financial assets originated or
purchased (P&L)
1
1
-
-
1
Recoveries of amounts previously written-off (P&L)
-
-
(7)
-
(7)
Change in the present value of the allowance
0
1
126
57
184
Write-off of interest recognised from change in the present
value of the allowance
(0)
(2)
(214)
(71)
(287)
Write-offs
(0)
(0)
(310)
(139)
(449)
Financial assets derecognised
-
-
(9)
(1)
(10)
Disposals of loans and advances
(2)
(8)
(1,796)
(764)
(2,569)
Debt for equity exchange
-
-
(18)
-
(18)
FX differences and other movements
40
(51)
(1,042)
(231)
(1,284)
ECL allowance as at 31/12/2021
69
115
1,330
160
1,675
As of 31 December 2022, the gross carrying amount and the corresponding ECL for impairment losses in relation to the
Company’s Corporate and Public sector lending portfolio is nil.
An analysis of changes in the gross carrying amount and the corresponding ECL allowance for impairment losses in relation to
the Company’s Corporate and Public sector lending portfolio for 2021 is as follows:
Piraeus Financial Holdings Group – 31 December 2022
217
Company
Corporate and Public Sector Lending - Movement in gross carrying
amounts
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount as at 1/1/2021
5
16
2,381
991
3,393
Transfer (to)/ from Held for Sale
-
-
0
-
0
New assets originated or purchased
-
-
-
-
0
Other debits to the Gross Balance /
(Repayments)
0
(2)
(0)
(6)
(8)
Assets sold
(5)
(15)
(2,391)
(990)
(3,402)
Assets derecognised (excluding write offs)
-
-
-
-
0
Transferred from Stage 1 to Stage 2
(0)
0
0
Transferred from Stage 1 to Stage 3
(0)
0
0
Transferred from Stage 2 to Stage 1
0
(0)
0
Transferred from Stage 2 to Stage 3
(6)
6
0
Transferred from Stage 3 to Stage 1
0
(0)
0
Transferred from Stage 3 to Stage 2
6
(6)
0
Debt for equity exchange
-
-
-
-
0
Change in the present value of the allowance
0
0
70
31
102
Write-off of interest recognised from change in the present
value of the allowance
(0)
(0)
(60)
(26)
(85)
Write-offs
-
(0)
(1)
(0)
(1)
FX differences and other movements
0
0
1
0
1
Contribution to the new credit institution
-
-
-
-
0
Gross carrying amount as at 31/12/2021
(0)
(0)
0
0
0
Piraeus Financial Holdings Group – 31 December 2022
218
Company
Corporate and Public Sector Lending - Movement in ECL allowance
Stage 1
Stage 2
Stage 3
POCI
Total
ECL allowance as at 1/1/2021
0
1
1,244
574
1,819
Transfer (to)/ from Held for Sale
-
-
(0)
-
(0)
Transferred from Stage 1 to Stage 2
(0)
0
0
Transferred from Stage 1 to Stage 3
(0)
0
0
Transferred from Stage 2 to Stage 1
0
(0)
0
Transferred from Stage 2 to Stage 3
(1)
1
0
Transferred from Stage 3 to Stage 1
0
(0)
0
Transferred from Stage 3 to Stage 2
2
(2)
0
ECL impairment charge/ (release) for the year (P&L) (as
reclassified)
3
6
541
195
745
Recoveries of amounts previously written-off (P&L)
-
-
-
-
0
Change in the present value of the allowance
0
0
45
22
67
Write-off of interest recognised from change in the present
value of the allowance
(0)
(0)
(60)
(26)
(85)
Write-offs
-
(0)
(1)
(0)
(1)
Financial assets derecognised
-
-
-
-
0
Disposals of loans and advances
(2)
(8)
(1,776)
(764)
(2,549)
Debt for equity exchange
-
-
-
-
0
FX differences and other movements
(1)
0
7
(2)
4
ECL allowance as at 31/12/2021
0
0
(0)
(0)
(0)
The gross modification impact recognized by the Group and the Company, during the period ended 31 December 2022, for
loans with ECL allowance measured at an amount equal to lifetime ECL was gain € 3 million and nil, respectively (31 December
2021: loss € 64 million and € 4 million, respectively). The said impact represents the changes in the gross carrying amount
(before ECL allowance) of the loans from immediately before, to immediately after modification. The impact of modification
for the Group and the Company on the ECL allowance associated with these loans was a release of ECL allowance of € 16 million
and nil, respectively (31 December 2021: € 39 million and € 1 million, respectively). The net impact for the Group and the
Company on the income statement for the period ended 31 December 2022 was therefore, gain € 19 million and nil,
respectively (31 December 2021 loss: € 25 million and € 3 million, respectively). The gross carrying amount (before
modification) of the loans whose cash flows were modified during the period ended 31 December 2022 amounted to € 1,267
million for the Group (31 December 2021: € 4,290 million) and nil for the Company (31 December 2021: € 232 million). The
Group's gross carrying amount as at 31 December 2022 of loans and advances to customers at amortised cost that have been
modified since initial recognition at a time when their ECL allowance was measured at an amount equal to lifetime ECL (Stage
3 and Stage 2) and for which their respective ECL allowance as at 31 December 2022 is measured at an amount equal to 12-
month ECL (Stage 1), is € 208 million (31 December 2021: € 473 million), while the respective amount for the Company is nil as
at 31 December 2022 and 2021.
4.3.3 Collateral and other credit enhancements
Piraeus Financial Holdings Group – 31 December 2022
219
Along with the evaluation of the creditworthiness of counterparties, the Group and the Company estimate the recovery rate
against exposures, when limits are set or reviewed. This estimation is based on the type of debt claim and the existence of any
connected collaterals and/or guarantees.
According to standard practice, when a borrower’s credit rating is low, then even stronger collaterals/ guarantees are
requested, in order to secure a higher recovery rate to account for the borrowers’ default probability.
The Group and the Company have defined categories of acceptable collateral and have incorporated them in the credit policy.
Main types of acceptable collateral are the following:
•
Pledged deposits and cheques,
•
Mortgages on real estate property,
•
Ship mortgages,
•
Greek government guarantees,
•
Bank letters of guarantee,
•
Guarantees by Development Bodies (i.e. the Hellenic Fund for Entrepreneurship & Development S.A),
•
Pledged financial instruments such as mutual fund shares, stocks, bonds, T-bills and receivables.
The collateral/ security associated with a credit is initially evaluated during the credit approval process, based on their current
or fair value and is re-evaluated at regular intervals. Collaterals or guarantees are not usually received against exposures to
financial institutions.
Market value assessment of properties, which may secure any type of credit facilities towards individuals or legal entities, is
performed by external certified independent valuers. The valuations are categorized into Individual valuations on a specific
property either on-site or desktop and indexed valuations performed with statistical methodology (e.g. Propindex, BoG Indexes
etc.) or any other automated processes.
The Group and the Company accept the following key valuation methodologies provided by International Valuation Standards
(IVS):
a)
Market approach or comparative method
b)
Income approach
c)
Cost Approach
The initial valuations of mortgaged properties are always performed on-site (physical inspection).
The Group and the Company update the valuations (either with individual valuations or statistical methods) for the collateral
of all exposures (irrespective of their classification as PE / NPE) at least annually.
Piraeus Financial Holdings Group – 31 December 2022
220
Furthermore, the revaluation of the immovable properties is updated on an individual basis at the time the exposure is
classified as NPE and at least annually (either through individual evaluations or statistical methods) while it continues to be
classified as such.
The Group and the Company according to Credit Policy Manual are constantly monitoring the changes in the market conditions
in the real estate market, either internally through macroeconomic reports of the Group’s Chief Economist, or externally
through reports produced by prestigious independent valuation firms. Changes in market conditions are considered as an
important factor determining the market value of a real estate property. More volatile real estate market conditions may lead
to a higher evaluation frequency.
The Group and the Company may also obtain guarantees from parent companies for loans and advances granted to their
subsidiaries.
Group
31/12/2022
Type of collateral or credit enhancement
Real estate
collateral
Financial collateral
Other collateral
Total value of
collateral
Guarantees
received
Loans and advances to customers at
amortised cost
14,899
1,427
5,423
21,749
3,449
Mortgages
6,426
70
56
6,551
-
Consumer, Personal and Other
350
78
153
581
-
Credit Cards
0
1
-
1
-
Large Corporate
5,018
853
1,069
6,940
1,453
SMEs
3,105
425
2,580
6,110
1,996
Public Sector
1
1
1,565
1,566
-
Total financial assets at amortised cost
14,899
1,427
5,423
21,749
3,449
Derivative financial instruments
-
635
-
635
-
Total financial instruments at FVTPL
0
635
0
635
0
Financial guarantees
126
120
86
333
1,046
Letters of credit
0
1
0
1
2
Irrevocable undrawn credit commitments
595
31
37
663
1,464
Total
721
152
123
996
2,512
Piraeus Financial Holdings Group – 31 December 2022
221
Group
31/12/2021
Type of collateral or credit enhancement
Real estate
collateral
Financial collateral
Other collateral
Total value of
collateral
Guarantees
received
Loans and advances to customers at
amortised cost
14,900
1,417
4,363
20,680
3,091
Mortgages
6,643
61
70
6,774
0
Consumer, Personal and Other
388
73
162
622
0
Credit Cards
0
1
-
1
-
Large Corporate
4,278
884
958
6,120
930
SMEs
3,591
398
1,691
5,680
2,161
Public Sector
1
1
1,482
1,484
-
Total financial assets at amortised cost
14,900
1,417
4,363
20,680
3,091
Derivative financial instruments
-
500
-
500
-
Total financial instruments at FVTPL
0
500
0
500
0
Financial guarantees
123
100
81
304
839
Letters of credit
2
0
2
4
1
Irrevocable undrawn credit commitments
411
21
54
486
1,092
Total
536
121
137
793
1,932
As of 31 December 2022 and 2021 the Company has zero balances.
The below tables provide the fair value of collaterals held and credit enhancements for Stage 3 loans and advances to
customers at amortised cost. Depending on the level of collateral some Stage 3 loans and advances to customers at amortised
cost may not have individual ECLs when the expected value of the collateral is greater than loan’s carrying amount, even if the
future value of collateral is forecasted using multiple economic scenarios.
Group
Fair value of collateral and credit enhancements of Stage 3 loans and advances to customers at
amortised cost held under the base scenario
31/12/2022
Type of collateral or credit enhancement
Real estate
collateral
Financial
collateral
Other
collateral
Total value of
collateral
Guarantees
received
Associated
ECL
Loans and advances to customers at
amortised cost
1,066
17
189
1,271
322
1,115
Mortgages
285
1
4
290
-
48
Consumer, Personal and Other
46
1
3
50
-
116
Credit Cards
0
0
-
0
-
41
Large Corporate
331
3
21
354
147
325
SMEs
404
12
157
573
175
581
Public Sector
-
-
4
4
-
4
Total loans and advances to
customers at amortised cost
1,066
17
189
1,271
322
1,115
Financial guarantees
13
1
8
22
137
80
Letters of credit
-
-
-
-
0
0
Total
13
1
8
22
137
80
Piraeus Financial Holdings Group – 31 December 2022
222
Group
Fair value of collateral and credit enhancements of Stage 3 loans and advances to customers at
amortised cost held under the base scenario
31/12/2021
Type of collateral or credit enhancement
Real estate
collateral
Financial
collateral
Other
collateral
Total value of
collateral
Guarantees
received
Associated
ECL
Loans and advances to customers at
amortised cost
2,015
97
268
2,381
533
1,508
Mortgages
346
2
6
354
0
36
Consumer, Personal and Other
55
3
2
60
0
101
Credit Cards
0
0
-
0
-
40
Large Corporate
579
77
29
686
163
460
SMEs
1,035
15
227
1,277
369
870
Public Sector
-
0
4
5
-
-
Total loans and advances to
customers at amortised cost
2,015
97
268
2,381
533
1,508
Financial guarantees
16
2
8
26
155
77
Letters of credit
-
-
-
-
0
0
Total
16
2
8
26
155
77
As of 31 December 2022 and 2021 the Company has zero balances.
4.3.4 Loan-to-value ratio of mortgage and commercial real estate lending portfolios
The below table depicts the Loan-to-value (LTV) ratio, which represents the correlation between mortgage and commercial
portfolios gross carrying amounts and the value of the property held as collateral (plus any other eligible collateral according
to credit policy manual). A clustering of residential and commercial real estate, by range of LTV, is summarized as follow:
31/12/2022
Group
Mortgages
(gross
amounts)
Commercial
real estate
loans (gross
amounts)
Less than 50%
3,082
50
50%-70%
1,568
53
71%-80%
555
19
81%-90%
415
35
91%-100%
311
8
101%-120%
356
37
121%-150%
254
3
Greater than 150%
338
17
Total exposure
6,879
223
Weighted Average LTV
63.1%
92.5%
Piraeus Financial Holdings Group – 31 December 2022
223
31/12/2021
Group
Mortgages
(gross amounts)
Commercial real
estate loans
(gross amounts)
Less than 50%
2,811
42
50%-70%
1,620
72
71%-80%
645
33
81%-90%
499
49
91%-100%
418
19
101%-120%
504
27
121%-150%
331
43
Greater than 150%
368
52
Total exposure
7,195
337
Weighted Average LTV
66.1%
104.2%
As of 31 December 2022 and 2021 the Company has no mortgage and commercial real estate lending portfolios.
4.3.5 Repossessed collaterals
The below mentioned real estate collaterals refer to property that is included in line items "Other Assets", "Property and
equipment", "Investment property" and "Assets held for sale" in the Statement of Financial Position.
Group
Gross amount
Of which:
added this year
Accumulated
impairment or
fair value
adjustment
Of which: on
newly added
Net amount
Net Sale Price
of repossessed
collaterals sold
Net gain /
losses on sale
of repossessed
collaterals
31/12/2022
Real estate
2,029
60
(127)
(19)
1,902
53
6
455
33
(29)
(4)
425
24
3
1,574
27
(98)
(16)
1,477
29
3
Other collateral
8
0
(7)
(1)
1
1
0
Group
Gross amount
Of which:
added this year
Accumulated
impairment or
fair value
adjustment
Of which: on
newly added
Net amount
Net Sale Price
of repossessed
collaterals sold
Net gain /
losses on sale
of repossessed
collaterals
31/12/2021
Real estate
2,033
112
(158)
(28)
1,875
61
6
431
46
(32)
3
399
32
5
1,602
66
(126)
(31)
1,476
29
2
Other collateral
9
0
(7)
(1)
2
0
0
As of 31 December 2022 and 2021 the Company has no repossessed collaterals.
The Group mainly through its subsidiary “Piraeus Bank S.A.” grants loans and advances to customers at amortised cost which
are collateralised by property. In case these loans become defaulted, the Group and the Bank proceed to the repossession of
the relevant property, if this is assessed as the best solution by the responsible, authorized for this purpose, units / committees
of the Bank and the other members of the Group. In this context, Management assesses the specific characteristics of each
property (such as the type and the condition of the property, the location, possible uses, etc.) and the cost for acquiring the
Piraeus Financial Holdings Group – 31 December 2022
224
property, taking into account the potential value of subsequent sale or the potential benefit of the own use of the asset. In this
context, as at 31 December 2022 the carrying amount of the repossessed property classified as investment property, which is
also been rented, amounted to € 471 million.
The aforementioned assessment is part of the Group and the Bank's strategy and is in line with the real estate owned assets
(“REO”) Policy Framework and its objectives for profitability, liquidity and capital adequacy.
For the Group and the Bank, the selection of property acquired from auctions and / or via voluntary surrenders is performed
by the Property Committee of the Group, which is responsible for deciding in which auctions the Bank will participate in the
acquisition of the collateral in cooperation with Intrum Debt Servicer. Furthermore, the management of the above mentioned
property
as well as the supervision of the cooperating REO servicers is performed by the Group Real Estate (GRE).
Regarding the property for sale there are procedures in place that involve several sale channels. These procedures are
supervised by GRE and are executed via the Bank's branch network, real estate agencies or direct sales, while e-bidding
procedures (
are being performed, as well as public tenders through the press. Relevant sale
procedures are executed through the channels of the cooperating servicers (i. Intrum REO Solutions and ii. REM Real Estate
Management). Furthermore, rental agreements for many acquired properties, managed by GRE, are signed
in collaboration
with the corresponding servicers, when it is presumed that the rental income offered by the potential lessee is favorable for
the Group and the Bank compared to the rental assessment of the asset. Those rental agreements for the perimeter of assets
under the exclusive management of GRE are being monitored by the responsible cooperating servicers, who are responsible
for the monitoring and collection of rental agreements of the assets included in the perimeter under their management
respectively. Additionally, the Real Estate portfolio includes property to be used by the Bank or to be rented to other
subsidiaries or associates of the Group. This portfolio is managed by GRE, in cooperation with the Technical Division
Department of the Bank. In addition, special property that can be utilized through further investments, is examined on an
individual base.
The above mentioned activities determine the basic policy and framework for the Group’s procedures under normal real estate
conditions. However, the management assesses alternative scenarios for portfolio sales of repossessed property or their
contribution to various investment vehicles, in cooperation with external advisors, in an attempt for the improvement of total
assets’ return.
4.4 Forbearance
Overview of modified and forborne loans
The Group applies the “Implementing Technical Standards” (“ITS”) of EBA relating to forborne loans.
The alignment of the Restructuring Policy of the Group with the relevant EBA definitions and BoG guidelines, was backed up
with the development of structures and procedures, deployment of new information systems and updates on existing
applications, in order to achieve more effective and reliable management of loans past dues, by performing restructurings
according to the financial ability of the borrower and monitoring the effectiveness of various types of forbearance measures.
Forborne loans and advances are defined as exposures arising from loans that have been subject to forbearance measures.
These measures are considered as a concession of the Group to a borrower who is facing or is about to face financial difficulties
in fulfilling its debt obligations. Forbearance may involve modification of contractual terms and conditions and/or refinancing
Piraeus Financial Holdings Group – 31 December 2022
225
of debts.
Forbearance measures do not lead to derecognition, unless the modification changes substantially the loan terms of the
original contract.
According to the EBA ITS Guidelines, for the forborne status to be removed, all relevant criteria should apply, including mainly
the minimum required probation period (at least 2 years from the date of classification as non forborne exposure). The group
has relevant detailed procedures in place.
In order to achieve greater efficiencies in the management of NPEs, the Company entered in October 2019 to a long-term
strategic partnership with Intrum for the management of NPEs and REOs, through the establishment of an independent NPE
servicing entity in Greece. Intrum Group is providing restructuring and turnaround services of NPE portfolios aiming at
maximising recoveries and, minimising credit related losses, in line with the operational and financial targets set by the Group.
The Group Planning Committee of the Bank, which inter-alia, is responsible for the management of loans’ past dues,
collaborates with Group Risk Management for the achievement of a common understanding and the development of
appropriate methodologies to assess the risk of the portfolio managed by Intrum. Group Risk Management monitors the
forbearance process, assesses the relative risks by portfolio and forbearance type and informs the CRO about the NPE
evolutions on a monthly basis.
Credit quality of forborne loans and advances to customers measured at amortised cost
31/12/2022
Group
Company
Loans
measured at
amortised cost
Forborne
Loans
measured at
amortised cost
% of Forborne
Loans
measured at
amortised cost
Loans
measured at
amortised cost
Forborne
Loans
measured at
amortised cost
% of Forborne
Loans
measured at
amortised cost
Stage 1
31,932
0
0.0%
-
-
0.0%
Stage 2
3,797
1,223
32.2%
-
-
0.0%
Stage 3
2,277
936
41.1%
-
-
0.0%
POCI
782
206
26.4%
-
-
0.0%
Total Gross exposure
38,787
2,365
6.1%
0
0
0.0%
Stage 1 ECL allowance
(37)
(0)
0.0%
(0)
-
0.0%
Stage 2 ECL allowance
(120)
(44)
36.9%
(0)
-
0.0%
Stage 3 ECL allowance
(1,115)
(351)
31.5%
0
-
0.0%
POCI ECL allowance
(148)
(24)
16.4%
(0)
-
0.0%
Total ECL allowance
(1,421)
(420)
29.5%
(0)
0
0.0%
Stage 1
31,895
0
0.0%
(0)
-
0.0%
Stage 2
3,677
1,178
32.0%
(0)
-
0.0%
Stage 3
1,162
585
50.4%
0
-
0.0%
POCI
633
182
28.7%
(0)
-
0.0%
Loans measured at amortised cost
37,367
1,945
5.2%
(0)
0
0.0%
Value of collateral
21,749
1,727
7.9%
-
-
0.0%
Piraeus Financial Holdings Group – 31 December 2022
226
31/12/2021
Group
Company
Loans
measured at
amortised cost
Forborne
Loans
measured at
amortised cost
% of Forborne
Loans
measured at
amortised cost
Loans
measured at
amortised cost
Forborne
Loans
measured at
amortised cost
% of Forborne
Loans
measured at
amortised cost
Stage 1
28,007
-
0.0%
-
-
0.0%
Stage 2
5,126
1,387
27.1%
-
-
0.0%
Stage 3
4,342
1,777
40.9%
-
-
0.0%
POCI
1,016
308
30.3%
-
-
0.0%
Total Gross exposure
38,492
3,472
9.0%
0
0
0.0%
Stage 1 ECL allowance
(91)
-
0.0%
(0)
-
0.0%
Stage 2 ECL allowance
(175)
(59)
33.8%
(0)
-
0.0%
Stage 3 ECL allowance
(1,508)
(442)
29.3%
0
-
0.0%
POCI ECL allowance
(197)
(21)
10.5%
(0)
-
0.0%
Total ECL allowance
(1,971)
(522)
26.5%
(0)
0
0.0%
Stage 1
27,917
-
0.0%
(0)
-
0.0%
Stage 2
4,950
1,328
26.8%
(0)
-
0.0%
Stage 3
2,834
1,335
47.1%
0
-
0.0%
POCI
820
287
35.0%
(0)
-
0.0%
Loans measured at amortised cost
36,521
2,950
8.1%
(0)
0
0.0%
Value of collateral
20,680
2,216
10.7%
-
-
0.0%
Forborne loans and advances to customers measured at amortised cost by type of forbearance measure
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Reduced payment schedule
395
556
-
-
Payment moratorium/ Holidays
21
71
-
-
Term extension
177
149
-
-
Arrears capitalization
113
91
-
-
Hybrid (i.e. combination of forbearance measures)
1,037
1,826
-
-
Other
202
258
-
-
Total net amount
1,945
2,950
0
0
For presentation purposes and due to amendment performed during this year as regards to mapping of types of forbearance
measures, the respective comparative amounts per type have been amended accordingly.
Reconciliation of forborne loans and advances to customers measured at amortised cost
Piraeus Financial Holdings Group – 31 December 2022
227
Group
Company
31/12/2022
31/12/2021
31/12/202
2
31/12/2021
Opening balance as at 1/1 (net)
2,950
6,967
-
1,140
Forbearance measures during the year
435
1,056
-
47
Repayment of loans (partial or total)
(282)
(443)
-
(21)
Loans that exited forbearance status during the year
(989)
(1,891)
-
-
Transfer (to)/ from Held for sale
(152)
(1,566)
-
-
Derecognition of forborne loans
-
(977)
-
(977)
ECL impairment charge for the year
(33)
(241)
-
(190)
FX differences and other movements
16
43
-
0
Contribution to the new credit institution
-
-
-
-
Closing balance (net)
1,945
2,950
0
(0)
Forborne loans and advances to customers measured at amortised cost by product line
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Retail lending
869
1,141
0
0
Mortgage
761
980
-
-
Consumer, Personal and Other
107
160
-
-
Credit cards
0
0
-
-
Corporate lending
1,077
1,810
0
0
Large Corporate
513
805
-
-
SME's
564
1,004
-
-
Public sector
0
0
0
0
Greece
-
-
-
-
Other Countries
-
-
-
-
Total net amount
1,945
2,950
0
0
Forborne loans and advances to customers measured at amortised cost by geographical region
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Greece
1,921
2,916
-
-
Rest of Europe
24
34
-
-
Total net amount
1,945
2,950
0
0
4.5 Debt to equity transactions
Piraeus Financial Holdings Group – 31 December 2022
228
In certain cases, a debt restructuring may involve the exchange of equity for debt in an effort to make the borrower’s businesses
viable. Such debt restructuring agreements result to obtaining a controlling interest, joint control, significant influence or a
minority shareholding over the borrower. The Group did not engage into material debt to equity transactions with third party
in 2022. In 2021, the Group acquired an ownership interest in Euromedica, which is accounted for as an associate ever since.
Further information is provided in the following table:
2021
S/N
Company
% Holding
Date of
acquisition
Cost of
acquisition
1
EUROMEDICA SOCIETE ANONYME FOR PROVISION OF
MEDICAL SERVICES
29.4%
17/11/2021
11
4.6 Debt securities at amortised cost and debt securities measured at FVTOCI
The tables below present the credit rating and stage allocation of debt securities measured at FVTOCI, based on Standard and
Poor’s rating scale:
Group
External rating grade of debt securities measured at FVTOCI
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
AAA
-
-
-
-
0
A- to A+
-
-
-
-
0
BBB- to ΒΒΒ+
0
-
-
-
0
BB- to ΒΒ+
795
-
-
-
795
Lower than BB-
1
-
-
-
1
Unrated
0
-
-
-
0
Total
796
0
0
0
796
Group
External rating grade of debt securities measured at FVTOCI
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
AAA
106
-
-
-
106
A- to A+
18
-
-
-
18
BBB- to ΒΒΒ+
177
-
-
-
177
BB- to ΒΒ+
1,568
3
-
-
1,571
Lower than BB-
408
19
-
-
427
Unrated
-
-
-
-
0
Total
2,277
22
0
0
2,299
Piraeus Financial Holdings Group – 31 December 2022
229
The Company had no debt securities measured at FVTOCI as at 31 December 2022 and 2021.
The tables below present the credit rating, stage allocation and ECL allowance of debt securities measured at amortised cost,
based on Standard and Poor’s rating scale:
Group
External rating grade of debt securities at amortised cost
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
ECL Allowance
Total
AAA
10
-
-
-
10
0
10
A- to A+
21
-
-
-
21
0
21
BBB- to ΒΒΒ+
2,463
-
-
-
2,463
0
2,462
BB- to ΒΒ+
8,126
-
-
-
8,126
25
8,101
Lower than BB-
248
11
-
-
258
9
250
Total
10,867
11
0
0
10,878
34
10,844
Company
External rating grade of debt securities at amortised cost
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
ECL Allowance
Total
BBB- to ΒΒΒ+
-
-
-
-
-
-
-
BB- to ΒΒ+
819
-
-
-
819
23
796
Lower than BB-
-
-
-
-
0
-
-
Total
819
0
0
0
819
23
796
Group
External rating grade of debt securities at amortised cost
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
ECL Allowance
Total
BBB- to ΒΒΒ+
2,429
-
-
-
2,429
0
2,429
BB- to ΒΒ+
6,772
-
-
-
6,772
18
6,754
Lower than BB-
18
-
-
-
18
0
18
Total
9,219
0
0
0
9,219
19
9,200
Company
External rating grade of debt securities at amortised cost
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
ECL Allowance
Total
BBB- to ΒΒΒ+
-
-
-
-
0
-
-
BB- to ΒΒ+
-
-
-
-
0
-
-
Lower than BB-
786
-
-
-
786
29
757
Total
786
0
0
0
786
29
757
4.7 Concentration of risks of financial assets with credit risk exposure
Piraeus Financial Holdings Group – 31 December 2022
230
Geographical sector
The following tables break down the gross carrying amounts of financial assets, which are exposed to credit risk. The credit risk
exposure is based on the country of domicile of each counterparty.
Group
Gross carrying amounts
31/12/2022
Greece
Other Countries
Grand
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Due from banks
77
0
(0)
-
77
674
-
-
-
674
750
Loans and advances to
customers at amortised
cost
22,526
3,612
1,735
766
28,638
9,407
185
542
15
10,149
38,787
Retail Lending
5,673
1,994
509
390
8,566
90
46
64
9
208
8,774
Mortgages
4,478
1,649
315
316
6,758
73
28
11
9
121
6,879
Consumer, Personal and
Other
860
246
146
71
1,323
16
17
53
0
86
1,410
Credit cards
335
99
47
3
484
1
0
0
0
1
485
Corporate and Public
Sector Lending
16,852
1,617
1,226
376
20,072
9,317
139
478
6
9,941
30,013
Large Corporate
8,572
424
439
100
9,535
9,206
112
221
2
9,541
19,076
SMEs
6,665
1,193
782
275
8,915
111
28
257
4
400
9,314
Public Sector
1,615
0
5
2
1,623
-
-
-
-
0
1,623
Financial assets at FVTOCI
795
-
-
-
795
1
-
-
-
1
796
Debt securities at
amortised cost
8,177
-
-
-
8,177
2,690
11
-
-
2,701
10,878
Other assets - Financial
Instruments
967
43
166
-
1,176
137
0
57
-
194
1,370
Total
32,542
3,654
1,901
766
38,863
12,909
196
599
15
13,719
52,581
Piraeus Financial Holdings Group – 31 December 2022
231
Group
Gross carrying amounts
31/12/2021
Greece
Other Countries
Grand
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Due from banks
45
-
-
-
45
1,299
0
(0)
-
1,299
1,344
Loans and advances to
customers at amortised
cost
19,382
5,059
3,327
1,007
28,775
8,625
67
1,015
10
9,717
38,492
Retail Lending
5,708
2,219
613
430
8,970
97
52
63
7
219
9,189
Mortgages
4,564
1,774
391
335
7,064
83
29
13
6
131
7,195
Consumer, Personal
and Other
823
330
173
91
1,417
14
23
49
0
86
1,503
Credit cards
321
115
50
4
490
1
0
0
0
1
491
Corporate and Public
Sector Lending
13,674
2,840
2,714
577
19,805
8,528
15
952
3
9,498
29,303
Large Corporate
6,869
1,165
1,093
111
9,237
8,435
6
337
2
8,780
18,017
SMEs
5,260
1,675
1,616
464
9,015
93
9
615
0
718
9,733
Public Sector
1,545
0
5
2
1,553
-
-
-
-
0
1,553
Financial assets at FVTOCI
1,879
8
-
-
1,887
398
14
-
-
412
2,299
Debt securities at
amortised cost
6,716
-
-
-
6,716
2,503
-
-
-
2,503
9,219
Other assets - Financial
Instruments
774
41
171
-
986
119
0
44
-
163
1,149
Total
28,797
5,109
3,498
1,007
38,410
12,943
81
1,059
10
14,093
52,503
Company
Gross carrying amounts
31/12/2022
Greece
Other Countries
Grand
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Due from banks
45
-
-
-
45
-
-
-
-
0
45
Debt securities at
amortised cost
819
-
-
-
819
-
-
-
-
0
819
Other assets - Financial
Instruments
18
-
0
-
18
0
-
11
-
11
29
Total
882
0
0
0
882
0
0
11
0
11
893
Company
Gross carrying amounts
31/12/2021
Greece
Other Countries
Grand
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Due from banks
50
-
-
-
50
-
-
-
-
0
50
Debt securities at
amortised cost
786
-
-
-
786
-
-
-
-
0
786
Other assets - Financial
Instruments
11
-
0
-
11
-
-
-
-
0
11
Total
848
0
0
0
848
0
0
0
0
0
848
Piraeus Financial Holdings Group – 31 December 2022
232
Industry Sector
The following tables break down the gross carrying amounts per industry sector of the Group’s financial assets that are exposed to credit risk, inclusive of staging classification
per industry. The allocation was performed according to the business sector of each counterparty.
Piraeus Financial Holdings Group – 31 December 2022
233
Group
Gross carrying amounts - Industry sectors
31/12/2022
Financial
corporations
Manufacturing
/ Handicraft
Construction
Real Estate
Companies
Project
Finance
Wholesale
and retail
trade
Public
sector
Shipping
Companies
Coastline/
Ferries
Companies
Hotels
Agricul-
ture
Energy
Transport
and Logistics
Other
industries
Individuals
Total
Due from banks
750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750
Loans and advances to
customers at amortised
cost
7,344
4,032
914
1,093
2,198
3,272
1,623
2,206
223
2,345
577
938
709
2,539
8,774
38,787
Retail lending
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,774
8,774
Mortgages
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,879
6,879
Consumer, Personal
and Other
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,410
1,410
Credit cards
-
-
-
-
-
-
-
-
-
-
-
-
-
-
485
485
Corporate and Public
Sector Lending
7,344
4,032
914
1,093
2,198
3,272
1,623
2,206
223
2,345
577
938
709
2,539
-
30,013
Large Corporate
7,272
1,775
351
755
2,183
902
-
2,206
223
1,199
19
628
361
1,203
-
19,076
SMEs
72
2,257
563
337
15
2,371
-
-
-
1,146
558
311
348
1,336
-
9,314
Public Sector
1,623
1,623
Financial assets at FVTOCI
-
-
-
-
-
-
796
-
-
-
-
-
-
-
-
796
Debt securities at
amortised cost
521
82
-
9
-
-
10,010
-
-
-
-
27
27
201
-
10,878
Other assets - Financial
Instruments
81
18
18
14
0
4
605
0
0
0
0
9
0
482
138
1,370
Total
8,696
4,133
932
1,115
2,198
3,277
13,034
2,207
223
2,345
577
974
736
3,222
8,912
52,581
Stage 1
8,632
3,488
545
791
2,182
2,563
12,968
2,141
124
1,772
493
890
483
2,523
5,855
45,451
Stage 2
39
325
225
36
5
354
16
62
-
296
34
26
97
295
2,040
3,850
Stage 3
14
277
137
251
10
309
48
3
99
183
43
32
154
320
619
2,499
POCI
10
43
26
37
-
52
2
0
-
94
7
27
2
84
399
781
Total
8,696
4,133
932
1,115
2,198
3,277
13,034
2,207
223
2,345
577
974
736
3,222
8,912
52,581
The Group’s gross carrying amount of the Public sector’s Loans and advances of € 1,623 million as at 31 December 202 2 includes the funding facility to OPEKEPE of € 1,558
million (31 December 2021: € 1,474 million). This amount was repaid in the first quarter of 2023.
Piraeus Financial Holdings Group – 31 December 2022
234
Group
Gross carrying amounts - Industry sectors
31/12/2021
Financial
corporation
s
Manufacturing
/ Handicraft
Construction
Real Estate
Companies
Project
Finance
Wholesale
and retail
trade
Public
sector
Shipping
Companies
Coastline/
Ferries
Companies
Hotels
Agricul-
ture
Energy
Transport
and Logistics
Other
industries
Individuals
Total
Due from banks
1,344
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,344
Loans and advances to
customers at amortised
cost
7,155
3,889
1,071
1,316
1,936
3,245
1,553
1,980
222
2,292
565
735
773
2,573
9,189
38,492
Retail lending
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,189
9,189
Mortgages
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,195
7,195
Consumer, Personal
and Other
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,503
1,503
Credit cards
-
-
-
-
-
-
-
-
-
-
-
-
-
-
491
491
Corporate and public
sector lending
7,155
3,889
1,071
1,316
1,936
3,245
1,553
1,980
222
2,292
565
735
773
2,573
-
29,303
Large Corporate
7,114
1,524
383
808
1,870
750
-
1,980
222
1,107
15
509
397
1,339
-
18,017
SMEs
42
2,365
688
508
66
2,495
-
-
-
1,185
551
226
375
1,234
-
9,733
Public Sector
1,553
1,553
Financial assets at FVTOCI
314
52
-
15
-
4
1,681
-
-
-
-
25
10
198
-
2,299
Debt securities at
amortised cost
-
-
-
-
-
-
9,219
-
-
-
-
-
-
-
-
9,219
Other assets - Financial
Instruments
79
19
23
8
-
6
518
0
-
0
0
5
0
346
146
1,149
Total
8,892
3,960
1,093
1,339
1,936
3,255
12,971
1,981
222
2,292
565
765
782
3,117
9,334
52,503
Stage 1
8,429
2,636
586
732
1,852
2,240
12,894
1,946
118
963
362
669
412
1,999
5,905
41,740
Stage 2
7
636
144
105
5
426
16
3
-
782
64
48
95
588
2,271
5,190
Stage 3
445
599
331
430
73
497
58
32
104
427
123
47
271
398
722
4,557
POCI
12
89
33
71
5
92
2
0
-
119
17
1
5
133
436
1,016
Total
8,892
3,960
1,093
1,339
1,936
3,255
12,971
1,981
222
2,292
565
765
782
3,117
9,334
52,503
The following tables break down the gross carrying amounts per industry sector of the Company’s financial assets that are exposed to credit risk, inclusive of staging
classification per industry. The allocation was performed according to the business sector of each counterparty.
