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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 ARTICLE 4 PAR. 2 OF LAW 3556/2007 .................................................................................................................. 8
BOARD OF DIRECTORS’ ANNUAL REPORT ...................................................................................................................................... 9
CORPORATE GOVERNANCE STATEMENT ................................................................................................ ..................................... 42
EXPLANATORY REPORT .............................................................................................................................................................. 102
ALTERNATIVE PERFORMANCE MEASURES (“APMs”) AT GROUP LEVEL .................................................................................... 106
INDEPENDENT AUDITOR’S REPORT
............................................................................................................................................. 110
Income Statement ................................ ..................................................................................................................................... 120
Statement of Comprehensive Income ....................................................................................................................................... 122
Statement of Financial Position ................................................................................................................................ ................. 123
Statement of Changes in Equity ................................................................................................................................................. 124
Cash Flow Statement ................................................................................................................................ ................................. 126
1 General information ................................................................................................................................................................ 127
2 Basis of preparation and significant accounting policies ........................................................................................................ 128
2.1 Basis of preparation ......................................................................................................................................................... 128
2.2 Going concern .................................................................................................................................................................. 129
2.3 Adoption of International Financial Reporting Standards ............................................................................................... 132
2.4 Significant accounting policies ......................................................................................................................................... 134
3 Critical accounting judgements and key sources of estimation uncertainty .......................................................................... 156
3.1 Critical judgements in applying the Group’s accounting policies .................................................................................... 156
3.2 Key sources of estimation uncertainty ............................................................................................................................ 158
4 Financial Risk Management .................................................................................................................................................... 162
4.1 Risk Management Framework ......................................................................................................................................... 162
4.2 Credit Risk ........................................................................................................................................................................ 168
4.3 Credit Risk Management ................................................................................................................................ ................. 185
4.4 Forbearance ..................................................................................................................................................................... 224
4.5 Debt to equity transactions ............................................................................................................................................. 227
4.6 Debt securities at amortised cost and debt securities measured at FVTOCI................................................................ ... 228
4.7 Concentration of risks of financial assets with credit risk exposure................................................................................ 229
4.8 Offsetting of financial assets and liabilities ................................................................ ..................................................... 237
4.9 Market risk ....................................................................................................................................................................... 238
4.10 Currency risk .................................................................................................................................................................. 240
4.11 Interest rate risk ................................................................ ............................................................................................ 244
4.12 Liquidity risk ................................................................................................................................................................... 247
4.13 Transfers of financial assets................................................................................................................................ ........... 249
4.14 Financial instruments not measured at fair value ......................................................................................................... 250
4.15 Financial assets and liabilities measured at fair value ................................................................................................... 251
4.16 Capital adequacy ................................................................................................................................ ........................... 257
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 .................................................................................................................... 260
4.18 IBOR Reform .................................................................................................................................................................. 261
4.19 Climate Related Matters ................................................................................................................................................ 262
5 Segment analysis ..................................................................................................................................................................... 264
6 Net interest income ................................................................................................ ................................................................ 269
7 Net fee and commission income ............................................................................................................................................. 271
8 Income from non-banking activities ................................................................................................ ....................................... 273
9 Net gains/ (losses) from financial instruments measured at FVTPL ....................................................................................... 274
10 Net gains/ (losses) from financial instruments measured at FVTOCI ................................ ................................................... 274
11 Net other income/ (expenses) .............................................................................................................................................. 274
12 Staff costs .............................................................................................................................................................................. 275
13 Administrative expenses ....................................................................................................................................................... 275
14 Discontinued operations ....................................................................................................................................................... 275
15 Other credit risk related expenses on loans and advances to customers at amortised cost ................................ ............... 277
16 Income tax benefit / (expense) ............................................................................................................................................. 277
17 Earnings/(losses) per share ................................................................................................................................................... 278
18 Tax effects relating to other comprehensive income/ (expense) for the period .................................................................. 279
19 Cash and balances with central banks ................................................................................................................................ .. 279
20 Due from banks ..................................................................................................................................................................... 280
21 Derivative financial instruments ........................................................................................................................................... 280
22 Financial assets at fair value through profit or loss .............................................................................................................. 283
23 Loans and advances to customers at amortised cost ........................................................................................................... 283
24 Financial assets at FVTOCI ..................................................................................................................................................... 286
