Tuesday

25th Sep 2018

Greek bank run fears grow, despite ECB lifeline

  • Money continues to flow out of Greek banks despite an ECB decision to increase its emergency lending programme. (Photo: ecb.int)

Deposits in Greek banks continue to tumble despite the European Central Bank increasing its financial life-support to the Greek banking sector by a further €1.1 billion on Wednesday (17 June).

The ECB’s emergency liquidity assistance (ELA) programme for Greek banks now totals €84.1 billion following a meeting of its governing council. The move comes just a week after the Governing Council decided to allow a €2.3 billion increase to the ELA ceiling for Greece, taking it to €83 billion.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

However, the increasing likelihood of talks between Greece and its creditors collapsing, resulting in a Greek default, is causing savers to withdraw their money at record levels.

According to the most recent figures from the ECB, Greek bank deposits fell by €27 billion over the first four months of 2015 and at €139.6 billion, are at their lowest level for a decade. An estimated €1.7 billion was withdrawn between Monday and Wednesday this week.

The ECB has repeatedly stressed that a solution to the Greek crisis will have to be thrashed out by politicians, but the Frankfurt-based bank would be one of the main losers from a Greek default and exit from the eurozone.

The ECB is owed €20 billion by the Greek government, although its real exposure is far higher. The bank has pumped in €118 billion into the Greek banking system, through the ELA programme and collateral based lending to the Greek central bank.

This figure is equivalent to around 66 percent of the Greek annual economy, and more than double the amount exposed at the end of 2014.

Greek lenders have become increasingly reliant on ELA as worried depositers continue to move money out of the country.

Speaking at a hearing in the European Parliament on Monday (15 June), ECB President Mario Draghi maintained that the bank would continue to lend to Greek banks despite the increasing possibility of a Greek default which would almost certainly prompt a bank run on the country’s banks, putting the ECB’s money in severe peril.

“ELA is being given to banks that are solvent and are in a position to offer collateral,” he said, adding that “the major Greek banks are solvent and the collateral they provide is adequate”.

“Of course, the situation is evolving..and we need to assess the general health…there is no set ceiling for ELA."

For his part, in an interview in Italian daily La Stampa on Thursday, Bundesbank president Jens Wiedmann stated that the ECB would have to end its ELA lending to Greek lenders if a political agreement with the country's creditors cannot be found.

"It is not the ECB's task to finance states, in fact it is forbidden," Wiedmann said.

Greek bank deposits hit decade low

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.

'Money time' for Greece

Fears the Greek banking system may collapse remain high as cash outflows continue ahead of emergency eurozone meetings on Monday.

News in Brief

  1. UN chief: World suffering from 'trust deficit disorder'
  2. Stalemate in Sweden as parliament ousts prime minister
  3. Migrant rescue ship heading to French port
  4. EU angry at British tabloids on Brexit
  5. UK to allow EU flights in no-deal Brexit
  6. Greek reporters arrested after story on 'mishandled' EU funds
  7. Austrian minister urges police to out foreign sex offenders
  8. ECB's Draghi set to clarify role in secretive G30 group

EU court delivers transparency blow on MEP expenses

The General Court of the European Union in Luxembourg argued that disclosure of how MEPs use their monthly €4,400 expenses allowance risks violating an MEP's data protection rights. Journalists behind the case will appeal.

Agenda

Brexit and MEPs expenses in the spotlight This WEEK

The EU will be watching closely how the political dynamics of Theresa May's Conservative party conference starting next week will influence Brexit negotiations. MEPs might also be forced to release their office expenses.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  2. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  3. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  4. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  5. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  6. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  7. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  8. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  9. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  10. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  11. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  12. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow

Latest News

  1. EU court delivers transparency blow on MEP expenses
  2. Russian with Malta passport in money-laundering probe
  3. Cyprus: Russia's EU weak link?
  4. Missing signature gaffe for Azerbaijan gas pipeline
  5. Every major city in Europe is getting warmer
  6. No chance of meeting EU renewable goals if infrastructure neglected
  7. Brexit and MEPs expenses in the spotlight This WEEK
  8. Wake-up call on European Day Against Islamophobia

Join EUobserver

Support quality EU news

Join us