Cyprus Mail

Greek bank closures may deplete supermarket shelves

By Martinne Geller and Lefteris Karagiannopoulos

A halt to international payments from Greek bank accounts is hurting Greek businesses and their foreign partners and threatening supplies of vital goods like food and clothing into the debt-crippled country.

With banks closed, people limited to withdrawing 60 euros ($66.62) per day and Greece’s future in the euro possibly hinging on a referendum on Sunday, Greek shoppers have been stocking up on essentials like sugar, flour, pasta, rice, beans, canned and paper goods.

Shelves remain full for now as retailers have inventories in storage. But capital controls put in place after Greece defaulted on a loan to international creditors have essentially frozen companies’ cash flows and credit.

This has severely hampered production and shipping, meaning that goods are in finite supply. With this week’s rush to supermarkets, shortages could be around the corner although budget limits are providing some cushion.

“At this stage there is no problem of shortages. There is sufficient stock in our warehouses and we renew it frequently,” said Melina Varoutsikou, spokeswoman for Sklavenitis, one of Greece’s largest supermarket chains.

“However, nobody knows how much these can last. It all depends on which product we are talking about.”

With no international bank transfers, imports and exports have been clobbered, according to SEV-Hellenic Federation of Enterprises, meaning there are fewer raw materials, even for local production, and less petrol available for deliveries.

The Greek finance ministry said on Friday that companies wishing to process bank transfers abroad to pay suppliers must submit a request to the Committee of Approval of Bank Transfers through their commercial bank.

The ministry said companies can get further information by going to their home branch or calling their bank’s central number. But for quicker processing, the ministry recommended faxing the requests. It made no mention of e-mail, the medium often used for international business.

Meanwhile, sellers of perishable items like fresh fruit and vegetables stand to realize losses as shipments are stalled.

“The food and beverage industry suffers heavily,” said George Xirogiannis, director of industrial and sectoral policies for SEV, a trade group involved in lobbying the government to reconsider its position on cross-border transactions.

“Cash flow problems are spread throughout the economy, regardless of the size of the enterprise.”

Large multinationals such as Nestle, Procter & Gamble, L’Oreal and Coca-Cola operate in Greece and could see a sales hit, since wholesalers that lack online banking facilities or international accounts have been unable to execute any payments abroad.

“Payment transactions have been severely affected,” said an official from an international consumer goods company who spoke on condition of anonymity.


Over the past five years the retail market in Greece has shrunk by nearly a quarter to about $29.7 billion this year, according to estimates from market research firm Euromonitor International, as its austerity-hit population of 11 million has cut back on everything from groceries to clothes to appliances. The less essential the product, the deeper the drop.

“Unnecessary items saw a dramatic decline already. With what’s happening now we expect the decline to be even deeper,” said Euromonitor analyst Dimitrios Dimakakos, based in London.

He noted however that retailers in Greece were reporting sharp increases in sales, versus a year ago, of staple items in the days since Prime Minister Alexis Tsipras announced a referendum on the country’s bailout.

With Tsipras’s leftist Syriza party having come to power in January, multinational companies have had months to plan for various scenarios and to consider options such as sending Greek profits to neighbouring countries to ease payments to suppliers, or by raising money from physical assets in Greece.

“They have done all the scenarios. They are ready to face the crisis,” said Spyros Christodoulatos, managing partner of consulting firm CS Compass, adding that the Greek business community remained on edge ahead of Sunday’s referendum.

Yet Yannis Perrotis, managing director of Atria Property Services, a Greek affiliate of CBRE Group that offers real estate consulting services to investors and developers, said some Greek subsidiaries of international companies had stopped getting supplies from parent companies.

“It’s a really peculiar situation, like a patient whose oxygen level is going down by the day and the heart will stop at some point as the systems stop functioning,” Perrotis said.

The head of one of Greece’s largest wholesale clothing importers said that since the capital controls were announced, the market has been frozen, with suppliers demanding different forms of security on orders, probably cash.

Credit insurers are reconsidering offering coverage to companies carrying out trade with Greece, according to the executive, who declined to be identified by name.

“Last season, when things started looking up for the first time since 2009, they were willing to provide Greek companies in our sector with a certain credit limit. They are now having second thoughts,” he said.

“The good scenario is that there is going to be a drop in consumption in our markets, so we try to be proactive and bring less goods inside the country.”


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