25 Debt securities at amortised cost ................................................................................................ ......................................... 287
26 Investments in consolidated companies ............................................................................................................................... 288
27 Intangible assets ................................................................ ................................................................................................... 303
28 Property and equipment ....................................................................................................................................................... 303
29 Investment property ............................................................................................................................................................. 304
30 Assets held for sale ................................................................................................................................ ............................... 305
31 Other assets .......................................................................................................................................................................... 306
32 Due to banks ......................................................................................................................................................................... 309
33 Due to customers .................................................................................................................................................................. 310
34 Debt securities in issue ................................................................................................................................ ......................... 311
35 Other borrowed funds .......................................................................................................................................................... 315
36 Other liabilities ...................................................................................................................................................................... 315
37 Provisions .............................................................................................................................................................................. 316
38 Tax receivables ...................................................................................................................................................................... 317
39 Deferred Taxes ................................................................ ...................................................................................................... 318
40 Retirement and termination benefit obligations .................................................................................................................. 320
41 Leases .................................................................................................................................................................................... 329
42 Contingent liabilities, assets pledged, transfers of financial assets and commitments ........................................................ 330
43 Share capital .......................................................................................................................................................................... 336
44 Other reserves and retained earnings ................................................................ .................................................................. 337
45 Dividend per share ................................................................................................................................................................ 338
46 Cash and cash equivalents .................................................................................................................................................... 339
47 Related party transactions .................................................................................................................................................... 339
47.1 Key Management Personnel and other related party ................................................................................................... 339
47.2 Subsidiaries .................................................................................................................................................................... 340
47.3 Associates ...................................................................................................................................................................... 341
47.4 Joint ventures ................................................................................................................................................................ 342
48 Changes in the portfolio of consolidated companies ........................................................................................................... 343
49 Independent Auditors’ fees ................................ .................................................................................................................. 345
50 Reclassifications of comparative year ................................................................................................................................... 345
51 Disclosures of Greek Law 4261/5.5.2014 .............................................................................................................................. 348
52 Disclosures of Greek Law 4151/2013 .................................................................................................................................... 349
53 Events Subsequent to the End of the Reporting Period ................................................................ ....................................... 350
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:
Piraeus Bank Research, IMF (2022): “World Economic Outlook”, October,
p. 9, 42-44.
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
https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7150
3
https://www.bankofgreece.gr/ekdoseis -ereyna/ekdoseis/anazhthsh-ekdosewn ?types=365d253d-456e-488d-b23e-
c569ad1fb3ef&mode=preview&years=2022&categories=fincancialStatements
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
https://www.bankofgreece.gr/en/statistics/evolution -of-loans-and-non-performing-loans
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
–
includes
Mass,
Affluent,
Small
Businesses,
International
Business
Unit
(“IBU”),
and
Public
core
customer
segments as well as Channels.
Corporate Banking
– includes Large Corporates, Shipping,
SME and Agricultural core customer segments.
Piraeus Financial
Markets
(“PFM”)
– includes
the Fixed
Income, Foreign
Exchange, Treasury
activities (including
the interest
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”)
– includes
the management
of any
NPE assessed as
non-core business,
irrespectively of
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)
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;
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
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
quarter 2022, the 2021 performance
cycle “Become & Achieve”
was timely completed
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
semester
of
2022,
the
new
variable
incentive
scheme
was
implemented
to
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
July, rea
ching 100% employees’ participation during
the first month of application.
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
Net-zero
portfolio
by
latest
2050,
with
intermediate
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
and in the Environmental
Statement
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
https://www.piraeusholdings.gr/~/media/Gr/Idiwtes/Files/unep-fi/20220923_Piraeus_PRB-Reporting-and-Self-Assessment.pdf
6
Piraeus most recent TCFD report:
https://www.piraeusholdings.gr/en/sustainable-banking/environment-and-society/environment/environmental-policy-
principles/tcfd-recommendations
7
Sustainability & Business Report:
https://www.piraeusholdings.gr/en/investors/financials/annual-reports
8
Environmental Statement
https://www.piraeusholdings.gr/en/sustainable-banking/environment-and-society/environment/environmental-fields-of-
action/environmental-management
>Piraeus Bank’s
Environmental Statement
Board of Directors' Report
– 31 December 2022
27
The calculation of
its financed emissions
(Scope 3
9
cat. 15) is
based on the
methodologies described in
the relevant
standard
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
For 2021, the climate risk assessment was executed
with the usage of all three RCP climate scenarios for
the first time.
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
RCP2.6
7%
93%
RCP4.5
20%
80%
RCP8.5
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
were used
for the
period 2020-2030
based on
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
(
IPCC
)
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
allocated to
the loans in
the renewable
energy
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
- Support and promotion of culture, historical knowledge and intellectual
creation, preservation and promotion
of the
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
cycle started in March 2022 and was completed in June 2022, while the 2
nd
started in October 2022 and was completed
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
cycle started in March 2022 and was completed in June 2022, while the 2
nd
started in October 2022 and was completed
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
The 1
st
cycle
started
in October
2022 and
was
completed
in February
2023.
The program
received
163 applications
for
50
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
cycle started in March 2022 and the 2
nd
in October 2022. The program received more than 80 applications from schools
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
Primary School of Komotini. A state-of-the-art
Inquiry-Based Learning
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
Primary School
of Komotini
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
anniversary since the Greek Revolution
Respecting its institutional
role and
the social responsibility
that derives from
it, the Group
participated in
the celebration
of
the 200
th
Anniversary since the Greek War
of Independence in 1821.