Piraeus Financial Holdings Group – 31 December 2022
235
Company
Gross carrying amounts - Industry sectors
31/12/2022
Financial
corporation
s
Manufacturing
/ Handicraft
Construction
Real Estate
Companies
Project
Finance
Wholesale
and retail
trade
Public
sector
Shipping
Companies
Coastline/
Ferries
Companies
Hotels
Agricul-
ture
Energy
Transport
and Logistics
Other
industries
Individuals
Total
Due from banks
45
-
-
-
-
-
-
-
-
-
-
-
-
-
-
45
Debt secutities at
amortised cost
819
-
-
-
-
-
-
-
-
-
-
-
-
-
-
819
Other assets - Financial
Instruments
1
-
-
-
-
-
0
-
-
-
-
-
-
28
-
29
Total
864
0
0
0
0
0
0
0
0
0
0
0
0
28
0
893
Stage 1
864
-
-
-
-
-
0
-
-
-
-
-
-
17
-
882
Stage 3
-
-
-
-
-
-
-
-
-
-
-
-
-
11
-
11
Total
864
0
0
0
0
0
0
0
0
0
0
0
0
28
0
893
Company
Gross carrying amounts - Industry sectors
31/12/2021
Financial
corporation
s
Manufacturing
/ Handicraft
Construction
Real Estate
Companies
Project
Finance
Wholesale
and retail
trade
Public
sector
Shipping
Companies
Coastline/
Ferries
Companies
Hotels
Agricul-
ture
Energy
Transport
and Logistics
Other
industries
Individuals
Total
Due from banks
50
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50
Debt securities at
amortised cost
786
-
-
-
-
-
-
-
-
-
-
-
-
-
-
786
Other assets - Financial
Instruments
1
-
-
-
-
-
0
-
-
-
-
-
-
11
-
11
Total
837
0
0
0
0
0
0
0
0
0
0
0
0
11
0
848
Stage 1
837
-
-
-
-
-
-
-
-
-
-
-
-
11
-
848
Stage 3
-
-
-
-
-
-
-
-
-
-
-
-
-
0
-
0
Total
837
0
0
0
0
0
0
0
0
0
0
0
0
11
0
848
The following tables break down the nominal amounts of off-balance items per industry sector of the Group’s financial assets that are exposed to credit risk inclusive of
staging classification per industry. The allocation was performed according to the business sector of each counterparty.
Piraeus Financial Holdings Group – 31 December 2022
236
Group
Nominal Amounts of Off Balance Sheet Items - Industry sectors
31/12/2022
Financial
corporation
s
Manufacturing
/ Handicraft
Construction
Real Estate
Companies
Project
Finance
Wholesale
and retail
trade
Public
sector
Shipping
Companies
Coastline/
Ferries
Companies
Hotels
Agricult
ure
Energy
Transport
and Logistics
Other
industries
Individuals
Total
Letters of Guarantee
2,180
536
987
28
-
246
-
-
-
46
13
466
57
230
-
4,789
Letters of Credit
0
54
6
1
-
12
-
-
-
-
4
-
-
36
-
114
Irrevocable undrawn credit
commitments
58
164
74
103
224
71
-
164
-
176
36
216
41
188
106
1,624
Balance at 31/12/2022
2,239
755
1,068
132
224
330
0
164
0
222
53
681
98
454
106
6,527
Stage 1
2,238
717
920
126
224
274
-
164
-
207
49
680
95
433
71
6,200
Stage 2
1
8
15
-
0
38
-
-
-
4
2
1
2
12
34
116
Stage 3
0
30
132
6
-
17
-
-
-
11
0
0
1
6
0
204
POCI
-
0
-
-
-
0
-
-
-
-
2
0
0
3
1
6
Total
2,239
755
1,068
132
224
330
0
164
0
222
53
681
98
454
106
6,527
Group
Nominal Amounts of Off Balance Sheet Items - Industry sectors
31/12/2021
Financial
corporatio
ns
Manufacturing
/ Handicraft
Construction
Real Estate
Companies
Project
Finance
Wholesale
and retail
trade
Public
sector
Shipping
Companies
Coastline/
Ferries
Companies
Hotels
Agricul-
ture
Energy
Transport
and Logistics
Other
industries
Individuals
Total
Letters of Guarantee
1,752
326
953
30
-
221
-
-
-
44
5
114
59
262
-
3,764
Letters of Credit
8
11
1
-
-
12
-
-
-
-
2
-
-
9
-
42
Irrevocable undrawn credit
commitments
18
109
14
88
154
45
-
48
-
107
47
21
42
266
90
1,050
Balance at 31/12/2021
1,777
446
967
118
154
278
0
48
0
151
54
134
101
538
90
4,856
Stage 1
1,776
401
778
114
154
226
-
48
-
100
44
130
88
496
65
4,421
Stage 2
1
13
41
0
-
39
-
-
-
39
8
4
11
24
24
204
Stage 3
0
32
148
4
-
13
-
-
-
11
1
0
2
13
0
224
POCI
-
0
-
-
-
0
-
-
-
1
2
0
0
4
1
7
Total
1,777
446
967
118
154
278
0
48
0
151
54
134
101
538
90
4,856
As at 31 December 2022 and 2021, the Company does not have any off balance sheet credit exposures.
Piraeus Financial Holdings Group – 31 December 2022
237
Receivables from the Greek Public Sector
The following table presents the carrying amount of the Group’s and the Company’s receivables from the Greek Public Sector.
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Derivative financial instruments
31
296
-
-
Debt securities at FVTPL
154
445
-
0
Loans and advances at amortised cost
1,619
1,551
-
-
Debt securities at amortised cost
7,517
6,698
-
0
Debt securities at FVTOCI
795
1,450
-
-
Other assets
731
650
12
20
Total
10,848
11,090
12
20
During 2022, the Group purchased GGBs of nominal value € 2.2 billion, which were classified at amortised cost. Refer to Note
25 for further information on material debt securities transactions throughout the reporting year.
4.8 Offsetting of financial assets and liabilities
According to the provisions of IFRS 7 “Financial Instruments: Disclosures”, the impact or the possible impact of enforceable
master netting agreements or similar agreements for financial instruments on the Statement of Financial Position of the Group
and the Company should be disclosed. More specifically, the disclosures should include the following:
i.
The financial assets and liabilities, which are offset in accordance with the criteria of IAS 32 and the net amount is
presented in the Statement of Financial Position, when there is a legally enforceable right and the intention to
settle the net amounts or simultaneously collect the receivable and settle the obligation.
ii.
The transactions which fall under International Swaps and Derivatives Association (“ΙSDA”) contracts and similar
master netting agreements irrespectively of whether these are offset or not in the Statement of Financial Position.
The Group and the Company have not offset any financial assets or liabilities on 31 December 2022 and 2021, given that the
netting criteria mentioned in the first case (i) are not fulfilled.
The following tables, present for the Group the gross amounts of the financial instruments recognised as at 31 December 2022
and 2021, as well as the net effect on the Statement of Financial Position from the exercise of netting rights (“net amount”)
arising from ISDA contracts and similar master netting agreements. Therefore, these tables include mainly the following
financial instruments: a) interest rate swap contracts (“IRSs”), cross currency interest rate swap contracts, fx forwards, currency
swaps and options, for which there are ISDA contracts and b) interbank repos covered by Global Master Repurchase Agreement
(“GMRA”).
As of 31 December 2022 and 2021, the Company did not hold ISDA contracts and similar master netting agreements.
Piraeus Financial Holdings Group – 31 December 2022
238
Group
Financial Position
31/12/2022
Recognised financial
assets (gross
amounts)
Financial liabilities
(offset amounts)
Net amount of
financial assets
Recognized financial
instruments and
other non cash
collateral received
Cash collateral
received
Net amount
Financial Assets
Derivative financial instruments
1,830
-
1,830
24
1,768
38
Reverse Repurchase agreements
52
-
52
52
-
-
Total
1,883
0
1,883
76
1,768
38
Group
Financial Position
31/12/2022
Recognised financial
liabilities (gross
amounts)
Financial assets
(offset amounts)
Net amount of
financial liabilities
Recognized financial
instruments and
other non cash
collateral pledged
Cash collateral
pledged
Net amount
Financial Liabilities
Derivative financial instruments
656
-
656
224
358
74
Repurchase agreements
298
-
298
298
0
-
Total
954
0
954
522
359
74
Group
Financial Position
31/12/2021
Recognised financial
assets (gross
amounts)
Financial liabilities
(offset amounts)
Net amount of
financial assets
Recognized financial
instruments and
other non cash
collateral received
Cash collateral
received
Net amount
Financial Assets
Derivative financial instruments
591
-
591
291
229
70
Reverse Repurchase agreements
51
-
51
51
-
-
Total
643
0
643
343
229
70
Group
Financial Position
31/12/2021
Recognised financial
liabilities (gross
amounts)
Financial assets
(offset amounts)
Net amount of
financial liabilities
Recognized financial
instruments and
other non cash
collateral pledged
Cash collateral
pledged
Net amount
Financial Liabilities
Derivative financial instruments
393
-
393
6
360
27
Repurchase agreements
286
-
286
286
0
0
Total
679
0
679
292
360
27
4.9 Market risk
Market risk is the current or prospective risk of loss due to adverse movements in the level or the volatility of market prices
and rates, including interest rates, equity and commodity prices and foreign exchange rates.
Piraeus Financial Holdings Group – 31 December 2022
239
The Risk Committee of the BoD has approved a market risk management policy that applies to both the Group and the Company
and outlines the basic definitions of market risk management and defines the roles and responsibilities of the units and
executives involved. The Group and the Company engage in moderate trading activities in order to enhance profitability and
service their clientele. These trading activities bears an inherent market risk, which the Group and the Company pursue to
identify, estimate, monitor and manage effectively through a framework of principles, measurement processes and a valid set
of limits that apply to all the transactions of the Group and the Company. The most significant types of market risk for the
Group and the Company are interest rates, equity and foreign exchange risk.
The Group and the Company apply up to date, generally accepted techniques for the measurement of market risk. Specifically,
sensitivity indicators such as CSPV01 (adverse impact to the net present value of the bond portfolio for a 1 basis point parallel
move in the yield spread curve) as well as Value -at-Risk (VaR incorporates all risk factors) are calculated.
For every activity that bears an inherent market risk, the Group and the Company have assigned adequate market risk limits
which are monitored systematically. Market risk management is not confined to trading book activities but covers the
Statement of Financial Position as a whole.
The Value-at -Risk measure is an estimate of the potential loss in the net present value of a portfolio, over a specified period
and with a specified confidence level. The Group as of 1
st
of July 2022, has enhanced its VaR model from Parametric approach
to Historical Simulation (HVaR), as the latter, among others, does not assume that the portfolio follows a normal distribution
and consequently the VaR is not a result of statistical parameters (volatility), whilst it is also applicable for fat tails, being more
precise for all kinds of products, inclusive of non-linear products.
The HVaR is a scenario-based method based on historical data variations and it is more precise for non-linear products. It uses
past observations to infer the potential future movements of market parameters, with no assumption about the risk factors
distribution. Market data shifts are measured over a look-back period of two years at daily horizons. The current positions are
fully revaluated using these shifted market parameters. After applying the different historical scenarios, the simulated profit
& loss variations are sorted from the lowest to the highest. The VaR is determined by reading the corresponding value out of
the ordered profit & loss variations at the desired confidence level. In the context of the above, the VaR results presented in
the table below are not comparable with the ones calculated in 2021.
As the Value-at-Risk methodology evaluates the maximum risk at a specified confidence level (e.g. a 99% VaR measures a loss
that is expected to be exceeded only 1% of the time), another metric the Expected Shortfall (ES), captures the tail risk that is
not accounted for in the existing VaR measures. Thus, ES calculates the average loss above this level (e.g. a 99% ES measures
the average of the worst 1% of losses).
As a complement to VaR, a stress test analysis is conducted to estimate the potential outcomes on portfolio values under
exceptional events. A scenario analysis approach is used where a series of shifts (historical or market specific) on market
parameters is defined. Stress testing results are produced by the same calculation engine that produces VaR figures and are
analyzed on a scenario basis to identify how the positions perform under the predefined scenarios.
The Group and the Company evaluate the validity of the Value-at-Risk estimates, by conducting a relevant back-testing
program on the trading book VaR, through the comparison of the Value-at-Risk estimate against the actual change in the value
of the portfolio, due to the changes in market prices, on a daily basis.
The Value -at-Risk estimate for the Group’s Trading Book as at 31 December 2022 amounted to € 2.8 million. This estimate
comprises € 1.0 million for interest rate risk, € 1.6 million for equity risk, nil for commodities risk and € 0.2 million for foreign
Piraeus Financial Holdings Group – 31 December 2022
240
exchange risk. As at 31 December 2022 and 2021, the Company does not have any exposure included in trading book and
hence there is not a relevant VaR metric.
The table below summarizes the VaR calculations depicting both approaches as at 31 December 2022 and 2021.
Group - Amounts in € million
VaR
Risk
VaR
Equity Risk
VaR
Foreign Exchange
Risk
VaR
Commodities Risk
Diversification
2022 – Historical Simulation
2.8
1.0
1.6
0.2
0.0
-
2021 – Parametric Approach
5.7
5.6
1.0
1.0
0.5
-2.5
4.10 Currency risk
The Group and the Company are exposed to effects of fluctuations in the prevailing foreign currency exchange rates on their
financial position and cash flows. Management sets limits on the level of exposure by currency, which are monitored daily. The
tables below summarise the Group’s and the Company's exposure to foreign currency exchange risk as at 31 December 2022
and 2021.
The following tables include an analysis per currency of the Group’s and the Company's carrying amount of both assets and
liabilities, as well as the notional amounts of derivatives, which reduce significantly the undertaken foreign currency exchange
risk:
Piraeus Financial Holdings Group – 31 December 2022
241
Group
EUR
USD
GBP
JPY
CHF
Other
currencies
Total
31/12/2022
Assets
Cash and balances with Central Banks
9,535
26
13
0
4
76
9,653
Due from banks
638
38
6
2
35
32
750
Financial assets at FVTPL
548
0
-
-
-
-
548
Financial assets mandatorily measured at FVTPL
165
17
-
-
-
-
182
Derivative financial instruments (notional amounts)
1,499
1,093
227
20
2
226
3,067
Loans and advances to customers at amortised cost
34,292
2,335
4
1
680
54
37,367
Loans and advances to customers mandatorily measured at FVTPL
52
-
-
-
-
0
52
Financial assets measured at FVTOCI
879
17
-
-
-
1
897
Debt securities at amortised cost
10,820
1
23
-
-
-
10,844
Investment property
1,459
-
-
-
-
63
1,522
Investments in associated undertakings and joint ventures
1,023
0
-
-
-
-
1,023
Property and equipment
724
-
-
-
-
4
728
Intangible assets
311
-
0
-
-
1
312
Tax receivables
145
-
-
-
0
0
145
Deferred tax assets
5,972
-
-
-
-
2
5,974
Other assets
3,369
15
1
0
(0)
42
3,427
Assets held for sale
386
0
-
-
20
0
406
Assets from discontinued operations
-
-
-
-
-
-
-
Total assets
71,816
3,542
274
23
741
500
76,897
Liabilities
Due to banks
6,816
63
42
-
0
1
6,922
Due to customers
55,303
2,597
127
3
25
317
58,372
Derivative financial instruments (notional amounts)
1,171
898
105
20
742
138
3,075
Debt securities in issue
849
-
-
-
-
-
849
Other borrowed funds
937
-
-
-
-
-
937
Current income tax liabilities
7
-
-
-
-
0
7
Deferred tax liabilities
9
-
-
-
-
1
10
Retirement and termination benefit obligations
55
-
-
-
-
0
55
Provisions
122
0
0
-
0
2
123
Liabilities held for sale
2
-
-
-
-
-
2
Other liabilities
1,129
(0)
0
(0)
0
17
1,147
Liabilities from discontinued operations
-
-
-
-
-
-
-
Total liabilities
66,400
3,559
274
23
767
476
71,499
Derivative financial instruments - fair value adjustment
1,182
0
0
0
0
0
1,182
Foreign currency exposure
6,599
(16)
0
(0)
(26)
24
6,581
Piraeus Financial Holdings Group – 31 December 2022
242
Group
EUR
USD
GBP
JPY
CHF
Other
currencies
Total
31/12/2021
Assets
Cash and balances with Central Banks
15,432
22
9
0
4
52
15,519
Due from banks
1,231
40
3
3
32
35
1,344
Financial assets at FVTPL
906
0
-
-
-
-
906
Financial assets mandatorily measured at FVTPL
177
28
-
-
-
-
205
Derivative financial instruments (notional amounts)
1,708
452
101
1
4
264
2,529
Loans and advances to customers at amortised cost
33,549
2,142
3
2
730
95
36,521
Loans and advances to customers mandatorily measured at FVTPL
77
-
-
-
-
0
77
Financial assets measured at FVTOCI
2,334
19
-
-
-
13
2,366
Debt securities at amortised cost
9,183
9
-
-
-
9
9,200
Investment property
970
-
-
-
-
71
1,041
Investments in associated undertakings and joint ventures
630
0
-
-
-
-
630
Property and equipment
883
-
-
-
-
6
890
Intangible assets
266
-
0
-
-
1
267
Tax receivables
160
-
-
-
0
0
160
Deferred tax assets
6,067
-
-
-
-
3
6,070
Other assets
3,233
122
1
0
25
71
3,453
Assets held for sale
208
206
-
-
22
0
435
Assets from discontinued operations
114
-
-
-
-
-
114
Total assets
77,127
3,040
117
6
817
620
81,728
Liabilities
Due to banks
14,794
50
1
-
4
16
14,865
Due to customers
52,789
2,179
118
1
19
337
55,442
Derivative financial instruments (notional amounts)
738
758
0
8
867
185
2,556
Debt securities in issue
971
-
-
-
-
-
971
Other borrowed funds
935
-
-
-
-
-
935
Current income tax liabilities
5
-
-
-
-
0
5
Deferred tax liabilities
9
-
-
-
-
1
10
Retirement and termination benefit obligations
75
-
-
-
-
0
75
Provisions
134
0
-
0
0
2
136
Liabilities held for sale
3
-
-
-
-
-
3
Other liabilities
1,119
(0)
0
(0)
(0)
5
1,124
Liabilities from discontinued operations
28
-
-
-
-
-
28
Total liabilities
71,600
2,987
119
9
889
546
76,150
Derivative financial instruments - fair value adjustment
225
0
0
0
0
0
225
Foreign currency exposure
5,752
53
(2)
(3)
(72)
74
5,803
Piraeus Financial Holdings Group – 31 December 2022
243
Company
EUR
USD
GBP
JPY
CHF
Other
currencies
Total
31/12/2022
Assets
Due from banks
45
-
-
-
-
-
45
Financial assets mandatorily measured at FVTPL
-
-
-
-
-
-
-
Loans and advances to customers mandatorily measured at FVTPL
-
-
-
-
-
-
-
Financial assets measured at FVTOCI
0
2
-
-
-
-
2
Debt securities at amortised cost
796
-
-
-
-
-
796
Investments in subsidiaries
5,546
-
-
-
-
12
5,558
Property and equipment
1
-
-
-
-
-
1
Tax receivables
12
-
-
-
-
-
12
Other assets
43
1
0
-
-
-
44
Total assets
6,442
3
0
0
0
12
6,457
Liabilities
Other borrowed funds
936
-
-
-
-
-
936
Deferred tax liabilities
0
-
-
-
-
-
0
Other liabilities
55
(0)
0
(0)
0
-
55
Total liabilities
992
(0)
0
(0)
0
0
992
Derivative financial instruments - fair value adjustment
0
0
0
0
0
0
0
Foreign currency exposure
5,450
3
0
0
(0)
12
5,465
Piraeus Financial Holdings Group – 31 December 2022
244
Company
EUR
USD
GBP
JPY
CHF
Other
currencies
Total
31/12/2021
Assets
Due from banks
50
-
-
-
-
-
50
Financial assets mandatorily measured at FVTPL
9
-
-
-
-
-
9
Loans and advances to customers mandatorily measured at FVTPL
26
-
-
-
-
-
26
Financial assets measured at FVTOCI
0
-
-
-
-
-
0
Debt securities at amortised cost
757
-
-
-
-
-
757
Investments in subsidiaries
5,524
-
-
-
-
15
5,539
Property and equipment
0
-
-
-
-
-
0
Tax receivables
20
-
-
-
-
-
20
Other assets
26
0
0
-
-
-
26
Total assets
6,413
0
0
0
0
15
6,428
Liabilities
Other borrowed funds
934
-
-
-
-
-
934
Deferred tax liabilities
1
-
-
-
-
-
1
Other liabilities
54
(0)
0
(0)
0
-
54
Total liabilities
989
(0)
0
(0)
0
0
989
Derivative financial instruments - fair value adjustment
0
0
0
0
0
0
0
Foreign currency exposure
5,424
0
0
0
(0)
15
5,439
4.11 Interest rate risk
Interest rate risk is the risk of a negative impact on the Group and the Company’s financial position due to its exposure to
interest rates fluctuations.
Changes in interest rates affect the Group and the Company's profitability by changing its Net Interest Income and the level of
the other interest - sensitive income and expenses.
Changes in interest rates also affect the underlying value of the Group and the Company's assets and liabilities because the
present value of future cash flows (and in some cases, the cash flows themselves) changes when interest rates also change.
Accordingly, an effective interest rate risk management process that assesses, monitors and helps maintain interest rate risk
within prudent levels (through effective hedging, where relevant), is essential for the sustainability and soundness of the Group
and the Company’s financial performance.
The Group and the Company apply an Interest Rate Risk Management Policy outlining various valuation techniques that mainly
rely on maturity and repricing schedules, incorporating behavioral models, where necessary.
As presented in the tables below, interest rate gap analysis is a maturity / repricing schedule that distributes interest-sensitive
assets and liabilities into a certain number of predefined time bands, according to their maturity (for fixed-rate instruments)
or time remaining to their next repricing (for floating-rate instruments).
Piraeus Financial Holdings Group – 31 December 2022
245
Those assets and liabilities lacking actual maturities (e.g. open accounts) or definitive repricing intervals (e.g. sight deposits or
savings accounts) are assigned to the appropriate time band through the application of behavioral models.
Assets and liabilities in foreign currency are translated into Euro using the corresponding FX rates as of the reporting date.
Group
Up to 1
month
1 - 3
months
3 - 12
months
1 - 5 years
Over 5
years
Non-
interest
bearing
Total
31/12/2022
Financial assets
Cash and balances with Central Banks
9,643
0
0
-
-
10
9,653
Due from banks
649
69
7
3
-
23
750
Financial assets at FVTPL
73
145
212
46
53
19
548
Financial assets mandatorily measured at FVTPL
-
-
32
-
12
138
182
Loans and advances to customers
14,743
7,669
6,627
5,298
3,080
0
37,418
Financial assets measured at FVTOCI
79
157
322
10
227
101
897
Debt securities at amortised cost
1
679
242
1,160
8,761
-
10,844
Other assets
0
0
5
35
92
1,064
1,196
Total financial assets
25,189
8,720
7,446
6,552
12,225
1,356
61,489
Financial liabilities
Due to banks
6,715
103
5
92
7
0
6,922
Due to customers
29,216
4,304
6,505
10,621
7,726
0
58,372
Debt securities in issue
-
-
-
849
-
-
849
Other borrowed funds
-
-
-
937
-
-
937
Other liabilities
2
1
3
2
-
1,139
1,147
Total financial liabilities
35,933
4,408
6,513
12,501
7,733
1,139
68,227
Net notional amount of derivative financial
instruments
842
(23)
88
2,618
(3,537)
(12)
Total interest rate gap
(9,902)
4,290
1,022
(3,331)
955
217
(6,750)
Piraeus Financial Holdings Group – 31 December 2022
246
Group
Up to 1
month
1 - 3
months
3 - 12
months
1 - 5 years
Over 5
years
Non-
interest
bearing
Total
31/12/2021
Financial assets
Cash and balances with Central Banks
15,512
-
0
-
-
7
15,519
Due from banks
1,261
64
8
-
-
11
1,344
Financial assets at FVTPL
58
16
159
89
564
20
906
Financial assets mandatorily measured at FVTPL
-
-
32
-
11
162
205
Loans and advances to customers
15,190
6,994
6,080
4,823
3,505
5
36,598
Financial assets measured at FVTOCI
59
113
187
562
1,379
67
2,366
Debt securities at amortised cost
-
3
29
160
9,008
-
9,200
Other assets
0
0
0
1
6
975
981
Total financial assets
32,081
7,189
6,496
5,635
14,472
1,248
67,121
Financial liabilities
Due to banks
14,760
87
4
16
-
-
14,865
Due to customers
23,736
5,364
7,475
11,366
7,500
0
55,442
Debt securities in issue
470
-
-
500
-
-
971
Other borrowed funds
-
-
-
935
-
-
935
Other liabilities
7
2
4
2
0
1,109
1,124
Total financial liabilities
38,973
5,453
7,483
12,819
7,500
1,109
73,337
Net notional amount of derivative financial
instruments
983
4,068
1,673
76
(6,829)
(30)
Total interest rate gap
(5,910)
5,804
687
(7,108)
142
139
(6,246)
Company
Up to 1
month
1 - 3
months
3 - 12
months
1 - 5 years
Over 5
years
Non -
interest
bearing
Total
31/12/2022
Financial assets
Due from banks
45
-
-
-
-
-
45
Financial assets mandatorily measured at FVTPL
-
-
-
-
-
-
-
Loans and advances to customers
0
-
-
-
-
-
0
Financial assets measured at FVTOCI
-
-
-
-
-
2
2
Debt securities at amortised cost
-
-
-
796
-
-
796
Other assets
-
-
-
-
-
29
29
Total financial assets
45
0
0
796
0
31
871
Financial liabilities
Other borrowed funds
-
-
-
936
-
-
936
Other liabilities
-
-
-
-
-
55
55
Total financial liabilities
0
0
0
936
0
55
992
Total interest rate gap
45
0
0
(141)
0
(24)
(120)
Piraeus Financial Holdings Group – 31 December 2022
247
Company
Up to 1
month
1 - 3
months
3 - 12
months
1 - 5 years
Over 5
years
Non-
interest
bearing
Total
31/12/2021
Financial assets
Due from banks
50
-
-
-
-
-
50
Financial assets mandatorily measured at FVTPL
-
-
-
-
-
9
9
Loans and advances to customers
-
-
-
-
26
-
26
Financial assets measured at FVTOCI
-
-
-
-
-
0
0
Debt securities at amortised cost
-
-
-
757
-
-
757
Other assets
-
-
-
-
-
11
11
Total financial assets
50
0
0
757
26
21
855
Financial liabilities
Other borrowed funds
-
-
-
934
-
-
934
Other liabilities
-
-
-
-
-
54
54
Total financial liabilities
0
0
0
934
-
54
988
Total interest rate gap
50
0
0
(176)
26
(33)
(134)
The Group and the Company calculate any change in the net present value of on balance-sheet items in response to a change in
interest rates by assuming a parallel yield curve shift of 1 basis point (PV01).
The interest rate gap analysis enables the evaluation of interest rate risk using the
changes in
Net Interest Income (“ΔNII”)
measure, which denotes the negative effect on the expected annual interest income, as a result of a parallel shift in interest
rates for all currencies considered.
For ΔNII and PV01, Management has assigned adequate limits, which are monitored on a regular basis.
Management evaluates potential financial losses under stressful market conditions. Possible stress scenarios include abrupt
changes in the level of interest rates, changes in the slope and the shape of the yield curves, or changes in the volatility of
market rates.
Interest rate risk disclosures under Pillar III are available at the Group’s website.
4.12 Liquidity risk
Management acknowledges that effective Liquidity Risk Management is essential to the Group’s ability to meet its liabilities,
while also safeguarding its financial results and its capital adequacy. Liquidity risk is defined as the risk arising from the Group’s
inability to meet its cash flow obligations when they come due, without incurring unacceptable costs or losses at all times,
including under stress.
The Group applies a uniform Liquidity Risk Management Policy for the effective management of liquidity risk, approved by the
Board Risk Management Committee. This policy complies with the supervisory regulations and is consistent with best practices
applied internationally.
The policy specifies the principal liquidity risk assessment definitions and methodologies, defines the roles and responsibilities
of the Company’s Units, Group subsidiaries and staff involved and sets out the guidelines for liquidity crisis management. In
order to manage liquidity risk effectively, Management monitors, inter alia, the amount, quality and
Piraeus Financial Holdings Group – 31 December 2022
248
composition/diversification of its liquid assets, the cash flow analysis of its assets and liabilities (inflows, outflows) in time
buckets, the composition/diversification and cost of its funding sources, the composition/diversification and funding capacity
of its unencumbered collateral and its funding needs in local and foreign currencies.
Furthermore, the policy defines a contingency funding plan to be used in the case of a liquidity crisis. Such a crisis can take
place either due to an event specific to the Company or due to a market-driven event. Triggers and early warning signals
prescribed within the contingency funding plan serve as indicators for its realisation.
The Company and the Group LCR and NSFR are calculated on a monthly and quarterly basis, respectively, as per regulation (EU)
No. 575/2013. As at 31 December 2022, both the Group LCR and NSFR exceeded the minimum regulatory threshold of 100%,
standing at 201% and 137% respectively. Liquidity Risk disclosures under Pillar III are available at the Group’s website.
Under Directive 2013/36/EU (known as CRD IV), which has been transported into Greek Law by virtue of Greek Law 4261/2014,
credit institutions are required to have comprehensive strategies, procedures, policies and systems to ensure adequate
monitoring of liquidity risk. In accordance with the said Directive, the Group submitted in 2022 to the SSM, its annual ILAAP
report, which includes the rules governing the management of liquidity risk and the main results of current and future liquidity
position assessments for the Company and the Group. In addition, within the ICAAP and ILAAP framework, Management
examined stress test scenarios and assessed their impact on the Company’s and the Group’s liquidity position and on
mandatory liquidity ratios.
Contractual undiscounted cash flows
The contractual undiscounted cash flows of non-derivative financial liabilities and irrevocable undrawn credit commitments
are presented in the tables below. Liquidity risk arising from derivative liabilities is not considered significant. The cash flows
arising from liabilities items are calculated and classified into time periods in accordance with the contractual maturity date or
an estimated date based on a statistical analysis.
Group
31/12/2022
Up to 1 month
1 - 3 months
3 - 12 months
1 - 5 years
Over 5 years
Total
Due to banks
1,261
3
2,071
3,848
43
7,225
Due to customers
52,984
2,870
2,511
25
-
58,389
Debt securities in issue
5
-
19
1,061
-
1,085
Other borrowed funds
-
28
39
994
-
1,061
Other liabilities
187
80
45
86
181
580
Total
54,437
2,980
4,685
6,014
225
68,341
Irrevocable undrawn credit commitments
0
8
71
990
554
1,624
Piraeus Financial Holdings Group – 31 December 2022
249
Group
31/12/2021
Up to 1 month
1 - 3 months
3 - 12 months
1 - 5 years
Over 5 years
Total
Due to banks
379
4
14,309
94
47
14,834
Due to customers
48,660
3,639
3,085
64
0
55,449
Debt securities in issue
2
-
493
78
521
1,094
Other borrowed funds
-
28
39
1,061
-
1,127
Other liabilities
99
62
174
77
26
439
Total
49,141
3,733
18,099
1,374
595
72,942
Irrevocable undrawn credit commitments
1
2
28
638
380
1,050
Company
31/12/2022
Up to 1 month
1 - 3 months
3 - 12 months
1 - 5 years
Over 5 years
Total
Other borrowed funds
-
28
39
994
-
1,061
Other liabilities
0
44
6
0
0
51
Total
0
72
45
994
0
1,111
Irrevocable undrawn credit commitments
-
-
-
-
0
-
Company
31/12/2021
Up to 1 month
1 - 3 months
3 - 12 months
1 - 5 years
Over 5 years
Total
Other borrowed funds
-
28
39
1,061
-
1,127
Other liabilities
0
44
3
0
-
47
Total
0
71
42
1,061
0
1,174
Irrevocable undrawn credit commitments
-
0
0
0
0
-
4.13 Transfers of financial assets
As of 31 December 2022 and 2021, the carrying amount of transferred financial assets , which continue to be recognized in
their entirety on the Group’s Statement of Financial Position, inclusive of the associated liabilities, are presented in the
following tables:
31/12/2022
Transferred assets
Associated liabilities
Carrying amount
Carrying amount
Group
Company
Group
Company
Financial assets at FVTPL
55
-
54
-
Loans and advances to customers
10,833
-
6,489
-
Financial assets at FVTOCI
0
-
0
-
Debt securities at amortised cost
427
-
337
-
Total
11,316
0
6,881
0
Piraeus Financial Holdings Group – 31 December 2022
250
31/12/2021
Transferred assets
Associated liabilities
Carrying amount
Carrying amount
Group
Company
Group
Company
Financial assets at FVTPL
863
-
759
-
Loans and advances to customers
9,478
-
5,691
-
Financial assets at FVTOCI
1,630
-
1,315
-
Debt securities at amortised cost
9,045
-
7,409
-
Total
21,016
0
15,173
0
Transactions whereby financial assets are transferred, but continue to be recognized in their entirety on the Group’s Statement
of Financial Position relate to Eurosystem funding under the general terms applying to such agreements, and securities sold
under agreements to repurchase, which are conducted under GMRAs. With respect to Eurosystem funding, a haircut is
generally applied to the collateral, which results in the associated liabilities having a carrying value less than the carrying value
of the transferred assets. The Group is unable to use, sell or pledge the aforementioned assets during the term of the
transaction and remains exposed to interest rate risk and credit risk on these assets. The counterparty’s recourse is not limited
to the transferred assets.
The Group has not transferred financial assets that are not subject to derecognition in full, but remain on the Statement of
Financial Position to the extent of continuing involvement or were derecognized in full, but continuing involvement exists.
The subsidiary that contributes to the Group amounts is Piraeus Bank S.A.
4.14 Financial instruments not measured at fair value
The following tables summarise the fair values and carrying amounts of those financial instruments, which are not measured
at fair value on a recurring basis, and their carrying amount is not a reasonable approximation of fair value.
