DDeeppoossiittss ssttaarrtt ttoo rriissee aaggaaiinn

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.