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
and 2
nd
lines of
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
George
P.
Handjinicolaou
Christos I. Megalou
Non-Excecutive Chairman of BoD
Managing Director (CEO)
Executive BoD Member
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
Directors’ Remuneration Policy
;
●
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
Code of Ethics
;
●
has adopted a
Policy against violence and harassment in the workplace
and set up a respective Committee in Piraeus
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
Articles of Association
, 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
Hellenic Corporate
Governance Code,
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:
Shareholder Structure- 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
understood as amendments thereto
for the purposes hereof;
●
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
auditors;
●
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
4548/2018;
●
Approval
of
the
remuneration
policy
and
the
remuneration
report
under
articles
110
and
112
of
law
4548/2018;
●
Merger,
split,
conversion,
revival,
term
extension
or
dissolution
of
the
Company,
according
to
law
4548/2018
and law 4601/2019, as in force;
●
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
increases imposed under the provisions of other legislation;
●
The
amendment
or
harmonization
of
provisions
in
the
articles
of
association
by
the
BoD
when
so
explicitly
provided by law;
●
The election of directors in the place of directors
who resigned, died or forfeited
their office in any other
manner, in accordance
with the article 82 of law 4548/2018;
●
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
current business year under a BoD resolution which
is submitted to the publication formalities.
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
(
Information on Shareholders
General meeting and Shareholders’ Rights
)
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
resolutions
adopted at the Ordinary GM of Shareholders
held on 22 July 2022 and the
voting results
have been posted on
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.
Mr.
Handjinicolaou
holds
a
BSc
in
Economics
from
University
of
Athens,
Law
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
(
Investor Relations | Piraeus Financial Holdings)
(piraeusholdings.gr)
.
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
is head
of the
Board and
presides over
its meetings.
In the
event of
his absence
or not
being in
a position
to
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
1
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
Annual Remuneration Report for 2021
as well as 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 Action Plans for the year 2022 of Group’s
Internal Audit and Compliance Units.
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
emuneration Report of year 2021
,
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
website
.
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;
●
Was
updated
regularly
and
reviewed
legal
and
tax
matters
which
could
significantly
impact
the
judgments
made
by
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,
the Audit Committee:
●
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,
the Audit Committee:
●
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,
to ensure that:
●
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,
the following duties and responsibilities:
●
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,
responsible to:
●
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,
inter alia,
the following responsibilities:
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
related topics:
●
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
is
independent
with
direct
reporting
to
the
Risk
Committee
of
the
Company
to
which
he/she
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
follows
the international
best
practices
to
ensure
that
the Group
complies with
the applicable
legal and regulatory framework. The Company’s
Compliance Officer
is independent with direct reporting to the BoD and Audit
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
Company’s Compliance
is mainly responsible for:
●
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:
Responsible for ensuring a business model, governance arrangements, including a risk management framework that take
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:
Responsible for
overseeing
the integrity
of the
Group’s
financial and
non-financial/ESG disclosures
within
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:
Responsible for
advising and supporting the
BoD regarding the
monitoring of the Group’s
overall actual and
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:
Responsible
for
considering
the
material
ethical,
environmental,
social
and
governance
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
follows a similar ESG
governance structure at BoD and BoD
Committees level with the exception of the
BoD Ethics
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;
●
ECB Climate Stress Test
.
ESG
and
Corporate
Responsibility
Committee
(Piraeus
Bank):
In
the
context
of
the
enforcement
and
coordination
of
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
Bank’s Executive
Committee
and (in early 2023 supplemented by)
two additional members, the Group
General Counsel and Piraeus Bank
Head
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.
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
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.
