Greek Banks' Liquidity Is Suffering As Nervous Clients Withdraw Savings
ATHENS—Greece's worsening slump is threatening to compound another risk for the country: the steady withdrawal of money from Greek banks.
In the last 20 months, the country's banks have suffered an unprecedented withdrawal of customer deposits. Tens of thousands of Greeks—from the well-heeled to the less well-off—have moved their savings out of the country or stashed the cash in safe-deposit boxes or under a mattress, bankers say.
The consequence for many Greek banks is a growing shortage of liquidity that is increasing their reliance on emergency funding from the European Central Bank and forcing them to further cut lending to businesses. That, in turn, is deepening Greece's recession, making it harder for the government to narrow its gaping budget deficit.
Speculation that the government might default on its debt, pushing the banking system into insolvency, is fueling such withdrawals. In addition, many Greek households, under financial pressure, simply need their cash reserves to make ends meet.
Economists say there are signs that bank deposits have stabilized in recent weeks, following the latest European bailout deal for Greece reached in July. But amid a worsening economic outlook, analysts say they doubt the calm will last.
Greek government officials warned on Friday that the struggling economy could contract more than 5% this year, rather than about 3.8%, as Greece's finance minister predicted on July 1. That gloomy outlook is likely to increase fears of national bankruptcy as well as personal financial pressures, economists say.
The flight of funds abroad reflect fears of a Greek banking collapse, says Yiannis Stournaras, director general of the Foundation for Economic and Industrial Research, an Athens think tank. Such fears are "unfounded," he says, because Greek banks are now under the protection of the ECB as well as the euro zone's bailout fund.
Still, he says, "the greatest part of the Greek banks' deposit outflows are due to the recession, as individuals and companies have run down deposits to finance their needs and pay down loans." Adds Mr. Stournaras, "A growing number of unemployed people have also used up their savings."
The outflow of deposits from Greek banks began in late 2009, soon after Greece's new Socialist administration revealed that the government budget deficit was far bigger than the departing conservatives had admitted. That triggered a crisis of investor confidence that has since spread to large swaths of the euro zone.
Deposits by households and businesses with Greek banks grew strongly in the years after Greece joined the euro in 2001, peaking at about €238 billion ($343 billion) in September 2009, according to figures from Greece's central bank. Fears of financial meltdown led to steady outflow throughout last year. By January 2011, private-sector deposits at the banks had fallen to €206 billion. By June, they were down to about €188 billion.
About a third of the funds withdrawn from banks have gone abroad, the Greek central bank estimates. One reason, analysts say, is fear of a crackdown on tax evasion, a chronic problem in Greece and one of the sources of the country's fiscal mess.
A number of Greeks have wired their money to banks in places such as Cyprus, Luxembourg, Switzerland and the U.K., said Platon Monokroussos, head of financial-markets research at Eurobank EFG, because of worries "that Greek authorities would require domestic banks to disclose depositors' information for tax-related purposes."
Finance Minister Evangelos Venizelos has made repeated appeals in recent weeks for wealthy Greeks and companies to repatriate the money they have sent abroad.
Deposits may have stabilized for the moment, economists say, as the July 21 bailout deal appears to have eased immediate fears of national bankruptcy.
Savers and businesses have become more confident about the stability of the banking system than they were earlier this summer, Mr. Monokroussos says.
But a "sustained reversal in the trend," he says, "would require a stabilization in domestic GDP growth and domestic credit."
Instead, the economy remains in free fall.
Concerns persist, however. Bankers and customers say banks have seen a surge in demand for safe-deposit boxes, as well as in people taking their savings home with them.
The latter trend has opened opportunities for thieves. Greek media have reported a number of instances of robberies, often targeting the elderly, who may prefer to hide their cash at home in times of trouble.
One unlucky saver who made the headlines recently:
A retiree from the island of Crete who, panicked by talk of a government default, (il nostro Amorgos...)withdrew his savings from his bank and hid the cash in the brick wall of his house for safekeeping. Several months later, he found that rats had gnawed their way through tens of thousands of euros, devouring most of his nest egg.
.....
......senza sapere poi come va a finire la storia
( prendo gli opportuni provvedimenti) ...non sono uscito dalla Grecia ...sto aumentando il nominale da 560k€ a 700/750k€ ....
