Greek Bank Deposit Outflows Continue at Alarming Level

gise trapezasGreek depositors withdrew over 1 billion euros from their bank accounts in the last two days, bringing deposit outflows to the January high levels.

In January — month of snap elections — a total 12 billion euros were withdrawn from bank accounts in Greece. In February, outflows slowed down as the new government pledged to keep the country in the euro zone.

Banks estimate that since the start of the week, deposits have seen their balance shrink by another 2 billion euros and acknowledge that unless this trend is contained and reversed, they risk finding themselves in big trouble without a drastic intervention of the European Central Bank.

A senior banker said on Friday that the outflow of the last few days is also connected to the long weekend ahead and the fear of capital control in case negotiations between Greece and its lenders in today’s Eurogroup have an unfavorable outcome.

The bank official said that Greek depositors worry that the three-day weekend may be similar to the one in Cyprus in 2013, when Cypriots returned from a long weekend and found out that there was a withdrawal limit to their accounts. However, the situation in Cyprus was different because it was caused by the collapse of a bank.

Monday is a public holiday marking the start of the Greek Orthodox Lent season. The failure in negotiations between Greece and its European partners this Friday over the issue of the state debt generated fears of capital controls. The Greek government denies any plans for such controls.

However, bank officials remain concerned over an unexpected “liquidity accident.”


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