Α. APMs
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
Relevance of use: Capital position regulatory
metric
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%
Β. APMs Components
Balance Sheet
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
Income Statement
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)
Internal Regulation
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
1,691
1,785
106
160
Ιnterest expense and similar charges
6
(339)
(375)
(69)
(78)
NET INTEREST INCOME
1,353
1,410
37
82
Fee and commission income
7
508
498
44
43
Fee and commission expense
7
(87)
(106)
(30)
(36)
NET FEE AND COMMISSION INCOME
421
392
14
7
Income from non-banking activities
8
64
40
-
0
Dividend income
47.2
2
3
53
26
Net gains/ (losses) from financial instruments measured at fair value through profit or
loss ("FVTPL")
9
359
85
(8)
(1)
Net gains/ (losses) from financial instruments measured at fair value through other
comprehensive income ("FVTOCI")
10
111
87
-
-
Net gains/ (losses) from derecognition of financial instruments measured at amortised
cost
(34)
326
-
(0)
Net gains/ (losses) from loss of control over subsidiaries/ disposal of associates and
joint ventures
26
278
184
-
-
Net other income/ (expenses)
11
29
(3)
(1)
(3)
TOTAL NET INCOME
2,582
2,523
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)
0
-
-
TOTAL OPERATING
EXPENSES
(889)
(892)
(8)
(18)
PROFIT/ (LOSS) BEFORE PROVISIONS, IMPAIRMENT AND OTHER CREDIT-RISK
RELATED EXPENSES
1,693
1,631
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)
2
-
(10)
ECL impairment (losses)/ releases on debt securities measured at FVTOCI
44
0
(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)
8
-
(0)
Share of profit/ (loss) of associates and joint ventures
26
29
18
-
-
PROFIT/ (LOSS) BEFORE INCOME TAX
1,037
(2,691)
103
(3,046)
Income tax benefit/ (expense)
16
(140)
(316)
0
0
PROFIT/ (LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS
897
(3,007)
103
(3,046)
DISCONTINUED OPERATIONS
Profit/ (loss) after income tax from discontinued operations
14
51
(7)
-
-
PROFIT/ (LOSS) FOR THE PERIOD
948
(3,014)
103
(3,046)
From continuing operations
Profit/ (loss) attributable to the equity holders of the parent
899
(3,007)
-
-
Non controlling interest
(2)
(1)
-
-
From discontinued operations
Profit/ (loss) attributable to the equity holders of the parent
51
(7)
-
-
Non controlling interest
-
-
-
-
Earnings/ (losses) per share attributable to the equity holders of the parent (in €):
From continuing operations
- Basic & Diluted
17
0.72
(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
0.04
(0.01)
-
-
Total
- Basic & Diluted
17
0.76
(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)
897
(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)
5
-
-
Items that will not be reclassified subsequently
to profit or loss
Change in reserve from equity instruments
measured at FVTOCI
18
23
(32)
(0)
-
Change in property revaluation reserve
18
7
-
-
-
Change in reserve of actuarial gains/ (losses)
18
7
(0)
-
-
Other comprehensive expense, net of tax
(B)
18
(101)
(132)
(0)
0
Total comprehensive
income/ (expense), net of tax (A)+(B)
796
(3,140)
103
(3,046)
- Attributable to the equity holders
of the parent
798
(3,139)
-
-
- Non controlling interest
(2)
(1)
-
-
DISCONTINUED OPERATIONS
Profit/ (loss) for the year
51
(7)
0
0
Total comprehensive
income/ (expense), net of tax
51
(7)
0
0
- Attributable to the equity holders
of the parent
51
(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
9,653
15,519
-
-
Due from banks
20
750
1,344
45
50
Financial assets at FVTPL
22
548
906
0
0
Financial assets mandatorily measured at FVTPL
22
182
205
-
9
Derivative financial instruments
21
1,830
591
-
-
Reverse repos with customers
0
0
-
-
Loans and advances to customers at amortised cost
23
37,367
36,521
0
0
Loans and advances to customers mandatorily measured at FVTPL
52
77
-
26
Financial assets measured at FVTOCI
24
897
2,366
2
0
Debt securities at amortised cost
25
10,844
9,200
796
757
Investment property
29
1,522
1,041
-
-
Investments in subsidiaries
26
-
-
5,558
5,539
Investments in associated undertakings and joint ventures
26
1,023
630
-
-
Property and equipment
28
728
890
1
0
Intangible assets
27
312
267
0
0
Tax receivables
38
145
160
12
20
Deferred tax assets
39
5,974
6,070
-
-
Other assets
31
3,427
3,453
44
26
Assets held for sale
30
406
435
-
-
Assets from discontinued operations
14
-
114
-
-
TOTAL ASSETS
75,661
79,789
6,457
6,428
LIABILITIES
Due to banks
32
6,922
14,865
-
-
Due to customers
33
58,372
55,442
0
0
Derivative financial instruments
21
656
393
-
-
Debt securities in issue
34
849
971
-
-
Other borrowed funds
35
937
935
936
934
Current income tax liabilities
7
5
-
-
Deferred tax liabilities
39
10
10
0
1
Retirement and termination benefit obligations
40
55
75
0
0
Provisions
37
123
136
0
0
Liabilities held for sale
2
3
-
-
Other liabilities
36
1,147
1,124
55
54
Liabilities from discontinued operations
14
-
28
-
-
TOTAL LIABILITIES
69,080
73,987
992
989
EQUITY
Share capital
43
1,163
1,188
1,163
1,188
Share premium
43
3,555
18,112
3,555
18,112
Οther equity instruments
600
600
600
600
Less: Treasury shares
43
(0)
(2)
-
-
Other reserves and retained earnings
44
1,235
(14,110)
147
(14,460)
Capital and reserves attributable to the equity holders of the parent
6,553
5,788
5,465
5,439
Non controlling interest
28
15
-
