De­posit out­flow reaches 4 bln

Banks wit­ness re­ver­sal of last year’s cli­mate, with con­cerns set to grow as long as bailout re­view drags on

Kathimerini English - - Focus - BY YIANNIS PAPADOYIANNIS

Greek banks have seen liq­uid­ity of about 4 bil­lion euros flow out of the lo­cal credit sys­tem since the start of the year.

The sum of house­hold, cor­po­rate and gen­eral gov­ern­ment sec­tor de­posits has dropped to 128 bil­lion euros from 132 bil­lion at the end of 2016, which has largely been blamed on the de­lays in the sec­ond bailout re- view and con­cerns that the econ­omy will be de­railed anew.

Se­nior bank of­fi­cials say that most of the funds that had re­turned to the bank­ing sys­tem last year have now been lost again. There is ad­di­tional con­cern over so-called “new money” that is not af­fected by the cap­i­tal con­trols and can eas­ily be re­moved from the lo­cal sys­tem. Bank sources es­ti­mate that the sys­tem has some 4 bil­lion euros of new money that could also flow out im­me­di­ately, which would lead to the need to raise the ceil­ing of the emer­gency liq­uid­ity as­sis­tance (ELA) of the Bank of Greece.

De­posits started to in­crease in May 2016 after the com­ple­tion of the first bailout re­view, and the in­flow strength­ened to­ward the end of the year when the im­pres­sion the sec­ond re­view would be com­pleted in De­cem­ber or by mid-Jan­uary was con­sol­i­dated.

House­hold and busi­ness de­posits rose by 4.2 bil­lion euros in 2016, while those of the gen­eral gov­ern­ment saw a 1.4-bil­lion-euro in­crease.

Although a large part of De­cem­ber’s growth was sea­sonal (agri­cul­tural sub­si­dies, end of cor­po­rate years, Christ­mas bonuses etc), and a cor­rec­tion was an­tic­i­pated in Jan­uary, the pic­ture be­came more dra­matic after the first cou­ple of weeks of the year, evok­ing mem­o­ries of 2015.

The ex­pec­ta­tions cre­ated in late 2016 for a swift con­clu­sion to the re­view proved er­ro­neous and the deep- 1.0737 en­ing con­cern that the gov­ern­ment may drag the talks on into the sum­mer, risking a new im­passe, has dra­mat­i­cally changed the pos­i­tive at­mos­phere gen­er­ated last year.

With­drawals from cash ma­chines have now in­creased con­sid­er­ably, fund re­turns have frozen, and cor­po­ra­tions are rid­ding them­selves of liq­uid­ity in their ac­counts and pay­ing off their credit lines, in the hope the worst-case sce­nario will not be re­al­ized.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.