Moody’s calls fresh de­posit flight a credit neg­a­tive event

Kathimerini English - - Focus -

The re­duc­tion in Greek bank de­posits over the first cou­ple of months of this year con­sti­tutes a “credit neg­a­tive” event for lo­cal lenders, in­ter­na­tional rat­ing agency Moody’s said yes­ter­day.

Moody’s noted that Jan­uary’s 1.6bil­lion-euro de­cline, which con­tin­ued in Fe­bru­ary, is mainly due to the de­lay in the com­ple­tion of the bailout re­view that has dam­aged the con­fi­dence of de­pos­i­tors. De­pos­i­tors have grown par­tic­u­larly sen­si­tive to po­lit­i­cal devel­op­ments, the rat­ing agency added, point­ing out the ma­jor out­flow of de­posits in the first half of 2015 when the gov­ern­ment had also been locked in end­less ne­go­ti­a­tions with its cred­i­tors.

Moody’s went on to warn that if the drop in de­posits con­tin­ues it is pos­si­ble that the fund­ing of banks through the Bank of Greece’s emer­gency liq­uid­ity as­sis­tance (ELA) mech­a­nism will in­crease, rais­ing the cost of money for banks and eat­ing into their earn­ings.

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