-
TOTAL EQUITY
6,581
5,803
5,465
5,439
TOTAL LIABILITIES AND EQUITY
75,661
79,789
6,457
6,428
Piraeus Financial Holdings Group
– 31 December 2022
124
The notes on pages 127
to
350 form an integral
part of the
Financial
Statements
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
2,620
13,075
2,040
0
(1)
(59)
281
0
115
0
(10,980)
7,091
106
7,197
Reclassification due to change in the presentation of non-
taxed reserves (1)
0
0
0
0
0
0
0
0
0
351
(351)
0
0
0
Opening balance as at 1/1/2021 (as reclassified) (1)
2,620
13,075
2,040
0
(1)
(59)
281
0
115
351
(11,331)
7,091
106
7,197
Other comprehensive income/ (expense), net of tax
18
-
-
-
-
-
5
(137)
-
-
-
(0)
(132)
0
(132)
Loss, net of tax for the year
-
-
-
-
-
-
-
-
-
-
(3,014)
(3,014)
(1)
(3,014)
Total comprehensive income/ (expense) for the year
0
0
0
0
0
5
(137)
0
0
0
(3,014)
(3,146)
(1)
(3,147)
Conversion of Cocos into ordinary shares
2,366
-
(2,040)
-
-
-
-
-
-
-
(353)
(27)
-
(27)
Share capital increase, net of issue costs
1,200
101
-
-
-
-
-
-
-
-
-
1,301
-
1,301
Reduction of par value per share
(4,936)
4,936
-
-
-
-
-
-
-
-
-
-
-
0
Share capital decrease in kind
(63)
-
-
-
-
-
-
-
-
-
-
(63)
-
(63)
AT1 capital instrument, net of issue costs
-
-
-
600
-
-
-
-
-
-
(8)
592
-
592
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
-
(1)
-
-
0
Transfer of the accumulated reserve from equity securities
measured at FVTOCI to retained earnings upon disposal
-
-
-
-
-
-
-
-
-
-
62
62
-
62
Disposals and movements in participating interests
-
-
-
-
-
-
-
-
2
-
3
5
(90)
(86)
Balance as at 31/12/2021
1,188
18,112
0
600
(2)
(54)
144
0
118
351
(14,669)
5,787
15
5,803
Opening balance as at 1/1/2022
1,188
18,112
0
600
(2)
(54)
144
0
118
351
(14,669)
5,787
15
5,803
Other comprehensive income/(expense), net of tax
18
-
-
-
-
-
(9)
(106)
7
-
-
7
(101)
(0)
(101)
Profit/ (loss), net of tax for the year
-
-
-
-
-
-
-
-
-
-
949
949
(2)
948
Total comprehensive income/ (expense) for the year
0
0
0
0
0
(9)
(106)
7
0
0
956
849
(2)
847
Share capital decrease in kind
43
(25)
-
-
-
-
-
-
-
-
-
-
(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)
-
(53)
(Purchases)/ sales of treasury shares
-
-
-
-
1
-
-
-
-
-
0
1
-
1
Transfer between reserves and retained earnings
-
-
-
-
-
-
-
-
1
-
(1)
-
-
0
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)
14
8
Balance as at 31/12/2022
1,163
3,555
0
600
(0)
(63)
38
7
118
351
784
6,553
28
6,581
Piraeus Financial Holdings Group
– 31 December 2022
125
The notes on pages 127
to
350 form an integral
part of the
Financial
Statements
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
1,087
(2,697)
103
(3,046)
Adjustments to profit/ (loss) before income tax:
Add: provisions and impairment
544
4,189
(17)
3,129
Add: depreciation and amortisation charge
108
114
0
0
Add: retirement benefits and cost of voluntary exit scheme
12
62
29
0
1
Net (gain)/ losses from valuation of financial instruments measured at FVTPL
381
(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
71
35
69
77
Cash flows from operating activities before changes in operating assets and liabilities
1,742
1,359
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
403
(353)
-
0
Net (increase)/ decrease in financial assets mandatorily measured at FVTPL
12
(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
655
(171)
-
-
Net (increase)/ decrease in loans and advances to customers
(1,773)
(1,108)
(0)
(164)
Net (increase)/ decrease in reverse repos with customers
-
8
-
-
Net (increase)/ decrease in other assets
133
(159)
2
131
Net increase/ (decrease) in amounts due to banks
(8,016)
3,495
-
-
Net increase/ (decrease) in amounts due to customers
2,938
5,484
-
-
Net increase/ (decrease) in other liabilities
(92)
(69)
0
52
Net cash flow from operating activities before income tax payment
(6,893)
4,004
81
85
Income tax paid
(10)
(3)
-
-
Net cash inflow/ (outflow) from operating activities
(6,903)
4,001
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
20
11
-
-
Purchases of intangible assets
27
(71)
(48)
-
(0)
Proceeds from disposal of assets held for sale other than loans and advances to customers
300
-
-
-
Purchases of financial assets at FVTOCI
(2,001)
(4,471)
-
(0)
Proceeds from disposal of financial assets at FVTOCI
2,692
4,862
-
-
Acquisition of subsidiaries net of cash and cash equivalents
(102)
2
(19)
(1,717)
Subscription of AT 1 capital instrument
-
-
-
(595)
Proceeds from disposal of subsidiaries, net of cash and cash equivalents disposed
7
26
-
-
Acquisition, establishment and participation in share capital increases of associates and
joint ventures
(0)
(2)
-
(0)
Proceeds from disposal of associates
8
-
-
-
Dividends received
8
18
53
26
Net cash inflow/ (outflow) from investing activities
763
319
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
0
1,301
Proceeds from the issue of AT 1 capital instrument
-
592
-
592
Repayment of AT 1 capital instrument
(53)
(26)
(53)
(26)
Proceeds from issue of debt securities and other borrowed funds
346
498
-
-
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
26
9
-
-
Purchases of treasury shares
(25)
(10)
-
-
Repayments of lease liabilities
(26)
(33)
(0)
-
Net cash inflow/ (outflow) from financing activities
(292)
2,232
(119)
1,790
Effect of exchange rate changes
on cash and cash equivalents
(35)
13
(0)
(0)
Net increase/ (decrease) in cash and cash equivalents (Α)
(6,467)
