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Friday, June 19, 2015, Ashar 5, 1422 BS, Ramadan 1, 1436 Hijr


Fears grow over Greek banks' health
Observer Online Desk
Published : Friday, 19 June, 2015,  Time : 6:46 PM,  View Count : 16
Fears are growing over the health of Greek banks after indications that savers have withdrawn billions of euros in the past week.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 (ECB) will hold a telephone conference later to discuss more emergency 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 (IMF).

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

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.

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.

Valdis Dombrovksis, European Commissioner for the euro, told BBC Radio 4's Today programme that there had been "a strong signal" from the Eurogroup to Greece "that it's [the] last moment to engage seriously in negotiations".

Responding to the reports of big cash withdrawals by Greek savers, he said: "It's very clear that one of the most urgent things Greece needs is financial stability."

'Quiet withdrawals'

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, says BBC Europe correspondent Chris Morris.

"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."

BBC World Service economics correspondent Andrew Walker said that depositors were "anxious that their accounts might be converted from euros to a restored national currency if bailout talks with European governments don't succeed".

Our correspondent says a member of the ECB's governing board was quoted as saying he could not be sure that Greek banks would open on Monday, but that this comment had been "selectively leaked by delegations from other countries".

"The rest of the eurozone has been trying to put pressure on the Greek government to strike a deal for months - and leaks like this suggest that the gloves have come off," he added.

'Prepared for the worst'


Ahead of a meeting of European finance ministers on Friday, UK Chancellor George Osborne said: "We have entered the eleventh hour of this Greek crisis, and we urge the Greek government to do a deal before it is too late.

"We hope for the best, but we now must be prepared for the worst."

But Greek Prime Minister Alexis Tsipras said on Friday that there would be a solution to Greece's debt crisis.

"The [eurozone] leaders summit on Monday is a positive development on the road toward a deal," Mr Tsipras said in a statement.

"All those who are betting on crisis and terror scenarios will be proven wrong."

He added: "There will be a solution based on respecting EU rules and democracy which would allow Greece to return to growth in the euro."

'Prepared for the worst'

Ahead of a meeting of European finance ministers on Friday, UK Chancellor George Osborne said: "We have entered the eleventh hour of this Greek crisis, and we urge the Greek government to do a deal before it is too late.

"We hope for the best, but we now must be prepared for the worst."

But Greek Prime Minister Alexis Tsipras said on Friday that there would be a solution to Greece's debt crisis.

"The [eurozone] leaders summit on Monday is a positive development on the road toward a deal," Mr Tsipras said in a statement.

"All those who are betting on crisis and terror scenarios will be proven wrong."

He added: "There will be a solution based on respecting EU rules and democracy which would allow Greece to return to growth in the euro."

Russia gas deal


Mr Tsipras was at an economic forum in St Petersburg in Russia on Friday with a delegation of ministers and business leaders.

At the forum, Greece and Russia signed a memorandum on extending the planned Turkish Stream gas pipeline to Europe through Greek territory.

Athens said funding would come from Russian state development bank VEB.

Greek Energy Minister Panagiotis Lafazanis said at the signing ceremony that Greece needed support and not pressure, and that co-operation with Russia was not aimed against other countries or Europe.

But Russia is ready to consider giving financial aid to Greece, the TASS news agency reported.

"We will support any solution on regulating the Greek debt crisis that is suggested by Greece and our European partners," the agency quoted Russian Deputy Prime Minister Arkady Dvorkovich as saying.

"The most important things for us are investment projects and trade with Greece. If financial support is required, we will consider this question."

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