Greek deposit outflows have accelerated before this weekend’s elections, two bankers familiar with the situation said, on concern the nation may move closer to abandoning the euro.
Daily withdrawals have increased to the upper end of a 100 million-euro ($125 million) to 500 million-euro range this month, one banker said, asking not to be identified because the figures aren’t public. A second banker said the drawdown may have exceeded 700 million euros yesterday. An official for the Bank of Greece, the Athens-based central bank, declined to comment.
Greek banks are under strain after individuals and companies withdrew about 72 billion euros since the nation triggered a region-wide sovereign-debt crisis in October 2009. While lenders have access to European Central Bank funding, an exit from the euro would cut them off. Depositors are seeking to preserve their cash on concern Greece may adopt a new currency that would immediately drop in value.
Outflows “could accelerate the sequence of events leading to the emergence of a new currency,” said Thomas Costerg, an economist at Standard Chartered Bank in London, said by e-mail. Still, “Greek banks can tap the abundant central bank funding, which can offset the pressure coming from deposit flight.”
Deposit outflows jumped in the days following the May 6 election after parties opposing the bailout by the European Union and the International Monetary Fund won most of the votes, raising doubts about Greece’s future in the euro. They couldn’t form a government and new elections will be held June 17.
Deposit withdrawals slowed as last month drew to a close, National Bank of Greece SA Chief Executive Officer Apostolos Tamvakakis said on May 30.
At 500 million euros a day, deposit outflows would probably exceed the previous monthly peaks since the outset of the crisis, and wouldn’t be sustainable if they continued over several months, according to one person.
Deposits rose in April to about 160 billion euros, the most recent figures available from the central bank show. Outflows reached as much as 6 billion euros in May, Athens-based Kathimerini reported June 9, without saying where it got the information. Withdrawals in May weren’t on track to surpass previous monthly peaks, people familiar with the matter said on May 23.
Alexis Tsipras, head of Greece’s biggest anti-bailout party Syriza, said yesterday a rapid recapitalization of the country’s banking system, which will give the state voting rights in the banks, will aid in restoring normalcy to the financial system.
He said goals of his government would include getting what Greeks have withdrawn from banks to be returned and asking for a European-wide guarantee on deposits.