Bank deposits edge upward in June
Greek bank deposits rose in June for the second month in a row, data released by the country’s central bank showed yesterday. Business and household deposits rose by 1.04 billion euros, or 0.85 percent month-on-month to 122.74 billion euros, their lowest level since November 2003. They had edged up to 121.7 billion euros in May. Greek banks have seen only a trickle of deposit inflows in nearly a year after the country clinched a third international bailout to stay in the eurozone. They remain dependent on central bank borrowing to plug their funding gap. Greece’s banking sector saw a 42billion-euro deposit outflow from Decem- ber to July last year. Capital controls imposed on June 28, 2015, helped contain the flight but sharply increased banks’ dependence on emergency liquidity assistance (ELA) from the Bank of Greece. Last week Greece further eased capital restrictions after making headway on bailout-mandated reforms and improved confidence in its banking system. As part of the relaxation of controls, “mattress” cash that is returned to banks will not be subject to the restrictions, meaning amounts deposited can be fully withdrawn. Greece’s Deputy Finance Minister Giorgos Houliarakis told Parliament earlier this month that the government projects a 3-4 billion-euro capital injection into banks as a result of hoarded cash being redeposited.
Credit expansion. The net flow of credit rose 479 million euros in June, as corporate loans increased by 566 million, Bank of Greece figures showed yesterday. This was the first month in 2016 when new issues outvalued loan repayments. Bank officials attribute this change to the start of the tourism season.