TWO of Greece’s biggest banks reported a shrinkage in their deposit bases yesterday as worried consumers continue to withdraw cash from the lenders.
Piraeus and National Bank of Greece (NBG) lost deposits in the first quarter of this year. Piraeus said its deposit base shrank by 24 per cent year-on-year to €20.9bn. At NBG, deposits fell by €2.3bn, with its loans-to-deposits ratio at 111 per cent.
NBG made a heavy loss in the first quarter and rival Piraeus also lost money as the country’s recession sapped clients’ ability to pay back loans and hit new business.
The banks are having to eat into their own profit margins by paying depositors higher interest rates to discourage them from withdrawing their funds, a tactic that squeezes the net interest income they earn.