Athens: Greek bank deposits fell in December for the third straight month as savers stepped up withdrawals amid rising political tensions and the prospect of a stand-off with the country’s international creditors, and bankers expect the trend will have accelerated in January.
The deposit outflow reported on Thursday came as Greek financial markets have fallen sharply since last weekend’s election victory by Alexis Tsipras’s left-wing Syriza party, which has spooked investors by cancelling privatisation plans agreed under the country’s international bailout deal.
Corporate and household deposit balances in December fell 2.4 per cent month-on-month to 160.3 billion euros ($181 billion) from 164.3 billion euros in November, down for a third month in a row, according to the Bank of Greece, a higher figure than expected.
Bankers had estimated the decline at about 3 billion euros last month, partly attributing the drop to seasonal factors and tax payments.
Deposits are expected to show a steeper fall this month as the pace of outflows picked up ahead of the election on January 25.
Bankers estimate a further decline of about 8-9 billion euros, adding to a liquidity squeeze on the country’s lenders.
On Thursday, bank shares picked up after a 40 per cent plunge in the first three days following the election and were up by more than 12 per cent.
Morgan Stanley said in a client note that Greek bank shares had potentially reached a point of maximum bearishness and offered long-term value, although it said deposit behaviour remains a risk.
Fears that Greek banks could be shut out of European Central Bank funding if Athens clashes with its Eurozone partners and exits its aid programme have battered the sector.
The liquidity squeeze has forced banks to increase their borrowing from the European Central Bank by 25 per cent last month to 56 billion euros.
