Aug 20, 2010
The European Commission has approved the next €9bn (£7.4bn) tranche of loans for Greece but the underlying economy continues to deteriorate as Greek banks suffer a record loss of deposits and output contracts at a quickening pace.
A report by HSBC said banks had lost 8pc of their entire deposit base in the five months to May. “The Greek market has never, since the first data in 2001, experienced such attrition,” said banking analyst Joanna Telioudi.
While some withdrawals point to capital flight by wealthy Greeks, it is clear that households and companies are running down savings to make ends meet. The Athens Chamber of Commerce warned yesterday that its members are in “dire straits”, with a majority facing a liquidity threat.
Simon Ward from Henderson Global Investors said Greek lenders are covering their funding gap through loans from the European Central Bank (ECB), which reached a record €96bn in July. “The question is how much eligible collateral they have left to take to the ECB. It must be nearing the limits,” he said.
This article was posted: Friday, August 20, 2010 at 3:48 am