DDeep­poos­si­ittss sst­taar­rtt ttoo rri­is­see aag­gaai­inn

Financial Mirror (Cyprus) - - FRONT PAGE -

Pri­vate sec­tor de­posits rose 0.4% month on month in May, with bal­ances reach­ing 162.1 bln eu­ros, ac­cord­ing to the Bank of Greece (BoG).

The net flow re­mained pos­i­tive for the third straight month with in­flows slightly in­creas­ing to 548 mln eu­ros in May from re­vised 411 mln in April. The May flow is fully at­trib­uted to time in­flows of 749 mln, while sight and sav­ings posted mod­est out­flows of 81 and 52 mln re­spec­tively.

Fol­low­ing the May in­flows, time bal­ance sur­passed the 100-bln mark for the first time since Au­gust 2013.

Al­though May showed in­flows for the third suc­ces­sive month, the year to date net flow is still neg­a­tive with out­flows amount­ing to 1.28 bln, pri­mar­ily re­flect­ing the neg­a­tive flow of 2.39 bln recorded in Jan­uary. The ex­tended out­flows in Jan­uary were at­trib­uted to the pay­ment of in­creased tax obli­ga­tions of both house­holds and cor­po­rates.

The break­down of the 1.28 bln eu­ros in out­flows posted so far in 2014 largely re­flects neg­a­tive flow in sight and sav­ings of 1.38 and 1.67 bln re­spec­tively more than off­set­ting time in­flows of 1.78 bln.

Sav­ings showed per­sis­tent out­flows in each of the

five months so far this year on con­tin­ued ero­sion of house­holds’ dis­pos­able in­come. That said, the sav­ings’ out­flows have been con­tained be­low the 100-mln mark in the last two months.

In con­trast to pri­vate sec­tor de­posits, to­tal de­posits - which also in­clude euro and non-euro area res­i­dents - fell by 2.26 bln eu­ros m-o-m to 187.31 bln in May, fol­low­ing in­flows of 760 mln recorded in April. The neg­a­tive flow in May mainly re­flects gen­eral govern­ment out­flows of 2.6 bln, while non-euro area res­i­dents posted a neg­a­tive flow of 372 mln.

The de­posit evo­lu­tion over the last two year shows that the in­flows of 12.3 bln eu­ros that have been posted since July 2012 (af­ter the last gen­eral elec­tions) cor­re­spond to just a frac­tion (14%) of the huge out­flows of 89 bln that had been posted un­til then.

A re­cent BoG pub­li­ca­tion ti­tled “The Chron­i­cle of the Great Cri­sis” un­veiled that 27.7 bln eu­ros in with­drawals from the bank­ing sys­tem un­til June 2012 most likely re­late to cash Greek cit­i­zens chose to keep in bank vaults, safety boxes and in­side their houses fear­ing an exit of the coun­try from the eu­ro­zone.

Al­though Greek banks have ex­pe­ri­enced out­flows so far in 2014, their Eurosys­tem re­liance has sub­stan­tially dropped by 22.25 bln eu­ros in the year to date, of which 11.3 bln was posted in May.

The sharp drop is pri­mar­ily at­trib­uted to the re­place­ment of ECB fund­ing by in­ter­bank lend­ing and - to a lesser ex­tent - on­go­ing delever­ag­ing.

In ad­di­tion, Pi­raeus and NBG have pro­ceeded to se­nior un­se­cured bond is­sues of 500 and 750 mln eu­ros re­spec­tively in March-April.

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