Group
Carrying
Amount
Fair Value
31/12/2022
31/12/2022
Level 1
Level 2
Level 3
Financial assets
Loans and advances to customers at amortised cost
37,367
37,007
-
-
37,007
Debt securities at amortised cost
10,844
9,139
8,842
297
-
Financial liabilities
Debt securities in issue
849
774
774
-
-
Other borrowed funds
937
848
848
-
-
Piraeus Financial Holdings Group – 31 December 2022
251
Group
Carrying
Amount
Fair Value
31/12/2021
31/12/2021
Level 1
Level 2
Level 3
Financial assets
Loans and advances to customers at amortised cost
36,521
36,556
-
-
36,556
Debt securities at amortised cost
9,200
8,982
8,982
-
-
Financial liabilities
Debt securities in issue
971
964
488
476
-
Other borrowed funds
935
957
957
-
-
Company
Carrying
Amount
Fair Value
31/12/2022
31/12/2022
Level 1
Level 2
Level 3
Financial assets
Debt securities at amortised cost
796
760
-
760
-
Financial liabilities
Other borrowed funds
936
848
848
-
-
Company
Carrying
Amount
Fair Value
31/12/2021
31/12/2021
Level 1
Level 2
Level 3
Financial assets
Debt securities at amortised cost
757
780
-
780
-
Financial liabilities
Other borrowed funds
934
957
957
-
-
The following methods and assumptions were used to estimate the fair values of the aforementioned financial instruments at
31 December 2022 and 2021.
Loans and advances to customers at amortised cost
: Fair value is estimated using discounted cash flow models, taking into
account yield curves observable in the market as of the date of the valuation and adjustments for credit risk.
Debt securities at amortised cost, debt securities in issue and other borrowed funds
: Fair value is estimated using market
prices, or, if such is not available, using discounted cash flow models based on current market interest rates offered for
instruments with similar credit quality and duration.
4.15 Financial assets and liabilities measured at fair value
Fair value is the price that would be received to sell a financial asset or paid to transfer a liability in an orderly transaction
between market participants, at the measurement date, under current market conditions.
IFRS 13 establishes a fair value hierarchy that categorises financial instruments into three levels based on the type of inputs to
the valuation techniques used, as follows:
Level 1
at the measurement date. Level 1 assets and liabilities include debt and equity securities, as well as derivative contracts that
are traded in an active and organized market structure (i.e. exchange listed futures and options). An active market is a market
Piraeus Financial Holdings Group – 31 December 2022
252
in which transactions for assets or liabilities take place with sufficient frequency and volume to provide information on an
ongoing basis and are characterized by low bid/ask spreads.
Level 2
markets that are not active, or other inputs that are observable or can be corroborated by observable market data for the full
term of the instrument. An input is observable if it is developed using market data, such as publicly available information about
events or transactions, and reflects the assumptions that market participants would use when pricing the asset or liability.
Level 2 assets and liabilities include Over the Counter (“OTC”) derivatives and securities whose values are determined using
pricing models, discounted cash flow methodologies, or similar techniques with inputs that are observable in the market or
can be corroborated by observable market data.
Level 3
assumptions market participants would use in the circumstances. An input is unobservable if, in the absence of market data
availability, it is developed using the best information available about the assumptions that market participants would use
when pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose value is determined using
pricing models, discounted cash flow methodologies, or similar techniques with inputs that require significant management
judgement or estimation. OTC complex derivatives transactions or structured securities, which are valued using a non-market
standard model, comprising substantial model uncertainty, are classified as level 3 instruments.
The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. The level of the fair
value hierarchy within which the fair value measurement is categorized, is determined on the basis of the lowest input that is
significant to the fair value measurement. For this purpose, the significance of an input as well as model uncertainty are
assessed against the entire fair value measurement of the instrument.
The following table presents the fair value by hierarchy, of the financial assets and liabilities which are measured at fair value,
on a recurring basis, and continue to be recognized, in their entirety, on the Group΄s Statement of Financial Position at the end
of the reporting period, by fair value hierarchy level:
Piraeus Financial Holdings Group – 31 December 2022
253
Financial instruments measured at fair value and basis of valuation
Group
31/12/2022
31/12/2021
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Derivative financial instruments
-
1,830
-
1,830
-
591
-
591
Financial assets at FVTPL
434
114
-
548
849
57
-
906
Financial assets mandatorily measured at FVTPL
104
-
78
182
112
-
93
205
Loans and advances to customers mandatorily
measured at FVTPL
-
-
52
52
-
-
77
77
Financial assets at FVTOCI
872
-
25
897
2,132
212
22
2,366
Financial liabilities
Derivative financial instruments
-
656
-
656
-
393
-
393
Financial instruments measured at fair value and basis of valuation
Company
31/12/2022
31/12/2021
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets mandatorily measured at FVTPL
-
-
-
-
-
-
9
9
Loans and advances to customers mandatorily
measured at FVTPL
-
-
-
-
-
-
26
26
Financial assets at FVTOCI
-
-
2
2
-
-
-
-
Transfers between Level 1 and Level 2
Within the year ended 31 December 2022, € 134 million of bonds issued by corporations and financial institutions were
transferred from Level 1 to Level 2, while € 22 million of corporate bonds were transferred from Level 2 to Level 1, due to
change in their trading activity. There were no transfers of financial liabilities between Level 1 and Level 2 during the years
ended 31 December 2022 and 31 December 2021. Transfers between levels of fair value hierarchy are deemed to have
occurred at the end of the reporting period, in which the financial instruments were transferred.
Level 3 financial instruments
Level 3 financial instruments include:
a)
Credit impaired loans and advances to customers, which are mandatorily measured at FVTPL because their contractual
cash flows are not SPPI, are valued using an income approach expected cash flow (expected present value) technique
incorporating unobservable inputs.
b)
Financial assets mandatorily measured at FVTPL, including a) contingent consideration in the form of a performance
note payable to the Bank based on the EBITDA of: (i) Intrum Hellas Credit Servicing S.A.; (ii) Intrum Hellas REO Solutions
Piraeus Financial Holdings Group – 31 December 2022
254
S.A.; and (iii) any of their affiliates for a specified period of time, with par value and fair value of € 32 million, issued
by Intrum Holding Spain S.A.U., b) contingent and variable consideration asset recognized following the disposal of
loans and corporate receivables, the fair value of which was estimated at € 10 million, for which the models used to
estimate their fair value utilize significant unobservable inputs (e.g. discount rate, volatility, expected cash flows etc.).
c)
Mutual funds and closed end funds, which do not meet the definition of an equity instrument under IAS 32 and are
mandatorily measured at FVTPL, for which the models used to estimate the fair value are price-based and the price is
obtained from the fund manager.
d)
Equity securities at FVTOCI and FVTPL, which are not traded in active markets and their fair value is estimated on the
basis of the available information using an income or market approach, for which the main inputs used are earnings
forecasts, comparable multiples, net asset value, adjusted equity and other parameters which are not market
observable, as well as estimations that may adjust these values.
e)
Contingent convertible instruments for which the trigger of conversion to equity is based on non-market observable
triggers. (e.g. balance sheet or regulatory capital).
f)
Subordinated notes of the Sunrise, Phoenix and Vega securitizations retained by the Group as of 31 December 2022
classified within “Loans and advances mandatorily measured at FVTPL”, which have been valued using multiple
valuation techniques incorporating significant unobservable inputs.
During the period ended 31 December 2022 and 2021, there were no transfers into or out of Level 3. The following table
presents a movement of Level 3 fair value measurements for the aforementioned periods:
Piraeus Financial Holdings Group – 31 December 2022
255
Group
Movement of Level 3 instruments
Financial assets
mandatorily
measured at
FVTPL
Loans and
advances to
customers
mandatorily
measured at
FVTPL
Financial assets
at FVTOCI
Opening balance as at 1/1/2021
71
50
35
Gain/ (loss) recognised in the income statement
19
(2)
-
Purchases/Additions
11
-
-
Recognition of Phoenix, Vega I,II,III and Sunrise I and II subordinated notes
-
156
-
Disposals/ Contributions
(9)
(127)
(13)
FX differences
2
-
-
Closing Balance as at 31/12/2021
93
77
22
Gain/ (loss) recognised in the income statement
(26)
-
-
Purchases/Additions
29
-
3
Disposals/ Contributions
(22)
(25)
-
FX differences
5
-
-
Closing Balance as at 31/12/2022
78
52
25
Company
Movement of Level 3 Instruments
Financial assets
mandatorily
measured at
FVTPL
Loans and
advances to
customers
mandatorily
measured at
FVTPL
Financial assets
at FVTOCI
Opening Balance as at 1/1/2021
10
-
-
Gain/ (loss) recognised in the income statement
(1)
-
-
Gain/(loss) recognised in OCI
-
-
-
Recognition of Phoenix, Vega I,II, III and Sunrise I and II subordinated notes
-
147
-
Disposals/ Contributions
-
(121)
-
Closing Balance as at 31/12/2021
9
26
-
Gain/ (loss) recognised in the income statement
-
(1)
-
Purchases / Αdditions
-
-
2
Disposals/ Contributions
(9)
(25)
-
Closing Balance as at 31/12/2022
-
-
2
Valuation Process and Control Framework
Piraeus Financial Holdings Group – 31 December 2022
256
The Group has established appropriate processes and internal controls to ensure that the fair values of its financial assets and
liabilities are reasonably estimated. The fair value measurements are determined by functions of the Group that are
independent of the risk-taking unit.
The fair values of bonds are determined either by reference to prices for traded instruments in active markets, to external
quotations or widely accepted financial models, which are based on market observable or unobservable information where
the former is not available, as well as relevant market based parameters such as interest rates, option volatilities, currency
rates, etc. The Group may, sometimes, also utilize third-party pricing information, and perform validating procedures on this
information to the extent possible or base its fair value on the latest transaction prices available, given the absence of an active
market or similar transactions or other market observable inputs. Such instruments are categorised within the lowest level of
the fair value hierarchy (i.e. Level 3). The fair value measurement of debt securities, including significant inputs on the valuation
models, is performed by Middle Office and independently validated by Group Risk Management (“GRM”) on a systematic basis.
The Group mainly engages in vanilla derivative products, hence, the valuation models utilised are fairly standard across the
industry. Inputs to valuation models are determined based on market observable information wherever possible. Counterparty
credit risk-adjustments are applied on all OTC derivatives. The Group calculates a separate Credit Value Adjustment (“CVA”)
for each counterparty to which the Group has exposure. The CVA is estimated considering expected exposures generated using
simulation techniques (i.e. Monte Carlo simulation), as well as International Swaps and Derivatives Association (“ISDA”) master
netting agreements and collateral postings under Credit Support Annex (“CSA”) contracts. With respect to own credit risk, the
Group estimates a Debt Value Adjustment (“DVA”) by applying a methodology symmetric to the one applied for CVA. The
bilateral CVA (“BCVA”) is based on implied probabilities of default, derived from credit default swaps (“CDS”) spreads observed
in the market, or, if these are not available, from appropriate proxies. As of December 2022
and
2021, the BCVA was
immaterial.
On a systematic basis, adequate control procedures are in place for the validation of these models, including the valuation
inputs. The Group’s Middle Office and GRM provide the control valuation framework necessary to ensure that the fair values
are reasonably determined, reflecting current market circumstances and economic conditions. Furthermore, under European
Markets and Infrastructure Regulation (“EMIR”) regulation, the valuation of interbank OTC derivatives is reconciled on a daily
basis with counterparties’ valuations, under the daily collateral management process.
Quantitative information for the Level 3 fair value measurements of the Group as at 31 December 2022 and 2021:
Piraeus Financial Holdings Group – 31 December 2022
257
Financial instruments⁴
Fair
Value
Fair
Value
Valuation
Technique
Significant
Unobservable
Input
Range of Inputs
Range of Inputs
2022
2021
2022
2021
Low
High
Low
High
Financial assets mandatorily measured at
FVTPL – Contingent & variable
considerations
42
43
Monte Carlo
simulation
Revenue
volatility
Discount rate
Expected
EBITDA/CFs
15%
14%
n/a
2
15%
14%
n/a
2
15%
14%
n/a
2
15%
14%
n/a
2
Financial assets mandatorily measured at
FVTPL and FVTOCI – equity securities,
mutual funds
59
72
Income,
market
approach
n/a
1
n/a
1
n/a
1
n/a
1
n/a
1
Loans and advances to customers
mandatorily measured at FVTPL – Phoenix,
Vega I, II, III and Sunrise I and II
subordinated notes
6
34
Market
approach
Binding quotes
from third
parties
10%
5
23%
5
15%
5
36%
5
Loans and advances to customers
mandatorily measured at FVTPL – Other
46
43
Discounted
Cash Flows
Credit risk
adjusted
expected cash
flows
0%
3
100%
3
0%
3
100%
3
1
Mainly refers to equity participations of the Group in the share capital of private companies, thus the respective shares are not traded in active markets. In
the absence of an active market, the fair value of these securities is estimated using an income or market valuation approach. Given the bespoke nature of the
valuation method in respect of each equity shareholding, it is not practicable to quote a range of unobservable inputs. The changes in the value do not materially
affect the Group΄s results and assets.
2
The performance targets and forecasted EBITDA or Cash Flows (CFs) of the underlying associates or debtors’ of the Group, throughout the earnout calculation
period, are commercially sensitive and are not disclosed, given that disclosing them would be detrimental to the Group’s interests.
3
Represented as percentage of the loan’s gross carrying amount
4
Includes financial instruments with an individual fair value higher than € 5 million at the end of the reporting period.
5
Reasonably possible assumptions, other than the aforementioned used for determining unobservable inputs of Level 3
instruments, would not have a significant effect on the Group’s financial assets and liabilities measured at fair value on a
recurring basis.
4.16 Capital adequacy
The main objectives of Management with respect to capital adequacy are the following:
●
To comply with the capital requirements against risks undertaken, according to the regulatory framework,
●
To preserve the Group’s ability to continue its operations unhindered, thus to continue providing returns and benefits
Piraeus Financial Holdings Group – 31 December 2022
258
to its shareholders and ensure the confidence of their customers,
●
To retain a sound and stable capital base in order to support the Group’s Business Plans, and
●
To maintain and enhance existing infrastructures, policies, procedures and methodologies for the adequate coverage
of supervisory needs, in Greece and abroad.
The Group currently complies with the CRD IV regulatory framework (Basel III implementation under EU rules), which came
into force with Directive 2013/36/EU as transposed into Greek Law 4261/2014 (amended by Law 4799/2021) and Regulation
(EU) No. 575/2013 as it is currently in force.
The aforementioned regulatory framework requires financial institutions to maintain for the Group a minimum level of
regulatory capital related to the undertaken risks. The minimum thresholds for the capital adequacy ratios, as per article 92 of
the CRR2, are as follows:
Group
Common Equity Tier 1 Ratio (CET1)
4.5%
Tier 1 Ratio (T1)
6.0%
Total Capital Ratio (CAD Ratio)
8.0%
Following the activation of the SSM on 4 November 2014, the Group was placed under the direct supervision of the ECB.
The ECB, through the SREP decision on 2 February 2022, informed the Management on the revised OCR levels, effective since
1 March 2022. The Group has to maintain, on a consolidated basis, a Total SREP Capital Requirement (TSCR) of 11% and an
OCR of 14.25%, which includes:
a)
the minimum Pillar I total capital requirements of 8.0% as per article 92(1) of Regulation 575/2013/EU;
b)
an additional Pillar II capital requirement of 3.0% as per article 16(2) of Regulation 1024/2013/EU;
c)
the fully loaded capital conservation buffer of 2.5% under Greek Law 4261/2014; and
d)
the transitional Other Systemic Important Institutions (“O-SII”) capital buffer of 0.75% for 2022 under Greek Law
4261/2014.
The capital adequacy ratios as at 31 December 2022 for the Group, as calculated under the existing regulatory framework,
taking into account the relevant transitional period provisions applicable under Regulation 575/2013 and the transitional
arrangements applicable under Regulation (EU) 2395/2017 for mitigating the impact of the introduction of IFRS 9 on own
funds, were as follows:
Piraeus Financial Holdings Group – 31 December 2022
259
Group
31/12/2022
31/12/2021
Ordinary shares
1,163
1,188
Share premium
3,555
18,112
Contingent Convertible bonds
-
-
Less: Treasury shares
(0)
(2)
Other reserves and retained earnings
1,235
(14,110)
Minority Interest
28
15
Less: Intangible assets
(217)
(200)
Total regulatory adjustments on CET1 capital
(1,699)
(1,421)
Common Equity Tier 1 Capital (CET1)
4,064
3,582
Additional Tier 1 instruments
600
600
Total Additional Tier 1 Capital
600
600
Tier 1 Capital (Α)
4,664
4,182
Subordinated debt
893
891
Total Tier II Capital (B)
893
891
Total regulatory capital (Α) + (Β)
5,557
5,073
Total risk weighted assets (on and off- balance sheet items)
31,178
32,207
CET1 Capital ratio
13.04%
11.12%
T1 Capital ratio
14.96%
12.98%
Tοtal Capital ratio
17.82%
15.75%
As at 31 December 2022, the Total Capital Adequacy ratio for the Group stood at 17.82% and the CET1 ratio stood at 13.04%,
covering the minimum Overall Capital Requirement (“OCR”) levels. In addition, the fully loaded CET1 and Total Capital
Adequacy ratios for the Group stood at 11.5% and 16.4%, respectively on the same date.
During the period ended 31 December of 2022, the Group received SRT approval for Ermis Triton, Ermis Mortgage, Ermis EIF
and Ermis VI, four (4) synthetic securitization transactions of performing business/mortgage loans that led to a RWA relief of €
1,6 billion.
The Group has adopted the provisions of Article 473a of Regulation (EU) No 2017/2395, amending Regulation (EU) No 575/2013
relating to the CRR in regards with “transitional arrangements for mitigating the impact of the introduction of IFRS 9 on own
funds”. These transitional arrangements allowed the Group to add back to its capital base a proportion of the IFRS 9 impact
due to ECL allowance during the first five (5) years of use.
In addition, according to paragraph 7a that has been added to the said article, the Group replaced the rescaling of all exposure
values that are reduced by ECL allowance with a standard risk weight of 100% to be assigned to the amounts added back to
CET1 capital. In addition, the Group, following the amendment of the article 468 CRR 575/2013 has made use of the temporary
regulatory treatment of unrealized gains and losses of sovereign bonds measured at FVTOCI. Based on the said amendment of
article 468, institutions may remove from the calculation of their Common Equity Tier 1 items the unrealized gains and losses
accumulated since 31 December 2019 accounted for as “fair value changes” of sovereign debt securities, multiplied with a
prudential factor of 0.7 for the year 2021 and of 0.4 for the year 2022.
Piraeus Financial Holdings Group – 31 December 2022
260
Finally, Commission Delegated Regulation (EU) 2020/2176 of 12 November 2020 is applied from the end of December 2020
onwards, allowing financial institutions to measure software assets on a prudential accumulated amortization basis and risk
weight a regulatory defined part instead of fully deducting them from Common Equity Tier 1.
4.17 Risks related to the recognition of the main part of deferred tax assets as claims (Deferred Tax Credits) against
the Greek State as regulatory capital or as an asset
The calculation of the capital adequacy ratios of the Group, takes into account the deferred tax assets which have been
recognised on the basis of the relevant provisions of the IFRS. As at 31 December 2022 the deferred tax asset of the Group
amounted to € 5,974 million (31 December 2021: € 6,070 million). At each reporting date, the Group and the Company review
the carrying amount of the deferred taxation, which is likely to lead to a change in the amount of deferred tax asset recognised
in the Statement of Financial Position, and consequently affect the calculation of the capital adequacy ratios. Under the current
directive about the capital adequacy (“CRD IV”), deferred tax assets are deducted from the CET1 capital, if they exceed specific
limits.
Under the provisions of Greek Law 4172/2013, Article 27A, as amended by Greek Law 4465/2017 and being currently in effect,
deferred tax assets of Greek financial institutions, as well as deferred tax assets of leasing and factoring companies, that have
been recognized due to losses from the Private Sector Involvement (“PSI”) and accumulated provisions due to credit risk in
relation to existing loans and advances to customers as of 30 June 2015, as well as the accounting write offs and final losses
due to permanent write offs or restructuring of debts under certain conditions, will be converted from 2017 onwards into
directly enforceable claims (Tax Credit) against the Greek State, provided that the financial result under IFRS, is a loss from the
fiscal year 2016 onwards. This claim will be offset against the relevant amount of income tax of the legal person or companies
of the same corporate group (associated companies) of the tax year the approved financial statements refer to. When the
amount of income tax is insufficient to offset the above claim, any remaining claim will give rise to a direct refund right against
the Greek State. Simultaneously, equivalent conversion rights are granted to the Greek State for the issuance and delivery of
ordinary shares.
Existing shareholders have option to buy the conversion rights from the State. Furthermore, a gradual amortization over a 20-
year period of the final tax losses arising from write-offs and disposals is provided, maintaining the DTC status during all this
period, while it disconnects the accounting write-offs from final debt write-offs.
As at 31 December 2022, the DTA of the Group that meets the provisions of article 27 of Law 4172/2013, as currently in force
i.e. is eligible for Deferred Tax Credit (“DTC”), amounted to € 3,541 million (31 December 2021: € 3,617 million), of which €
1,050 million relates to unamortised PSI losses (31 December 2021: € 1,105 million) and € 2,491 million relates to temporary
differences between the IFRS carrying amount and tax base of loans and advances to customers (31 December 2021: € 2,512
million).
In addition, refer to Note 3.2 for the key sources of estimation uncertainty in regards with the recoverability of DTA.
recognition of deferred tax assets may be adversely affected by: a) the future reduction of income tax rates, b) the adverse
change of the regulations governing the treatment of deferred tax assets for regulatory capital purposes and c) any adverse
change in the interpretation of the aforementioned legislative amendments by the EC. In case where any of the
aforementioned risks occur, it would probably have an adverse effect on the adequacy of the Group’s regulatory capital ratios.
Piraeus Financial Holdings Group – 31 December 2022
261
4.18 IBOR Reform
During 2021, the Group has established an internal Benchmark Rates Reform Working Group (the “BR Working Group”), led
by senior representatives from Piraeus Bank’s Business Units, in order to manage the transition to the new risk-free rates
(“RFRs”), mitigate any related risks and comply with the regulatory requirements of the EU 2016/1011 – EU Benchmark
Regulation (EU BMR). In this context, the IBOR reform process for CHF / GBP / JPY related contracts was completed successfully.
In addition, the Group launched all necessary actions relating to the new USD risk-free reference rate definition (USD SOFR) in
order to replace the USD LIBOR Benchmark, which is expected to cease being representative and published on 30 June 2023.
More specifically, Piraeus Bank proceeded to the USD LIBOR contracts’ amendments with the insertion of new RFR SOFR
(Secured Overnight Financing Rate) definition and necessary fallback language provisions.
Financial instruments impacted by the reform
Changes made to a financial instrument measured at other than FVTPL, that are economically equivalent and required by
interest rate benchmark reform, do not result in derecognition or a change in their carrying amount. Instead, they require the
effective interest rate to be updated to reflect the change in the interest rate benchmark. In addition, hedge accounting
relationships should not be discontinued solely as a result of benchmark interest rate replacement, while any difference in
hedge effectiveness assessment arising from the reform should be treated as an additional source of ineffectiveness provided
that the hedge accounting relationship meets all other criteria.
The table below represents the non-derivative financial assets, non-derivative financial liabilities and derivative financial
instruments that have not yet completed the transition to an alternative benchmark rate:
Financial Instruments yet to transition to alternative benchmarks, by main benchmark
31/12/2022
USD LIBOR
Non derivative financial assets
2,306
Non derivative financial liabilities
-
Notional Amounts of Derivatives
Interest Rate Swaps
49
Options-Interest rate
84
Total
2,439
The amounts depicted in the table here above, reflect the 31 December 2022 carrying amount of non-derivative financial
assets, in specific loans and advances to customers at amortised cost, as well as the notional amounts of derivatives yet to
transition to alternative benchmarks.
As far as USD Libor benchmark loan accounts are concerned, these have not been reformed to the new RFR, since the
respective USD Libor benchmark is expected to cease being representative and published on 30 June 2023.
Piraeus Financial Holdings Group – 31 December 2022
262
As far as derivatives are concerned, following the announcement by ICE Benchmark Administration Limited (“IBA”), in March
2021, that the publication of the USD Libor would be extended on 30 June 2023, the Group’s transition program focused mainly
on client engagement for Sterling (GBP), Swiss franc (CHF) and Japanese yen (JPY) Libor interest rates, as well as EONIA.
Regarding EURIBOR, this underwent a methodological reform in 2019 to make it compliant with the regulatory requirements
laid down in the EU 2016/1011 –EU Benchmark Regulation (EU BMR). In specific, EURIBOR may continue to be representative
following a hybrid methodology that became applicable at the end of 2019, based on transactions, to the extent that these
exist, as well as on expert judgement as derived from related markets if there is no relevant unsecured money market activity.
Following the application of this methodology, the EURIBOR administrator (EMMI - European Money Markets Institute) has
confirmed that EURIBOR may continue to be used as a reference rate for new and legacy contracts after 1 January 2022.
In October 2022, the EMMI issued a press release to start publishing the forward-looking term rate EFTERM (Euro Forward
Looking Term Rate) on 14 November 2022. The EFTERM rate will be an alternative interest rate (fallback rate) for EURIBOR in
accordance with the provisions of Regulation (EU) 2016/1011 (Benchmark Regulation). The Group, assessing the future
possibility of EURIBOR reform, has initiated preparatory work for the adjustment of the respective contracts, by introducing
fallbacks provisions in the contracts, so as to cover the possibility of the abolition of EURIBOR and its replacement by a new
reference interest rate.
IBOR reform does not have any impact on the active fair value hedge accounting relationships of the Group as of 31 December
2022, considering that the hedging instruments used are referenced to Euribor rates which are not subject to the contemplated
reform.
4.19 Climate Related Matters
The Group recognizes that climate change has an impact on the economy, the society, and the environment. Therefore, the
Group has developed a climate strategy based on four (4) pillars:
1.
Reach net zero in own operations: the Group’ climate action starts by managing its own environmental footprint
through its operations. The Group monitors and manages its environmental impact closely, investing in operational
efficiency solutions and sourcing 100% renewable energy for the buildings it has management control over.
2.
Steer portfolio towards net zero by 2050 or sooner: Piraeus Bank makes the most positive impact on climate action
also through its financing to companies and individuals. Piraeus Bank focuses on the sectors that are responsible for
the higher greenhouse gas emissions, and measures whether the Bank’s lending in each sector is aligning with the
Group’s climate ambition.
3.
Support and advise clients in line with a carbon neutral economy: to support Bank’s clients in their climate transition
it focuses on accelerating the green economy, financing the energy transition, and pioneering financing for new
technologies and business models. Traditionally such financing has focused more on corporate clients, but the Bank
is increasingly offering such solutions to SME, and retail customers in Greece.
4.
Manage climate and environmental risks: Piraeus Bank is progressively integrating the risks associated with climate
change in the Group’s risk management framework. Piraeus Bank approach continues to develop as methodologies
advance and regulatory guidance and requirements evolve. The Group also aims to help its clients protect their
business from climate risks by advising them and financing their transition.
Piraeus Financial Holdings Group – 31 December 2022
263
T
he Group participates in the
ECB supervisory dialogue with the aim of incorporating strategies and practices for managing
climate-related and environmental risks under the current prudential framework. The Group has embarked on a project named
“Proteus” to meet all ECB expectations by end of 2023. The project has an internal governance structure that facilitates
effectively, and timely decision-making related to Climate and Environmental (“C&E”) risks.
The Group participated in the 2022 supervisory Climate Stress Test that assessed how prepared European banks are for dealing
with financial and economic shocks stemming from climate risk. The test was a learning exercise both for banks and supervisors.
It aimed to identify shortcomings, best practices and challenges banks face when managing climate-related risk. Importantly,
this is not a pass or fail exercise, nor does it have direct implications for banks’ capital levels.
Overall, Piraeus Bank scored at par with the average of the European participating banks. The results indicated an adequate
climate risk stress testing framework and a good performance in data quality. On the other hand, income reliance on carbon
intensive activities was higher than the EU average, also reflecting country -specific characteristics.
Piraeus Bank is using the results of the Climate Stress Test to deeper investigate how to further engage with its clients to steer
them on a low-carbon path and hence manage potential sensitivities to long-term transition risk, high concentration of
corporate exposures into carbon intensive counterparties, as well as short-term transition and physical risks.
Assessing Climate Risk deriving from the Bank’s business borrowers
The Group is exposed to climate-related and environmental risks through its financial activities and its operations. Thus, it
recognizes that both rapidly changing regulation, as well as stakeholder demands, may materially affect its business, operations
and strategic plans. In this context, the Group assesses its exposure to material climate risks through its borrowers, customers,
and counterparties. As already mentioned above, climate related risks can affect several important aspects of the Group’s
financial position, both in the short-term but more likely in the medium and long-term and can also pose new challenges for
the Group’s Risk Management.
The Group has developed the propriety tool “Climabiz” which is used for the annual assessment of the business borrower's
climate risk. The tool estimates, in monetary terms, the risks deriving from climate change for economic sectors and businesses
that are deemed vulnerable to climate change and in which the Bank has material exposures.
Climabiz uses three IPCC (the Intergovernmental Panel on Climate Change) climate scenarios (Representative Concentration
Pathways/ RCPs) simulated for different regions of the country, both for the historical (period 1971-2020) and for the future
(period 2021-2050) climate. The climate scenarios include the adoption of ambitious emission reduction policies (RCP2.6), the
evolution of climate change without the implementation of additional policies for the emissions reduction (RCP8.5) and the
intermediate scenario (RCP4.5). The tool estimates physical risk (acute and chronic) and transition risk.
The Group will continue to upgrade the Climabiz tool, monitor on an annual basis the climate risk of its business portfolios and
gradually use the results to inform its decisions in supporting energy transition plans of its clients.
This approach will enable the Group to leverage on the climate risk quantification and achieve a comprehensive C&E risk
classification. Namely:
•
create a qualitative classification of portfolios and their potential exposure to C&E risks and their transmission
channels;
Piraeus Financial Holdings Group – 31 December 2022
264
•
summarise the identification, measurement, monitoring and reporting of C&E risks and outline the process for
establishing Climate Risk Appetite;
•
outline roles and responsibilities applicable to Climate Risk Framework;
•
utilise enhancements in scenarios analysis and methodology capabilities to effectively manage collaterals;
•
incorporate C&E Risks in Credit Risk parameters;
•
further integrate C&E risks into Operational Risk Framework and conduct trainings to raise awareness on C&E drivers
for strengthening the identification and measurement of Operational Risks (incl. reputation and litigation risks).
5 Segment analysis
The CEO, supported by the Group Executive Committee members, is considered the Chief Operating Decision Maker for the
purposes of identifying the Group’s reportable segments.
The Group manages its business through the following reportable segments:
Retail Banking
segments, as well as Channels.
Corporate Banking
segments.
Piraeus Financial Markets (“PFM”)
the interest rate gap management arising from all banking activities) and Institutional Clients.
Other
owned (“REO”) assets, Wealth and Asset Management (“WAM”) activities, certain equity participations of the Group, funding
transactions approved by the Asset and Liability Management Committee (“ALCO”) and intersegmental eliminations.
NPE Management Unit (“NPE MU”)
whether the said exposures are serviced by the Group or third parties. In addition, following the derecognition of Phoenix,
Vega I, II, III, Sunrise I and Sunrise II securitized portfolios, this reportable segment includes also the senior and subordinated
notes issued by the securitization special purpose vehicles and retained by the Group. The fees payable for servicing the
Group’s NPE portfolio are recognized within this segment. Furthermore, the respective segment includes certain equity
participations classified in either FVTOCI or FVTPL and certain associates (i.e. Strix Asset Management, Strix Holdings Limited
and Strix Holdings NC LP).
Business segments include internal allocations of income and expense based on an internally approved methodology. These
allocations include, among other, the costs of certain support services and functions to the extent that they can be meaningfully
attributed to the reportable business segments. Such allocations are made on a systematic and consistent basis and involve a
degree of subjectivity. Costs that are not allocated to business segments are included in Corporate Centre (reported under
business segment “other”).
Piraeus Financial Holdings Group – 31 December 2022
265
Where relevant, income and expense amounts presented include the results of inter-segment funding along with inter-
company and inter-business line transactions. All inter-company transactions between business segments are undertaken on
arm’s length basis and inter-segment transactions and balances are eliminated within each relevant segment. Refer to Note
2.4.39.
An analysis of the results and other financial figures per business segment of the Group is presented below.
Piraeus Financial Holdings Group – 31 December 2022
266
1/1 - 31/12/2022
“Core” Segments (1), (2)
NPE MU
Group
Retail Banking
Corporate
Banking
PFM
Other
Total
Net interest income
573
465
264
75
1,378
(25)
1,353
Net fee and commission income
226
168
8
14
415
6
421
Income from non-banking activities
-
-
-
58
58
6
64
Net gains/ (losses) from derecognition of financial instruments measured at amortised cost
(0)
(0)
(17)
1
(16)
(18)
(34)
Net other income/ (expenses)
282
0
506
(10)
779
(0)
779
Total Net Income
1,081
633
762
138
2,614
(32)
2,582
Total operating expenses
(483)
(188)
(60)
(105)
(836)
(53)
(889)
Profit/ (loss) before provisions, impairment and other credit-risk related expenses
598
445
702
33
1,778
(85)
1,693
ECL Impairment (losses)/ releases on loans and advances to customers at amortised cost
12
89
1
(8)
95
(567)
(472)
Οther credit-risk related expenses on loans and advances to customers at amortised cost
(28)
(33)
(0)
(1)
(63)
(80)
(142)
Impairment (losses) / releases on other assets
-
-
0
(47)
(47)
-
(47)
Impairment on subsidiaries and associates
-
-
-
(2)
(2)
-
(2)
Impairment of property and equipment and intangible assets
-
-
-
(4)
(4)
-
(4)
Impairment on debt securities at amortised cost
-
-
(4)
-
(4)
-
(4)
Other provision (charges)/ releases
2
4
-
(17)
(12)
(1)
(13)
Share of profit/ (loss) of associates and joint ventures
-
-
-
6
6
23
29
Profit/ (loss) before income tax
583
506
700
(42)
1,747
(710)
1,037
Income tax benefit/ (expense)
(140)
Profit/ (loss) for the year from continuing operations
897
Profit/ (loss) after income tax from discontinued operations
-
-
-
51
51
-
51
Profit/ (loss) for the year
948
As at 31/12/2022
Total assets from continuing operations (excluding assets held for sale)
9,604
20,214
24,337
11,949
66,104
9,150
75,255
Assets held for sale
4
12
-
17
33
373
406
Total assets
9,608
20,226
24,337
11,966
66,138
9,523
75,661
Total liabilities
42,791
14,319
8,356
3,141
68,608
472
69,080
(1)
In the second quarter of 2022, the Group changed the presentation of: i) selected equity participations from reporting segment “other” to “NPE MU”, in
order to align the respective segmental presentation with the organizational structure and responsibilities of NPE MU; and ii) selected expenses, included
in certain line items (i.e. net interest income, net other income/ (expenses), ECL impairment losses) from reporting segment “other” into the other four
(4) “core” segments of the Group. The comparative information has been adjusted accordingly
.
Piraeus Financial Holdings Group – 31 December 2022
267
(2)
In the third quarter of 2022, the Group reclassified Private Banking from reporting segment “Retail” into “Other”. This was in line with the establishment
of the new WAM division, which is included within reporting segment “Other”. This segment is engaged in developing clients' wealth and capital
management operations. The comparative information has been adjusted accordingly.
