Tsipras feels deal still possible as banks bleed

ECB raises emergency funding cap for Greek banks Euro zone sets emergency meet on Monday

GREEKS pulled more than 1 billion euros out of their banks in a single day, banking sources said on Friday, as the country edged closer to default despite assurances from Prime Minister Alexis Tsipras that the doomsayers are wrong.

The Greek central bank – which has warned that the country's future in the euro and even the European Union is at risk unless the government strikes a deal with its creditors – tried to calm savers by saying that the banking system remained stable.

Germany, the biggest European contributor to the bailout programmes that have kept Greece afloat for the past five years, insisted it still wasn't too late for Athens to come to terms with its creditors at the EU and International Monetary Fund.

Greece is on course to default on a 1.6 billion euro debt repayment it must make to the IMF in less than two weeks unless the creditors resume funding that was halted last August.

Policymakers at the European Central Bank, which is keeping the Greek financial system on life support by providing emergency funds, agreed on Friday to raise the amount of cash it provides, a banking source said.

Including the billion withdrawn on Thursday, savers have pulled 3 billion euros ($3.4 billion) from Greek banks since talks between Athens and its creditors collapsed at the weekend, the banking sources told Reuters. That represents about 2.2% of household and corporate deposits at the end of April. The figures were provided on condition of anonymity as the statistics were not yet officially published.

Tsipras played down the gravity of the situation. “All those who are betting on crisis and terror scenarios will be proven wrong,” he said. "There will be a solution based on respecting EU rules and democracy which would allow Greece to return to growth in the euro."

Greek central bank chief Yannis Stournaras also tried to shore up confidence. “The governor of the Bank of Greece confirms the stability of the banking system, which is fully secured by the joint actions of the Bank of Greece and the European Central bank,” the bank said in a statement.

After euro zone finance ministers failed to settle the dispute on Thursday, government leaders of the currency bloc will try to break the stalemate at an emergency summit on Monday.

If Greece defaults at the end of this month, it will be the first euro zone member to do so.

Greek share prices rose after Tsipras's office issued the statement, in which he described the emergency summit as "a positive development on the road toward a deal".

Two officials with knowledge of the finance ministers' meeting in Luxembourg on Thursday said ECB executive board member Benoit Coeure had said he was unsure whether Greek banks would open next week.

European Commission President Jean-Claude Juncker said he feared the Greeks appeared to believe that "there is someone in Europe who can pull a rabbit out of the hat at the end. But this is not the case".