6,565
(5)
(412)
Cash and cash equivalents at the beginning of the year (B)
15,868
9,303
50
462
Cash and cash equivalents at the end of the year (A) + (B)
46
9,401
15,868
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
Piraeus Financial Holdings S.A.
(hereinafter the “Company”), registered under
General Commercial Registry (“GEMI”) number
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.
The Company operates in the form of a Société Anonyme, in accordance with the provisions of Greek Law 4548/2018, as
currently in force, as well as the applicable regulatory framework on the operation of listed companies.
In
addition,
as
a
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”).
According to its codified articles of association, the Company’s business scope includes, inter alia, activities related to directly
and indirectly participating in domestic and/or foreign legal entities and other entities, undertakings and companies
established or to be established, of any form and purpose, undertaking or carrying on insurance intermediation and insurance
distribution activities on a retainer, pursuant to the provisions of Greek Law 4583/2018, as in force from time to time, for and
on behalf of one or several insurance undertakings (insurance agent), providing insurance advisory services to third parties and
to the subsidiaries of the Company, as well as researching, studying and analysing insurance related issues. The Company also
provides financial advisory services including planning, development, research, reorganization or resolution, assessment,
business strategy, acquisitions, sales, mergers and restructuring of companies, as well as advisory services on private insurance
issues.
The Company is incorporated and domiciled in Greece.
The address of its registered office is 4 Amerikis str., 105 64, Athens.
The duration of the Company lapses on 6 July 2099.
The Company and its subsidiaries (hereinafter the “Group”) provide
services in Southeastern and Western Europe.
As
of
31
December
2022,
the
headcount
of
the
Group
is
8,658
full
time
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
Financial Statements & Other Information | Piraeus Financial Holdings (piraeusholdings.gr)
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.
The amounts are stated
in
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
European Commission, PPS Report, Greece, Autumn 2022 institutional paper 191, November 2022
12
https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7150
Piraeus Financial Holdings Group
– 31 December 2022
132
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”.
The amendment updates
a reference
in IFRS 3 to the
Conceptual Framework
for Financial Reporting without changing the accounting
requirements for business combinations
.
Piraeus Financial Holdings Group
– 31 December 2022
133
IAS 16 (Amendment)
“Property,
Plant and
Equipment”.
The amendment
prohibits the
deduction from
the cost
of property,
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”.
The
amendment
specifies
which
costs
a
company includes when assessing whether a contract
is loss making.
Annual Improvements 2018-2020
IAS
1
(Annual
Improvement)
“Presentation
of
Financial
Statements”.
The
amendment
permits
a
subsidiary
that
applies
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 amendment clarifies which fees an entity includes when it applies
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”.
The amendment to Illustrative Example
13 accompanying IFRS 16 removes from
the
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”.
The amendment is
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.
Piraeus Financial Holdings Group
– 31 December 2022
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.
Piraeus Financial Holdings Group
– 31 December 2022
135
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).
The
carrying
amount
of
the
investment
is
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
Piraeus Financial Holdings Group
– 31 December 2022
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
Piraeus Financial Holdings Group
– 31 December 2022
137
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.
Piraeus Financial Holdings Group
– 31 December 2022
138
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
Piraeus Financial Holdings Group
– 31 December 2022
139
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
Piraeus Financial Holdings Group
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140
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;
Piraeus Financial Holdings Group
– 31 December 2022
141
•
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
Piraeus Financial Holdings Group
– 31 December 2022
142
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
Piraeus Financial Holdings Group
– 31 December 2022
144
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
Piraeus Financial Holdings Group
– 31 December 2022
145
•
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
Piraeus Financial Holdings Group
– 31 December 2022
146
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
Piraeus Financial Holdings Group
– 31 December 2022
147
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
Piraeus Financial Holdings Group
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148
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.
