Greek banks between a rock and a hard place
(28 July 2015 – Greece) Greek banks are likely to continue broad cash controls in the months ahead until fresh money arrives from Europe along with a sweeping restructuring, according to officials.
A third bailout deal for Greece is expected to be concluded in the coming weeks, however the longer it takes, the more critical Greek banks’ conditions become.
The country is in a bind when it comes to the banks – they need to limit cash withdrawals to €420 (A$633) a week, but this also means people will struggle to repay loans or get the country’s economy back on track.
"The banks are in deep freeze but the economy is getting weaker," one official told Reuters, pointing to a steady rise in loans that are not being repaid.
Greek officials, scared by a downward spiral in the economy, want an urgent release of funds for their banks.
Four big banks dominate Greece, including National Bank of Greece, Eurobank and Piraeus which all fell short in a European Central Bank (ECB) health check last year, when their restructuring plans were not taken into account.
"We want, if possible, an initial amount to be ready for the first needs of the banks," said one official at the Greek finance ministry, who spoke on condition of anonymity.
"That should be about 10 billion euros."
Others, including Germany, however, are lukewarm and could push for losses for large depositors with more than 100,000 euros on their accounts, or bondholders.
There are more than €20 billion of such deposits in Greece's four main banks, dwarfing the roughly €3 billion of bonds the banks have issued.
Imposing a loss, something the Greek government has repeatedly denied any planning for, would be controversial, not least because much of this money is held by small Greek companies rather than wealthy individuals.
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