TURNED down for a 10,000- euro (US$11,100) loan, George Sarris is one of hundreds of thousands of small business owners shunned by Greek banks.

    Pointing to the parliament building overlooking his small cafe in Athens’ Syntagma Square, the 35-year-old blames Greece’s turbulent politics for the troubles of its banking system.

    “It took three years for the country to come close to turning around,” said Sarris, referring to modest economic growth in the second half of 2014, which has since halted.

    “After the Jan. 25 elections it all went downhill. Now things are bleak. For me, there is no salvation here.”

    This is the background against which Greeks head to the polls again Sept. 20, the country’s fifth elections since its debt crisis started in 2009. The snap poll was triggered by the resignation of Prime Minister Alexis Tsipras, whose agreement to an 86-billion-euro bailout cost him the parliamentary majority of his coalition government.

    Six months of wrangling with creditors had led to a 40-billion-euro deposit run, culminating in Greek banks being shut and capital controls enforced at the end of June.

    Greek banks were badly wounded and limited the little lending they did even further, fearful about their exposure to loans many borrowers may never be able to pay back.

    This fear of a rise in so-called nonperforming loans (NPLs) is a deterrent not only to the banks, but also to potential investors whose money is needed to recapitalize them.

    While banks have reopened and capital controls have somewhat eased, small business owners such as Sarris, who account for about 75 percent of private sector jobs, are starved of credit.

    “All our suppliers have stopped accepting credit. Everyone is short on cash. I still pay salaries, but I’m behind on my taxes. My business is down 35 percent this year and I don’t want to lose more customers,” said Sarris.

    The immediate outlook for Greece is equally bleak.

    Along with its lenders, Athens expects gross domestic product to contract 2.3 percent this year and another 1.3 percent next year before the economy bounces back. These projections are in the ECB’s baseline scenario in a health check of Greek banks, a banker with knowledge of the matter said.

    The deal struck by Tsipras includes a recapitalization of the banks. However, interviews with some of the sector’s top executives, as well as international investors, suggest this will not be sufficient on its own to kick start lending.

    “The economy’s return to growth and its funding from the banking system will be affected by a number of factors, including political stability, the implementation of bailout reforms, a successful conclusion of the first review in October and the completion of banks’ recapitalization with private investor participation,” Fokion Karavias, chief executive of Eurobank, one of Greece’s top four banks, said.

    (SD-Agencies)