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The Greek Bank Run Spreads To All Four Largest Banks
Zero Hedge
While moments ago Greece was downgraded by that paragon of analytical and timing virtue, Fitch, to a negative outlook from stable, that is largely meaningless for a nation, devoid of tax revenues and increasingly deposits, which is suddenly imploding at an ever-faster motion.
What is relevant is that following yesterday’s report that two Greek banks had suffered sufficiently material deposit withdrawals to force them to apply for the unpopular and highly stigmatizing Emergency Liquidity Assistance program with the ECB, now the other two of Greece’s largest banks have also succumbed to reserve depletion after the Greek bank run appears to have gone viral. As Greek Capital.gr reports, now all four Greek banks have requested ELA assistance from the same ECB president who earlier today is said to have unceremoniously kicked out Greece from the ECB’s QE program.
As a reminder, this is what we learned yesterday via Kathimerini:
Two Greek systemic banks reportedly submitted the first requests to the Bank of Greece for cash via the emergency liquidity assistance (ELA) system on Thursday, in response to the pressing liquidity conditions resulting from the growing outflow of deposits as well as the acquisition of treasury bills forced onto them by the state.
Banks usually resort to ELA when they face a cash crunch and do not have adequate collateral to draw liquidity from the European Central Bank, their main funding tool. ELA is particularly costly as it carries an interest rate of 1.55 percent, against just 0.05 percent for ECB funding.
The requests by the two lenders will be discussed by the ECB next Wednesday.
And now this, from Capital.gr, google translated:
All four banks in request precautionary ELA
People at the Bank of Greece confirmed that it has submitted a request from the four banks to provide liquidity through the ELA and the Bank of Greece, in the prescribed procedure, has informed the European Central Bank. Not specified amount of requests.
To the question of why Capital.gr requested liquidity through “national” ELA and not by the ECB, despite what has been interrupted and remains active financing from Frankfurt, no details were given. Note that all four Greek systemic banks open until February 28 the ECB funding to guarantee Greek government securities.
