Tuesday, February 17, 2015

BREAKING Major New Bank Runs in Greece; More Emergency Funds Needed

Greek lenders are urging central bank Governor Yannis Stournaras to seek additional emergency cash as deposit outflows accelerate, according to three people familiar with the situation, Bloomberg reports.

Deposit withdrawals picked up after talks between Greece and its euro-area creditors on extending its bailout ended in acrimony in Brussels Monday night, said the people, who asked not to be identified because the information is private.

Stournaras meets European Central Bank Governing Council colleagues in Frankfurt tomorrow as Greek banks exhaust their current allocation of emergency funds, the three people said.

 Banks are being kept afloat through the Emergency Liquidity Assistance lifeline extended by the Bank of Greece, subject to approval by the ECB. The ELA pool, which currently stands at 65 billion euros ($74 billion), is extended to solvent lenders as a temporary measure to cover liquidity shortages.

Greek daily Kathimerini reported last week that deposit withdrawals in January and the beginning of February totaled 15 billion euros, indicating total deposits have dropped to 145 billion euros from 160 billion euros at the end of 2014.

The ECB will likely provide ELA to Greek banks as long as there is a chance of an agreement between Greece and its creditors to extend the current bailout, economists at Barclays Plc including Antonio Garcia Pascual and Thomas Harjes wrote in a client note after the meeting ended Monday, reports B.

This, of course, will provide more cover for the new Greek government to cut a deal with the banksters: "We did it to protect our banks and their depositors."


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