Piraeus Financial Holdings Group – 31 December 2022
268
1/1 - 31/12/2021 As reclassified
“Core” Segments
NPE MU
Group
Retail Banking
Corporate
Banking
PFM
Other
Total
Net interest income
430
454
142
166
1,193
217
1,410
Net fee and commission income
219
150
6
4
379
13
392
Income from non-banking activities
-
-
-
31
31
9
40
Net gains/ (losses) from derecognition of financial instruments measured at amortised cost
0
8
323
2
334
(8)
326
Net other income/ (expenses)
6
4
163
180
352
4
355
Total Net Income
655
616
634
383
2,288
235
2,523
Total operating expenses
(447)
(169)
(46)
(146)
(808)
(84)
(892)
Profit/ (loss) before provisions, impairment and other credit-risk related expenses
207
448
588
237
1,480
151
1,631
ECL Impairment (losses)/releases on loans and advances to customers at amortised cost
(253)
(13)
(1)
4
(263)
(3,869)
(4,131)
Οther credit-risk related expenses on loans and advances to customers at amortised cost
(42)
(9)
(0)
(5)
(55)
(98)
(153)
Impairment (losses) / releases on other assets
-
-
(0)
(4)
(4)
6
2
ECL impairment (losses) / releases on debt securities measured at FVTOCI
-
-
(11)
-
(11)
-
(11)
Impairment on subsidiaries and associates
-
-
-
(23)
(23)
-
(23)
Impairment of property and equipment and intangible assets
-
-
-
(13)
(13)
-
(13)
Impairment on debt securities at amortised cost
-
-
(19)
-
(19)
-
(19)
Other provision (charges)/ releases
(3)
(1)
-
12
8
(0)
8
Share of profit/ (loss) of associates and joint ventures
-
-
-
18
18
0
18
Profit/ (loss) before income tax
(91)
424
557
227
1,118
(3,810)
(2,691)
Income tax benefit/ (expense)
(316)
Profit/ (loss) for the year from continuing operations
(3,007)
Profit/ (loss) after income tax from discontinued operations
-
-
-
(7)
(7)
-
(7)
Profit/ (loss) for the year
(3,014)
As at 31/12/2021
Total assets from continuing operations (excluding assets held for sale)
9,584
17,595
29,138
13,439
69,756
9,484
79,240
Total assets from discontinued operations
-
-
-
114
114
-
114
Assets held for sale
7
7
-
33
47
388
435
Total assets
9,591
17,602
29,138
13,586
69,917
9,872
79,789
Total liabilities
40,057
12,636
16,199
4,719
73,611
376
73,987
Piraeus Financial Holdings Group – 31 December 2022
269
Interest income is presented for each reporting segment net of interest expense, as the performance of each segment is
evaluated on a net interest income basis. The amount of € 779 million presented under line item “net other income/
(expenses)” mainly includes a gain upon loss of control over subsidiaries of € 282 million relating to the disposal of the merchant
acquiring business (refer to Note 26), presented within reporting segment “Retail Banking”, as well as net gain from financial
instruments of € 506 million (refer to Notes 9 and 10), presented within report ing segment “PFM”.
b) Geographical segment
The Group operates in the following geographical areas: a) Greece, the Company’s country of domicile; b) Rest of Europe, which
includes Albania, Bulgaria, Romania, Serbia, Ukraine, Cyprus, United Kingdom, Germany and Ireland; and c) Other Countries,
which include Egypt. To this end, Greece generated 99% of the Group’s net income.
The following table summarises the Group’s net income and non-current assets, across all geographical areas. The breakdown
is based on the location of the respective legal entity.
Group
Net Income
Non-current assets
1/1 - 31/12/2022
1/1 - 31/12/2021
As reclassified
31/12/2022
1/1 - 31/12/2021
Greece
2,548
2,494
2,431
2,056
Rest of Europe
34
28
127
136
Other countries
0
0
4
5
Continuing Operations
2,582
2,523
2,562
2,197
Discontinued Operations
84
39
0
80
For information regarding the entities of the Group classified as discontinued operations in 2022 and 2021, refer to Note
.
6 Net interest income
Piraeus Financial Holdings Group – 31 December 2022
270
Continuing operations
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
1/1 - 31/12/2022
1/1 - 31/12/2021
Interest and similar income
Debt securities measured at FVTOCI
31
47
-
-
Debt securities at amortised cost
187
87
99
88
Loans and advances to customers at amortised cost &
Reverse repos
1,203
1,349
(0)
67
Due from banks
7
3
-
-
Negative interest from liabilities due to ECB
70
146
-
-
Negative interest from other interest-bearing liabilities
4
2
-
-
Other
74
10
-
-
Total interest income for financial instruments not
measured at FVTPL
1,575
1,644
99
155
Financial instruments measured at FVTPL
18
8
7
5
Derivative financial instruments
98
133
-
-
Total interest and similar income
1,691
1,785
106
160
Ιnterest expense and similar charges
Due to customers and repurchase agreements
(51)
(40)
-
-
Debt securities in issue and other borrowed funds
(96)
(77)
(69)
(77)
Due to banks
(15)
(3)
-
-
Contribution of Law 128/75
(54)
(59)
-
(1)
Negative interest from interest bearing assets
(38)
(43)
-
(0)
Other
(3)
(3)
-
-
Total interest expense from financial instruments not
measured at FVTPL
(256)
(225)
(69)
(78)
Derivative financial instruments
(82)
(150)
-
-
Total interest expense
(339)
(375)
(69)
(78)
Net interest income
1,353
1,410
37
82
Line
of Piraeus Bank S.A. due to ECB, in the context of the TLTRO III program. Specifically, the revenue recognised during the year
ended 31 December 2022 amounting to € 70 million (31 December 2021: € 146 million), which includes the program’s extra
benefit (50 basis points lower than the average DFR of the respective period) up to 23 June 2022 (the end of additional special
interest period), given that the Bank met the related lending performance requirements between 1 October 2020 and 31
December 2021.
Line item “Other” of interest and similar income comprises € 54 million, generated from the use of Eurosystem’s deposit facility
(overnight deposits with the Central Bank remunerated at the applicable DFR). During the second semester of 2022, the ECB
proceeded with a rapid tightening of its monetary policy in order to tame the very high and persistent inflation. As a result,
ECB announced four (4) consecutive increases of its key interest rates by a total of 250 basis points.
Interest income by credit quality and product line
The table below presents interest income from loans and advances to customers at amortised cost, by credit quality and
product line.
During the year ended 31 December 2022, no interest income from loans and advances to customers at amortised cost was
recognised by the Company.
Piraeus Financial Holdings Group – 31 December 2022
271
Group - Continuing operations
1/1 - 31/12/2022
1/1 - 31/12/2021
Not credit
impaired
Credit impaired
Not credit
impaired
Credit impaired
Stage 1 and 2
Stage 3
POCI
Total
Stage 1 and 2
Stage 3
POCI
Total
Retail Lending
293
17
12
322
281
64
46
391
Corporate Lending
762
97
19
878
634
260
63
956
Public Sector Lending
4
0
0
4
2
0
0
2
Total Interest income
1,059
114
31
1,203
916
324
109
1,349
Company
1/1 - 31/12/2021
Not credit
impaired
Credit impaired
Stage 1 and 2
Stage 3
POCI
Total
Retail Lending
5
16
8
28
Corporate Lending
0
28
10
39
Total Interest income
5
44
19
67
7 Net fee and commission income
Continuing operations
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
As reclassified
1/1 - 31/12/2022
1/1 - 31/12/2021
Fee and commission income
Commercial banking
449
433
44
43
Investment banking
26
36
-
-
Asset management
33
29
-
-
Total fee and commission income
508
498
44
43
Fee and commission expense
Commercial banking
(79)
(99)
(30)
(36)
Investment banking
(6)
(6)
-
-
Asset management
(1)
(1)
-
-
Total fee and commission expense
(87)
(106)
(30)
(36)
Net fee and commission income
421
392
14
7
a. Fee and commission income
The Group and the Company classify revenue from contracts with customers based on the type of services provided.
Management believes that this classification reflects how the nature, quantity, timing and uncertainty of the Group's and the
Company’s income and cash flows are affected by financial factors.
The tables below present total fee and commission income from contracts with customers of the Group and the Company, for
the years ended 31 December 2022 and 2021, per product type and business segment.
The Group reclassified the amounts of the reporting segment “Retail” into “Other”. Refer to Note 5 for further information.
Piraeus Financial Holdings Group – 31 December 2022
272
Group
Fee and Commission income
1/1 - 31/12/2022
Retail Banking
Corporate
Banking
Piraeus
Financial
Markets
Other
NPE MU
Total
Acquiring
9
5
0
0
0
14
Asset management/Brokerage
31
3
9
8
0
51
Bancassurance
33
4
0
14
1
52
Cards (1)
60
8
0
0
2
70
Deposits Commissions (1)
8
1
0
0
0
9
Funds Transfer
61
17
0
3
1
82
Letters of Guarantee
3
34
0
1
2
40
Loans and advances to customers
(1)
10
81
0
0
1
92
Payments
22
5
1
0
0
28
FX fees
27
6
1
0
0
34
Other
20
12
0
4
0
36
Total
284
176
11
30
7
508
Group
Fee and Commission income
1/1 - 31/12/2021 As reclassified
Retail Banking
Corporate
Banking
Piraeus
Financial
Markets
Other
NPE MU
Total
Acquiring
53
24
1
0
1
79
Asset management/Brokerage
30
2
6
9
0
47
Bancassurance
33
5
0
11
1
50
Cards (1)
41
5
0
0
2
48
Deposits Commissions (1)
8
1
0
0
0
9
Funds Transfer
48
13
1
3
2
67
Letters of Guarantee
2
29
0
0
3
34
Loans and advances to customers
(1)
9
60
0
0
1
70
Payments
20
5
1
1
0
27
FX fees
18
4
0
1
0
23
Other
18
21
0
5
0
44
Total
280
169
9
30
10
498
(1) Refers to financial assets and financial liabilities carried at amortised cost
Piraeus Financial Holdings Group – 31 December 2022
273
Company
Fee and Commission income
1/1 - 31/12/2022
Retail Banking
Corporate
Banking
Piraeus
Financial
Markets
Other
NPE MU
Total
Bancassurance
29
4
0
11
0
44
Total
29
4
0
11
0
44
Company
Fee and Commission income
1/1 - 31/12/2021
Retail Banking
Corporate
Banking
Piraeus
Financial
Markets
Other
NPE MU
Total
Bancassurance
30
4
0
8
1
43
Total
30
4
0
8
1
43
Fee and commission expense figures have been restated in order to better reflect the nature of the expenses recognised, in
respect of the services provided in processing of cards transactions, and due to the amendment of the presentation of assets
under management and success fees (refer to Note 15 for further information).
b. Other income
The tables below present other income from contracts with customers of the Group and the Company, for the years ended 31
December 2022 and 2021, which fall within the scope of IFRS 15.
Group
Other Income
1/1 - 31/12/2022
Retail
Banking
Corporate
Banking
Piraeus
Financial
Markets
Other
NPE MU
Total
Other operating income
0
0
13
22
1
36
Gain from sale of investment property
-
-
-
2
-
2
Gain from sale of other assets
-
-
-
5
1
6
Total
0
0
13
29
2
44
Group
Other Income
1/1 - 31/12/2021 As reclassified
Retail
Banking
Corporate
Banking
Piraeus
Financial
Markets
Other
NPE MU
Total
Other operating income
0
0
-
40
2
42
Gain from sale of investment property
-
-
-
1
-
1
Gain from sale of other assets
-
-
-
3
3
6
Total
0
0
0
44
5
49
8 Income from non-banking activities
During the year ended 31 December 2022, the Group and the Company amended the presentation of income from non-banking
activities, mainly comprising rental income from investment property, previously reported in line item “Net Other income/
(expenses)” into line item “Income from non-banking activities”. Rental income from investment property for the current year
Piraeus Financial Holdings Group – 31 December 2022
274
stood at € 58 million for the Group and nil for the Company (31 December 2021: € 34 million for the Group and nil for the
Company). Refer to Note 50 for the said change in presentation of comparatives.
9 Net gains/ (losses) from financial instruments measured at FVTPL
Group
Company
Continuing operations
1/1 - 31/12/2022
1/1 - 31/12/2021
1/1 - 31/12/2022
1/1 - 31/12/2021
Gains / (losses) from debt securities
(73)
(2)
-
(1)
Gains / (losses) from other financial instruments
432
87
(8)
-
Net income from financial instruments measured at FVTPL
359
85
(8)
(1)
The Group’s net gains from financial instruments measured at FVTPL for the year ended 31 December 2022 mainly comprise
gains of € 407 million from derivatives (31 December 2021: gains of € 71 million). The Group’s losses from debt securities for
the year ended 31 December 2022 are mainly attributable to disposal of GGBs and Greek treasury bills amounting to € 54
million.
The Company’s net losses from financial instruments measured at FVTPL for the year ended 31 December 2022
mainly pertain to realized losses from derecognition of equity securities.
10 Net gains/ (losses) from financial instruments measured at FVTOCI
The Group’s net gains from derecognition of financial instruments measured at FVTOCI for the year ended 31 December 2022
amounted to € 111 million (31 December 2021: € 87 million) and related to disposal of debt securities, of total nominal value
€ 1,596 million. An amount of € 106 million pertains to realized gains and reversal of ECL allowance upon disposal of GGBs and
Greek treasury bills, of total nominal value € 1,363 million.
11 Net other income/ (expenses)
Continuing operations
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
As reclassified
1/1 - 31/12/2022
1/1 - 31/12/2021
As reclassified
Gains/ (losses) from fair value remeasurement of investment
property (Note 29)
38
4
-
-
Other net income / (loss)
(9)
(7)
(1)
(3)
Total Net other income / (expense)
29
(3)
(1)
(3)
Refer to Note 50 for the change in presentation of comparatives.
Piraeus Financial Holdings Group – 31 December 2022
275
12 Staff costs
Continuing operations
Group
Company
1/1 - 31/12/2022
1/1/ - 31/12/2021
1/1 - 31/12/2022
1/1/ - 31/12/2021
Wages and salaries
(299)
(291)
(2)
(2)
Social insurance contributions
(62)
(56)
(1)
(0)
Other staff costs
(23)
(29)
(0)
(0)
Voluntary redundancy costs
(57)
(25)
(0)
(1)
Retirement benefit charges
(5)
(4)
(0)
(0)
Total
(446)
(405)
(3)
(3)
In accordance with its strategic objectives and transformation priorities, the Group initiated in 2022 a new Voluntary Exit
Scheme (“VES”) for certain group of employees . As a result, a corresponding provision of € 57 million was booked in 2022,
increasing equally the staff cost of the Group.
The Group’s and the Company’s full time equivalents (“FTE”) from continuing
operations as of 31 December 2022 was 8,658 and 33, respectively (31 December 2021: 9,493 and 29, respectively). The
number of FTE who exited voluntarily in 2022, making use of the 2022 and 2021 VES, stood at 635.
13 Administrative expenses
Continuing operations
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
As reclassified
1/1 - 31/12/2022
1/1 - 31/12/2021
As reclassified
Taxes and duties
(75)
(81)
(1)
(3)
Promotion and advertising expenses
(25)
(29)
(1)
(0)
Fees and similar expenses
(69)
(104)
(3)
(11)
Contributions payable to Deposit Insurance and Resolution
Funds
(59)
(49)
-
-
Other administrative expenses
(109)
(115)
(1)
(1)
Total
(337)
(377)
(5)
(15)
The contributions payable to Deposit Insurance and Resolution Funds mainly comprise: a) € 33 million under the Resolution
leg of the Hellenic Deposit and Investment Guarantee Fund (“HDIGF”) (31 December 2021: € 31 million); and b) € 25 million
ex-ante contributions to the Single Resolution Fund (“SRF”) (31 December 2021: € 17 million).
14 Discontinued operations
On 23 March 2022, Piraeus Bank signed a share transfer agreement for the contribution of its entire shareholding in subsidiary
Imithea Single Member S.A. into Strix Holdings LP. The transaction was completed in the third quarter of 2022, after having
Piraeus Financial Holdings Group – 31 December 2022
276
obtained the required regulatory approval by the Hellenic Competition Commission (“HCC”). Following the loss of control over
its former subsidiary, the Group recognised a gain of € 55 million (Refer also to Note 48).
The profit from discontinued operations for the period ended 31 December 2022 comprises mainly Imithea Single Member
S.A.
A)
Profit / (loss) after income tax from discontinued operations
1/1 - 31/12/2022
1/1 - 31/12/2021
Gain from loss of control over subsidiaries
55
-
Net other income
29
39
Total net income
84
39
Staff costs
(19)
(27)
Administrative expenses
(11)
(13)
Depreciation and amortisation
(3)
(4)
Total operating expenses
(33)
(44)
Profit/(loss) before provisions, impairment and other credit-risk related expenses
52
(5)
Provisions and impairment losses
(1)
(1)
Profit/(loss) before income tax
51
(6)
Income tax expense
0
(1)
Profit/(loss) after income tax from discontinued operations
51
(7)
B) Assets and liabilities from discontinued operations
31/12/2022
31/12/2021
ASSETS
Property and equipment
-
80
Deferred tax assets
-
9
Other assets
-
25
Total Assets
0
114
31/12/2022
31/12/2021
LIABILITIES
Retirement and termination benefit obligations
-
2
Provisions
-
4
Other liabilities
-
22
Total Liabilities
0
28
Piraeus Financial Holdings Group – 31 December 2022
277
15 Other credit risk related expenses on loans and advances to customers at amortised cost
During the year ended 31 December 2022, the Group and the Company amended the presentation of fees payable for having
its NPE portfolio managed, such as assets under management (“AUM”) fees and success fees, previously included in line items
“Administrative expenses”, “ECL Impairment losses on loans and advances to customers at amortised cost” and “Fee and
commission expense”, into line item “Οther credit-risk related expenses on loans and advances to customers at amortised
cost”. For the year ended 31 December 2022 AUM fees amounted to € 28 million for the Group and nil for the Company (31
December 2021: € 38 million for the Group and € 6 million for the Company), while success fees amounted to € 81 million for
the Group and nil for the Company (31 December 2021: € 101 million for the Group and € 5 million for the Company). Refer to
Note 50 for the said change in presentation of comparatives.
Additionally, for the year ended 31 December 2022, credit protection fees payable by the Group in the context of synthetic
securitizations, amounted to € 33 million (31 December 2021: € 13 million).
16 Income tax benefit / (expense)
Continuing operations
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Current tax expense
(13)
(7)
-
(0)
Deferred tax benefit / (expense) (Note 39)
(126)
(310)
0
0
Income tax benefit / (expense)
(140)
(316)
0
0
Under the tax amendments of Greek Law 4799/2021 corporate income tax rate for legal entities, other than credit institutions,
decreased to 22% for tax years as of 2021 onwards.
The corporate income tax rate applicable to financial institutions, remains at 29% for 2022 and 2021, provided that the specific
provisions of art. 27A of the Greek Income Tax Code (“ITC”) apply to those tax years.
The income tax benefit/ (expense) recognized in the income statement differs from the tax credit /(charge) that would apply
if all profits/(losses) had been taxed at nominal corporate income tax rates, as follows:
Piraeus Financial Holdings Group – 31 December 2022
278
Group
Company
2022
2021
2022
2021
Profit / (loss) before income tax / (expense)
1,037
(2,691)
103
(3,046)
Tax calculated based on current tax rate
(228)
592
(23)
670
Non taxable income
275
62
23
-
Non tax deductible expenses and other permanent differences
(123)
(1,054)
-
(670)
Effect of different tax rates applied
(71)
82
-
-
Deferred tax impact due to change in tax rate
-
(2)
-
-
Effect of results of investments in associates
6
4
-
-
Income tax benefit / (expense)
(140)
(316)
0
0
Effective tax rate for the year
13.0%
(11.8)%
0.0%
0.0%
As at 31 December 2022, the Group recognised a DTA of € 5,974 million (31 December 2021: € 6,070 million) and a deferred
tax liability of € 10 million (31 December 2021: € 10 million). For further information, refer to Note 39.
Effective from tax year 2021 onwards, par. 3A of article 27 of the ITC applies, as added with article 125 of Greek Law 4831/2021,
regarding the treatment and order of offsetting the debit difference defined under article 27 of the ITC. According to par. 1 of
the same article, any debit difference outstanding at the end of the twenty -year amortization period is classified as a loss and
carried forward for five years.
The income tax benefit/ (expense) of the Group’s foreign subsidiaries is estimated based on the respective nominal corporate
income tax rates applicable in 2022 and 2021 (Bulgaria: 10%, Romania: 16%, Egypt: 22.5%, Serbia: 15%, Ukraine: 18%, Cyprus:
12.5%, Albania: 15% and United Kingdom: 19%).
According to article 82 of Greek Law 4472/2017 credit institutions and other legal entities scoped into the provisions of article
27A of the ITC are required to pay an annual fee of 1.5% on the excess amount guaranteed by the Greek State of deferred tax
assets arising from the difference between the tax rate applicable under Greek Law 4334/2015 (Gazette A' 80/16/7/2015)
retrospectively from 1 January 2015 onwards (29%), and the tax rate applicable on 30 June 2015 (26%). The corresponding
amount for the Group for the year ended 31 December 2022 and 2021 amounted to € 6 million and has been charged within
line item “net other income/ (expenses)" of the Income Statement.
17 Earnings/(losses) per share
Basic earnings/(losses) per share (“EPS”) are calculated by dividing the profit/(loss) after tax attributable to the ordinary
shareholders of the Company by the weighted average number of ordinary shares in issue during the year, excluding the
average number of ordinary shares held by the Group.
Piraeus Financial Holdings Group – 31 December 2022
279
1/1 - 31/12/2022
1/1 - 31/12/2021
Profit/(loss) for the year attributable to ordinary shareholders of the parent entity from continuing
operations
899
(3,007)
Profit/(loss) for the year attributable to ordinary shareholders of the parent entity from discontinued
operations
51
(7)
Profit/(loss) for the year attributable to ordinary shareholders of the parent entity from continuing
and discontinued operations
950
(3,014)
Weighted average number of ordinary shares in issue (basic and diluted earnings/losses)
1,249,647,205
859,533,251
Basic and diluted earnings/(losses) per share in € from continuing operations
0.72
(3.50)
Basic and diluted earnings/(losses) per share in € from discontinued operations
0.04
(0.01)
Basic and diluted earnings/(losses) per share in € from continuing and discontinued operations
0.76
(3.51)
18 Tax effects relating to other comprehensive income/ (expense) for the period
Group - Continuing operations
1/1 - 31/12/2022
1/1 - 31/12/2021
Gross
Tax
Net
Gross
Tax
Net
Items that may be reclassified subsequently to profit or loss
Change in reserve from debt securities measured at FVTOCI
(175)
46
(129)
(151)
46
(105)
Change in currency translation reserve
(9)
-
(9)
5
-
5
Items that will not be reclassified subsequently to profit or loss
Change in reserve from equity instruments measured at FVTOCI
32
(9)
23
(45)
13
(32)
Change in property revaluation reserve
10
(3)
7
-
(0)
(0)
Change in reserve of actuarial gains/ (losses)
10
(3)
7
(0)
0
(0)
Οther comprehensive income/ (expense) from continuing operations
(132)
31
(101)
(191)
59
(132)
19 Cash and balances with central banks
Group
31/12/2022
31/12/2021
Cash in hand
693
721
Deposits in central banks
8,361
14,728
Cheques clearing system – central banks
25
66
Cash and balances with Central Banks (Note 46)
9,080
15,514
Mandatory reserves with central banks
573
5
Total Cash and balances with central banks
9,653
15,519
The variance in line “Deposits in central banks” is mainly due to partial repayment of the ECB funding through TLTRO III. Refer
to Note 32 for further details.
The BoG requires all banks established in Greece to maintain deposits in the central bank with an average balance equal to
Piraeus Financial Holdings Group – 31 December 2022
280
1.0% of total customer deposits, as defined by the ECB. Similar requirements apply to the Company’s banking subsidiary in
Ukraine, namely JSC Piraeus Bank ICB. The Bank’s mandatory deposits at BoG bear interest set equal to the ECB deposit facility
rate (2.0% as of 31 December 2022), while the interest on any excess average balance of the relevant account is zero. The
corresponding deposits of JSC Piraeus Bank ICB are non-interest bearing.
20 Due from banks
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Sight and time deposits with banks
238
177
45
50
Securities purchased under agreements to resell
52
51
-
-
Placements with banks
70
73
-
-
Collateral posted in margin accounts
390
1,042
-
-
Total due from banks
750
1,344
45
50
οf which:
Current
749
1,277
45
50
Non-current
1
67
0
0
The decrease of € 652 million in cash posted as collateral margin is mainly attributable to unrealized gains of derivative
transactions engaged under ISDA and CSA agreements. Refer to Notes 21 and 32 for further information.
21 Derivative financial instruments
Group 31/12/2022
Group 31/12/2021
Notional
amount
Fair value
Notional
amount
Fair value
Derivatives held for trading
Assets
Liabilities
Assets
Liabilities
IRSs
9,259
616
528
9,414
359
341
Currency swaps
1,454
5
11
1,366
1
20
FX forwards
923
11
18
555
3
9
Options and other derivative instruments
6,805
104
82
5,106
8
11
Cross Currency Interest Rate Swaps
540
17
16
379
6
12
18,981
753
656
16,820
377
393
Derivatives held for hedging (fair value hedges)
IRSs
3,496
1,077
-
6,649
214
-
Total
22,477
1,830
656
23,470
591
393
IRSs mainly include transactions held with the Group’s clientele and their offsetting positions engaged by the Group with other
counterparties in order to economically hedge its interest rate risk exposure.
HEDGE ACCOUNTING
Piraeus Financial Holdings Group – 31 December 2022
281
Fair Value Hedge accounting
The Group enters into IRSs to mitigate the risk of changes in interest rates on the fair value of fixed rate debt securities.
Specifically, the Group hedges the benchmark interest rate risk component by entering into IRSs with critical terms that match
those of the debt instrument hedged. This hedging objective is consistent with the Group’s overall interest rate risk
management strategy (refer to Note 4.11).
The Group assesses hedge effectiveness on a prospective and retrospective basis by comparing the changes in fair value of the
hedged item, resulting from movements in the benchmark interest rate, with the changes in fair value of the IRS used to hedge
the exposure.
The Group has identified the following sources of ineffectiveness:
- Credit risk of the counterparty, which is not offset by the hedged item. The Group minimizes counterparty credit risk by
entering into derivatives with clearing members of central clearing counterparties (”CCPs”) and CCPs or bilaterally under ISDA
master netting agreements and CSA annexes.
- Use of different discounting curves when measuring the fair value of the hedged items and hedging instruments.
The IBOR reform does not have any impact on the outstanding fair value hedge accounting relationships of the Group as at 31
December 2022 (refer to Note 4.18).
The maturity profile of IRSs designated by the Group as hedging instruments in fair value hedge accounting relationships, which
were effective as of the end of the reporting period, is illustrated below:
31/12/2022
Group
Due between 1 to 5
years
Due after 5 years
Total
Notional amount of IRSs
5
3,491
3,496
31/12/2021
Group
Due between 1 to 5
years
Due after 5 years
Total
Notional amount of IRSs
5
6,644
6,649
The tables below summarize the balance sheet and income statement figures related to IRSs and fixed rate sovereign bonds
designated as hedging instruments and hedged items, respectively, in fair value hedge accounting relationships.
Piraeus Financial Holdings Group – 31 December 2022
282
31/12/2022
Group
Interest Rate Risk
Fair Value
Derivative hedging instruments
Notional
Amount
Asset
Liability
Statement of financial
position line item
Changes in fair value
used for calculating
hedge ineffectiveness
IRSs
3,496
1,077
-
Derivative financial
instruments
1,444
31/12/2021
Group
Interest Rate Risk
Fair Value
Derivative hedging instruments
Notional
Amount
Asset
Liability
Statement of financial
position line item
Changes in fair value
used for calculating
hedge ineffectiveness
IRSs
6,649
214
-
Derivative financial
instruments
208
31/12/2022
Group
Interest Rate Risk
Hedged Items
Nominal
Amount
Carrying
amount
Accumulated hedge
adjustments in the
carrying amount of
hedged item
Statement of financial
position line item
Changes in fair
value used for
calculating
hedge
ineffectiveness
Debt securities at amortised cost
3,294
3,409
(999)
Debt securities at
amortised cost
(1,373)
Debt securities at FVTOCI
202
200
n/a
Financial assets at FVTOCI
(52)
31/12/2021
Group
Interest Rate Risk
Hedged Items
Nominal
Amount
Carrying
amount
Accumulated hedge
adjustments in the
carrying amount of
hedged item
Statement of financial
position line item
Changes in fair
value
used for
calculating
hedge
ineffectiveness
Debt securities at amortised cost
6,189
7,293
(190)
Debt securities at
amortised cost
(190)
Debt securities at FVTOCI
460
612
n/a
Financial assets at FVTOCI
(15)
“Changes in fair value used for calculating hedge ineffectiveness” include also fair value hedge adjustments recognised in
Group’s Income Statement related to discontinued hedges until their de-designation date.
The cumulative amount of fair value hedge adjustments remaining in the statement of financial position of the Group by
reducing the carrying amount of hedged items regarding the discontinued hedge relationships, not included in the figures of
the table above, was € 533 million as at 31 December 2022.
Piraeus Financial Holdings Group – 31 December 2022
283
The hedge ineffectiveness, determined as the difference between the hedging gains or losses of the hedging instrument and
the hedged item, recognised in profit or loss of the Group for the period ended 31 December 2022 amounts to gain of € 19
million (31 December 2021: gain of € 3 million).
22 Financial assets at fair value through profit or loss
a) Financial assets at FVTPL
Group
31/12/2022
31/12/2021
Greek government bonds and T-bills
154
445
Foreign government bonds and T-bills
370
437
Corporate bonds
4
4
Equity securities
19
20
Total
548
906
As at 31 December 2022 and 2021, the Company did not hold any Financial assets at FVTPL.
b) Financial assets mandatorily measured at FVTPL
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Contingent consideration assets
42
43
-
-
Βonds issued by financial institutions
2
0
-
-
Unlisted shares
33
40
-
-
Mutual Funds
105
122
-
9
Total
182
205
0
9
Line item “contingent consideration assets” comprises: i) a performance note issued by Intrum Holding Spain S.A.U. in 2019
with a fair value of € 32 million; and ii) a contingent claim initially recognized in 2021 following the disposal of certain corporate
loans included in the Pivot transaction, the fair value of which stood at € 10 million as at 31 December 2022.
23 Loans and advances to customers at amortised cost
Piraeus Financial Holdings Group – 31 December 2022
284
Group
31/12/2022
31/12/2021
Mortgages
6,877
7,191
Consumer/ personal and other loans
1,403
1,486
Credit cards
485
490
Retail Lending
8,766
9,168
Corporate and Public Sector Lending
29,484
29,125
Collateralised loan obligations (CLOs)
502
93
Total gross loans and advances to customers at amortised cost
38,751
38,386
Less: ECL allowance
(1,385)
(1,864)
Total
37,367
36,521
of which:
Current
6,180
5,136
Non current
31,186
31,386
At Group level, the senior notes of the securitizations Phoenix, Vega I, II and III, Sunrise I and II, with a gross carrying amount
of € 6,075 million as at 31 December 2022 (31 December 2021: € 6,236 million), are included within line item “Corporate and
Public Sector Lending” (refer to Note 2.4.18). The ECL allowance on the aforementioned notes is immaterial as at the reporting
date.
A reconciliation of the gross carrying amount and the ECL allowance of loans and advances to customers at amortised cost, as
defined in Note 4.3.1, against the values presented in the aforementioned table is provided below, taking into account the
unamortised PPA as of the reporting date. For the purposes of this reconciliation, CLOs are presented within line item
“Corporate and Public Sector Lending”.
Piraeus Financial Holdings Group – 31 December 2022
285
Group
31/12/2022
31/12/2021
Mortgages (grossed up with PPA adjustment)
6,879
7,195
Less PPA adjustment
(2)
(4)
Mortgages
6,877
7,191
Consumer/ personal and other loans (grossed up with PPA adjustment)
1,410
1,503
Less PPA adjustment
(6)
(17)
Consumer/ personal and other loans
1,403
1,486
Credit cards (grossed up with PPA adjustment)
485
491
Less PPA adjustment
(0)
(1)
Credit cards
485
490
Retail Lending (grossed up with PPA adjustment)
8,774
9,189
Less PPA adjustment
(9)
(21)
Retail Lending
8,766
9,168
Corporate and Public Sector Lending (grossed up with PPA adjustment)
30,013
29,303
Less PPA adjustment
(27)
(85)
Corporate and Public Sector Lending
29,986
29,218
Total gross loans and advances to customers at amortised cost (grossed up with PPA adjustment)
38,787
38,492
Less PPA adjustment
(36)
(106)
Total gross loans and advances to customers at amortised cost (A)
38,751
38,386
Less: ECL allowance (grossed up with PPA adjustment)
(1,421)
(1,971)
Less PPA adjustment
36
106
Less: ECL allowance (B)
(1,385)
(1,864)
Net loans and advances to customers at amortised cost (A) + (B)
37,367
36,521
of which:
Current
6,180
5,136
Non current
31,186
31,386
Loans and advances to customers at amortised cost include finance lease receivables , broken down as follows:
Group - Finance lease receivables
31/12/2022
31/12/2021
No later than one year
231
203
One to five years
436
407
Later than five years
435
467
Gross investment in finance leases
1,102
1,077
Unearned finance income
(211)
(148)
Net investment in finance leases
891
929
of which:
No later than one year
193
179
One to five years
339
341
Later than five years
359
409
As at 31 December 2022 and 2021, the Group recognized an ECL allowance of € 76 million and € 65 million, respectively, on its
finance lease receivables.
Piraeus Financial Holdings Group – 31 December 2022
286
24 Financial assets at FVTOCI
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Greek Government Bonds
237
1,118
-
-
Corporate Bonds
-
304
-
-
Bonds issued by financial institutions and foreign governments
1
545
-
-
Greek treasury bills
558
332
-
-
Debt securities at FVTOCI
796
2,299
-
-
Equity securities at FVTOCI
101
67
2
0
Total financial instruments at FVTOCI
897
2,366
2
0
Current debt securities at FVTOCI
558
359
-
-
Non-current debt securities at FVTOCI
238
1,940
-
(0)
Total debt securities at FVTOCI
796
2,299
0
(0)
Refer to Note 4.6 for information on the credit rating and stage allocation of the debt securities classified at FVTOCI.
The Group holds certain equity securities designated at FVTOCI, the fair value of which is presented in the following table:
Group - Fair value of equity securities designated at FVTOCI
31/12/2022
31/12/2021
Attica Ηoldings S.A.
59
27
Ideal Group
9
9
Atlantic Insurance Public Limited Company
6
7
Other
27
24
Total
101
67
The equity investment in Attica Holdings S.A. refers to a non-controlling shareholding of 11.8%, previously held by Piraeus
Bank. In July 2022, Piraeus Bank contributed all such shares into Strix Holdings LP in exchange for additional limited partnership
interests. Following this transfer, as of 31 December 2022, Strix Holdings LP is the legal owner of the said shares. The
transaction did not meet the IFRS 9 derecognition requirements, therefore, the said equity securities are recognized by the
Group as financial assets measured at FVTOCI. Refer to Note 53 for further information on the corollary mandatory tender
offer launched by Piraeus Bank on 22 February 2023 to the shareholders of Attica Holdings S.A. holding a total stake of 20.62%.
