Len­ders lose some 8 per­cent of de­posits

Kathimerini English - - Business -

Greek banks have lost about 8 per­cent of their pri­vate sec­tor de­posits so far this year as cus­tomers wor­ried about Greece’s po­ten­tial debt de­fault trans­ferred funds abroad or bought gold, ac­cord­ing to Moody’s.

The rat­ings agency said in a re­port that about half of the de­cline in de­posits was also be­cause of the cash-burn ef­fect of Greece’s re­ces­sion, which caused in­di­vid­u­als and com­pa­nies to with­draw their sav­ings to com­pen­sate for their lower in­come.

But “con­fi­dence-sen­si­tive de­pos­i­tors con­cerned about lo­cal banks’ fi­nan­cial health have also been trans­fer­ring funds abroad and con­vert­ing their de­posits into gold coins, while oth­ers have been plac­ing their cash into bank safety-[de­posit] boxes,” Moody’s said, cit­ing re­cent me­dia re­ports.

Moody’s warned that Greek banks would face se­vere cash short­ages if out­flows in­crease to 35 per­cent of de­posits. It called the cur­rent level of out­flows “a key credit neg­a­tive” for the banks.

Out­flows ac­cel­er­ated in May and June be­cause of po­lit­i­cal ten­sions and un­cer­tain­ties re­gard­ing the com­mit­ment of Euro­pean authorities to keep fund­ing Greece, Moody’s said.

Mean­while, sources told Reuters that up to one in six Euro­pean banks is set to fail an EU-wide fi­nan­cial health check, with ca­su­al­ties ex­pected in Greece, Ger­many, Por­tu­gal and Spain.

Eu­ro­zone sources said the Euro­pean Bank­ing Au­thor­ity (EBA) is set to an­nounce within weeks that be­tween 10 and 15 of the 91 banks be­ing tested had failed the tests.

In the drive to en­sure the cred­i­bil­ity of the bank as­sess­ments, the EBA, which runs the tests and the Euro­pean Cen­tral Bank, which sets the macroe­co­nomic sce­nar­ios, are push­ing for a higher num­ber of banks to fail than last year’s seven. ”How many do we ex­pect to fail? I would say 10 to 15,” said one se­nior eu­ro­zone cen­tral bank­ing source.

The EBA wants the num­ber of banks that do not pass the tests to be around that level to show the ex­am­i­na­tions are se­ri­ous, adding that the au­thor­ity did not want to push for more, for fear it could spark panic and in­ten­sify the eu­ro­zone’s debt cri­sis.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.