Bank officials are not expecting a significant return of deposits as long as capital controls remain in place. The recent relaxation of controls, which allows the withdrawal and transfer of funds that have returned to the banking system, has improved sentiment and raised expectations of more money returning. However, banking sources say that until now the improvement can be attributed to seasonal factors, such as tourism, rather than money being pulled out from under mattresses. They say that the rise is marginal and that liquidity remains in short supply, with deposits at their lowest level in 13 years.
Deposits showed a new drop in the first half of 2016, despite the stabilization of the situation after the government signed a new bailout with creditors and the danger of Greece’s exiting the eurozone was reduced. According to Bank of Greece data, at the end of June private sector deposits (households and businesses) came to 122.74 billion euros, from 123.38 billion euros at the end of December 2015. It is encouraging that the picture improved in May, with deposits rising by 277 million euros, and in June, with an increase of 1.04 billion euros.
It is worth noting that deposits were at 160.29 billion euros in 2014, 163.25 billion in 2013, 161.45 billion in 2012, 174.23 billion in 2011, 209.6 billion in 2010 and 237.5 billion in 2009.
Banking sources say that – aside from tourism’s contribution – the improvement in the past two months can be attributed also to greater stability in the economy and the partial completion of creditors’ evaluation of the government’s efforts. Banks have also been offering new products in a bid to attract deposits. Further improvement depends on the timely completion of the second evaluation by creditors.
Another positive factor is the payment by the state of 1.1 billion euros of arrears to private individuals and companies in July. If the government completes another 15 actions needed for the first evaluation to be completed, then another 1.7 billion euros will be freed for the payment of arrears. This will bolster deposits and help the economy to get moving.
Kathimerini’s sources say that excluding “new” deposits from capital controls will lead to an increase of 3 billion euros in the banking system. They add, however, that for a real improvement, confidence must first return through growth and through the scrapping of capital controls.