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Greek debt: Fears grow over Greek banks’ health

Fears are growing over the health of Greek banks after indications that savers have withdrawn billions of euros in the past week.

Capital flight from beleaguered Greek banks this week alone could be more than €3bn (£2.1bn), reports say.

Savers are moving funds as time runs out to resolve Greece’s debt crisis.

It is understood the European Central Bank will hold a telephone conference later to agree on more emergency liquidity assistance for the banks.

The pace of withdrawals has gained speed as talks between the government and its creditors have collapsed.

Greece has less than two weeks remaining to strike a deal or face defaulting on a €1.6bn (£1.1bn) loan repayment due to the International Monetary Fund.

The country has already rolled a €300m payment into those due on 30 June.

If it fails to make the payment, it risks having to leave the eurozone and possibly also the EU.

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But the European Commission, the IMF and the ECB are unwilling to unlock bailout funds until Greece agrees to reforms.

They want Greece to implement a series of economic changes in areas such as pensions, VAT and on the budget surplus before releasing €7.2bn of funds, which have been delayed since February.

‘Too little’ progress

On Monday, an emergency summit of leaders from eurozone nations will be held after the latest attempt to resolve the Greek debt crisis failed.

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A meeting of eurozone finance ministers on Thursday made no breakthrough.

The head of the Eurogroup of finance ministers, Jeroen Dijsselbloem, said that “too little” progress had been made and that “no agreement as yet is in sight”.

Mr Dijsselbloem stressed that “very little time remains” for Greece.

The Reuters news agency said withdrawals by Greek savers between Monday and Thursday reached about €3bn, which represents about 2.2% of household and corporate deposits held by Greek banks at the end of April.

“There are no lines [queues] or panic, it has been a quiet and gradual phase of withdrawals,” one banker told Reuters. “They are due to worries whether a deal will be clinched with the country’s lenders.”

A fully fledged run on the banks could upset the plans of the Greek government and its creditors, said BBC Europe correspondent Chris Morris.

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“Will there be capital controls? In the end that’s not going to depend on British newspaper headlines, it’s going to depend on whether people in Greece vote with their feet,” he said.

“If the outflow of deposits from banks reaches alarming levels which no-one can really cope with then the decision is taken out of policymakers’ hands.”

Source:https://www.bbc.com

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