Greece, ranked 115 – with a score of 34.5 in Q3 2012 – on ECR’s global rankings, making it by far the riskiest eurozone country, has been dragged into a new liquidity crisis.
Coca-Cola Hellenic, the sovereign’s largest quoted company, with a value of $7.6 billion, has quit the Athens Stock Exchange, citing the volatility of the Greek operating environment and the illiquidity of the Athens exchange, which has plummeted 90% since 2007.
ECR data show that Coca-Cola’s decision is unsurprising. Greece is by far the riskiest environment of domicile among Coca-Cola’s six anchor bottlers. Greece’s ECR score shows the country falls well below the average of 66.6 among the five other domiciles of Coca-Cola’s anchor bottlers: Coca-Cola Enterprises, US; Coca-Cola Amatil, Australia; Swire Coca-Cola, Hong Kong; Coca-Cola Japan; and Coca-Cola Femsa, Mexico.
Switzerland was chosen as the new domicile for the company because of its “stable economy and regulatory environment, and the ease of doing business there”, according to a statement from Coca-Cola Hellenic.
This difference is reflected in ECR’s data, which shows that Greece’s regulatory and policy indicator – a measure of the quality of the regulatory environment, and how well policy is informed and implemented – registers a 4.3 (maximum of 10) point difference to Switzerland’s regulatory indicator.
Greece’s inability to access capital is another main issue for large companies domiciled in the country. Greece scores a lowly 24 points (out of 100) in ECR’s access to capital metric, compared to Switzerland’s score of 93.
Thirdly, Greece’s high transfer risk reflects the heavy tax-burden and low government revenue inflicting the sovereign. Greece records the lowest government non-payments and non-repatriation indicator score among the six domiciles of Coca-Cola’s anchor bottlers, with a score of 4.1 (out of 10) in Q3 2012.
The indicator is used as a measure of the risk that government policies and actions pose to financial transfers. Therefore, transfer risk in Greece remains a considerable concern for ECR analysts and is a key factor in the decision by Coca-Cola to pull out of Greece.
This is reflected in a report by Standard & Poor’s, which this week lifted the warning on Fage Dairy Industry – another company to abandon the Athens stock market. It states, as reported in the Wall Street Journal: “The transfer of domicile reduced some of the risks associated with a possible exit of Greece from the eurozone and would likely ease the company's access to capital markets.”