Piraeus Financial Holdings Group
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149
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.
Piraeus Financial Holdings Group
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150
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.
Piraeus Financial Holdings Group
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151
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
Piraeus Financial Holdings Group
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152
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
Piraeus Financial Holdings Group
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153
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
Piraeus Financial Holdings Group
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154
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
Piraeus Financial Holdings Group
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155
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
Piraeus Financial Holdings Group
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156
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):
The Group assesses whether a SICR has occurred since initial recognition of a
financial
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:
The Group segments exposures on the basis of similar
credit risk characteristics for the purposes of assessing both SICR and measuring ECL allowance on a collective basis. Exposures
Piraeus Financial Holdings Group
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157
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:
The Group
uses various
models in
estimating
the ECL
allowance. Judgement
is
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:
The Company assesses for impairment
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
Piraeus Financial Holdings Group
– 31 December 2022
158
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.
Significant increase in credit risk criteria: The Group did not relax any of the thresholds or assumptions of the model-based
staging outcome compared to the year ended 31 December 2021. The Group’s stage allocation model is based on a complete
set of quantitative and qualitative criteria and incorporates lifetime expectations on macro-environment and probabilities of
default. The aforementioned model structure captures expected changes in credit quality. As at 31 December 2021, the Group
considered additional SICR criteria based on probabilities of default, industry characteristics and pre-pandemic performance
in order to capture the remaining uncertainty derived from the Covid-19 pandemic. As of 31 December 2022, the
aforementioned criteria have been revised in order to include sectors vulnerable to high energy prices and inflation. The
aforementioned approach increased the gross balance scoped under lifetime ECL calculation by € 762 million.
Determination of macroeconomic factors, scenarios and scenario weights: To achieve the objective of measuring ECL, the
Group evaluates a range of possible outcomes in line with the requirements of IFRS 9, through the application of three (3)
macroeconomic scenarios i.e. base, pessimistic and optimistic, in a way that reflects an unbiased and probability weighted
outcome. Each of the aforementioned scenarios, is based on the Group’s dedicated macro-forecasting model and
Management’s assumptions for future economic conditions in the form of macroeconomic, market and other factors.
For the year ended 31 December 2022, the three aforementioned scenarios and related macroeconomic factors for the
collective loan assessment process were reviewed in light of the economic conditions that prevailed at that particular year.
According to the established pre-Covid-19 methodology, the fan-chart method was used to represent the evolution of both
forecasts and the uncertainty around future estimates. The central projection of the single most likely path -the Baseline
Scenario- is determined. Then, Optimistic and Pessimistic Scenarios are determined based on a degree of uncertainty and a
degree of asymmetry. The Pessimistic Scenario corresponds to the threshold partitioning the worst 20% of the outcomes from
the best 80% of the outcomes. The Baseline Scenario corresponds to the middle of the distribution, covering 60% of the
outcomes. The Optimistic Scenario corresponds to the threshold partitioning the top 20% of the outcomes from the remaining
80%.
As a consequence, the weight allocation between the three scenarios was shifted significantly compared to the year ended 31
December 2021. The Optimistic and Pessimistic scenarios were weighted with a 20% probability each (31 December 2021: 5%
each) while a 60% probability weight was assigned to the Base scenario (31 December 2021: 90%) to best reflect Management’s
current sentiment regarding the boundaries of economic outcomes. Refer to Note 4.2 for more details, including an analysis
of the sensitivity of the reported ECL to changes in estimated forward looking information.
The table below presents the expected annual average 4-year 2022-2025 forecasts for each key economic variable and scenario
utilized in the ECL calculation of the collectively assessed loans and advances to customers at amortised cost as at 31 December
2022
.
Piraeus Financial Holdings Group
– 31 December 2022
159
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:
Piraeus Financial Holdings Group
– 31 December 2022
160
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”):
Management evaluates
the recoverability
of the Group’s
and the Company’s
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
Piraeus Financial Holdings Group
– 31 December 2022
161
Greek State. Refer
to Note 16 for further information
.
Fair valuation
of real
estate
properties:
The fair
value of
real estate
property is
determined
by reference
to current
market
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
Piraeus Financial Holdings Group
– 31 December 2022
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:
Project Solar is a joint securitization with other Greek financial institutions under the Hellenic Asset Protection
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
Piraeus Financial Holdings Group
– 31 December 2022
163
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
Piraeus Financial Holdings Group
– 31 December 2022
164
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,
Piraeus Financial Holdings Group
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165
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;
Piraeus Financial Holdings Group
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166
-
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
Piraeus Financial Holdings Group
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167
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:
The Market
Scenarios Steering
Committee
reviews
and approves
scenario variables
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:
The Provisioning Committee is responsible for the approval of the quarterly ECL allowance estimates
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.),
Piraeus Financial Holdings Group
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168
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:
The
Risk
Models
Oversight
Committee
(“RMOC”)
is
chaired
by
the
CRO
and
is
mainly
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
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169
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
Piraeus Financial Holdings Group
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170
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.
