- Teen OK after riding in wheel well of Hawaii jet
- Kraft recalls 96K pounds of Oscar Mayer hot dogs over cheese error
- Boy Scouts boots church as host after gay leadership dispute
- Sen. Elizabeth Warren’s new book raises 2016 presidential speculation
- America is an oligarchy, not a democracy or republic, university study finds
- Rep. Marsha Blackburn: Hillary Clinton won’t be first female president
- French president accuses Syria’s Assad of gassing his own citizens
- Jimmy Carter’s grandson makes gains in governor’s race in Georgia
- Yemen: Airstrike targets al Qaeda training camps
- Easter worshippers shocked as car rams church, injuring 21
Greek lenders see more depositors pulling cash
ATHENS, Greece — Greek banking officials say that depositors unnerved by political instability and talk of a potential exit from the euro are continuing to pull out their savings from local lenders, but not at a pace that would destabilize the battered banking sector.
Outflows spiked just after the inconclusive May 6 election, and have picked up in recent days ahead of Sunday’s new vote, one banking official said Wednesday.
He said the result so far is “not destabilizing,” although much will hinge on the election’s result. The vote is expected to be a close race between the pro-bailout conservatives and a radical left party vowing to scrap Greece’s commitments to pay off its debts via further austerity and economic reforms.
These pledges secured Athens two vital bailouts from its European partners and the International Monetary Fund, who have made it clear that the rescue loans keeping Greece solvent would stop if a new government reneges on the bailout deal.
That could cause such misery that Athens would be eventually forced to leave the 17-member eurozone, reverting to a deeply devalued version of its old drachma currency. The same might happen if the steady outflows of deposits seen over the past 2 1/2 years turns into a bank run, bleeding lenders dry and forcing the government to freeze remaining deposits.
Since the Greek debt crisis broke in late 2009, depositors have slowly pulled some $90 billion from local lenders, with total household and corporate deposits standing at almost $208 billion in April, according to the latest data from the Bank of Greece.
Some of that money was spent, much was redeposited or invested abroad, while a portion has also been hidden away in homes, despite the risk of burglary or accident.
“Most people prefer to place their deposits in bonds issued by other eurozone countries or in eurozone bank accounts,” said Theodore Krintas, managing director at Attica Wealth Management. “Behavior varies as each depositor reacts according to what they have heard from friends or family, and much less in an organized structured way — as the case should be - by diversifying in several countries.”
Other analysts say a lot of money came into the Greek banking system shortly before the crisis, creating a jump in deposits of around 15 percent when the economy was not so vibrant.
Deposit outflows eased in March and April, following Greece’s second international bailout and a massive write-down in its privately held debt, but resumed in May after the election results. In a few days after the May 6 ballot, some $1 billion was pulled out.
Another Greek banker, a senior official with a leading lender, said that his customers had not stepped up withdrawals in recent days ahead of the new vote.
“The outflows are continuing but they have not increased, compared with what happened after the May 6 elections,” he said. “There was an increase then, and since then the outflow is steady. We haven’t seen an explosion in recent days.”
Both Greek banking officials spoke on the condition of anonymity, due to the sensitive nature of the issue. The central bank and the finance ministry declined to comment.
Bank deposits tend to shrink during a recession, which Greece has been in for almost five years. But the outflows have been about a broader lack of confidence in the country’s banking system.
Local banks, while healthy when the crisis broke out, have since been hammered. In particular, they suffered massive losses from their participation in the government’s debt write-down. Greek banks were among the biggest holders of the government’s bonds.
TWT Video Picks
Women losing coverage under Obamacare, too
- Tactical advantage: Russian military shows off impressive new gear
- Former Ranger breaks silence on Pat Tillman death: I may have killed him
- Scalia to students on high taxes: At a certain point, 'perhaps you should revolt'
- USAID documents cite Hillary Clinton in chaos of Afghan aid
- Special Forces' suicide rates hit record levels casualties of 'hard combat'
- CURL: Shelly O first lady Michelle Obama comes in last
- Inside China: Marine's comment on islands draws sharp Chinese response
- Building a D.C. memorial for an endless war bumps into regulations
- Army goes to war with National Guard, seizes Apache attack helicopters
- No rush: Bob Goodlatte waits for heads to cool on heated legislation
Top 10 handguns in the U.S.