By Yiannis Papadoyiannis

Deposits at Greek banks shrank in September on fears over the non-implementation of the July 21 eurozone summit agreement and increasing worries about the consequences of the fiscal crisis.

Bank of Greece data released on Tuesday showed that deposits in September declined by 5.46 billion euros from the month before.

At the end of September deposits amounted to 183.2 billion euros, against 188.66 billion at the end of August.

Tightening liquidity conditions have resulted in banks resorting to the emergency liquidity assistance (ELA) process, whereby the Bank of Greece secures cash flow to commercial lenders.

Central bank figures showed that the level of cash banks withdrew through the ELA process in September rose to over 20 billion euros, taking the total ELA disbursement to 26.56 billion at the end of September from 6.42 billion at the end of August. Sources suggest that all major commercial banks and a few smaller ones have boosted their liquidity levels with the scheme.

Bank officials told Kathimerini that the deposit outflow continued relentlessly in October, too, and intensified further in the last couple of weeks owing to the political instability created by Prime Minister George Papandreou’s referendum announcement and the open threats by European officials regarding the country’s prospects in the eurozone.

What is encouraging right now is that those pressures have eased with the announcement of the creation of a coalition government. The outflow continued on Monday and Tuesday, Kathimerini understands, but at a slower pace than last week. Banks are hoping that if the transitional government is formed without any further problems, the situation could revert to normal and deposit figures will stabilize.

Sources are even eyeing a rebound in deposits if the political situation improves and worries about the country’s place in the eurozone are put to rest. They note that in August, during the aftermath of the July 21 agreement, there was a 1.45-billion-euro increase in deposits on expectations created for a solution to Greece’s fiscal problems.