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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (62595)	4/8/2010 6:23:12 AM
From: elmatador	Respond to of 217573

Greece’s four largest banks are seeking government support to help counter a liquidity squeeze resulting from a significant flight of deposits in the first two months of the year. Capital flight squeezes Greek banks By Kerin Hope in Athens Published: April 7 2010 18:37 \| Last updated: April 7 2010 18:37 Greece’s four largest banks are seeking government support to help counter a liquidity squeeze resulting from a significant flight of deposits in the first two months of the year. George Papaconstantinou, finance minister, said on Wednesday that the banks “have asked for access to the remaining funds of the support plan” – a €28bn ($37bn, £24.5bn) government package that was put together during the 2008 global credit crunch. EDITOR’S CHOICE Short View: Greek contagion - Apr-07Lex: Greece - Apr-07Comment: Why rescue isn’t going to plan - Apr-07Europe urged to focus on real economy - Apr-07In depth: Greek debt crisis - Mar-28Eurozone recovery stalled at end of last year - Apr-07The banks’ request, which came as spreads on 10-year Greek bonds remained at record levels for a second day, flagged up concerns about the growing impact of the country’s debt crisis on the financial sector. Local savers transferred about €10bn of deposits – equal to about 4.5 per cent of the total in the banking system – out of Greece in the first two months of the year, according to the central bank. The transfers reflected “anxiety among wealthy Greeks about keeping assets here, given the increasing uncertainty”, said an Athens-based private banker. Many savers had chosen to move funds to their banks’ subsidiaries outside Greece, including Cyprus and Luxembourg, rather than switch to foreign institutions. Others had transferred funds to local subsidiaries of foreign banks, the banker added. “We would expect these funds to return swiftly once the crisis is resolved,” he said. Several bankers dismissed rumours of savers withdrawing large-denomination notes such as €200 and €500 to put in safe-deposit boxes or hold in cash as “mattress money”. Greece’s four biggest lenders – National Bank of Greece, EFG Eurobank, Alpha Bank and Piraeus Bank – have asked for access to about €14bn in loan guarantees and €3bn of special bonds that could be used as collateral to borrow from the European Central Bank. Because of high fees and administrative hurdles to disbursement, the funds had been left untapped while Greek banks were still able to raise money on international markets, one banker said. Greek banks have increased their dependence on the ECB for funding after losing access to the international “repo” and wholesale markets because Greek sovereign bonds are seen as too risky to be accepted as collateral. “The market has closed to Greek borrowers, even for very short-term ‘repos’ of a couple of weeks,” said a senior Greek banker. Greek banks’ funding from the ECB, which still accepts the country’s bonds as collateral, jumped from €40bn to €65bn in the first quarter, according to IOBE, an Athens think-tank. Moody’s, the ratings agency, last week downgraded all four banks by one notch, saying Greece’s deteriorating economic outlook would “place additional pressure on the sector’s already weakened assets and profitability”. All four lenders reported a 30-40 per cent fall in 2009 full-year profits as Greece moved into recession and lending by subsidiaries in south-east Europe declined. Share prices of Greek banks on the Athens stock exchange fell by 4 per cent on Wednesday, on top of a 3 per cent decline on Tuesday. The decline was triggered by news that the banks had resorted to applying for the remainder of the state package, analysts said.