Wednesday

11th Dec 2019

Greek bank deposits hit decade low

  • Greek banks saw a further €5.6 billion reduction in deposits, as panicked savers fear default or capital controls. (Photo: Queenofhearts820)

Deposits held by Greek banks have fallen to their lowest level in a decade, according to statistics released on Friday by the European Central Bank.

Total deposits from households and businesses in April stood at €139.4 billion, a €5.6 billion decline - equivalent to 3.9 percent - from March, the ECB reported. Deposits fell by €27 billion over the first four months of 2015, a rate of around €1.5 billion each week.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

Capital flight from Greek banks has been going on steadily since Greece’s first bailout package was agreed in 2010. At that time, banks held deposits totalling €220 billion.

The decision by panicked savers to withdraw their money from Greek lenders is the result of the difficult talks - now in the fifth month - between Greece’s left-wing government and its EU and IMF creditors on the remaining €7.2 billion of Greece’s bailout package.

Athens continues to argue that an agreement could be reached by Sunday (31 May), but their optimism has not been reciprocated by their creditors. On Thursday, the International Monetary Fund (IMF) insisted that a deal would require the Greek government to agree to a sizeable economic reform package and to budget surplus targets.

In an interview with a German newspaper on Thursday, IMF chief Christine Lagarde became the latest international figure to warn that a Greek exit from the eurozone was “a possibility". She also warned that a swift compromise deal on the bailout was “very unlikely”.

As a result, the prospect that Alexis Tsipras’ government will be forced to follow Cyprus and become the eurozone’s second country to impose capital controls, is becoming increasingly likely if the country is to avoid a string of its banks collapsing.

Cyprus announced the end of capital controls last month, just over two years after they were introduced in a bid to limit a run on its banks, following a messily agreed €10 billion bailout with the EU in March 2013. Initially, the government set restrictions on bank money transfers and withdrawals, including a daily cash withdrawal limit of €300.

Greece has to make a payment of €1.5 billion to the IMF on 5 June but has pledged that it will continue to honour its debt repayments.

In the absence of a bailout deal, Greece has become increasingly reliant on the ECB which has more than doubled its exposure to Greek debt from €50 billion to €104 billion since December, equivalent to almost two thirds of the country’s annual economic output.

The ECB’s board of directors decided on Wednesday to maintain its emergency liquidity assistance (ELA) scheme, under which Greek banks can borrow without posting collateral from the Greek central bank, at €80.2 billion.

Analysis

Greece's cash-flow crisis

The general view amongst commentators and analysts is that Greece needs an agreement with its creditors by mid-April to prevent a default.

ECB to tighten noose on Greek government

The European Central Bank is set to make it illegal for Greek lenders to increase their purchases of short-term government bonds in a move that will tighten the funding noose on the Greek government.

Greek bank deposits fall despite cash controls

Greek bank deposits fell by a further €1.4 billion in July, despite the introduction of strict capital controls preventing Greeks from withdrawing more than €420 per week.

Lenders to present last offer to Greece

Leaders from Germany, France, the EU and the International Monetary Fund met on Monday night in Berlin to prepare what could be a final offer for Greece.

News in Brief

  1. Czechs protest against PM Babis over EU subsidy 'fraud'
  2. EU disbursed €2.7bn for Turkey refugees
  3. UK ports set to host EU border checks for Northern Ireland
  4. EU puts tech giants in crosshairs
  5. Faroe Islands under pressure to chose Huawei
  6. Hungary asked to apologise after council leak
  7. MEPs: Finnish budget proposal 'impossible to implement'
  8. EP committee supports 'Future of EU Conference'

Exclusive

Zahradil 'conflict of interest' over EU-Vietnam trade deal

Right-wing Czech MEP Jan Zahradil is leading European Parliament negotiations on a trade deal with Vietnam. As rapporteur, he is supposed to be neutral but has neglected to declare his involvement in a group with ties to the Communist party.

Investigation

Data watchdog raps EU asylum body for snooping

The European Asylum Support Office combed through social media to monitor refugee routes to Europe for three years. The agency sent weekly reports on its findings to member states, the EU Commission and institutions such as UNHCR and Interpol.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Join EUobserver

Support quality EU news

Join us