Greek crisis: ECB maintains emergency funding for Greek banks and imposes bigger haircut on Greek bank collateral

Jessica Morris
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The Eurozone has been drip-feeding credit to Greek banks (Source: Getty)

The European Central Bank (ECB) has imposed a bigger haircut on Greek banks making it harder for them to receive the emergency funding they need to stay afloat.

The governing council's move means Greek banks will have to cough up more assets in exchange for Emergency Liquidity Assistance (ELA), however a source told Reuters that the impact will be minimal.

"The governing council of the European Central Bank decided today to maintain the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on 26 June 2015 after discussing a proposal from the Bank of Greece," it said in a statement today.

"ELA can only be provided against sufficient collateral. The financial situation of the Hellenic Republic has an impact on Greek banks since the collateral they use in ELA relies to a significant extent on government-linked assets."

"In this context, the governing council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA."

The ECB also kept Emergency Funding Assistance (ELA) frozen for Greek banks at its 89bn (£63bn) level last hiked two weeks ago.

While the ECB didn't disclose what it had hiked the haircut to, reports from Bloomberg suggest the guarantee was raised to 45 per cent.

Last night Greece voted against accepting bailout conditions from the country's so-called "troika" of lenders in return for unblocking credit that it so desperately needs last night.

And while Greece's lenders have insisted they will not enter into further renegotiations, Prime Minister Alexis Tsipras has said that a "no" vote will put the Greeks in a stronger position.

Eurozone leaders and finance ministers are set to meet at a summit tomorrow where they will discuss their next move.

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