The movement of debt securities at FVTOCI is summarized below:
Piraeus Financial Holdings Group – 31 December 2022
287
Group
Stage 1
Stage 2
Total
Opening balance at 1/1/2021
2,698
19
2,717
Additions
4,522
3
4,525
Coupon collections
(56)
(1)
(57)
Disposals/ maturities
(4,849)
-
(4,849)
Interest Income
46
2
47
Foreign exchange differences
3
-
3
Gain/ (loss) from changes in fair value
(88)
(0)
(88)
Closing balance 31/12/2021
2,277
22
2,299
Additions
2,028
-
2,028
Coupon collections
(35)
(1)
(36)
Disposals/ maturities
(2,716)
(4)
(2,720)
Transferred from Stage 1 to Stage 2
(9)
9
0
Transferred from Stage 2 to Stage 1
3
(3)
0
Interest Income
29
2
30
Gain/ (loss) from changes in fair value
(192)
(4)
(196)
Reclassification to debt securities at amortised cost
(589)
(21)
(610)
Closing balance 31/12/2022
796
(0)
796
As of 31 December 2022 and 2021, the Company did not hold any debt securities measured at FVTOCI.
The Group recognized in the income statement and OCI an ECL allowance on debt securities measured at FVTOCI of € 1 million
and € 11 million for the period ended 31 December 2022 and 2021, respectively.
On 1 October 2022 the Group reclassified debt securities issued by corporations and financial institutions, from FVTOCI to
amortised cost, of total nominal value € 700 million, following the change in business model for managing the said asset class.
Refer to Note 25 for more information.
25 Debt securities at amortised cost
The Group’s portfolio of debt securities at amortised cost mainly consists of foreign and domestic sovereign bonds as well as
debt securities issued by corporate and financial institutions, the vast majority of which have a residual maturity higher than
12 months as of the reporting date.
In addition, the Company’s debt securities portfolio comprises solely two Tier 2 instruments issued by Piraeus Bank and fully
subscribed by the Company (the “Back-to-Back Tier 2 Notes”), that mirror all material terms of the Company’s Tier 2
subordinated notes of nominal value € 400 million and € 500 million, included under line item “other borrowed funds” in the
statement of financial position. This intragroup transaction has no accounting impact on the Group’s consolidated financial
statements.
During the year, the Group purchased debt securities measured at amortised cost of total nominal value € 2,679 million, of
Piraeus Financial Holdings Group – 31 December 2022
288
which € 2,175 million relates to GGBs and € 301 million to foreign sovereign bonds. The impact of fair value hedge accounting
on the debt securities measured at amortised cost was a loss of € 1,373 million, which was offset by the valuation gain of the
hedging derivatives (refer to Note 21).
The Group recognised during the year ended 31 December 2022 loss of € 15 million related to the derecognition of debt
securities measured at amortised cost, mainly attributable to disposal of GGBs of nominal value € 80 million. The
aforementioned disposals are in consistency with HTC business model based on Group’s authorized thresholds.
As at 31 December 2022, the Group’s debt securities classified in Stage 1 amounted to € 10,837 million (31 December 2021: €
9,200 million) and their ECL adjustment was € 31 million (31 December 2021: € 19 million). The Group’s debt securities
classified in Stage 2 amounted to € 7 million (31 December 2021: nil).
The Company’s debt securities are all classified in Stage 1 and their resulting ECL allowance amounted to € 23 million (31
December 2021: € 29 million). Refer to Note 4.6. for further information on the credit rating of the portfolio.
During the third quarter of 2022, the Executive Committee approved the termination of the business line of acquiring debt
securities issued by corporations and financial institutions for the purposes of trading, due to the significant operational
restructuring triggered by the acquisition of Iolcus. Specifically, on 18 July 2022, Piraeus Bank publicly announced the formation
of the new WAM Division, with the business objective of offering specialized asset management services to its clientele. The
Bank’s former “Economics & Investment Strategy” Unit comprising the “Investment Strategy”, “Portfolios”, “Global Economics”
and “Greek & Sectoral Economics” functions, was transferred from PFM to WAM and renamed to “Economic Research and
Analysis Unit” (“ERAU”). The change was significant to the Group’s operations, given that the FTEs transferred approximate
40% of PFM’s total headcount. To this effect, a more passive investment approach mainly focusing on the credit quality of the
issuers and specifically their ability to pay coupons and repay capital at maturity, i.e. a hold-to-collect business model, applies.
Such change in the objective of the business model required reclassification of all affected financial assets from FVTOCI to
amortised cost, in accordance with IFRS 9.
The nominal value and carrying amount of the debt securities affected by the aforementioned change of business model and
reclassified was € 700 million and € 610 million as of the reclassification date, respectively. The reclassification date for the
Group was 1 October 2022.As at 31 December 2022 the fair value of the debt securities reclassified to amortised cost amounted
to € 591 million. The impact from the fair value measurement that would have been recognised in other comprehensive income
during the reporting period, had the reclassification of the said portfolio not taken place, is a loss of € 79 million.
As disclosed in Note 2.4.15, henceforth, debt securities issued by corporations and financial institutions will be acquired by
the Group solely for HTC purposes and classified at amortised cost, unless they fail the SPPI test.
26 Investments in consolidated companies
The Group’s and the Company’s investments in consolidated companies as at 31 December 2022, are provided below:
A.
Subsidiaries (full consolidation method)
Piraeus Financial Holdings Group – 31 December 2022
289
a/a
Name of Company
Activity
Country
Unaudited
tax years (1)
Group
Company
% holding
% holding
1.
Piraeus Bank S.A.
Banking activities
Greece
2020-2022
100.00%
100.00%
2.
Piraeus Leasing Single Member
S.A.
Financial Leasing
Greece
-
100.00%
-
3.
Sunshine Leases Single Member
S.A.
Financial Leasing
Greece
-
100.00%
-
4.
Piraeus Property Real Estate
Management Single Member S.A.
Property management
Greece
-
100.00%
-
5.
Dynamic Asset Operating Leasing
S.A.
Operating leasing
Greece
2017-2022
100.00%
-
6.
Geniki Single Member S.A.
Financial & Consulting Services
Financial & consulting services
Greece
2017-2022
100.00%
-
7.
Piraeus Securities S.A.
Stock exchange services
Greece
2017-2022
100.00%
-
8.
Piraeus Factoring Single Member
S.A.
Corporate factoring
Greece
2017-2022
100.00%
-
9.
Piraeus Capital Management
Single Member S.A.
Management of venture capital
fund
Greece
2017-2022
100.00%
-
10.
Piraeus Jeremie Technology
Catalyst Management Single
Member S.A.
Management of venture capital
fund
Greece
2017-2022
100.00%
-
11.
Piraeus Asset Management Single
Member M.F.M.C. S.A.
Mutual funds management
Greece
2017-2022
100.00%
-
12.
Geniki Information Single Member
S.A.
Assessment and collection of
commercial debts
Greece
2017-2022
100.00%
-
13.
Achaia Clauss Εstate S.Α.
Property management
Greece
2017-2022
75.76%
-
14.
Kosmopolis Α' Shopping Centers
Single Member S.A.
Shopping center’s management
Greece
2017-2022
100.00%
-
15.
ND Development Single Member
S.A.
Property management
Greece
2017-2022
100.00%
-
16.
New Up Dating Development Real
Estate and Tourism Single
Member S.A.
Property, tourism & development
company
Greece
2017-2022
100.00%
-
17.
Picar Single Member S.A.
City Link areas management
Greece
2017-2022
100.00%
-
18.
P.H. Development
Property management
Greece
2017-2022
100.00%
-
19.
General Construction and
Development Co. S.A.
Property development/ holding
company
Greece
2017-2022
66.66%
-
20.
Entropia Ktimatiki S.A.
Property management
Greece
2017-2022
66.70%
-
21.
Komotini Real Estate Development
Single Member S.A.
Property management
Greece
2017-2022
100.00%
-
22.
Piraeus Development Single
Member S.A.
Property management
Greece
2017-2022
100.00%
-
23.
Piraeus Real Estate Single Member
S.A.
Construction company
Greece
2017-2022
100.00%
-
24.
Pleiades Estate Single Member
S.A.
Property management
Greece
2017-2022
100.00%
-
25.
Piraeus Agency Solutions Single
Member S.A.
Insurance agency
Greece
2017-2022
100.00%
100.00%
26.
Mille Fin S.A.
Trading of boat vehicles, cars and
equipment
Greece
2017-2022
100.00%
-
27.
Multicollection S.A.
Assessment and collection of
commercial debts
Greece
2009-2022
51.00%
-
Piraeus Financial Holdings Group – 31 December 2022
290
a/a
Name of Company
Activity
Country
Unaudited
tax years (1)
Group
Company
% holding
% holding
28.
Piraeus Direct Solutions Single
Member S.A.
Financial - telecommunication &
ΙΤ services
Greece
2017-2022
100.00%
-
29.
Centre of Sustainable
Entrepreneurship Excelixi Single
Member S.A.
Consulting Services - Hotel -
Training & Seminars
Greece
2017-2022
100.00%
-
30.
PROSPECT M.C.P.Y.
Yachting management
Greece
2017-2022
100.00%
-
31.
Ianos Properties Single Member
S.A.
Property management
Greece
2017-2022
100.00%
-
32.
Lykourgos Properties Single
Member S.A.
Property management
Greece
2017-2022
100.00%
-
33.
Thesis Hermes Single Member S.A.
Property management
Greece
2022
100.00%
-
34.
Thesis Agra Single Member S.A.
Property management
Greece
2022
100.00%
-
35.
Thesis Cargo Single Member S.A.
Property management
Greece
2022
100.00%
-
36.
Thesis Schisto Single Member S.A.
Property management
Greece
2022
100.00%
-
37.
Thesis Stone Single Member S.A.
Property management
Greece
2022
100.00%
-
38.
Trastor Real Estate Investment
Company
Real estate investment property
Greece
2017-2022
98.32%
-
39.
Sinoris Single Member S.A.
Property management
Greece
-
100.00%
-
40.
Iolcus Investments Alternative
Investments Funds Managers S.A.
Alternative investments funds
management
Greece
2017-2022
100.00%
-
41.
Shnappi S.A.
Digital banking products and
services
Greece
-
55.00%
55.00%
42.
Neoris Single Member S.A.
Property management
Greece
-
100.00%
-
43.
Aleva Single Member S.A.
Property management
Greece
-
100.00%
-
44.
Arpis Single Member S.A.
Property management
Greece
-
100.00%
-
45.
Tirana Leasing Sh.A.
Finance leases
Albania
2018-2022
100.00%
-
46.
Cielo Consultancy Sh.P.K.
Property management
Albania
2014-2022
99.09%
-
47.
Beta Asset Management EOOD
Rent and management of real
estate
Bulgaria
2013-2022
100.00%
-
48.
Bulfina E.A.D.
Property management
Bulgaria
2008-2022
100.00%
-
49.
Bulfinace E.A.D.
Property management
Bulgaria
2008-2022
100.00%
-
50.
Delta Asset Management EOOD
Real estate development
Bulgaria
-
100.00%
-
51.
Varna Asset Management EOOD
Real estate development
Bulgaria
2014-2022
100.00%
-
52.
Asset Management Bulgaria EOOD
Travel - rental services and
property management
Bulgaria
2012-2022
100.00%
-
53.
Besticar Bulgaria EOOD
Receivable's collection
Bulgaria
2012-2022
100.00%
-
54.
Besticar EOOD
Receivable's collection
Bulgaria
2012-2022
100.00%
-
55.
Emerald Investments EOOD
Property management
Bulgaria
2018-2022
100.00%
-
56.
Piraeus Nedvizhimi Imoti EOOD
Property management
Bulgaria
-
100.00%
-
57.
Ekaterina Project EOOD
Property management
Bulgaria
-
100.00%
-
58.
Botstile EOOD
Property management
Bulgaria
-
100.00%
-
59.
Euroinvestment & Finance Public
Ltd
Asset management, real estate
operations
Cyprus
2018-2022
90.90%
2.21%
Piraeus Financial Holdings Group – 31 December 2022
291
a/a
Name of Company
Activity
Country
Unaudited
tax years (1)
Group
Company
% holding
% holding
60.
R.E. Anodus Two Ltd
Holding and investment company
Cyprus
2013-2022
99.09%
-
61.
Tellurion Ltd
Holding company
Cyprus
2013-2022
100.00%
-
62.
Tellurion Two Ltd
Holding company
Cyprus
2015-2022
99.09%
-
63.
Trieris Two Real Estate LTD
Holding, Investment and Real
Estate Portfolio Management
Cyprus
2011-2022
100.00%
-
64.
R.E. Anodus Ltd
Consultancy services for real
estate development and
investments
Cyprus
2014-2022
100.00%
-
65.
Lakkos Mikelli Real Estate Ltd
Property management
Cyprus
2018-2022
50.66%
-
66.
Philoktimatiki Public Ltd
Land and property development
Cyprus
2018-2022
53.32%
-
67.
Sunholdings Properties Company
Ltd
Land and property development
Cyprus
2018-2022
26.66%
-
68.
Philoktimatiki Ergoliptiki Ltd
Construction company
Cyprus
2018-2022
53.32%
-
69.
JSC Piraeus Bank ICB
Banking activities
Ukraine
-
99.99%
99.99%
70.
Akinita Ukraine LLC
Real estate development
Ukraine
2014-2022
100.00%
-
71.
Sinitem LLC
Sale and purchase of real estate
Ukraine
2013-2022
99.94%
-
72.
Solum Enterprise LLC
Property management
Ukraine
2012-2022
99.94%
-
73.
Solum Limited Liability Company
Property management
Ukraine
2018-2022
99.94%
-
74.
Piraeus Leasing Romania S.A.
Monitoring and collection services
for loans disbursed by the
company
Romania
2003-2022
100.00%
-
75.
Daphne Real Estate Consultancy
SRL
Real estate development
Romania
2014-2022
99.09%
-
76.
Proiect Season Residence SRL
Real estate development
Romania
2018-2022
100.00%
-
77.
R.E. Anodus SRL
Real estate development
Romania
2013-2022
99.09%
-
78.
Piraeus Rent Doo Beograd
Operating leases
Serbia
2007-2022
100.00%
-
79.
Piraeus Real Estate Egypt LLC
Property management
Egypt
2011-2022
100.00%
-
80.
Trieris Real Estate Management
Ltd
Management of real estate
companies
British Virgin
Islands
-
100.00%
-
81.
Piraeus Group Capital Ltd
Debt securities’ issuance
United
Kingdom
-
100.00%
100.00%
82.
Piraeus Group Finance PLC
Debt securities’ issuance
United
Kingdom
-
100.00%
-
83.
Praxis I Finance PLC
SPV for securitization of consumer
loans
United
Kingdom
-
-
-
84.
Piraeus SNF DAC
SPV for securitization of
corporate, mortgage and
consumer loans
Ireland
-
-
-
85.
Sunrise III NPL Finance DAC
SPV for securitization of corporate
loans
Ireland
-
-
-
Piraeus Financial Holdings Group – 31 December 2022
292
a/a
Name of Company
Activity
Country
Unaudited
tax years (1)
Group
Company
% holding
% holding
86.
Magnus NPL Finance DAC
SPV for securitization of corporate
loans
Ireland
-
-
-
Note
1
: In accordance with Ministerial Decision 1208/20.12.2017 of the Independent Public Revenue Authority, the tax position of entities domiciled in Greece
that have not been notified by the local tax authorities for a tax audit, is deemed to be final only after a five-year period has elapsed since the end of each fiscal
year.
The subsidiaries duly numbered 83 - 86 are SPVs for securitization of loans and advances to customers and issuance of debt
securities. The investment numbered 67 is a subsidiary due to majority representation in the company’s Board of Directors.
Furthermore, as at 31 December 2022 the subsidiaries duly numbered 6, 12, 26, 27, 45 and 83 were under liquidation.
The following subsidiaries, that in aggregate are immaterial to the Group’s financial position and results of operations, are not
consolidated but recognized at cost: a) “Hellenic Information Systems HIS S.A.”; b) “The Museum Ltd”; and c) “Kion Holdings
Ltd”. The full consolidation of the aforementioned companies would not have a significant effect on the Consolidated Financial
Statements since the sum of their total net income, total equity and total assets comprises less than 0.01% of the Group’s
respective balances, based on their most recent financial statements.
The movement of the Company’s investments in subsidiaries during the year is provided below:
Company
31/12/2022
31/12/2021
Opening balance
5,539
4,881
Additions
44
-
Participation in share capital increases/ decreases of Piraeus Bank and other
subsidiaries
-
1,661
Subscription of AT 1 capital instrument issued by Piraeus Bank
-
595
Disposals and absorption
(25)
-
Ιmpairment charge
-
(1,597)
Closing balance
5,558
5,539
Disposal of the merchant acquiring business unit
On 15 March 2022, the Bank completed the sale of its merchant acquiring business to Euronet Worldwide that was demerged
by way of hive -down and contributed into a newly established legal entity, after obtaining the required regulatory approvals,
for a total consideration of € 300 million. The Group’s gain from the transaction amounted to € 282 million and was recognized
in line item “Net gains/ (losses) from loss of control over subsidiaries/ disposal of associates and joint ventures” of the Income
Statement.
Acquisition of Trastor Real Estate Investment Company S.A.
On 21 January 2022, the Company announced that its subsidiary Piraeus Bank S.A. reached an agreement with WRED LLC
Piraeus Financial Holdings Group – 31 December 2022
293
(“WRED”), a company affiliated with Värde Partners, for the acquisition of WRED’s approximately 52% stake in Trastor Real
Estate Investment Company S.A. (“Trastor”). The transaction was completed on 28 February 2022, after receiving the required
regulatory approvals, as well as the consent of the HFSF. The cash consideration of the transaction amounted to € 98 million
(€ 1.25 per share).
Τhe acquisition of Trastor underpins the Group’s strategy for accretive return-on-capital actions and entails the following key
benefits: i) immediate enhancement of the fee generating pools of the Group; ii) capture of the dynamics of the Greek real
estate market, especially in the segments of prime office and logistic spaces where Trastor is mainly focused; and iii)
strengthening of the Group’s capabilities in real estate platforms in Greece.
The fair value of each major class of assets acquired and liabilities assumed as at the acquisition date is provided below:
Trastor Real
Estate
Investment
Company
ASSETS
Due from banks
10
Investment property
327
Other assets
6
Total Assets
343
LIABILITIES
Due to banks
72
Other liabilities
23
Total Liabilities
95
Shareholders’ equity
248
Total liabilities and shareholders’ equity
343
Goodwill recognized
Cash consideration
98
Effective settlement of pre-existing relationships
66
Non controlling interest
6
Previously held interest
81
251
Fair value of identifiable net assets
248
Goodwill
3
The Group recognized the resulting goodwill within line item “Intangible Assets” in the Statement of Financial Position. The
remeasurement at fair value of the previously held interest in Trastor resulted to a gain of approximately € 2 million.
The table below presents: (a) Trastor’s post-acquisition total net income and profit before tax that is included in the
consolidated income statement for the year ended 31 December 2022 and (b) the total net income and profit before tax which
would have been included in the consolidated income statement had the acquisition occurred on 1 January 2022.
Piraeus Financial Holdings Group – 31 December 2022
294
Post acquisition
results up to 31
December 2022
(a)
Results of
Trastor for the
year ended 31
December 2022
(b)
Total net income
39
42
Profit before income tax
31
32
For the period from 1 January 2022 up to the acquisition date, the Group’s share (44.75%) in Trastor’s total net income and
profit before income tax was € 1 million and € 1 million, respectively.
Piraeus Bank acquired an additional 1.6% stake in Trastor in the context of a mandatory tender offer that was completed in
June 2022.
Acquisition of Shnappi S.A.
On 13 July 2022, the Company fully covered the share capital increase of Shnappi S.A. (“Shnappi”) with € 19 million, in the
context of the Group’s strategic partnership with Natech S.A. to develop an independent innovative digital bank for customers
in Greece and the rest of the European Market. Following the aforementioned share capital increase, the Company holds a
55% controlling stake in Shnappi, hence the latter is a subsidiary of the Group.
The fair value of each major class of assets acquired and liabilities assumed as at the acquisition date is provided below:
Shnappi
ASSETS
Intangible assets
5
Cash
20
Total Assets
25
Shareholders’ equity
25
Total liabilities and shareholders’ equity
25
Goodwill recognized
Cash consideration
19
Non controlling interest
11
30
Fair value of identifiable net assets
25
Goodwill
5
The Group recognized the resulting goodwill within balance line item "Intangible Assets" in the Statement of Financial Position.
Annual financial statements of subsidiaries
The annual financial statements of the Group’s subsidiaries for the year ended 31 December 2022, which have been issued
prior to approval of the Annual Financial Statements, are available on the Company’s web site at www.piraeusholdings.gr in
section Investor Relations, subsection Financial Data - Financial Statements and Other Information - Consolidated Companies.
The annual financial statements of the remaining subsidiaries will be available on the Company’s web site upon their issuance.
Piraeus Financial Holdings Group – 31 December 2022
295
Significant restrictions of subsidiaries
With respect to subsidiaries, except for inherent restrictions applied under the regulatory framework based on which they
operate, no other significant legal, contractual, or regulatory restrictions are imposed regarding the transfer of cash in the form
of dividends, the transfer of funds, as well as the repayment of intragroup loans.
Consolidated structured entities
As of 31 December 2022, the Group controlled, thus, consolidated two (2) SPVs, namely Sunrise III NPL Finance DAC and
Magnus NPL Finance DAC which were established for the securitization of the respective NPE portfolios. As at 31 December
2022, the underlying loans of Sunrise III NPL Finance DAC are recognized on the Group’s statement of financial position, whilst
Magnus NPL Finance DAC consists of legal claims that had already been written off from the Group’s Statement of Financial
Position at the date of their securitization.
Furthermore, the Group controls, therefore, consolidates PIRAEUS SNF DAC (retained securitization of mortgage, corporate
and consumer NPEs). The underlying loans are recognized on the Group’s Statement of Financial Position.
The following table presents the outstanding amount of debt securities held by the Group, that were issued by the SPVs, though
not recognized on the Group’s Statement of Financial Position:
Company name
Outstanding amount of
debt securities held
31/12/2022
31/12/2021
Sunrise III NPL Finance DAC
174
-
Magnus NPL Finance DAC
11
-
Total
185
0
Interests in unconsolidated structured entities
As at 31 December 2022, the Group has investments in open-ended mutual funds that are managed by its wholly owned
subsidiary Piraeus Asset Management Single Member M.F.M.C. S.A. with independent management and organizational
structure, licensed by the HCMC. The assets of these funds are equal to € 2 billion, while the clientele includes 59,852
customers.
The management of mutual funds is performed under the investment framework defined for each mutual fund. The Group
acts as an agent acting on behalf of its clients and does not control the mutual funds. On this basis, the interests in mutual
funds are classified and measured at FVTPL.
As of 31 December 2022, the Bank’s assets in open-ended mutual funds are valued at € 104 million according to the table
below:
Piraeus Financial Holdings Group – 31 December 2022
296
Mutual funds
Total Assets
31/12/2022
31/12/2021
Domestic Mutual Funds
58
28
Abroad Mutual Funds
46
84
The following table presents the carrying amount of the mutual funds’ assets that the Group manages, per asset class, as at 31
December 2022 and 2021:
Mutual funds
Total Assets
31/12/2022
31/12/2021
Equity funds
393
368
Balanced funds
156
198
Bonds funds
778
685
Money Market funds
198
215
Fund of Funds
518
602
Total
2,043
2,068
Within 2021, the Group completed the securitization of Phoenix, Vega, Sunrise I and Sunrise II NPE portfolios, through six (6)
SPVs, namely “Phoenix NPL Finance DAC”, “Vega I NPL Finance DAC”, “Vega II NPL Finance DAC”, “Vega III NPL Finance DAC”,
“Sunrise I NPL Finance DAC” and “Sunrise II NPL Finance DAC”. The establishment of the SPVs was in the context of the Group’s
NPE de-risking plan which utilized the HAPS scheme pursuant to law 4649/2019.
The NPE portfolios were transferred to the SPVs, on or after their establishment, and the SPVs issued three (3) tranches
structured notes (i.e. Senior, Mezzanine and Junior) which were fully subscribed by the Group. The Group lost control over the
SPVs, following the transfer to third parties of 95% of mezzanine and junior notes issued by the SPVs. The Group maintained
100% of the senior notes which are classified within loans and advances to customers measured at amortised cost and 5% of
the mezzanine and junior notes which are classified within loans and advances to customers mandatorily measured at FVTPL.
The following table sets out an analysis of the carrying amounts of said assets held by the Group. The maximum exposure to
loss is equal to the carrying amount of the assets held.
Securitization SPVs
Total Assets
31/12/2022
31/12/2021
Loans and advances to customers at amortised cost
Senior Notes
6,075
6,236
Loans and advances to customers mandatorily measured at FVTPL
Mezzanine and Junior Notes 1
6
34
(1)
As at 31 December 2021 the Group held 49% of the Mezzanine and Junior Notes issued by Sunrise I NPL Finance DAC and Sunrise II NPL
Finance DAC.
A.1 Impairment assessment of the Company’s investment in Piraeus Bank
As of 31 December 2022, the Company estimated the recoverable amount of its investment in subsidiary Piraeus Bank based
Piraeus Financial Holdings Group – 31 December 2022
297
on a value-in-use calculation. The outcome of the impairment test approximated the Company’s cost of investment in Piraeus
Bank, therefore, no impairment loss was recognised or reversed during the year ended 31 December 2022. Refer to Note 3.2
for information on the sensitivity of the value-in-use calculation to reasonably possible changes in the discount rate and long
term growth rate.
B.
Associates and joint ventures (equity accounting method)
B.1 Associates
The Group’s and the Company’s associates as at 31 December 2022 are the following:
s/n
Name of Company
Activity
Country
Unaudited
tax years (1)
Group
Company
% Holding
% Holding
1
Piraeus - TANEO Capital Fund
Close end venture capital fund
Greece
-
50.01%
-
2
PJ Tech Catalyst Fund
Close end venture capital fund
Greece
-
30.00%
-
3
APE Commercial Property Real
Estate Tourist and Development
S.A.
Holding company
Greece
2017-2022
27.80%
-
4
Marfin Investment Group Holdings
S.A.
Holding company
Greece
2017-2022
31.19%
-
5
Omicron Cyclos Ena Symmetohiki
S.A. (2)
Holding company
Greece
2017-2022
28.10%
-
6
APE Fixed Assets Real Estate
Tourist and Development S.A.
Real estate, development/ tourist
services
Greece
2017-2022
27.80%
-
7
APE Investment Property S.A.
Real estate, development/ tourist
services
Greece
2017-2022
28.92%
-
8
Olganos Real Estate S.A.
Property management/electricity
production from renewable
energy resources
Greece
2017-2022
32.27%
-
9
Pyrrichos S.A.
Property management
Greece
2017-2022
55.95%
-
10
Exodus S.A.
Information technology &
software
Greece
2017-2022
49.90%
-
11
Evros Development Company S.A.
European community programs
management
Greece
2017-2022
30.00%
-
12
Gaia S.A.
Software services
Greece
2017-2022
24.92%
-
13
Crete Scient & Tech. Park Manag.
& Dev. Co. S.A.
Scientific and technology park
management
Greece
2017-2022
30.45%
-
14
Intrum Hellas REO Solutions S.A.
Real estate
Greece
2019-2022
19.96%
-
15
Intrum Hellas Credit Servicing S.A.
Credit and loan servicing
Greece
2019-2022
20.00%
-
16
Teiresias S.A.
Ιnterbanking company of
development, operation and
management of information
systems
Greece
2017-2022
23.53%
-
17
Piraeus Direct Services S.A.
Support & e-commerce services,
trade of time renewal cards
Greece
2017-2022
49.90%
-
Piraeus Financial Holdings Group – 31 December 2022
298
s/n
Name of Company
Activity
Country
Unaudited
tax years (1)
Group
Company
% Holding
% Holding
18
ANEK Lines S.A.
Maritime transport - Coastal
shipping
Greece
2019-2022
27.68%
-
19
Perigenis Business Properties S.A.
Property management
Greece
2020-2022
20.61%
-
20
Neuropublic S.A.
Development and management of
information systems
Greece
2021-2022
5.00%
-
21
Abies S.A. (2)
Property management
Greece
2017-2022
40.14%
-
22
ΕΤVΑ Industrial Parks S.A.
Development/ management of
industrial areas
Greece
2017-2022
1.00%
-
23
Euromedica Societe Anonyme for
provision of Medical Services
Hospital and health services
Greece
2021-2022
29.35%
-
24
Trieris Real Estate Ltd
Property management
British Virgin
2018-2022
26.35%
-
25
Strix Holdings LP
Holdings limited partnership
Ireland
-
100.00%
-
26
Strix Asset Management Ltd
Asset management
Ireland
-
25.00%
-
27
Strix Holdings NC LP (3)
Holdings limited partnership
Ireland
-
100.00%
-
Note
1
: In accordance with Ministerial Decision 1208/20.12.2017 of the Independent Public Revenue Authority, the tax position of entities domiciled in Greece
that have not been notified by the local tax authorities for a tax audit, is deemed to be final only after a five-year period has elapsed since the end of each fiscal
year.
Note
2
: Placed under liquidation as of 31 December 2022.
Note
3
: Renamed to Strix Holdings LP II effective from 20 February 2023.
The Group’s associate NGP Plastic S.A., is immaterial to the Group’s financial position and results of operations, therefore, is
not accounted for under the equity method but recognised at cost. The contribution of this non-significant associate is
approximately 0.2%, 0.03% and 0.03% of the Group’s total net income, total equity and total assets, respectively, based on the
most recent financial statements obtained.
The Group exercises significant influence but does not control any of the companies listed above as at 31 December 2022. This
holds even for the entities duly numbered 1, 9, 25 and 27, where the Group’s shareholding exceeds 50%. Significant influence
also exists in the companies duly numbered 14, 20 and 22, where the Group’s shareholding does not exceed 20%.
In June 2022, Strix Holdings (GP) Limited (“Strix GP”), an entity controlled by Blantyre Capital Limited (“Blantyre”), established
a limited partnership in Ireland under the name Strix Holdings NC LP. In December 2022, the Bank became the sole limited
partner of Strix Holdings NC LP and executed an agreement, under which certain equity investments (i.e. Piraeus Equity
Partners Limited, Euroterra Real Estate Company, Rebicat Real Estate Company, Euroak Real Estate Company and Imithea
Single Member S.A) will be transferred from Strix Holdings LP to Strix Holdings NC LP. The transfer of the said investments was
reflected as a reclassification of € 246 million between the carrying amount of the Bank’s investment in Strix Holdings LP and
Strix Holdings NC LP as of 31 December 2022. No gain or loss was recognized by the Group as a result of this reclassification.
Strix Holdings LP and Strix Holdings NC LP are material associates of the Group.
As of 31 December 2022, Piraeus Bank had committed to Strix GP that certain non-core assets with a total carrying value of
Piraeus Financial Holdings Group – 31 December 2022
299
€157 million in Piraeus Bank’s standalone financial statements shall be placed under professional management by 15 June
2023.
B.2 Joint ventures
The Group’s and the Company’s joint ventures as at 31 December 2022 are the following:
s/n
Name of Company
Activity
Country
Unaudited
tax years (1)
Group
Company
% Holding
% Holding
1
AEP Elaiona S.A.
Property management
Greece
2017-2022
50.00%
-
2
Peirga Kythnou P.C.
Real estate
Greece
2019-2022
50.00%
-
3
Sunrise III Real Estate Single
Member S.A.
Property management
Greece
-
100.00%
-
Note
1
: In accordance with Ministerial Decision 1208/20.12.2017 of the Independent Public Revenue Authority, the tax position of entities domiciled in Greece
that have not been notified by the local tax authorities for a tax audit, is deemed to be final only after a five-year period has elapsed since the end of each fiscal
year.
The total carrying value of the Group’s interests in non-significant associates and joint ventures as at 31 December 2022 and
2021, amounted to € 191 million and € 278 million, respectively.
The following table presents in total the proportion of the Group in the after-tax results and total comprehensive income for
the year, of its associates as at 31 December 2022 and 2021. The below condensed financial information reported by the
associates for the purposes of being accounted for under the equity method, is prepared in accordance with IFRS and adjusted
(if necessary) in conformity with the Group’s accounting policies.
Condensed financial information
2022
2021
Share of profit/ (loss) of associates and joint ventures, after tax
29
18
Total comprehensive income
29
18
Other information on associates and joint ventures
The Group discontinues to recognise its share of accumulated losses in associates, when its share of losses equals or exceeds
its interest in the associate. The cumulative unreco gnised losses from associates as at 31 December 2022 amounted to € 49
million (31 December 2021: € 38 million). In case the associate subsequently reports profits, the Group resumes recognizing
its share of those profits only after its share of the profits equals the share of losses not recognized.
There are no significant contingent liabilities relating to the Group’s participation in associates and joint ventures.
There are no unrecognised commitments of the Group related to its participation in joint ventures and associates that could
result in future outflow of cash or other resources.
There are no significant restrictions in the ability of associates or joint ventures to transfer resources to the Bank in the form
of dividends or to repay lending facilities granted by the Group, apart from the customary restrictions imposed on their
framework of operation and the applicable legislation.
Piraeus Financial Holdings Group – 31 December 2022
300
Movement of investment in associates and joint ventures during the year
The movement of the Group’s investments in associates and joint ventures during the year is provided below:
Group
31/12/2022
31/12/2021
As reclassified
Opening balance
630
269
Contribution of equity interests
135
358
Disposals
(1)
-
Share of profit/ (loss) of associates and joint ventures, after tax
29
18
Contribution of debt assets
329
-
Acquisition of controlling interests
(79)
-
Impairment
(2)
(23)
Foreign exchange differences and other adjustments
(18)
8
Closing balance
1,023
630
In 2022, Piraeus Bank contributed its entire shareholding in subsidiary Imithea Single Member S.A. into Strix Holdings LP. Refer
to Note 14 for further information. The carrying amount of the Bank’s investment in Strix Holdings LP increased by € 135 million
and the Group recognised a gain from loss of control over Imithea Single Member S.A. of € 55 million.
In November 2022, Piraeus Bank contributed into Strix Holdings LP, two bond loans of total carrying value € 329 million due
from Marfin Investment Group Holdings S.A. (“MIG”), in exchange for additional limited partnership interests in Strix Holdings
LP. As a result of this contribution, Piraeus Bank’s cost of investment in Strix Holdings LP increased by an equivalent amount
and no gain or loss was recognized by the Group.
The decrease in the carrying amount of the Group’s investments in associates and joint ventures of € 79 million refers to the
previously-held interest in Trastor that was accounted for as an associate and which increased to a controlling interest on 8
February 2022 through a business combination. Refer to Note 26Α for further information.
Basic financial information of the associates and the joint ventures for 2022 and 2021
31/12/2022
s/n
Name of Company
Country
Participation
Profit/ (loss)
before tax
Total
Revenues
Total assets
Total
liabilities
1
Crete Scient. and Tech. Park Manag. and Dev. Co. S.A.
Greece
30.45%
-
-
0
0
2
Evros' Development Company S.A.
Greece
30.00%
(0)
0
0
0
3
APE Commercial Property Real Estate Tourist and
Development S.A.