Piraeus Financial Holdings Group
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171
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:
Piraeus Financial Holdings Group
– 31 December 2022
172
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:
Piraeus Financial Holdings Group
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173
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
Piraeus Financial Holdings Group
– 31 December 2022
174
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
Piraeus Financial Holdings Group
– 31 December 2022
175
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).
Piraeus Financial Holdings Group
– 31 December 2022
176
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
are used for the calculation of LGD.
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:
Piraeus Financial Holdings Group
– 31 December 2022
179
Where:
•
IFRS Outstanding Balance:
The gross carrying amount of the lending exposure
at the reporting date.
•
Present Value of
the Recoverable Amount:
Quantification of the recoverable
amount, based upon the present
value
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
180
•
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:
In exceptional cases, those
mainly denoting exposures of prominent
customers,
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:
Any
proceeds
anticipated
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
181
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.
Piraeus Financial Holdings Group
– 31 December 2022
182
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:
Defined as
the fraction
of the
total exposure
that the
Bank estimates
not to
be able
to recover
in the
case of
default. The LGD assumption depends
on the type of the issuer,
level of seniority and the presence of collateral.
•
EIR:
The yield to maturity of the instrument at the time
of acquisition.
•
EAD:
Defined
as
the
total
loss
that
the
Bank
may
incur,
from
a
potential
default
of
the
issuer
of
the
financial
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%)
2
8
10
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%)
4
11
14
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
Large Corporate
17,778
536
6
654
67
34
19,076
SMEs
6,776
1,221
267
772
132
147
9,313
Public Sector
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
Large Corporate
15,304
1,171
15
1,415
63
50
18,018
SMEs
5,353
1,684
432
1,799
217
247
9,732
Public Sector
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
Large Corporate
-
-
-
-
-
-
0
SMEs
-
-
-
-
-
-
0
Public Sector
-
-
-
-
-
-
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
Large Corporate
-
-
-
-
-
-
0
SMEs
-
-
-
-
-
-
0
Public Sector
-
-
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
Fair value of collateral and credit enhancements 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
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
Fair value of collateral and credit enhancements 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
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
-Residential
455
33
(29)
(4)
425
24
3
-Commercial
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
-Residential
431
46
(32)
3
399
32
5
-Commercial
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
(
www.properties4sale.gr
)
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
Related amounts not offset in the
Statement of
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
Related amounts not offset in the
Statement of
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
Related amounts not offset in the
Statement of
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
Related amounts not offset in the
Statement of
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
Total VaR
VaR
Interest Rate
Risk
VaR
Equity Risk
VaR
Foreign Exchange
Risk
VaR
Commodities Risk
Diversification
Effect
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
inputs comprise unadjusted quoted prices in active markets for identical assets and liabilities that the entity can access
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
inputs comprise
observable
inputs other
than Level
1 quoted
prices for
similar assets
or liabilities,
quoted
prices in
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
inputs refer
to
unobservable
inputs,
including
the entity’s
own data
which are
adjusted,
if necessary,
to
reflect
the
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
Represented as percentage of the subordinated notes’ nominal value.
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.
The
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
–
Includes
Mass,
Affluent,
Small
Businesses,
International
Business
Unit
(“IBU”)
and
Public
core
customer
segments, as well as Channels.
Corporate Banking
– Includes Large Corporates,
Shipping, Small and Medium Entities (“SME”) and
Agricultural Core customer
segments.
Piraeus Financial Markets (“PFM”)
– This segment includes the Fixed Income, Foreign
Exchange, Treasury
activities (including
the interest rate gap
management arising from all banking activities) and Institutional
Clients.
Other
– Includes
all management
related activities
not allocated
to specific
customer segments,
management of
real estate
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”)
– Includes the
management of
any NPE
assessed as
non-core business,
irrespectively of
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
14
.
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
item “negative
interest from
liabilities due to
ECB” comprises the
interest income
recognised from
the funding liabilities
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
Islands
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
Islands
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
Islands
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
(
Covered Bonds | Piraeus Financial Holdings (piraeusholdings.gr)
)
.
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.
Piraeus Bank S.A. and Piraeus Financial Holdings S.A. Private
Pension Plan
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
year of age
and death of
employee-parent or
to the employee-parent
in cases such as
departure from the
employer due
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
(amounts in thousand €)
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.
Athens, 16 March 2023
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
www.piraeusbankgroup.com