Greek banks are safe for now as deposit outflows grind to a halt

 
Chris Papadopoullos
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Greek finance minister Yanis Varoufakis’ deal with creditors has curbed deposit outflows (Source: Getty)
The worst may be over for Greek banks, with deposit flows looking to have halted at just over €20bn (£14bn).

“Based on discussions we had with Greek banks, it seems that deposit outflows have abated last week following the Eurogroup decision on 20 February,” Nondas Nicolaides, a senior credit officer at ratings agency Moody’s told City A.M.

On that date, Greece said it would comply with demands from its European creditors – the European Commission, International Monetary Fund and European Central Bank (ECB) – to access urgent funding.

ECB chief Mario Draghi yesterday implied that strong rhetoric from Greek officials had endangered the Greek banking system. “If there is in place a certain communication that creates volatility in the market, this destroys collateral and undermines the solvency of the Greek banking system,” Draghi said.

The collateral he is referring to is Greek government bonds which plummeted in value when it looked like Syriza might lead Greece to a debt default.

Draghi also said that the limit for the amount of emergency lending to Greek banks had been raised by €500m. This is lower than previous increases, suggesting Greek banks are in less trouble than before as they are demanding less assistance.

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