Greece
27.80%
(1)
-
6
1
4
APE Fixed Assets Real Estate Tourist and Development
S.A.
Greece
27.80%
0
-
49
5
5
Trieris Real Estate LTD
British Virgin
26.35%
(0)
-
5
0
6
APE Investment Property S.A.
Greece
28.92%
(0)
-
173
8
7
Omicron Cyclos Ena Symmetohiki S.A.
Greece
28.10%
-
-
115
140
8
Exodus S.A.
Greece
49.90%
(1)
2
-
2
Piraeus Financial Holdings Group – 31 December 2022
301
9
Piraeus - TANEO Capital Fund
Greece
50.01%
5
-
2
0
10
Teiresias S.A.
Greece
23.53%
0
17
18
15
11
PJ Tech Catalyst Fund
Greece
30.00%
5
-
11
0
12
Pyrrichos S.A.
Greece
55.95%
(1)
0
6
21
13
Piraeus Direct Services S.A.
Greece
49.90%
1
19
4
1
14
Gaia S.A.
Greece
24.92%
(1)
5
14
10
15
Olganos S.A.
Greece
32.27%
(0)
0
7
10
16
Abies S.A.
Greece
40.14%
(0)
-
0
0
17
ΕΤVΑ Industrial Parks S.A.
Greece
1.00%
(2)
8
218
20
18
Euromedica Societe Anonyme for provision of medical
services
Greece
29.35%
(15)
47
198
204
19
Neuropublic S.A.
Greece
5.00%
1
6
24
12
20
Marfin Investment Group Holding S.A.
Greece
31.19%
*
*
*
*
21
Intrum Hellas REO Solutions S.A.
Greece
19.96%
(3)
5
58
7
22
Intrum Hellas Credit Servicing S.A.
Greece
20.00%
107
230
601
172
23
ANEK Lines S.A.
Greece
27.68%
*
*
*
*
24
Perigenis Business Properties S.A.
Greece
20.61%
(0)
-
47
0
25
Strix Holdings LP
Ireland
100.00%
16
-
587
-
26
Strix Asset Management Limited
Ireland
25.00%
0
-
7
-
27
Strix Holdings NC LP
Ireland
100.00%
-
-
250
4
28
AEP ELAIONA S.A.
Greece
50.00%
(4)
-
108
110
29
Peirga Kythnou P.C.
Greece
50.00%
1
-
4
1
30
Sunrise III Real Estate Single Member S.A.
Greece
100.00%
(0)
-
0
0
(*) As of the date that the BoD approved the Annual Financial Statements, the listed associated companies Marfin Investment
Group Holdings S.A. and ANEK Lines S.A., had not published their annual financial statements for 2022.
Piraeus Financial Holdings Group – 31 December 2022
302
31/12/2021
s/n
Name of Company
Country
Participation
Profit/ (loss)
before tax
Total
revenues
Total assets
Total
liabilities
1
Crete Scient. and Tech. Park Manag. and Dev. Co. S.A.
Greece
30.45%
-
-
0
0
2
Evros' Development Company S.A.
Greece
30.00%
(0)
0
1
1
3
APE Commercial Property Real Estate Tourist and
Development S.A.
Greece
27.80%
(0)
-
6
0
4
APE Fixed Assets Real Estate Tourist and Development
S.A.
Greece
27.80%
(0)
-
48
5
5
Trieris Real Estate LTD
British Virgin
32.35%
(0)
-
5
1
6
APE Investment Property S.A.
Greece
28.92%
(0)
-
173
8
7
Omicron Cyclos Ena Symmetohiki S.A.
Greece
28.10%
-
-
115
140
8
Exodus S.A.
Greece
49.90%
0
2
3
4
9
Piraeus - TANEO Capital Fund
Greece
50.01%
2
-
3
0
10
Teiresias S.A.
Greece
23.53%
0
15
14
12
11
PJ Tech Catalyst Fund
Greece
30.00%
3
-
15
0
12
Pyrrichos S.A.
Greece
55.95%
(2)
0
6
20
13
Piraeus Direct Services S.A.
Greece
49.90%
0
20
5
2
14
Gaia S.A.
Greece
26.00%
(0)
23
12
7
15
Olganos S.A.
Greece
32.27%
(1)
0
7
10
16
Abies S.A.
Greece
40.14%
(0)
-
0
0
17
ΕΤVΑ Industrial Parks S.A.
Greece
1.00%
-
-
215
-
18
Euromedica Societe Anonyme for provision of medical
services
Greece
29.35%
-
-
145
136
19
Neuropublic S.A.
Greece
5.00%
(1)
6
19
8
20
Exus Software Ltd
United
Kingdom
49.90%
(0)
7
12
11
21
Marfin Investment Group Holding S.A.
Greece
31.24%
(26)
367
1,223
1,115
22
Intrum Hellas REO Solutions S.A.
Greece
19.96%
26
31
78
15
23
Intrum Hellas Credit Servicing S.A.
Greece
20.00%
51
183
654
264
24
Trastor Real Estate Investment Company
Greece
44.75%
23
37
355
174
25
ANEK Lines S.A.
Greece
27.68%
(40)
126
281
321
26
Perigenis Business Properties S.A.
Greece
20.61%
(0)
-
48
0
27
Strix Holdings LP
Ireland
100.00%
-
-
350
-
28
Strix Asset Management Limited
Ireland
25.00%
-
-
32
-
29
AEP ELAIONA S.A.
Greece
50.00%
(2)
0
111
110
30
Peirga Kythnou P.C.
Greece
50.00%
0
-
4
0
31
Sunrise I Real Estate Single Member S.A.
Greece
100.00%
(0)
-
33
33
32
Sunrise II Real Estate Single Member S.A.
Greece
100.00%
(0)
-
0
0
33
Sunrise I NPL Finance DAC
Ireland
-
-
-
2,539
2,539
34
Sunrise II NPL Finance DAC
Ireland
-
-
-
1,279
1,279
Piraeus Financial Holdings Group – 31 December 2022
303
27 Intangible assets
Group
Goodwill
Software
Other
intangible
Total
Cost
At 1 January 2021
38
678
50
766
Additions
0
48
0
48
Transfers
0
20
0
20
Disposals and write-offs
-
(1)
(0)
(1)
Derecognitions
(29)
(1)
(0)
(30)
At 31 December 2021
9
744
50
803
Opening balance of newly consolidated companies
14
5
-
19
Additions
-
71
0
71
Transfers
3
8
0
11
At 31 December 2022
27
828
50
904
Accumulated amortisation
At 1 January 2021
0
(441)
(45)
(486)
Amortisation charge
0
(51)
(1)
(52)
Derecognitions
-
1
1
2
At 31 December 2021
0
(491)
(45)
(536)
Amortisation charge
-
(55)
(1)
(56)
At 31 December 2022
0
(546)
(46)
(592)
Net book value
At 31 December 2021
9
253
5
267
At 31 December 2022
27
282
4
312
As of 31 December 2022 the Group’s goodwill increased by € 18 million, mainly due to acquisition of controlling interests in
Iolcus Ιnvestments AIFM S.A. (€ 9 million), Shnappi S.A. (€ 5 million) and Trastor (€ 3 million). Refer to Note 48a for further
information.
28 Property and equipment
Group
Land and
buildings
Equipment
and other
tangible
assets
Right of use
assets
Assets under
construction
Leasehold
improvements
Total
Cost
At 1 January 2021
691
384
181
48
191
1,495
Additions
5
22
13
12
4
54
Transfers
5
0
0
(22)
0
(16)
Disposals and write-offs
(1)
(13)
(12)
(1)
(10)
(37)
Derecognitions
(17)
(69)
(4)
(4)
0
(94)
Impairment
(0)
(1)
0
0
(11)
(13)
Other movements
0
1
0
0
0
1
Transfer to held for sale
0
(41)
0
0
0
(41)
At 31 December 2021
683
282
178
33
174
1,349
Acquisition of subsidiaries
62
1
(24)
0
0
40
Additions
5
25
23
6
5
64
Piraeus Financial Holdings Group – 31 December 2022
304
Transfers
(226)
0
(10)
(8)
(0)
(244)
Disposals and write-offs
(2)
(9)
(11)
(0)
(7)
(29)
Derecognitions
(1)
(0)
(1)
(0)
(0)
(3)
Revaluations
10
0
0
0
0
10
Impairment
(1)
(0)
0
0
(3)
(4)
Other movements
(0)
(1)
(1)
(0)
(0)
(2)
At 31 December 2022
530
298
153
31
169
1,181
Accumulated depreciation
At 1 January 2021
(83)
(253)
(77)
0
(86)
(500)
Depreciation charge for the year
(8)
(22)
(23)
0
(5)
(58)
Disposals and write-offs
0
12
5
0
10
27
Derecognitions
13
23
2
0
0
37
Transfer to held for sale
0
34
0
0
0
34
At 31 December 2021
(78)
(206)
(94)
0
(81)
(459)
Acquisition of subsidiaries
0
(1)
9
0
(0)
9
Depreciation charge for the year
(8)
(19)
(18)
0
(5)
(49)
Transfers
14
0
8
0
0
23
Disposals and write-offs
0
8
3
0
6
17
Derecognitions
0
0
2
0
0
2
Other movements
0
5
0
0
0
5
At 31 December 2022
(72)
(212)
(89)
0
(80)
(453)
Net book value
At 31 December 2021
605
76
84
33
93
890
At 31 December 2022
458
86
64
31
89
728
Refer to Note 26A for information on the subsidiaries acquired in 2022.
At the end of the reporting period the Group’s “Right of use assets” includes an amount of € 60 million (31 December 2021: €
80 million) relating to leases of land and buildings. Line item ”Derecognitions” mainly refers to loss of control over subsidiaries
that occurred in 2022. Refer to Note 48 for further information.
29 Investment property
Piraeus Financial Holdings Group – 31 December 2022
305
Group
Owned property
Right-of-use
assets
Total
At 1 January 2021
1,047
71
1,119
Net gain/ (losses) from fair value measurement (Note 11)
11
(7)
4
Additions
36
0
36
Transfers
(1)
0
(1)
Disposals and write-offs
(10)
-
(10)
Other movements
2
-
2
Derecognitions
(108)
-
(108)
At 31 December 2021
977
64
1,041
Acquisition of subsidiaries
250
27
278
Net gain/ (losses) from fair value measurement (Note 11)
43
(6)
38
Additions
66
0
66
Transfers
121
2
123
Disposals and write-offs
(17)
-
(17)
Other movements
(4)
-
(4)
Derecognitions
(2)
-
(2)
At 31 December 2022
1,434
88
1,522
For information on rental income recognised from investment property, refer to Note 8. Direct operating expenses arising from
investment property generating rental income for the years ended 31 December 2022 and 2021 amounted to € 4 million for
the Group, whilst for those investment property that did not generate income the said expenses amounted to € 3 million for
both 2022 and 2021.
The fair value measurements of investment property are classified within Level 3 of the fair value hierarchy. Refer to Note 3.1
for additional information on how the Group determines the fair value of its investment property.
Refer to Note 26A for information on the subsidiaries acquired in 2022.
30 Assets held for sale
As at 31 December 2022, the carrying amount of the Group’s assets held for sale amounted to € 406 million (31 December
2021: € 435 million), of which € 400 million comprises financial assets – mainly loans and advances to customers. Note 5
presents a breakdown of these assets held for sale per business segment, where € 373 million and €33 million have been
reported under “NPE MU” and “Core” reporting segments, respectively. The total loss recognized by the Group in 2022 from
writing down the carrying amount of the assets held for sale to fair value less cost to sell, amounted to € 232 million, of which
€ 227 million and € 5 million charged in line items “ECL impairment losses on loans and advances to customers at amortized
cost” and “Impairment (losses)/releases on other assets”, respectively.
Held for sale classifications in the current year:
Sunrise III and Solar:
Management assessed and concluded that these loan portfolios meet the held for sale classification
criteria. For information on the basis and factors applied by Management in its assessment, refer to Note 3.1. As at 31
Piraeus Financial Holdings Group – 31 December 2022
306
December 2022 the carrying amount of the Sunrise III and Solar portfolios was written down to € 169 million and € 102 million,
respectively.
Other NPE portfolios:
Certain NPEs comprising corporate loans were classified as held for sale during the current year, the
carrying value of which was written down to € 9 million as at 31 December 2022.
Assets classified as held for sale in prior years:
As of the reporting date, Management reassessed the held for sale criteria of certain NPE portfolios, namely Sunshine, Chios,
Trinity IX and Trinity XI (previously designated as Trinity IV) and concluded that they still continue to apply. Management
expects that any factors that may have delayed the disposal process will be resolved throughout the next twelve months. As
at 31 December 2022 the total carrying amount of the said NPEs amounted to € 127 million (31 December 2021 € 175 million).
Assets sold during the current year:
NPE portfolios
: During 2022, the Group disposed certain NPE portfolios namely Dory, Wheel, Trinity IV-B and Trinity X. The
profit and loss recognized upon disposal was immaterial. The aggregate carrying value of the aforementioned portfolios was €
234 million as at 31 December 2021.
Merchant acquiring business
: On 15 March 2022 Piraeus Bank completed the sale of its merchant acquiring business. The
carrying value of the assets disposed was € 27 million as at 31 December 2021. The gain recognized by the Group upon disposal
amounted to € 282 million. Refer to Note 26A for further information.
31 Other assets
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Inventories - property
1,391
1,337
-
-
Accumulated impairment of inventories - property
(131)
(159)
-
-
Net amount of inventories - property (A)
1,260
1,178
0
0
Other inventories
69
78
-
-
Accumulated impairment of other inventories
(1)
(1)
-
-
Net amount of other inventories (Β)
68
77
0
0
Total net amount of inventories (A) + (B)
1,328
1,255
-
-
Prepaid expenses
44
41
0
0
Accrued income
21
20
20
20
Claims from tax authorities and the Greek State
16
9
-
-
Credit Cards-settlement account
54
69
-
-
Deposit and Investment Guarantee Fund (HDIGF)
582
826
-
-
Other
282
333
51
51
Total other non financial assets
1,000
1,299
71
71
Piraeus Financial Holdings Group – 31 December 2022
307
Accumulated impairment of other non financial assets
(97)
(82)
(56)
(56)
Net amount of other non financial assets (C)
903
1,217
15
15
Claims from the Greek State
597
507
0
0
Credit Cards
83
86
-
-
Accrued income
84
59
13
2
Receivables
93
82
16
10
Other
512
413
0
-
Total financial assets
1,370
1,148
29
11
ECL allowance of financial assets
(174)
(167)
0
0
Net amount of financial assets (D)
1,195
981
29
11
Other assets (A) + (B) + (C) + (D)
3,427
3,453
44
26
of which (excluding inventory):
Current
826
741
29
11
Non-current
1,272
1,457
15
14
Inventory property mainly comprises real estate property acquired through auctions. The accumulated impairment of
inventory refers to the monetary difference between cost and net realisable value. As at 31 December 2022, the carrying
amount of inventory property that was written down to its net realizable value amounted to € 650 million (31 December 2021:
€ 455 million).
Other non-financial assets
Line item “Deposit and Investment Guarantee Fund (HDIGF)” refers to the Bank’s participation in assets of HDIGF.
More specifically:
●
In accordance with art. 9, par. 1 of Greek Law 4370/2016, the cap for the amount of deposits guaranteed by the HDIGF
is € 100 thousand per client. Due to the increase to the aforementioned amount, the contributions paid by credit
institutions to HDIGF increased from 2008 onwards.
●
Greek Law 4370/2016 article 25 par. 8, 9 and 10 provides that the Supplementary Deposit Cover Fund (“SDCF”), is
considered as a distinct group of assets comprising annual contributions made by the credit institutions, pursuant to
paragraph 2 of art. 6 of Greek Law 3714/2008 (A '231). SDCF’s assets are assets of the SDCF members credit institutions,
based on their respective participation, managed by HDIGF. Each credit institution participating in SDCF has an individual
share corresponding to its percentage of participation.
●
Article 144 of Greek Law 4972/2022 specified that the SDCF assets will be gradually returned to the credit institutions in
three annual installments throughout 2022-2024. The Bank received in December 2022 the first installment, which
amounted to € 247 million.
●
In accordance with article 13 of Greek Law 4370/2016, HDIGF compensates investor -clients for a maximum protection
limit of € 30 thousand for the aggregate investment services provided by a participating credit institution, in default. The
participating credit institutions paid their first contributions in 2010. The said contributions are made in a dedicated
contributions reserve account which is jointly owned by the credit institutions. Each credit institution participating in the
Investment Cover Scheme (“ICS”) has an individual share in the said reserve account which is proportional to its
participation in the ICS assets, in accordance with article 30 of Greek Law 4370/2016.
Piraeus Financial Holdings Group – 31 December 2022
308
●
In accordance with article 36, par. 1 to 3 of Greek Law 4370/2016, the source of HDIGF’s Resolution Scheme (“RS”) funds,
comprises recurring ex ante contributions, non-recurring ex post contributions and alternative means of funding,
pursuant to internal articles 98 to 100 of article 2 of Greek Law 4355/2015.
●
Under Regulation (EU) 806/2014, the Bank is subject to annual ex-ante contributions, calculated by the SRB.
Line item “other” primarily comprises prepayment assets and transitional accounts expected to be settled in the following
period.
Other financial assets
Line item “claims from the Greek State” mainly comprises amounts claimed by the Bank from the Greek State relating to loans
guaranteed by the latter, whilst line item “other” mainly relates to trade receivables and accrued income.
The credit cards receivable mainly refers to unsettled transactions as well as installments not yet due by the cardholders, which
have been advanced to merchants.
The tables below illustrate the movement of line item “ECL allowance of financial assets” for the Group in 2022 and 2021.
Group
Movement of ECL allowance
Stage 1
Stage 2
Stage 3
Total
ECL allowance as at 1/1/2022
1
1
165
167
Reversal of unutilised impairment allowance
(0)
(0)
(4)
(4)
ECL impairment charge for the year
0
0
11
11
Write-off of impairment losses
-
-
(1)
(1)
Other movements
-
(0)
1
1
At 31/12/2022
1
1
172
174
Group
Movement of ECL allowance
Stage 1
Stage 2
Stage 3
Total
ECL allowance as at 1/1/2021
8
11
383
402
Transfer to held for sale
-
-
(207)
(207)
Reversal of unutilised impairment allowance
(1)
(0)
(2)
(3)
ECL impairment charge for the year
1
0
8
9
Financial assets derecognized
(6)
(10)
(16)
(32)
At 31/12/2021
1
1
165
167
As of 31 December 2022 and 2021 the Company has not recognised any ECL allowance on financial assets.
Ageing analysis of selective financial assets by product line
Piraeus Financial Holdings Group – 31 December 2022
309
Group
Days past due - Gross Carrying Amount
31/12/2022
Current
1-30
days
31-90
days
91-180
days
181-
365
days
365+
days
Denoun-
ced
Total
Stage 1
Stage 2
Stage 3
Total
Claims from the Greek
State
82
7
2
1
129
375
-
597
538
16
42
597
Credit cards
83
-
-
-
-
-
-
83
83
-
-
83
Receivables
291
115
55
57
2
169
0
690
487
36
168
690
Total
457
122
57
58
131
544
0
1,370
1,108
53
211
1,370
Group
Days past due - Gross Carrying Amount
31/12/2021 As reclassified
Current
1-30
days
31-90
days
91-180
days
181-
365
days
365+
days
Denoun-
ced
Total
Stage 1
Stage 2
Stage 3
Total
Claims from the Greek
State
194
104
2
17
1
189
-
507
442
14
52
507
Credit cards
86
-
-
-
-
-
-
86
86
-
-
86
Receivables
212
68
13
82
17
162
0
555
365
28
162
554
Total
492
172
15
99
18
351
0
1,148
893
42
214
1,148
Company
Days past due - Gross Carrying Amount
31/12/2022
Current
1-30
days
31-90
days
91-180
days
181-
365
days
365+
days
Denoun-
ced
Total
Stage 1
Stage 2
Stage 3
Total
Receivables
-
18
-
11
-
0
-
29
18
-
11
29
Company
Days past due - Gross Carrying Amount
31/12/2021
Current
1-30
days
31-90
days
91-180
days
181-
365
days
365+
days
Denoun-
ced
Total
Stage 1
Stage 2
Stage 3
Total
Receivables
-
11
-
-
-
0
-
11
11
-
-
11
32 Due to banks
Piraeus Financial Holdings Group – 31 December 2022
310
Group
31/12/2022
31/12/2021
Amounts due to ECB and central banks
5,443
14,348
Interbank deposits
159
90
Securities sold to credit institutions under agreements to repurchase
298
286
Other
1,021
142
6,922
14,865
of which:
Current
3,255
14,728
Non-current
3,667
138
During the fourth quarter of 2022, the Group made use of the early repayment option granted from ECB and therefore prepaid
an amount of € 8.65 billion from the outstanding TLTRO III funds. Additionally, during the second semester of 2022 an amount
of € 0.35 billion was also repaid to ECB, upon maturity of the respective transactions.
The increase of € 879
million in category “Other” is mainly attributed to cash collateral received by the Bank in the context of
derivative transactions engaged under ISDA and CSA agreements.
The revenue recognised in Net Interest Income, regarding the TLTRO III funding for the year ended 31 December 2022
amounted to € 70 million (31 December 2021: € 146 million), including the additional bonus provided for the additional special
interest period, given that the Bank met the lending performance requirements between 1 October 2020 and 31 December
2021 (refer to Note 6).
33 Due to customers
Piraeus Financial Holdings Group – 31 December 2022
311
Group
31/12/2022
31/12/2021
Corporate
Current and sight deposits
14,101
14,231
Term deposits
3,120
2,105
Blocked deposits, guarantee deposits and other accounts
324
283
Total (A)
17,545
16,618
Retail
Current and sight deposits
7,672
6,238
Savings accounts
25,795
24,322
Term deposits
7,210
8,186
Blocked deposits, guarantee deposits and other accounts
39
44
Total (B)
40,717
38,791
Cheques payable and remittances (C)
110
32
Total due to customers (A)+(B)+(C)
58,372
55,442
of which:
Current
58,345
55,380
Non-current
27
61
As at 31 December 2022 the Group’s due to customers (excluding cheques payable and remittances) bearing variable interest
rate and fixed interest rate amounted to € 47.8 billion and € 10.5 billion, respectively (31 December 2021: € 45.0 billion and €
10.4 billion, respectively).
34 Debt securities in issue
Group
Weighted Interest Rate (%)
31/12/2022
31/12/2021
Covered Bonds - floating rate - Series 4
3m Euribor + 250bp
-
471
Senior Preferred Bond
3.875%
501
500
Senior Preferred Bond
8.250%
349
-
Total debt securities in issue
849
971
Piraeus Financial Holdings Group – 31 December 2022
312
The financial terms of the Group’s debt securities held by third parties as of the end of the reporting period, are as follows:
Issuer
Description
Underlying
Loan Type
Issue Date
Maturity
Date
Currency
Weighted Interest
Rate on Total
Outstanding Amount/
Coupon Frequency
Nominal
value
Outstanding
nominal
amount
Redem-
ptions
Nominal
amount
own held by
the Bank
Nominal
amount
held by
third party
Carrying
value
Weighted
Interest Rate
on third
party
31/12/2022
Senior Preferred
Bond
Piraeus Bank S.A.
Fixed Rate
Senior Preferred
Bond
-
3-Nov-21
3-Nov-27
EUR
3.875% / Annual
500
500
0
0
500
501
3.875%
Piraeus Bank S.A.
Fixed Rate
Senior Preferred
Bond
-
28-Nov-22
28-Jan-27
EUR
8.250% / Annual
350
350
0
0
350
349
8.250%
Issuer
Description
Underlying
Loan Type
Issue Date
Maturity
Date
Currency
Weighted Interest
Rate on Total
Outstanding Amount/
Coupon Frequency
Nominal
value
Outstanding
nominal
amount
Redempti
ons
Nominal
amount
own held by
the Bank
Nominal
amount
held by
third party
Carrying
value
Weighted
Interest Rate
on third
party
31/12/2021
Covered Bonds
Piraeus Bank S.A.
Floating rate
covered bond
series 4
Mortgage
loans
31-Oct-17
31-Oct-22
EUR
3m Euribor + 250bp/
Quarterly
500
500
0
30
470
471
3m Euribor +
250bp
Senior Preferred
Bond
Piraeus Bank S.A.
Fixed Rate Senior
Preferred Bond
-
3-Nov-21
3-Nov-27
EUR
3.875% / Annual
500
500
0
0
0
500
3.875%
On 3 November 2021, Piraeus Bank S.A., issued Senior Preferred Notes of nominal value € 500 million, maturing in November 2027, bearing an annual
Piraeus Financial Holdings Group – 31 December 2022
313
fixed interest rate of 3.875% for the first 5 years and reset once thereafter, at the prevailing mid swap rate plus 3.948%. The Senior Preferred Notes, having an
embedded issuer call option after five (5) years , may be fully redeemed by the issuer on 3 November 2026 at par, in their entirety, subject to prior regulatory
approval. The Bond is listed in the Luxembourg Stock Exchange‘s Euro MTF market. The Senior Preferred Notes were issued under the Euro Medium Term Notes
(ΕΜΤΝ) Programme, compliant with the Bank’s "Green Bond Framework".
On 31 October 2022, Piraeus Bank S.A. repaid € 500 million of a 5-year Covered Bond Series bearing a floating coupon of 3M Euribor + 250bps (issued in October
2017). The bond was issued under the € 10 billion Covered Bond Programme, privately placed and mainly subscribed by the European Investment Bank, the
European Investment Fund and the European Bank for Reconstruction and Development.
On 28 November 2022, Piraeus Bank S.A., issued Senior Preferred Notes of nominal value € 350 million, maturing in January 2027, bearing an annual fixed interest
rate of 8.25% for the first 3.5 years and reset once thereafter, at the prevailing mid swap rate plus 5.715% per annum. The Senior Preferred Notes, having an
embedded issuer call option after three (3.5) years, may be fully redeemed by the issuer on 28 January 2026 at par in their entirety, subject to prior regulatory
approval. The Bond is listed in the Luxembourg Stock Exchange’s Euro MTF market. The Senior Preferred Notes were issued under the Euro Medium Term Notes
(ΕΜΤΝ) Programme.
The following table includes the financial terms of debt securities retained by the Group as of the end of the reporting period:
Piraeus Financial Holdings Group – 31 December 2022
314
Issuer
Description
Underlying Loan
Type
Issue Date
Maturity
Date
Currency
Weighted Interest
Rate/ Coupon
Frequency
Nominal
value
Outstanding
nominal
amount
Redemptions
Accumulated
Cancellations
31/12/2022
Covered Bonds
Piraeus Bank S.A.
Floating rate covered bond Series 3
Mortgage loans
16-Feb-17
16-Nov-26
EUR
1m Euribor + 150bp /
Monthly
1,000
500
0
500
Piraeus Bank S.A.
Floating rate covered bond Series 5
Mortgage loans
20-Nov-17
20-May-24
EUR
3m Euribor + 150bp /
Quarterly
1,000
500
0
500
Piraeus Bank S.A.
Floating rate covered bond Series 6
Mortgage loans
31-Jan-18
31-Jan-26
EUR
3m Euribor + 150bp /
Quarterly
1,000
500
0
500
Piraeus Bank S.A.
Floating rate covered bond Series 7
Mortgage loans
11-May-18
11-Feb-27
EUR
3m Euribor + 150bp /
Quarterly
1,000
1,000
0
0
Issuer
Description
Underlying Loan
Type
Issue Date
Maturity
Date
Currency
Weighted Interest
Rate/ Coupon
Frequency
Nominal
value
Outstanding
nominal
amount
Redemptions
Accumulated
Cancellations
31/12/2021
Covered Bonds
Piraeus Bank S.A.
Floating rate covered bond Series 3
Mortgage loans
16-Feb-17
16-Nov-23
EUR
1m Euribor + 150bp /
Monthly
1,000
500
0
500
Piraeus Bank S.A.
Floating rate covered bond Series 5
Mortgage loans
20-Nov-17
20-Nov-22
EUR
3m Euribor + 150bp /
Quarterly
1,000
500
0
500
Piraeus Bank S.A.
Floating rate covered bond Series 6
Mortgage loans
31-Jan-18
31-Jan-23
EUR
3m Euribor + 150bp /
Quarterly
1,000
500
0
500
Piraeus Bank S.A.
Floating rate covered bond Series 7
Mortgage loans
11-May-18
11-Feb-24
EUR
3m Euribor + 150bp /
Quarterly
1,000
1,000
0
0
Piraeus Financial Holdings Group – 31 December 2022
315
On 10 November 2022, Piraeus Bank S.A. proceeded with amendments to its fully retained Covered Bond Series 3 (issued in
February 2017), Series 6 (issued in January 2018) and Series 7 (issued in May 2018) with regards to their maturity dates by 36
months and to the Covered Bond Series 5 (issued in November 2017) by 18 months, respectively.
As at 31 December 2022 and 2021 the carrying amount of loans and advances to customers at amortised cost that have been
pledged as collateral under the terms of the covered bonds programme is € 3,779 million and € 4,160 million, respectively.
Pursuant to the provisions of Greek Law 4920/2022, which incorporates the Directive (EU) 2162/2019 of the European
Parliament and of the Council of 27 November 2019 on the issue of covered bonds and covered bond public supervision, the
minimum statutory level of overcollateralization is set to 5% of the nominal value of the Covered bonds’ outstanding balances.
For further information about Covered bonds refer to the Company’s website in the Investor Relations and Base Prospectus
(
.
35 Other borrowed funds
Group’s and Company’s other borrowed funds comprise solely two Tier 2 subordinated Notes of nominal value €
400 million and € 500 million, maturing in June 2029 and in February 2030, respectively. As at 31 December 2022
the carrying value of the said notes for the Group amounted to € 418 million and € 519 million (31 December 2021:
€ 417 million and € 518 million, respectively). The aforementioned notes may be redeemed by the issuer at par on
26 June 2024 and 19 February 2025, respectively, subject to prior regulatory approval. Furthermore, the respective
subordinated Νotes bear annual fixed rates of 9.75% and 5.5% for the first five years and reset once thereafter at
the prevailing 5 year mid swap rate plus 9.952% and 5.774%, respectively.
During 2022, the Group did not proceed with any repurchases of other borrowed funds.
36 Other liabilities
Piraeus Financial Holdings Group – 31 December 2022
316
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Deferred income
29
23
-
-
Accrued expenses
142
174
3
3
Lease liabilities
104
107
1
-
Liabilities from transactions via DIAS
259
171
-
-
Non-income taxes payable and social security contributions
40
37
1
1
Creditors and suppliers
79
82
27
31
Collections for third parties
193
242
0
0
Other
302
287
23
18
1,147
1,124
55
54
of which:
Current
898
736
55
54
Non-current
249
388
0
-
The following table summarises the lease liabilities:
Lease liabilities
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
No later than one year
24
25
0
-
One to five years
64
77
0
-
Later than five years
29
21
1
-
Gross lease liabilities
117
123
1
0
Discounting
(13)
(16)
(0)
-
Lease liabilities
104
107
1
0
of which:
No later than one year
19
20
0
-
One to five years
57
67
0
-
Later than five years
28
20
1
-
37
Provisions
The movement of the Group’s provisions during the year is summarized below:
Piraeus Financial Holdings Group – 31 December 2022
317
Group
Litigations
Other
ECL
allowance on
credit
commitments
Total
At 1 January 2021
30
55
117
202
Provision charge/(release)
3
23
(14)
12
Provision utilised
(2)
(74)
-
(76)
Other movements
(2)
0
0
(2)
At 31 December 2021
29
4
103
136
Provision charge/(release)
20
27
(11)
36
Provision utilised
(21)
(26)
-
(47)
Other movements
(1)
(0)
(0)
(1)
At 31 December 2022
26
5
92
123
The Group establishes provisions for all litigations, for which it believes it is probable that a loss will incur in the future and the
amount of the loss can be reasonably estimated. These provisions may change from time to time, as appropriate, in light of
additional information. Management, following consultation with its legal advisors has concluded that the amount of
recognized provisions for outstanding litigations is sufficient.
The ECL allowance on credit commitments is estimated based on the same methodology applied for loans and advances to
customers at amortised cost. Refer to Note 4.3.1.
Line item “Provision utilised” includes an amount of € 25 million relating to the provision established for VES, utilised during
2022 (refer to Note 40).
38 Tax receivables
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Tax receivables
197
212
12
20
Accumulated impairment of tax receivables
(51)
(51)
-
0
Net tax receivables
145
160
12
20
Net tax receivables for the Group as at 31 December 2022 amounted to € 145 million (31 December 2021: € 160 million), of
which € 131 million and € 12 million are attributable to Piraeus Bank and the Company, respectively.
Piraeus Bank S.A.
Net tax receivables comprise the following:
Piraeus Financial Holdings Group – 31 December 2022
318
a)
Receivables from withholding taxes on interest of bonds and treasury bills of € 67 million relating to financial years 2009,
2011, 2012 and 2013 (tax years 2008, 2010, 2011 and 2012). Under the provisions of Greek Law 4605 (article 93, par.1 and
2), as published
at Gazette
Α' 52 on 1 April 2019, an amendment was introduced into the ITC, clarifying the status of the
aforementioned withholding tax receivables of Piraeus Bank S.A., as follows:
•
Withholding taxes of € 26 million, in accordance with the provisions of para. 8 of article 12 of Greek Law 2238/1994,
for the financial year 2013 (tax year 2012), are offset as a priority when income tax is incurred and to the extent that
such income tax is sufficient for the purposes of the above set-off. In addition, an amount of € 7 million, withheld on
the same basis, for the financial year 2010 (tax year 2009) is claimed from the Greek State; and
•
Withholding taxes of € 34 million, which are subject to the provisions of para. 6 of article 3 of Greek Law 4046/2012
and not offset within five (5) years, can be netted off against tax liabilities of Piraeus Bank S.A. in equal instalments
within 10 years, starting from 1 January 2020.
b) Withholding taxes of € 32 million deriving from interest income earned on Greek Government treasury bills, which were
withheld after 1 January 2013. Such tax receivables are offset against income tax available in the five (5) financial years
following the financial year in which the income tax was withheld. Upon completion of the five-year period, any remaining
withholding tax is netted off against current tax liabilities.
c) Withholding taxes of € 28 million arising from corporate bonds, which are refundable by the Greek State.
d) Various other tax claims of € 4 million.
Company
Net tax receivables comprise the following:
a)
Withholding taxes on corporate bonds of € 5 million, withheld in years 2020-2021 which are refundable by the Greek
State.
b)
Various other tax claims of € 7 million.
39 Deferred Taxes
Deferred taxes for the Group and the Company are calculated on all temporary differences under the liability method. The
nominal tax rates of Group subsidiaries are different compared to the nominal tax rate of the Company (Note 16).
The Group’s deferred tax assets and liabilities are attributable to the following items:
Piraeus Financial Holdings Group – 31 December 2022
319
Group
31/12/2022
31/12/2021
Deferred tax liabilities
Investment property fair value adjustment
9
9
Other temporary differences
1
1
Total
10
10
Group
31/12/2022
31/12/2021
Deferred tax assets
Pensions and other post retirement benefits
14
20
Loans and advances to customers
5,066
5,192
Derivative financial instruments valuation adjustment
98
(58)
Investment property fair value adjustment
41
7
Depreciation of property and equipment
(28)
(39)
Amortisation of Intangible assets
(16)
(30)
Recognition of tax losses carried forward
2
2
Impairment of Greek government bonds (PSI)
1,050
1,105
Investments
(103)
(120)
Other temporary differences
(154)
43
Reserve from financial assets at FVTOCI
3
(52)
Total
5,974
6,070
Net deferred tax asset
5,964
6,060
Management estimated that the tax losses carried forward of € 12 million for the Group as at 31 December 2022 can be used
to offset future taxable profits and thus the Group recognised a DTA amounting to € 2 million (31 December 2021: € 2 million).
