Deposit withdrawals from Greek lenders gathered pace in April, as a standoff between the country’s anti-austerity coalition and its creditors has renewed doubts about the country’s future in the euro area.
Deposits by households and businesses fell to to 133.7 billion euros ($146.7 billion) in April from 138.6 billion euros in March, a 3.6 percent monthly drop, and over €100 billion below the September 2009 peak, the Bank of Greece said today. The drop brings total outflows since the start of an election campaign which catapulted anti-bailout Syriza party to power, to 31 billion euros, or 18.8 percent of total deposits.
Private deposits fell to their lowest level since September 2004, amid concerns that the quarrel between the government and its lenders will lead to a re-denomination of savings to drachmas, or a bail in of depositors.
Greek lenders have lost access to capital markets as well as the European Central Bank’s regular financing operations, amid a standoff between the country’s government and its creditors over the terms attached to the current bailout. They rely on more than 80 billion euros of Emergency Liquidity Assistance extended by the Bank of Greece to plug the hole from deposit withdrawals and stay afloat, a more expensive source of funding, while they are forced to participate in liquidity-draining auctions of government treasury bills.