Lenders saw their customers’ deposits shrink further last month, Bank of Greece data showed on Thursday, while the flight appears to be continuing this month. On the bright side, the European Central Bank gave the local credit sector a fresh liquidity cushion on Wednesday.
February drained Greek bank accounts of another 7.6 billion euros, taking the three-month decline since the end of November to 23.8 billion euros. Consequently, the Greek bank deposit balance stood at 140.47 billion euros at the end of February, the lowest since March 2005, putting great pressure on local lenders’ liquidity.
The European Central Bank slightly eased the pressure on Greek banks on Wednesday, allowing them more access to emergency liquidity assistance (ELA) via the Bank of Greece. The mechanism’s ceiling has been lifted by another 2 billion euros to reach up to 71 billion euros, with a view to a new revision next Wednesday.
However, Frankfurt again made it clear to Greek banks that the additional liquidity is not to be used for the purchase of Greek treasury bills, beyond the total amount of 15 billion euros that has already been met.
On Thursday ECB Governor Mario Draghi reiterated that Frankfurt will not purchase any Greek bonds in the context of its bond-buying program (QE). He stressed that this is not possible in the case of countries that are in eurozone and International Monetary Fund financing programs where there is an assessment pending.
Greek bonds in particular have two more obstacles, Draghi said: their low credit rating and the fact that the ECB cannot overstep the mark that would make it the country’s biggest creditor.
BoG data also showed on Thursday that credit contraction continued in February, at a 2.5 percent annual clip, although the net flow of corporate credit increased by 433 million euros from January 2015. Corporate loans declined by 2.3 percent year-on-year, mortgage loans contracted 3.1 percent and consumer loans dropped 2.8 percent.