a medium - sized local bank. as i have already said, the contribution of south east europe, including turkey and romania, to the profitability of greek banks is expected to increase in the future. however, in order to achieve this they have to integrate their new acquisitions smoothly into their systems and culture ; this is by no means an easy task. we at the bank of greece make sure that banks that expand their activities abroad not only have enough capital but also have the organizational structure to support such an expansion. as many of you probably know any acquisition of a credit or financial institution abroad and any expansion of branch network has to be approved by the bank of greece after a thorough assessment of its capital base and its internal control and risk management system. this is not only a regulatory requirement but also a business necessity in order to accurately monitor risks and thus maintain their competitive position in what is a very sought after market.

prospects for continuing high profit rates encouraged the creation of numerous private banks especially in the period up to 2001 and was followed by a scramble for market shares both by new and old private banks. this resulted in a major card reshuffling of the financial system. whereas until the mid - 1990s one state controlled bank – the nbg – ( including its subsidiary the national mortgage bank ) had a market share of almost 50 % and, as such, was effectively the market maker, to - day its domestic market share is 23 %, closely followed by two private banks with a market share of 18 % each and two others with 10 % each. if we include subsidiaries and branches abroad the largest bank ’ s share – the nbg – is higher but it is still far below that of 10 - 12 years ago. the more even distribution of market shares does not leave much room for anti - competitive practices. i would like to note that not only there is a better distribution of market shares today but also, reflecting strong competition, the ranking has significantly changed : banks with a market share of 18 % today had less than 10 % in 1995 and a couple with double - digit markets shares in 1995 have now a single - digit market share. foreign financial institutions are also present, especially in the wholesale banking sector, and they constitute a challenge for the better. as in most european countries, the greek banking landscape can now be characterized as highly competitive. this is also underlined by the sometimes aggressive advertisements by individual banks trying to take away other banks ’ customers, by offering very advantageous loan terms, especially to those who regroup their dispersed accounts among different banks in one bank. in the very competitive international environment, and especially after joining the euro area with its unified money market, the small size of greek banks was an important handicap that banks themselves perceived as being a serious threat to their longer - run existence. effectively they thought that either they would be an easy prey for larger foreign banks or they would be unable to compete with the larger european banks, which had much lower operating costs. in 1998, among the first 100 eu banks, there was only one greek bank and it occupied the 78th place. a wave of mergers and acquisitions ( m & as ) started towards the end of the 1990s and is still continuing, and which was also aided by the privatization process. today, the greek banking system occupies a place in europe that corresponds to the size of the country with three greek banks being among the 100