In relation to the tax losses of € 12 million, for the amount of € 9 million there is no predefined time horizon for being netted
off against taxable income, whereas the amount of € 3 million can be netted off in the five (5) financial years following the
financial year in which the income tax was withheld.
DTA on tax losses carried forward are recognised only when it is probable that future taxable profits will be available, against
which these carried forward tax losses can be utilised. On this base the Group and the Company have unused tax losses as at
31 December 2022 of € 1,944 million and € 1,762 million, respectively (31 December 2021: € 2,107 million and € 1,615 million
for the Group and the Company, respectively), for which no DTA was recognized in the Statement of Financial Position.
The Group and the Company have offset the deferred tax assets and deferred tax liabilities on an entity per entity basis, based
on the legally enforceable right to set off the recognised amounts i.e. offset current tax assets against current tax liabilities, as
well as the deferred tax assets and deferred tax liabilities when such taxes relate to the same fiscal authority.
Piraeus Financial Holdings Group – 31 December 2022
320
Group
1/1 - 31/12/2022
1/1 - 31/12/2021
Net deferred tax asset at 1/1
6,060
6,290
Deferred tax benefit / (expense)
(126)
(310)
Financial assets at FVTOCI (Note 18)
36
59
Actuarial gains/ (losses) (Note 18)
(3)
(0)
Derecognition of subsidiaries
(0)
21
Property revaluation reserve
(3)
-
Net deferred tax asset at 31/12
5,964
6,060
During 2022, deferred taxation directly recognized in equity for the Group amount ed to € 31 million, relating to the valuation
of financial assets at FVTOCI, actuarial gains and property revaluation reserve (Note 18).
The deferred tax recognised in the Income Statement is attributed to temporary differences between the tax and accounting
base, the effect of which is analysed in the table below:
Deferred tax (Income Statement)
Group
1/1 - 31/12/2022
1/1 - 31/12/2021
Pensions and other post retirement benefits
(3)
(4)
Loans and advances to customers
(126)
(124)
Derivative financial instruments valuation adjustment
101
9
Investment property fair value adjustment
34
(12)
Depreciation of property and equipment
14
25
Amortisation of Intangible assets
15
31
Recognition of tax losses carried forward
1
1
Impairment of Greek government bonds (PSI)
(55)
(55)
Investments
17
(69)
Other temporary differences
(142)
(111)
Reserve from financial assets at FVTOCI
19
-
Total
(126)
(310)
Net deferred tax asset analysis
Group
1/1 - 31/12/2022
1/1 - 31/12/2021
Current
256
83
Non-current
5,719
5,987
Total
5,974
6,070
Net deferred tax liability analysis
Group
1/1 - 31/12/2022
1/1 - 31/12/2021
Current
0
0
Non-current
9
10
Total
10
10
40 Retirement and termination benefit obligations
Piraeus Financial Holdings Group – 31 December 2022
321
Retirement indemnities
Most of the Group’s subsidiaries are required by local law to offer a lump sum amount upon retirement. In Greece, this is
defined by Greek Law 2112/1920 as modified by Greek Law 4093/2012. Such lump sum payments are usually based on the
final salary and years of service, the calculation of which depends on the jurisdiction in which the company operates and the
employee’s profession (e.g. Greek law provides for different retirement benefits to salaried employees, wages earners and
lawyers). In some cases, certain subsidiaries’ bylaws provide for additional benefits to employees in excess of the floor defined
under statutory requirements.
A summary of the Group’s defined benefit plans is provided below:
1.
Lump sum retirement benefit according to Greek Law 2112/1920 and Greek Law 4093/2012
Lump sum retirement benefit is provided to the majority of employees of Piraeus Financial Holdings S.A., Piraeus Bank S.A. and
Greek subsidiaries as per the terms set out below:
In accordance with Greek Law 4046/2012 and Board of Ministers’ Decision (6/28/2/2012), from 14 February 2012 onwards,
the employment contracts that lapse on attainment of the normal retirement age or based on the particular retirement
conditions, are considered as indefinite duration employment contracts and therefore, the provisions for employee’s statutory
retirement indemnity of Greek Law 2112/1920, are applicable.
On 12 November 2012, the Greek Law 4093/2012 (GG A’ 222) decreased the statutory indemnity scale set by Greek Law
2112/1920 in case of employee dismissal or normal retirement. Employees having more than 16 full years of service to the
same employer as at 12 November 2012, are entitled to a statutory indemnity for all the years employed until that date.
Employees having less than 17 full years of service to the same employer as at 12 November 2012, the maximum statutory
indemnity is 12 actual salaries. In both conditions and in case of normal retirement, employees receive 40% of the statutory
indemnity scale set by Greek Law 2112/1920 and Greek Law 4093/2012. In case of disability before the normal retirement age
or in case of early retirement no indemnity is provided.
For lawyers based on Law 4194/2013 the benefit paid in case of retirement is 100%. In case of voluntary departure, the benefit
paid is: 100%, after 28 years of service, 66.67%, after 20 years of service and 50%, after 15 years of service.
2.
Lump Sum Benefit according to Piraeus Bank Collective Agreement
A lump sum benefit is granted to certain employees of Piraeus Bank S.A. and Piraeus Financial Holdings S.A. The lump sum
benefit is payable when the member is eligible for full pension by the social security fund. The lump sum benefit based on pre-
defined number of salaries at 100% of the average salary of the last 3 months of active service prior to retirement. No lump
sum benefit is paid in case of death, disability or termination before the normal retirement age.
3.
Lump Sum Benefit according to employee contracts of Former Nat West Bank Employees
A lump sum benefit is granted to certain employees of former Nat West Bank who work in Piraeus Bank, hired prior to 31
December 1991. The lump sum benefit is payable when the employee is eligible for full pension by the social security fund or
in case of death. The lump sum benefit is equal to 100% of the retirement benefit according to Greek Law 2112/1920 and
Greek Law 4093/2012.
Piraeus Financial Holdings Group – 31 December 2022
322
4.
Lump Sum Benefit according to the Agreement of Former Macedonia Thrace Bank Employees
A lump sum benefit is granted to former employees of Macedonia Thrace Bank who work in Piraeus Bank based on a collective
agreement. The lump sum benefit is payable when the member is eligible for full pension from the social security fund.
The lump sum benefit is equal to 100% of the retirement benefit according to the Macedonia Thrace Bank’s collective
agreement.
5.
Lump Sum Benefit to former Macedonia Thrace Children’s Account
The lump sum benefit is paid to the children of former Macedonia Thrace Bank employees according to a preset calculation of
the liability when the child reaches the age of 25 or earlier under specific prerequisites. In case of death of the child the amount
is paid to the parent, in case of departure of the parent from the Bank the amount contributed by the employee and not by
the Bank is refunded without interest. If the departure is due to retirement, the plan can be continued and funded by the ex -
employee’s pension salary, in which case the Bank also continues to pay contributions.
6.
Lump Sum Benefit according to the Insurance Policy of certain Key Management Members
Piraeus Bank S.A. retains an insurance contract regarding the lump sum benefit to be paid to certain members of Management
based on a preset calculation of the liability when the employment is terminated in all cases except for fraud.
Piraeus Financial Holdings S.A. and Piraeus Financial Holdings Group
The present value of the defined benefit obligation is determined by an independent actuary by applying the "projected unit
credit method", according to which, the charge for pension plans to the income statement is allocated over the service lives of
the related employees. The defined benefit obligation is determined by the present value of cash outflows using interest rates
of high-quality corporate bonds, which have terms to maturity approximating the terms of the related liability.
The employees of the Group are entitled to compensation upon termination of service, based on their service, their salary and
their classification group.
The benefits paid for the years 2022 and 2021, according to the voluntary redundancy schemes are included in the disclosures
for the non-funded plans.
The tables below present the amounts recognized in the Statement of Financial Position and the Income Statement for the
Group and the Company, broken down by funded and non-funded pension schemes.
Amounts recognised in the Statement of Financial Position
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Pension schemes – funded
4
5
-
-
Other post retirement benefits - non-funded
51
70
0
0
Total
55
75
0
0
Piraeus Financial Holdings Group – 31 December 2022
323
Amounts recognised in Equity
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
1/1 - 31/12/2022
1/1 - 31/12/2021
Funded
-
Liability gain /(loss) due to changes in assumptions
1
(0)
-
-
Total funded
1
(0)
-
-
Non-funded
Liability gain /(loss) due to changes in assumptions
9
(1)
0
(0)
Liability experience gain/ (loss) arising during the year
(1)
(0)
(0)
(0)
Total non-funded
8
(1)
0
(0)
Total
9
(1)
0
(0)
The difference between the amount of € 58 million relating to Settlement/ Curtailment/ Termination loss/ (gain) and the
amount of € 57 million reported as VES cost in Staff Cost (Note 12) is due to provision utilization by € 25 and an additional
charge of € 24 million.
Amounts recognised in the Income Statement
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
1/1 - 31/12/2022
1/1 - 31/12/2021
Total pension schemes – funded
0
0
0
-
Other post retirement and termination benefits of non-
funded
Current service cost
4
4
0
0
Settlement/ Curtailment/ Termination loss/ (gain)
58
77
0
1
Total other post retirement and termination benefits of
non-funded
62
81
0
1
Total
62
81
0
1
Α) Pension schemes - funded
The net liability in the Statement of Financial Position is determined as follows:
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Present value of funded obligations
5
7
-
-
Fair value of plan assets
(1)
(2)
-
-
Total
4
5
0
0
In funded plans, the Group follows the recommendations of the insurance company concerning the amount of contributions.
The expected contributions to funded post-employment defined benefit plans for the year 2023, amount to € 0.2 million. Τhere
are no commitments arising from the law concerning the level of funding for post-employment defined benefit plans provided
by the Group.
The movement of the gross defined benefit obligation is analysed as follows:
Piraeus Financial Holdings Group – 31 December 2022
324
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
1/1 - 31/12/2022
1/1 - 31/12/2021
Opening balance
7
8
-
-
Benefits paid from the fund
(1)
(1)
-
-
Actuarial (gains)/ losses
(1)
0
-
-
Closing balance
5
7
0
0
The movement in the fair value of plan assets for the Group and the Company is analysed as follows:
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
1/1 - 31/12/2022
1/1 - 31/12/2021
Opening balance
2
2
-
-
Employer contributions
0
1
-
-
Benefits paid from the fund
(1)
(1)
-
-
Closing balance
1
2
0
0
Return on plan assets
(0)
0
0
0
The plan assets, which are not quoted, are invested as follows:
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Mutual funds
97.6%
88.2%
-
-
Bonds
0.0%
4.6%
-
-
Deposits
2.4%
7.2%
-
-
Below is presented the movement of the net liability of funded pension schemes for the Group and the Company, broken down
into expenses, contributions, benefits and amounts recognized in equity:
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
1/1 - 31/12/2022
1/1 - 31/12/2021
Opening balance
5
6
-
-
Employer contributions
(0)
(1)
-
-
Amount recognised in equity
(1)
0
-
-
Closing balance
4
5
0
0
B) Other non-funded post retirement and termination benefits
The amounts recognised in the Statement of Financial Position are analysed as follows:
Piraeus Financial Holdings Group – 31 December 2022
325
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Present value of unfunded obligations
51
70
0
0
Liability in the Statement of Financial Position
51
70
0
0
An amount of € 4 million included in the balance of the liability as of 31 December 2022, refers to terminations ’ benefits.
The movement in the defined benefit obligation is analysed as follows:
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
1/1 - 31/12/2022
1/1 - 31/12/2021
Opening balance
70
82
0
0
Current service cost
4
4
0
0
Settlement/ Curtailment/ Termination loss/ (gain)
58
77
0
1
Benefits paid directly by the employer
(73)
(93)
(0)
(1)
Actuarial (gains) / losses
(8)
1
(0)
0
Derecognition of subsidiaries
(1)
0
-
-
Closing balance
51
70
0
0
The movement in the liability recognised in the Statement Financial Position for the Group and the Company, broken down
into expenses, contributions, benefits and amounts recognized in equity is analysed as follows:
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
1/1 - 31/12/2022
1/1 - 31/12/2021
Opening balance
70
82
0
0
Total expense recognised in Income statement
63
81
0
1
Benefits paid by the employer
(73)
(93)
(0)
(1)
Amount recognised in equity
(8)
1
(0)
0
Derecognition of subsidiaries
(1)
(0)
-
-
Closing balance
51
70
0
0
The expected weighted average duration of the defined benefit obligation is 5.3 years for the Group and 9 years for the
Company.
The actuarial assumptions used are as follows:
Piraeus Financial Holdings Group – 31 December 2022
326
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Discount rate
3.8%
0.7%
3.9%
0.9%
Price inflation
2.6%
2.1%
2.6%
2.1%
Expected return on plan assets
3.7%
0.4%
-
-
Future increase in salaries
2.0%
2.1%
2.0%
2.1%
Mortality table applied
EVK00, based on Swiss
mortality table
EVK00, based on Swiss
mortality table
According to IAS 19, the rate used to calculate the expected return on plan assets is the discount rate that is used to discount
the post-employment benefit obligation.
Sensitivity analysis in defined benefit obligation
The sensitivity analysis for the significant assumptions in the post-employment defined benefit obligation is as follows:
Main assumptions
Effect in defined benefit obligation (Group)
Effect in defined benefit obligation (Company)
Change in the
assumptions
Increase
Decrease
Change in the
assumptions
Increase
Decrease
Discount rate
+/-0.50%
-2.4%
2.5%
+/-0.50%
-4.1%
4.3%
Future increase in salaries
+/-0.50%
2.2%
-2.1%
+/-0.50%
4.3%
-4.1%
Voluntary withdrawal rate
increase/
decrease by
50%
-0.3%
0.4%
increase/
decrease by
50%
-0.6%
0.6%
The aforementioned sensitivity analysis is based on changing each assumption, while keeping the other assumptions
unchanged. However, in an economic environment assumption do not change independently and are usually affected at the
same time. The method adopted for the sensitivity analysis is the one used for the determination of the defined benefit
obligation in the Statement of Financial Position. The final cost of defined benefit plans depends on the actual future experience
relating to the actual pay increases , as well as other factors that affect the cost, like the mobility of the employees and the
recruitment.
Defined Contribution Plans
Total contributions to social security funds, state run plans and defined contribution plans for 2022 for the Group and the
Company amounted to € 63 million and nil, respectively (2021: € 57 million for the Group and nil for the Company).
Below is a summary of the defined contribution plans of the Group:
1.
Piraeus Financial Holdings S.A. and Domestic Subsidiaries State Pension and State Health Plan
Company’s main post retirement and health plan is a defined contribution plan that is run by the State sponsored social security
fund EFKA. Contribution by the employer and employee to the State is defined by law and amounts to 22.29% and 13.87%
respectively, of the employees’ salaries with a cap. The State Health Plan offers health benefits to employees before and after
Piraeus Financial Holdings Group – 31 December 2022
327
their retirement, and to insured family members.
2.
Piraeus Bank State Pension Plan
The Bank’s main post retirement pension plan is a defined contribution plan that is run by the State sponsored social security
fund EFKA. Contribution by the employer and employee to the State post retirement pension plan is defined in the law and
amounts to 17.74% and 11.32% respectively, of the employees’ salaries with a cap.
3.
Piraeus Bank State Health Plan
Defined contribution to the State Health Plan amounts to 4.55% of the employees’ salary for the employer and 2.55%
contribution of employees’ salary. Additional contributions are paid for insured members of the employees’ families (such as
spouse that does not work and children) and are increased further in the event that the insured spouse is employed or that
members of the paternal family are also insured. Contribution of retired employees’ amount to a percentage of their pension,
while additional contributions are paid for other insured members of their families. The State Health Plan offers health benefits
to employees before and after their retirement, and to insured family members.
4.
In November 2020 the Company established the Institution for Occupational Retirement, Life and Μedical Provision
(“IORP”)
,
a Non-Profit Legal Entity of Private law jurisdiction, which aims to provide additional insurance protection to its members, in
addition to the main ones provided by social security funds.
With the IORP’s establishment, a single fund was created from which all employees will receive a supplementary lump sum,
improving their retirement conditions. Employees’ participation in the IORP is voluntary and their contribution is optional and
it can range from zero up to 20% of the gross monthly salary. Piraeus Bank and the Company, as employers, contribute to the
individual account of the employee an additional 2% of the monthly gross salary for 14 months on an annual basis, valid from
the date of registration in the Fund and without obligation to contribute by the employee. Moreover, the Bank and the
Company retain a defined contribution insurance plan for the payment of an amount at the end of the employment
relationship, for certain members of Management, in all cases with the exception of fraud.
5.
Group Child Savings Private Defined Contribution Plans
Piraeus Bank S.A. and Piraeus Financial Holdings S.A. offer three (3) defined-contribution plans to their employees in respect
of their children, which have the same terms and requirements.
The total amount raised during period of insurance (i.e. employee’s and employer’s contributions, as well as interest) is paid
in the form of a lump sum either to the child in case certain prerequisites are fulfilled, such as child’s marriage, employment,
25
th
to retirement, participation in voluntary exit scheme, permanent or total disability and death of the insured child. In case of
employee’s resignation, the employee receives his/her contributions including interest.
6.
Piraeus Bank S.A. and Piraeus Financial Holdings S.A. Private Insurance Health Plan
In addition, Piraeus Bank S.A. and Piraeus Financial Holdings S.A. offer to their employees and their families (spouse and
children with specific age limits respectively), through IORP, a Life and Health Care Insurance Plan. It includes employee’s life
Piraeus Financial Holdings Group – 31 December 2022
328
insurance, reimbursement in case of employee’s permanent and total disability due to accident or serious illness, employee’s
and/or dependent’s hospital care and outpatient care, surgery / hospitalisation allowance, maternity allowance and check-up.
Piraeus Bank S.A. and Piraeus Financial Holdings S.A. pay monthly premiums to the insurance company which are fixed for the
benefit of health of employee and relatives and a percentage of salary for the benefits of life and disability insurance. In case
of insurance in the plan of a spouse or child that is not insured for social health insurance under the employee, the insurance
covers the benefits of hospital and outpatient care and the employee pays a monthly fixed amount per insured person which
is deducted from the monthly salary.
7.
Defined Contribution Pension Plans of Greek Subsidiaries
Piraeus Asset Management Single Member S.A., Piraeus Leasing Single Member S.A., Sunshine Leases Single Member S.A.,
Piraeus Direct Solutions Single Member S.A., Piraeus Factoring Single Member S.A., Piraeus Securities S.A. and Piraeus Agency
Solutions Single Member S.A. offer their employees the possibility to participate in Group’s IORP. Employee participation in
the IORP is voluntary and their contribution is optional: it can range from zero up to 20% of the gross monthly salary. Employer’s
contribution is 2% of the monthly gross salary for 14 months on an annual basis.
8.
Defined Contribution Pension Plans of Foreign Branches and Subsidiaries
For two (2) Cypriot subsidiaries, Philoktimatiki Public Ltd and Philoktimatiki Ergoliptiki Ltd, the employer and employees pay
contributions to the State Social Insurance Fund calculated on the basis of the employees’ salaries. Additionally, these
subsidiaries operate a defined contribution plan, the assets of which are held in a separate fund managed by a Committee. The
plan is funded by payments made by the employer and the employees.
9.
Child Savings Private Defined Contribution Plans of Greek Subsidiaries
Piraeus Agency Solutions Single Member S.A. and Shnappi S.A. offer defined -contribution plans to their employee’s children,
which have the same terms and requirements.
The total amount raised during period of insurance (i.e. employee’s and Bank’s contributions, as well as interest) is paid in the
form of a lump sum either to the child in case certain prerequisites are fulfilled, such as child’s marriage, employment, 25
th
year of age and death of employee-parent or to the employee-parent in cases such as departure from the Bank due to
retirement, resignation, participation in voluntary exit scheme, permanent or total disability and death of the insured child.
10.
Private Health Plans of Greek Subsidiaries
Shnappi S.A., Piraeus Leasing Single Member S.A., Sunshine Leases Single Member S.A., Piraeus Real Estate Single Member
S.A., Piraeus Agency Solutions Single Member S.A., Piraeus Direct Solutions Single Member S.A., Piraeus Factoring Single
Member S.A., Piraeus Securities S.A., Piraeus Asset Management Single Member S.A., Piraeus Capital Management S.A., Piraeus
Jeremy Technology Catalyst Management Single Member S.A. and Piraeus Bank Group Cultural Foundation, offer employees
group health plans, which include employee’s life insurance, reimbursement in case of employee’s permanent and total
disability due to accident or serious illness, employee’s and/or dependent’s hospital care and outpatient care,
surgery/hospitalisation allowance and maternity allowance. The subsidiaries pay monthly or annual premiums to the insurance
companies. For coverage for hospital and outpatient care of a spouse or child in the plan, in the cases of Piraeus Leasing Single
Member S.A., Sunshine Leases Single Member S.A., Piraeus Agency Solutions Single Member S.A. , Piraeus Factoring Single
Member S.A., Piraeus Securities S.A., Piraeus Asset Management Single Member S.A. and Piraeus Bank Group Cultural
Piraeus Financial Holdings Group – 31 December 2022
329
Foundation the premiums are also paid by the subsidiaries.
In the case of Piraeus Real Estate Single Member S.A. the employee pays monthly premiums per insured person which are
deducted from the monthly salary. For Piraeus Direct Solutions Single Member S.A., Piraeus Capital Management S.A. and
Piraeus Jeremy Technology Catalyst Management Single Member S.A in case of insurance in the plan of a spouse or child that
is not insured for social health insurance under the employee, the employee pays a monthly fixed amount per insured person
which is deducted from the monthly salary.
11.
Private Health Plans of Foreign Branches and Subsidiaries
Varna Asset Management EOOD offer employees group health plan for hospital and outpatient care. Premiums are paid
monthly. The employee pays the premium for insuring family (children, spouse and parents).
JSC Piraeus Bank ICB, Solum Enterprise LLC and Akinita Ukraine LLC in Ukraine offer employees group health plans for hospital
and outpatient care. Premiums are paid per quarter.
Piraeus Leasing Romania S.A. offer a check-up (on an annual basis or more frequently under specific circumstances e.g. long-
term leave of employee due to illness) only to employees, not provided on the basis of an insurance contract.
Philoktimatiki Public Ltd and Philoktimatiki Ergoliptiki Ltd in Cyprus offer employees group health plan, which includes
employee’s life insurance, reimbursement in case of employee’s permanent and total disability due to accident or serious
illness, employee’s and/or dependent’s hospital care and outpatient care. Premiums are paid monthly by both the employees
and the subsidiaries.
41 Leases
The table below presents the contractual undiscounted cash flows of the gross lease liabilities. The Group and the Company
have elected to take a recognition exemption for short-term leases; hence, the analysis below does not include any leases with
a residual term lower than 12 months.
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Up to 1 year
24
25
0
-
From 1 to 5 years
64
77
0
-
More than 5 years
29
21
0
-
Total undiscounted gross liabilities
117
123
0
0
As at 31 December 2022, the present value of lease liabilities amounts to € 104 million for the Group (31 December 2021: €
107 million) and nil for the Company.
Lease liabilities are included in line item “Other liabilities”.
Piraeus Financial Holdings Group – 31 December 2022
330
a.
Lease liabilities
Amounts recognized in profit or loss- RoU own assets
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Interest on lease liabilities
2
2
-
-
Depreciation charge for the year
18
23
0
-
Expenses relating to short-term leases
14
19
0
-
b. Lease receivables
Gross investments in finance leases
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Up to 1 year
231
203
-
-
From 1 to 5 years
436
407
-
-
More than 5 years
435
467
-
-
Total undiscounted lease payments receivable
1,102
1,077
-
-
Less: Unearned finance income
211
148
-
-
Net investment in the lease
891
929
-
-
Future income from operating leases
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Up to 1 year
40
35
-
-
From 1 to 5 years
159
129
-
-
More than 5 years
24
24
-
-
Total undiscounted lease payments receivable
223
188
-
-
42 Contingent liabilities, assets pledged, transfers of financial assets and commitments
42.1 Legal proceedings
Litigation is a common occurrence in the Banking industry due to the nature of the business undertaken. The Group has formal
controls and policies for managing legal claims. Once professional advice has been obtained and the amount of loss reasonably
estimated, the Group makes adjustments to account for any adverse effects that the claims may have on its financial position.
As at 31 December 2022, the Group and the Company provided for cases under litigation an amount of € 26 million and nil,
respectively (31 December 2021: € 29 million and nil for the Group and the Company, respectively) which represents
Management’s best estimate on the probable loss to be incurred upon finalization of these pending legal cases.
The Group has been advised by its legal advisors that it is possible, but not probable, that the final decision of certain legal
cases referring mainly to unjust enrichment damages, nullity of debt contract, labor disputes, moral damage and compensation
claims, may not be in favor of the Group. Accordingly, no litigation provision for such claims has been established as at 31
December 2022. The contingent liability that could potentially result from such litigations, based on the current status of the
legal proceedings and Management’s best estimate, is expected not to exceed € 231 million for the Group and nil for the
Piraeus Financial Holdings Group – 31 December 2022
331
Company (31 December 2021: € 265 million and nil for the Group and the Company, respectively), while the timing of the
outflow is uncertain. It is noted that based on historical data, this category of legal cases has led to non-significant losses for
the Group.
42.2 Pending tax audits
The Company has been audited by the tax authorities up to and including the year 2010.
For the years 2011 - 2016, tax audits were required for the Company and all Greek Societe Anonyme Companies. Such tax
audits were conducted by the statutory auditors under Greek Law 2190/1920 according to article 82 of Greek Law 2238/1994
and article 65A of Greek Law 4174/2013 as were in force.
From 2016 onwards, the requirement to obtain a tax audit became optional, however Management has opted for the Company
and the Group's Greek subsidiaries to continue being tax audited by the statutory auditors. The Tax Administration retains its
right to proceed with a tax audit, within the applicable statute of limitations in accordance with article 36 of Greek Law
4174/2013, as currently in force.
Fiscal years 2011 and 2012 have been tax audited by PricewaterhouseCoopers S.A., in accordance with article 82 par.5 of Greek
Law 2238/1994 and the tax audit certificates issued were unqualified.
The tax audit of fiscal year 2013 has been completed by PricewaterhouseCoopers S.A. and a relevant tax audit certificate with
an emphasis of matter on the applicable provisions of Greek Tax Law regarding the acquisition of assets and liabilities of Greek
branches of credit institutions domiciled in other EU (European Union) member countries, according to which the above-
mentioned transactions are not subject to tax, has been issued and submitted to the Ministry of Finance.
Fiscal years 2014, 2015 and 2016 have been tax audited by PricewaterhouseCoopers S.A and the tax audit certificates issued
were unqualified. Fiscal years 2017, 2018, 2019, 2020 and 2021 were tax audited by Deloitte Certified Public Accountants S.A.
and the tax audit certificates issued were unqualified.
In regards to the Group’s Greek subsidiaries, for which Management elected to conduct a tax audit in accordance with article
65a of Greek Law 4174/2013, the respective tax audits for the fiscal year 2021 have been completed and the relevant tax audit
certificates have been issued. Fiscal year 2022 of the Company and its Greek subsidiaries is currently being tax audited by
Deloitte Certified Public Accountants S.A. and the final outcome of the tax audits is not expected to have a material effect on
the Annual Financial Statements.
The unaudited tax years of the Group's subsidiaries, associates and joint ventures, are included in Note 26 and therefore their
tax liabilities for these years have not been finalized. The tax authorities have not yet audited the Group’s subsidiaries for all
fiscal years and consequently their tax positions for those years may not be considered as final.
Additional taxes and penalties may be imposed, for the unaudited years, however it is not expected to have a material effect
on the financial position of the Group.
42.3 Commitments
In the normal course of business, the Group enters into contractual credit commitments towards their customers to facilitate
Piraeus Financial Holdings Group – 31 December 2022
332
their financing needs or obligations. Due to their nature, credit commitments are treated as off-balance sheet items. These
credit commitments consist of letters of guarantees, letters of credit and irrevocable undrawn committed credit facilities.
Typically, letters of guarantee and letters of credit ensure payment to a third party for a customer's trade transactions or
guarantee the performance of a customer to a third party. Irrevocable undrawn committed credit facilities are agreements to
lend to a customer as long as there is no violation of the conditions established in the contract. Credit risk on the
aforementioned commitments is measured by applying the same Credit Policy, approval process and monitoring procedures
to those applied on Loans and advances to customers at amortised cost.
As at 31 December 2022 and 2021 the Group had undertaken the following commitments:
Group
31/12/2022
31/12/2021
Financial guarantees
4,789
3,764
Letters of credit
114
42
Irrevocable undrawn credit commitments
1,624
1,050
Total credit commitments
6,527
4,856
Other commitments
110
-
Total commitments
6,637
4,856
As of 31 December 2022 and 2021 the Company had not undertaken any commitments.
The irrevocable undrawn committed credit facilities are included in the Risk Weighted Assets calculation for capital adequacy
purposes under regulatory rules currently in force. An ECL allowance is measured for letters of guarantee, letters of credit and
irrevocable undrawn credit commitments.
Group
Financial guarantees - Internal rating grade
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
ECL
Allowance
Balance
Strong
4,233
-
-
-
4,233
6
4,228
Recommended
317
-
-
-
317
1
316
Substandard
-
37
-
-
37
1
37
Default
-
-
202
-
202
80
122
Total
4,550
37
202
0
4,789
87
4,702
Group
Financial guarantees - Internal rating grade
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
ECL
Allowance
Balance
Strong
3,253
0
-
-
3,253
10
3,243
Recommended
191
-
-
-
191
1
189
Substandard
-
96
-
-
96
1
95
Default
-
-
224
-
224
77
147
Total
3,444
96
224
0
3,764
90
3,674
Piraeus Financial Holdings Group – 31 December 2022
333
Group
Financial guarantees - Movement in nominal amount
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount as at 1/1/2022
3,444
96
224
-
3,764
New off balance sheet items originated or purchased
2,841
24
35
-
2,900
Off balance sheet items repaid / matured
(1,744)
(81)
(49)
-
(1,874)
Off balance sheet items derecognized (excluding write offs)
(1)
(0)
-
-
(1)
Transferred from Stage 1 to Stage 2
(103)
103
-
-
0
Transferred from Stage 1 to Stage 3
(3)
-
3
-
0
Transferred from Stage 2 to Stage 1
116
(116)
-
-
0
Transferred from Stage 2 to Stage 3
-
(3)
3
-
0
Transferred from Stage 3 to Stage 2
-
14
(14)
-
0
Gross carrying amount as at 31/12/2022
4,550
37
202
0
4,789
Group
Financial guarantees - Movement in nominal amount
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount as at 1/1/2021
2,846
147
321
-
3,314
New off balance sheet items originated or purchased
1,792
4
52
-
1,848
Off balance sheet items repaid / matured
(1,173)
(89)
(130)
-
(1,393)
Off balance sheet items derecognized (excluding write offs)
(5)
(1)
-
-
(5)
Transferred from Stage 1 to Stage 2
(130)
130
-
-
0
Transferred from Stage 1 to Stage 3
(13)
-
13
-
0
Transferred from Stage 2 to Stage 1
126
(126)
-
-
0
Transferred from Stage 2 to Stage 3
-
(5)
5
-
0
Transferred from Stage 3 to Stage 2
-
37
(37)
-
0
Gross carrying amount as at 31/12/2021
3,444
96
224
0
3,764
Group
Financial guarantees - Movement in ECL allowance
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
ECL allowance as at 1/1/2022
12
1
77
-
90
Transferred from Stage 1 to Stage 2
(0)
0
-
-
0
Transferred from Stage 2 to Stage 1
1
(1)
-
0
Transferred from Stage 3 to Stage 2
-
4
(4)
-
0
ECL Impairment charge/ (release) for the year (P&L)
(6)
(5)
7
-
(4)
ECL allowance as at 31/12/2022
6
1
80
0
87
Piraeus Financial Holdings Group – 31 December 2022
334
Group
Financial guarantees - Movement in ECL allowance
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
ECL allowance as at 1/1/2021
8
1
98
-
108
Transferred from Stage 1 to Stage 2
(1)
1
-
-
-
Transferred from Stage 2 to Stage 1
3
(3)
-
-
Transferred from Stage 3 to Stage 2
-
9
(9)
-
-
ECL Impairment charge/ (release) for the year (P&L)
2
(8)
(12)
-
(18)
ECL allowance as at 31/12/2021
12
1
77
0
90
Group
Letter of credit - Internal rating grade
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
ECL
Allowance
Balance
Strong
112
-
-
-
112
1
112
Recommended
2
-
-
-
2
0
2
Total
114
0
0
0
114
1
113
Group
Letter of credit - Internal rating grade
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
ECL
Allowance
Balance
Strong
37
-
-
-
37
0
37
Recommended
4
-
-
-
4
0
3
Substandard
-
1
-
-
1
0
1
Total
41
1
0
0
42
0
42
Group
Letters of credit - Movement in nominal amount
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount as at 1/1/2022
41
1
1
-
42
New off balance sheet items originated or purchased
228
-
0
-
228
Off balance sheet items repaid/ matured
(155)
(1)
(1)
-
(156)
Gross carrying amount as at 31/12/2022
114
(0)
0
0
114
Group
Letters of credit - Movement in nominal amount
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying amount as at 1/1/2021
37
1
2
-
40
New off balance sheet items originated or purchased
66
2
3
-
71
Off balance sheet items repaid/ matured
(62)
(3)
(4)
-
(69)
Transferred from Stage 1 to Stage 2
(1)
1
0
Gross carrying amount as at 31/12/2021
41
1
0
0
42
Piraeus Financial Holdings Group – 31 December 2022
335
Group
Irrevocable Undrawn Credit Commitments - Internal rating grade
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
ECL
Allowance
Balance
Strong
1,430
-
-
-
1,430
2
1,428
Recommended
106
-
-
-
106
1
105
Substandard
-
78
-
6
85
2
83
Default
-
-
3
-
3
0
3
Total
1,536
78
3
6
1,624
5
1,619
Group
Irrevocable Undrawn Credit Commitments - Internal rating grade
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
ECL
Allowance
Balance
Strong
889
-
-
-
889
7
882
Recommended
47
-
-
-
47
1
46
Substandard
-
107
-
7
114
5
109
Default
-
-
0
-
0
0
0
Total
936
107
0
7
1,050
12
1,038
Group
Irrevocable Undrawn Credit Commitments - Movement in ECL
allowances
31/12/2022
Stage 1
Stage 2
Stage 3
POCI
Total
ECL allowance as at 1/1/2022
8
4
0
0
12
Transferred from Stage 1 to Stage 2
(1)
1
-
-
0
Transferred from Stage 2 to Stage 1
5
(5)
-
-
0
Transferred from Stage 2 to Stage 3
(0)
0
0
ECL Impairment charge/ (release) for the year (P&L)
(8)
2
(1)
0
(7)
ECL allowance as at 31/12/2022
4
2
(1)
0
5
Group
Irrevocable Undrawn Credit Commitments - Movement in ECL
allowances
31/12/2021
Stage 1
Stage 2
Stage 3
POCI
Total
ECL allowance as at 1/1/2021
5
3
0
0
8
Transferred from Stage 1 to Stage 2
(1)
1
-
-
0
Transferred from Stage 2 to Stage 1
2
(2)
-
-
0
Transferred from Stage 2 to Stage 3
(1)
1
0
ECL Impairment charge/ (release) for the year (P&L)
2
3
(1)
(0)
4
ECL allowance as at 31/12/2021
8
4
0
0
12
42.4 Assets pledged
Piraeus Financial Holdings Group – 31 December 2022
336
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Due from banks
390
1,044
-
-
Financial assets at FVTPL
55
854
-
-
Loans and advances to customers measured at amortised cost
7,055
5,318
-
-
Financial assets at FVΤOCI
0
1,552
-
-
Debt securities measured at amortised cost
41
8,821
-
-
Other assets
-
29
-
-
7,541
17,618
0
0
The aforementioned financial assets are mainly pledged either for drawing liquidity from the Eurosystem, under the general
terms applying to such agreements, or for margins in regards with a) derivative transactions engaged under ISDA master netting
agreements and CSA contracts and b) repurchase transactions covered by Global Master Repurchase Agreement (“GMRA”)
contracts.
In the context of interbank repurchase agreement (repo) transactions, securities of total nominal value € 389 million (31
December 2021: € 227 million) are used for liquidity purposes. The said amount includes GGBs of total nominal value € 162
million (31 December 2021: € 221 million).
In addition to the above, as at 31 December 2022 and 2021 the Bank had pledged an amount of € 168 million, with respect to
written guarantee for the non-payment risk of the Greek State, included within balance sheet line item “Due from banks”.
The decrease of “due from banks” line item compared to 31 December 2021, is mainly attributable to decreased collateral
postings to derivative counterparties.
Additionally, it is noted that during December 2022 the Bank proceeded to voluntary early repayments of specific TLTRO III
operations amounted to € 8.9 billion. The aforementioned reduction of Group’s borrowings resulted to a corresponding
decrease of the debt securities pledged for liquidity purposes from the Eurosystem.
Furthermore, it is noted that Bank’s minimum reserve requirement, regarding the amount of funds held on average over the
current maintenance period in its current accounts to BoG, amounts to € 573 million.
43 Share capital
Piraeus Financial Holdings Group – 31 December 2022
337
Number of shares
Company
Group
Issued shares
Treasury shares
Net number of
shares
Opening balance at 1/1/2021
436,659,164
(555,321)
436,103,843
Increase in the number of ordinary shares due to conversion of CoCos
394,400,000
-
394,400,000
Decrease in the number of ordinary shares due to reverse split (16.5:1)
(780,691,941)
-
(780,691,941)
Increase in the number of ordinary shares due to issuance of new shares
1,200,000,000
-
1,200,000,000
Purchases of treasury shares
-
(8,000,128)
(8,000,128)
Sales of treasury shares
-
7,298,795
7,298,795
Balance at 31/12/2021
1,250,367,223
(1,256,654)
1,249,110,569
Opening balance at 1/1/2022
1,250,367,223
(1,256,654)
1,249,110,569
Purchases of treasury shares
-
(20,275,861)
(20,275,861)
Sales of treasury shares
-
21,272,717
21,272,717
Balance at 31/12/2022
1,250,367,223
(259,798)
1,250,107,425
The Company’s share capital as at 31 December 2021 amounted to € 1,188 million divided into 1,250,367,223 ordinary
registered voting shares with a nominal value of € 0.95 each.
On 22 July 2022, the annual general meeting of the Company’s shareholders (“AGM”) approved a share capital reduction in
kind of € 25 million by decreasing the nominal value of each ordinary share by the amount of € 0.02, without changing the total
number of common shares pursuant to article 31 para. 1 of Law 4548/2018 in conjunction with the provisions of article 17 of
Law 4548/2018, and the distribution to the shareholders of shares issued by the Cypriot subsidiary company under the name
“SUNRISEMEZZ LTD” (already SUNRISEMEZZ Plc) held by the Company, with a value corresponding to the value of the
Company’s share capital decrease.
Following the above decrease, the share capital of the Company as at 31 December 2022 amounts to € 1,163 million, divided
into 1,250,367,223 common registered voting shares with a nominal value of € 0.93 each.
The AGM also approved the offsetting of an amount equal to approximately € 14,557 million in the Company’s “share
premium” account by writing-off accumulated losses carried forward of an equal amount.
The purchases and sales of treasury shares during the current year and year 2021, as well as the treasury shares owned as at
31 December 2022 and 2021, relate to transactions that are carried out by the Group’s subsidiary Piraeus Securities S.A. in the
context of its activities, which derive from its role as a market maker.
44 Other reserves and retained earnings
Piraeus Financial Holdings Group – 31 December 2022
338
Group
Company
31/12/2022
31/12/2021
As
reclassified
31/12/2022
31/12/2021
As
reclassified
Legal reserve
85
84
69
69
Reserve from financial assets measured at FVTOCI
38
144
(0)
-
Currency translation reserve
(63)
(54)
-
-
Property revaluation reserve
7
-
-
-
Other reserves
33
34
27
27
Non-taxed reserves
351
351
351
351
Total other reserves
451
559
447
447
Retained earnings
784
(14,669)
(301)
(14,908)
Other reserves and retained earnings
1,235
(14,110)
147
(14,460)
The table below illustrates the movement of the reserve from financial assets measured at FVTOCI. The movement of other
reserves and retained earnings is provided in the Statement of Changes in Equity.
Group
31/12/2022
31/12/2021
Opening balance
144
281
Losses from the valuation of debt securities
(50)
(74)
Gains/(losses) from the valuation of equity securities
31
17
ECL on debt securities
(13)
11
Recycling of valuation adjustments and accumulated impairments upon disposal
(110)
(87)
Transfer to retained earnings
-
(62)
Deferred taxation
36
59
Closing balance
38
144
Regarding the “Recycling of valuation adjustments and accumulated impairments upon disposal” for the year ended 31
December 2022 refer to Note 10.
45 Dividend per share
The distribution of dividend for the year 2022 is not permitted as the provisions of the article 159 of the Law 4548/2018 (Reform
of the Law of Sociétés Anonymes) are not met and restrictions of the same article of the law exist.
Furthermore, pursuant to the 2022 SREP Decision, the Company is required to obtain ECB’s approval before making any
distribution to its shareholders and to members or holders of capital instruments, other than shares, insofar as these qualify
as CET 1, where non-payment does not constitute an event of default.
In compliance with the above, the Board of Directors of the Company will propose the non – distribution of dividends for the
fiscal year 2022 in the AGM of Shareholders of 2023.
Piraeus Financial Holdings Group – 31 December 2022
339
46 Cash and cash equivalents
For the purpose of the Cash Flow Statement, cash and cash equivalents comprise the following outstanding balances as at 31
December 2022 and 2021 with less than 90 days maturity from the date of their initial recognition.
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Cash and balances with Central Banks
9,080
15,514
-
-
Due from banks
290
229
45
50
Financial assets at fair value through profit or loss
3
61
-
-
Financial assets at fair value through other comprehensive income
28
64
-
-
9,401
15,868
45
50
47 Related party transactions
Related parties are:
a)
Members of the Board of Directors and the Executive Committee, Group’s and Company’s Chief Internal Auditors and
Compliance Officers, and the CEOs of the significant subsidiaries, collectively “Key Management Personnel”,
b)
Close family members of Key Management Personnel,
c)
Companies having transactions with Piraeus Financial Holdings S.A., if those are controlled or jointly controlled by Key
Management Personnel and other related party referred to in points (a) and (b) above,
d)
Company΄s subsidiaries,
e)
Company΄s associates and the subsidiaries of its associates,
f)
Company΄s joint ventures and the subsidiaries of its joint ventures,
g)
HFSF, which holds ordinary shares in the share capital of the Company and benefits from the special rights stated in
article 10 of Greek Law 3864/2010, as amended and in force.
The Group enters into transactions with the aforementioned entities and individuals under usual market terms and within the
normal course of business. Loans and advances granted to related party and letters of guarantee issued in favor of related
party were made in accordance with the Group’s approved credit policies and procedures in terms of interest rates, collateral
and non-payment risk.
47.1 Key Management Personnel and other related party
The tables below present Group’s and Company’s related party transactions with Key Management Personnel and the related
party referred to in points (b) and (c) above, as well as with HFSF. No significant transactions occurred with the HFSF during
Piraeus Financial Holdings Group – 31 December 2022
340
the year ended 31 December 2022.
Group
31/12/2022
31/12/2021
(amounts in thousand €)
Key Management
Personnel
Other related
party
Key Management
Personnel
Other related
party
Loans and advances to customers at amortised cost (Gross
carrying amount)
3,394
407
3,725
369
Due to customers
4,587
2,018
3,418
474
Group
1/1 - 31/12/2022
1/1 - 31/12/2021
(amounts in thousand €)
Key Management
Personnel
Other related
party
Key Management
Personnel
Other related
party
Income
58
36
35
31
Expense
104
0
0
1
As of 31 December 2022 and 2021 the Company has no transactions with Key Management Personnel and other related party.
Μembers of the Key Management Personnel benefits
Group
Company
(amounts in thousand €)
1/1 -
31/12/2022
1/1 -
31/12/2021
1/1 -
31/12/2022
1/1 -
31/12/2021
Short-term benefits
7,917
6,171
553
210
Contributions to the Institution for Occupational Retirement, Life
and Medical Provision
83
97
3
3
Post-employment benefits
92
80
4
4
Short-term benefits of Key Management Personnel include wages, salaries, employer’s share of social contributions and other
charges, while the “Post-employment benefits” includes the cost of program mes for the post-employment benefits.
The total provision for post-employment benefits to Key Management Personnel as at 31 December 2022 and 2021 amounted
to € 1 million for the Group and less than € 0.1 million for the Company recognised in line item “Retirement and termination
benefit obligations” in the Statement of Financial Position.
The ECL allowance for impairment on loans and advances to customers at amortised cost granted from the Group to Key
Management Personnel and other related party as at 31 December 2022 and 2021 amounted to less than € 0.1 million.
As of 31 December 2022 Key Management Personnel and other related party held 247 thousand ordinary shares of the
Company, compared to 185 thousand as of 31 December 2021.
47.2 Subsidiaries
Company’s related party transactions with subsidiaries are presented below:
Piraeus Financial Holdings Group – 31 December 2022
341
(amounts in thousand €)
Company
31/12/2022
31/12/2021
Assets
Due from banks
44,760
50,048
Debt securities at amortised cost (Gross carrying amount)
818,819
786,468
Other assets
852
782
Total
864,431
837,298
Liabilities
Other liabilities
46,726
46,831
Total
46,726
46,831
(amounts in thousand €)
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
As restated
Income
Interest and similar income
98,851
91,192
Net gain from financial instruments measured at FVTPL
-
720
Dividend income
52,500
26,250
Net other income/ (expenses)
(1,154)
(986)
Total
150,197
117,176
Expenses
Interest expense and similar charges
-
(7,727)
Fee and commission expense
(25,000)
(30,227)
Operating expenses
(946)
(982)
Total
(25,946)
(38,936)
The carrying amount of the Company’s debt securities measured at amortised cost, regarding the fully subscribed Back-to-Back
Tier 2 Notes issued by the Bank, amounted to € 796 million as at 31 December 2022 (31 December 2021: € 757 million) and
includes ECL allowance of € 23 million (31 December 2021: € 29 million). The ECL release for the current year amounted to € 6
million (31 December 2021: charge of € 4 million). Line item “Interest and similar income” refers to interest income from the
fully subscribed Back-to-Back Tier 2 notes.
Line item “Other Liabilities” as at 31 December 2022 includes an amount of € 1 million, which is related to lease liabilities of
the Company’s subsidiaries, according to IFRS 16.
Line item “Dividend income” refers to income from the coupons of the internal AT 1 capital instrument issued by the Bank and
fully subscribed by the Company.
47.3 Associates
Group’s and Company’s related party transactions with associates are presented below:
Piraeus Financial Holdings Group – 31 December 2022
342
(amounts in thousand €)
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Loans and advances to customers at amortised cost (Gross carrying amount)
433,444
910,320
-
-
Other assets
3,409
5,818
3
114
Due to customers
254,136
400,083
-
-
Other liabilities
15,790
29,885
-
-
(amounts in thousand €)
Group
Company
1/1 - 31/12/2022
1/1 - 31/12/2021
As restated
1/1 - 31/12/2022
1/1 - 31/12/2021
Total expense and capital expenditure
(105,823)
(379,401)
(1)
(15,110)
Total income
47,505
62,520
16
34
The ECL allowance for impairment on loans and advances to customers at amortised cost granted from the Group and the
Company to their associates as at 31 December 2022 amounted to € 75 million and nil, respectively (31 December 2021: € 124
million for the Group and nil for the Company). The ECL measurement on loans and advances to customers at amortised cost
for the year 2022 amounted to € 46 million for the Group and nil for the Company (31 December 2021: € 9 million for the
Group and nil for the Company).
Letters of guarantee to associates as at 31 December 2022 amounted to € 14 million for the Group and nil for the Company
(31 December 2021: € 17 million for the Group and nil for the Company).
The variance in line item “Loans and advances to customers at amortised cost (Gross carrying amount)” mainly relates to the
contribution into Strix Holdings LP of two (2) bond loans of € 421 million due from MIG (refer to Note 26B for further
information).
In addition, the Group contributed its former subsidiary IMITHEA Single Member S.A. to its associate Strix Holdings LP. The
Group recognised from the said transaction a gain of € 55 million (Refer to Note 14 and 26B for further details).
47.4 Joint ventures
Group’s related party transactions with joint ventures are presented below:
(amounts in thousand €)
Group
31/12/2022
31/12/2021
As restated
Loans and advances to customers at amortised cost (Gross carrying amount)
53,635
103,880
Other assets
5
-
Due to customers
35
145,299
Piraeus Financial Holdings Group – 31 December 2022
343
(amounts in thousand €)
Group
1/1 - 31/12/2022
1/1 - 31/12/2021
As restated
Total income
664
674
As of 31 December 2022 and 2021 the Company has no transactions with joint ventures.
The ECL allowance for impairment on loans and advances to customers at amortised cost granted from the Group and the
Company to joint ventures as at 31 December 2022 amounted to € 40 million and nil, respectively (31 December 2021: € 42
million as restated for the Group and nil for the Company).
Letters of guarantee to joint ventures as at 31 December 2022 amounted to nil (31 December 2021: € 60 million).
48 Changes in the portfolio of consolidated companies
a) New subsidiaries, associates and joint ventures recognised during the period
:
On 25 May 2022, within the context of the restructuring and rationalization of the leasing business of the Group through a
corporate demerger, certain wholly owned subsidiaries of the Group were established, namely Piraeus Leasing Single Member
S.A., Sunshine Leases Single Member S.A. and Piraeus Property Real Estate Management Single Member S.A. (the beneficiary
entities), following the demerger of certain wholly owned subsidiaries of the Group, namely Piraeus Leasing Single Member
S.A., Piraeus Financial Leasing Single Member S.A. and Piraeus Leases Single Member S.A. (the demerged entities), by
transferring from each demerged entity certain assets and liabilities to a) each beneficiary entity (the net asset value, as at the
transformation date, amounted to € 92 million, € 19 million and € 7 million, respectively) and b) to Piraeus Bank S.A. (a net
asset value, as at the transformation date, of € 70 million). Hence, the aforementioned demerged entities were removed from
the General Commercial Registry, while the subsidiary of Piraeus Financial Leasing Single Member S.A., namely Dynamic Asset
Operating Leasing S.A., became a subsidiary of Piraeus Leasing Single Member S.A. Refer also to Note 30.
On 13 July 2022, the Company acquired a 55% controlling stake in Shnappi by fully subscribing a share capital increase of € 19
million. Refer to Note 26A for further information.
On 18 July 2022, Piraeus Bank S.A. acquired a 100% shareholding in Iolcus for a consideration of € 10 million, which became a
subsidiary of the Group.
On 30 December 2022, Piraeus Bank S.A. established through contribution in kind the subsidiaries Aleva Single Member S.A.
and Arpis Single Member S.A., by fully subscribing in their share capital of € 15 million. The aforementioned entities were
founded in the context of the rehabilitation agreement of the Greek Sugar Industry.
Except for the above, during the period ended 31 December 2022 the Company did not make any new investment through
acquisition or establishment of new companies, in excess of € 10 million.
b) Significant changes in the Group’s subsidiaries, associates and joint ventures during the period:
The changes incurred during the period ended 31 December 2022, in excess of € 10 million, were the following :
Piraeus Financial Holdings Group – 31 December 2022
344
On 2 March 2022, Piraeus Bank S.A. acquired a 52% controlling interest in Trastor for a cash consideration of € 98 million. Refer
to Note 26A for further information.
On 22 September 2022, the Group lost control over Imithea Single Member S.A. Refer to Note 14 for further information.
Refer to Note 26B for current year’s movements in associates.
c) Liquidation, disposal and merging of subsidiaries:
On 3 February 2022, the SPVs Axia Finance III PLC, Axia Finance PLC, Axia III APC Limited, Estia Mortgage Finance PLC, Estia
Mortgage Finance ΙΙ PLC, Praxis II APC Limited, Praxis II Finance PLC, Axia III Holdings Ltd and Praxis II Holdings Ltd were
dissolved, while the dissolution of the SPV Kion Mortgage Finance PLC was performed on 11 April 2022.
On 31 May 2022, the liquidation of the subsidiary of the Group, Rhesus Development Projects SRL, was completed and the
subsidiaries of Piraeus Bank S.A. namely Geniki Single Member S.A. Financial & Consulting Services and Geniki Information
Single Member S.A. were set under liquidation.
On 2 June 2022, Bulfina E.A.D. 100% subsidiary company of the Group disposed of its total participation in its subsidiary namely
Office Project 2021 EOOD.
On 17 June 2022, the subsidiary of Piraeus Bank S.A. namely Trastor Real Estate Investment Company, absorbed its wholly
owned subsidiaries namely Dorida S.A. and Syzefxis Ltd.
On 28 June 2022, Piraeus Nedvizhimi Imoti EOOD, 100% subsidiary company of the Group disposed of its total participation in
its subsidiaries Lozenetz Construction EOOD and Mladost Home EOOD.
On 11 July 2022, the liquidation of the subsidiary of the Group, Priam Business Consultancy SRL, was completed.
On 11 August 2022, Bulfina E.A.D., 100% subsidiary company of the Group, disposed of its participation in its subsidiary namely
Vitosha Invest 146 EOOD.
On 6 September 2022, Omicron Cyclos Ena Symmetohiki S.A., 28.10% associate company of the Group, was set under
liquidation.
On 6 October 2022, Piraeus Bank S.A., in the context of its strategy for targeted assets utilization, disposed of its total
participation in its subsidiary namely Piraeus Real Estate Management Single Member S.A.
On 31 October 2022, the shares of the Cypriot subsidiary company Sunrise Mezz PLC were admitted for trading on the
Alternative Market (E.NA. PLUS) of the Athens Stock Exchange, following the distribution of shares issued by the company
Sunrise Mezz PLC to the shareholders of the Company, according to the decisions of the Company’s AGM of 22 July 2022.
Hence, Sunrise Mezz PLC ceased to be a subsidiary of the Group.
On 16 December 2022, Piraeus Bank S.A. disposed of its total participation in its associate namely Exus Software Ltd.
On 16 December 2022, Piraeus Nedvizhimi Imoti EOOD, 100% subsidiary company of the Group, disposed of its total
participation in its subsidiary namely Infinity Omnia 11 OOD.
Piraeus Financial Holdings Group – 31 December 2022
345
On 20 December 2022, the liquidation of the subsidiary of the Group, Piraeus Buildings S.A., was completed.
On 30 December 2022, Piraeus Bank S.A. disposed of its total participation in its subsidiary namely Piraeus Support Services
Single Member S.A.
49 Independent Auditors’ fees
On 22 July 2022, the Ordinary General Meeting of the Shareholders appointed Deloitte Certified Public Accountant S.A. as the
principal independent public accountant for the year ended 31 December 2022. The following table presents the aggregated
fees for professional statutory audit fees, tax audit fees, other audit related fees and other non-audit related fees for the years
2022 and 2021, by the Group’s principal accounting firm Deloitte, which is a member firm of the Deloitte Network, other
member firms of the Network and their respective affiliates (collectively, “Deloitte”).
Group
Company
31/12/2022
31/12/2021
31/12/2022
31/12/2021
Statutory audit fees
2,482
2,626
205
250
Other audit related fees (Including tax audit fees)
1,071
1,301
505
609
Other non-audit related fees
272
132
91
-
Total
3,825
4,059
801
859
50 Reclassifications of comparative year
The reclassifications reflected in the Income Statement of the year 2021 are presented below. Refer to Note 7 “Net fee and
commission income “, Note 8 “Income from Non-Banking activities” and Note 15 “Οther credit-risk related expenses on loans
and advances to customers at amortised cost” for further details.
Piraeus Financial Holdings Group – 31 December 2022
346
€ Million
Group
Year ended 31/12/2021
As published
Reclassifications
As reclassified
CONTINUING OPERATIONS
Interest and similar income
1,785
-
1,785
Ιnterest expense and similar charges
(375)
-
(375)
NET INTEREST INCOME
1,410
0
1,410
Fee and commission income
498
-
498
Fee and commission expense
(104)
(2)
(106)
NET FEE AND COMMISSION INCOME
394
(2)
392
Income from non-banking activities
0
40
40
Dividend income
3
-
3
Net gains/ (losses) from financial instruments measured at FVTPL
85
-
85
Net gains/ (losses) from financial instruments measured at FVTOCI
87
-
87
Net gains/ (losses) from derecognition of financial instruments measured at amortised cost
326
-
326
Net gains/ (losses) from loss of control over subsidiaries/ disposal of associates and joint ventures
184
-
184
Net other income/ (expenses)
37
(40)
(3)
TOTAL NET INCOME
2,526
(2)
2,523
Staff costs
(405)
-
(405)
Administrative expenses
(418)
41
(377)
Depreciation and amortisation
(110)
-
(110)
TOTAL OPERATING EXPENSES
(933)
41
(892)
PROFIT/ (LOSS) BEFORE PROVISIONS, IMPAIRMENT AND OTHER CREDIT-RISK RELATED EXPENSES
1,592
39
1,631
ECL impairment (losses)/ releases on loans and advances to customers at amortised cost
(4,232)
101
(4,131)
Other credit-risk related expenses on loans and advances to customers at amortised cost
(13)
(139)
(153)
Impairment (losses)/releases on other assets
2
-
2
ECL impairment (losses)/ releases on debt securities measured at FVTOCI
(11)
-
(11)
Impairment on subsidiaries and associates
(23)
-
(23)
Impairment of property and equipment and intangible assets
(13)
-
(13)
Impairment on debt securities at amortised cost
(19)
-
(19)
Other provision charges/ (releases)
8
-
8
Share of profit/ (loss) of associates and joint ventures
18
-
18
PROFIT/ (LOSS) BEFORE INCOME TAX
(2,691)
0
(2,691)
Income tax benefit/ (expense)
(316)
-
(316)
PROFIT/ (LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS
(3,007)
0
(3,007)
DISCONTINUED OPERATIONS
Profit/ (loss) after income tax from discontinued operations
(7)
-
(7)
PROFIT/ (LOSS) FOR THE PERIOD
(3,014)
0
(3,014)
From continuing operations
Profit/ (loss) attributable to the equity holders of the parent
(3,007)
-
(3,007)
Non controlling interest
(1)
-
(1)
From discontinued operations
Profit/ (loss) attributable to the equity holders of the parent
(7)
-
(7)
Non controlling interest
-
-
-
Earnings/ (losses) per share attributable to the equity holders of the parent (in €):
From continuing operations
- Basic & Diluted
(3.50)
-
(3.50)
From discontinued operations
- Basic & Diluted
(0.01)
-
(0.01)
Total
- Basic & Diluted
(3.51)
-
(3.51)
Piraeus Financial Holdings Group – 31 December 2022
347
€ Million
Company
Year ended 31/12/2021
As published
Reclassifications
As reclassified
CONTINUING OPERATIONS
Interest and similar income
160
-
160
Ιnterest expense and similar charges
(78)
-
(78)
NET INTEREST INCOME
82
0
82
Fee and commission income
43
-
43
Fee and commission expense
(36)
-
(36)
NET FEE AND COMMISSION INCOME
7
0
7
Income from non-banking activities
0
0
0
Dividend income
26
-
26
Net gains/ (losses) from financial instruments measured at FVTPL
(1)
-
(1)
Net gains/ (losses) from financial instruments measured at FVTOCI
-
-
-
Net gains/ (losses) from derecognition of financial instruments measured at amortised cost
(0)
-
(0)
Net gains/ (losses) from loss of control over subsidiaries/ disposal of associates and joint ventures
-
-
-
Net other income/ (expenses)
(3)
(0)
(3)
TOTAL NET INCOME
111
(0)
111
Staff costs
(3)
-
(3)
Administrative expenses
(21)
6
(15)
Depreciation and amortisation
(0)
-
(0)
Net gain/ (losses) from sale of property and equipment and intangible assets
-
-
-
TOTAL OPERATING EXPENSES
(24)
6
(18)
PROFIT/ (LOSS) BEFORE PROVISIONS, IMPAIRMENT AND OTHER CREDIT-RISK RELATED EXPENSES
87
6
94
ECL impairment (losses)/ releases on loans and advances to customers at amortised cost
(1,523)
5
(1,518)
Οther credit-risk related expenses on loans and advances to customers at amortised cost
-
(11)
(11)
Impairment (losses)/releases on other assets
(10)
-
(10)
ECL impairment (losses)/ releases on debt securities measured at FVTOCI
-
-
-
Impairment on subsidiaries and associates
(1,597)
-
(1,597)
Impairment of property and equipment and intangible assets
-
-
-
Impairment on debt securities at amortised cost
(4)
-
(4)
Other impairment (losses)/ releases
-
-
-
Other provision charges/ (releases)
(0)
-
(0)
Share of profit/ (loss) of associates and joint ventures
-
-
-
PROFIT/ (LOSS) BEFORE INCOME TAX
(3,046)
(0)
(3,046)
Income tax benefit/ (expense)
0
-
0
PROFIT/ (LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS
(3,046)
(0)
(3,046)
DISCONTINUED OPERATIONS
Profit/ (loss) after income tax from discontinued operations
-
-
-
PROFIT/ (LOSS) FOR THE PERIOD
(3,046)
(0)
(3,046)
From continuing operations
Profit/ (loss) attributable to the equity holders of the parent
-
-
-
Non controlling interest
-
-
-
From discontinued operations
Profit/ (loss) attributable to the equity holders of the parent
-
-
-
Non controlling interest
-
-
-
Earnings/ (losses) per share attributable to the equity holders of the parent (in €):
From continuing operations
- Basic & Diluted
-
-
-
From discontinued operations
- Basic & Diluted
-
-
-
Total
- Basic & Diluted
-
-
-
Piraeus Financial Holdings Group – 31 December 2022
348
51 Disclosures of Greek Law 4261/5.5.2014
According to article 81 of Greek Law 4261/2014, which incorporates into the Greek legislation article 89 of EU Directive
2013/36/EU of the European Parliament and of the Council of 26 June 2013, according to which, it is adopted for the first time
the obligation for the Group to disclose information, on a consolidated basis, for each country in which it operates.
Disclosed information includes: name of the subsidiary, nature of business, geographical location, turnover, number of
employees on a full-time equivalent basis, profit or loss before tax, tax on profit or loss and public subsidies. Turnover, profit
or loss before tax, as well as tax on profit or loss are prepared on the same basis as the relevant figures reported in the financial
statements for the years ended 31 December 2022 and 2021, which are prepared in accordance with IFRS as issued by the IASB
and endorsed by the European Union.
Public subsidies received by the Group during the year ended 31 December 2022 are immaterial. Information presented above
is analyzed in the following tables:
A) Country specific information
Country
31/12/2022
Total net income⁽³⁾
Profit/ (loss)
before tax
Income tax
benefit/ (expense)
Number of staff
Greece⁽¹⁾
2,651
1,080
(139)
8,338
Romania
0
0
(0)
4
Bulgaria
2
(5)
(0)
8
Egypt
0
0
(0)
1
Cyprus
(2)
(3)
(0)
4
Serbia
2
3
(0)
5
Albania
0
(0)
-
2
Ukraine
14
(3)
0
293
Other countries⁽²⁾
(1)
15
-
3
Group⁽⁴⁾
2,666
1,087
(139)
8,658
(1)
The amounts reported include the operations of the Bank’s branches operating in foreign countries and special purpose vehicles
incorporated in the U.K and Ireland.
(2)
Other countries include U.K., British Virgin Islands and Ireland.
(3)
Total net income includes net interest income, net fee and commission income, income from non-banking activities, dividend income,
net gains/ (losses) from financial instruments measured at FVTPL, net gains/ (losses) from financial instruments measured at FVTOCI,
net gains/ (losses) from derecognition of financial instruments measured at amortised cost, net gains/ (losses) from loss of control over
subsidiaries/ disposal of associates and joint ventures and net other income/ (expenses).
(4)
The amounts reported include both continuing and discontinued operations.
Piraeus Financial Holdings Group – 31 December 2022
349
Country
31/12/2021 As reclassified
Total net income⁽³⁾
Profit/ (loss)
before tax
Income tax
benefit/ (expense)
Number of staff
Greece⁽¹⁾
2,573
(2,662)
(319)
10,072
Romania
(1)
(1)
(0)
4
Bulgaria
2
(10)
(0)
8
Egypt
0
0
(0)
1
Cyprus
(24)
(24)
1
4
Serbia
0
(0)
-
5
Albania
(0)
(0)
-
2
Ukraine
12
1
1
326
Other countries⁽²⁾
0
(0)
-
3
Group⁽⁴⁾
2,562
(2,697)
(317)
10,425
(1)
The amounts reported include the operations of the Bank’s branches operating in foreign countries and special purpose vehicles
incorporated in the U.K and Ireland.
(2)
Other countries include U.K. and British Virgin Islands.
(3)
Total net income includes net interest income, net fee and commission income, income from non-banking activities, dividend
income, net gains/ (losses) from financial instruments measured at FVTPL, net gains/ (losses) from financial instruments measured
at FVTOCI, net gains/ (losses) from derecognition of financial instruments measured at amortised cost, net gains/ (losses) from loss
of control over subsidiaries/ disposal of associates and joint ventures and net other income/ (expenses).
(4)
The amounts reported include both continuing and discontinued operations.
B) Group's subsidiaries based on the nature of their business and their geographical location
The Group's subsidiaries based on the nature of their business and their geographical location are presented in Note 26A.
Greek Law 4261/2014, article 82, which incorporated into Greek legislation the article 90 of Directive 2013/36/EU of the
European Parliament and of the Council on 26 June 2013, established the requirement to disclose the total return on assets
ratio. This ratio for the Company and the Group for the year ended 31 December 2022 amounted to 1.60% and 1.16%,
respectively (31 December 2021: (36.90%) and (3.98%), respectively).
52 Disclosures of Greek Law 4151/2013
In accordance with the provisions of Greek Law 4151/2013, every credit institution operating in Greece has the obligation to
remit to the Greek State the cash balances plus interest for all dormant deposits, for which a period of 20 years has passed
until the end of April of each year. In this context, on 19 April 2022, Piraeus Bank remitted to the Greek State the amount of €
1,201,649.19.
Piraeus Financial Holdings Group – 31 December 2022
350
53 Events Subsequent to the End of the Reporting Period
Since 6 February 2023 and up to 14 March 2023, Piraeus Bank gradually increased through the Stock Exchange its shareholding
in MIG from 31.2% to 57.9%. The shareholding acquired in excess of one third of MIG’s outstanding shares is subject to
regulatory approval by the HCC and as a result, pursuant to the relevant provisions of antitrust law, the voting rights arising
from such shares are not currently exercisable. Therefore, on 16 March 2023, the date that the Annual Financial Statements
were authorized for issue, the Group had not obtained control over MIG. The cash consideration paid by Piraeus Bank for the
additional equity interest in MIG throughout the subsequent events period, amounted to € 44 million, increasing the carrying
amount of its investment in MIG to € 69 million. In line with the requirements of Greek Law 3461/2006, Piraeus Bank launched
a mandatory tender offer (“MTO”) in order to purchase the remaining MIG shares held by third parties at a price of €0.217 per
share. Assuming that all existing shareholders accept Piraeus Bank's offer to sell their shares, the additional consideration
payable in the context of the MTO is € 86 million. The MTO is expected to be completed in April 2023.
As disclosed in Note 26B, in November 2022, Piraeus Bank contributed into Strix Holdings LP, two bond loans due from MIG of
total carrying value € 329 million, in exchange for additional limited partnership interests. On 13 December 2022, MIG
announced that its BoD had accepted a proposal submitted by Strix Holdings LP for the exchange of the entirety of the bonds
owned by Strix Holdings LP pertaining to said two bond loans for MIG’s total direct and indirect stake in Attica Holdings S.A.
(i.e. a total shareholding of 79.4%), the “Debt-to-Asset Swap”. The proposed transaction was subject to two conditions
precedent, namely: a) Strix Holdings LP being granted regulatory approval by the HCC for the acquisition of a controlling stake
in Attica Holdings S.A.; and b) approval of the proposed Debt-to -Asset Swap by MIG’s shareholders. Both conditions were met
subsequent to the end of the reporting period. Specifically, on 23 February 2023 the HCC approved the acquisition of a
controlling stake in Attica Holdings S.A. by Strix Holdings LP and on 3 March 2023, MIG’s re-iterative extraordinary general
meeting of shareholders held upon postponement, resolved on the approval of the Debt-to-Asset Swap. Assuming that the
HCC grants approval to Piraeus Bank for acquiring a controlling stake in MIG, the latter will be accounted for as a subsidiary
under the full consolidation method, effective from the HCC approval date (i.e. the acquisition date). Following satisfaction of
the Debt-to-Asset Swap conditions precedent, the scope of MIG’s identifiable net assets as of the acquisition date shall not
include: a) Attica Holdings S.A. and its subsidiaries; and b) MIG’s bond loan liabilities due to Strix Holdings LP. Based on MIG’s
public announcement dated 15 December 2022, MIG’s total assets, total liabilities and net assets as of 30 September 2022
adjusted on a proforma basis for the Debt-to-Asset Swap, amounted to €228 million, € 100 million and € 128 million,
respectively, therefore, the impact of the aforementioned business combination on the Group’s financial position is not
expected to be material.
Piraeus Financial Holdings Group – 31 December 2022
351
Following the increase of its shareholding in excess of one third of MIG’s outstanding shares, Piraeus Bank launched on 22
February 2023 a corollary MTO to the shareholders of Attica Holdings S.A. holding a total stake of 20.62%, in order to purchase
their shares at a price of € 1.855 per share. The MTO is subject to approval by the HCC. Assuming that all such shares are
purchased by Piraeus Bank, the cost of the MTO is € 83 million.
CHAIRMAN
OF THE BOARD OF DIRECTORS
MANAGING
DIRECTOR
GROUP CHIEF
FINANCIAL OFFICER
DEPUTY CHIEF
FINANCIAL OFFICER
GEORGE P. HANDJINICOLAOU
ID No X 501829
CHRISTOS I. MEGALOU
ID No AE 011012
THEODOROS CH. GNARDELLIS
ID No AI 662109
GEORGE TH. MARINOPOULOS
ID No ΑΡ 154589
License No Class A 0137758
Piraeus Financial Holdings Group – 31 December 2022
352