Piraeus Bank resorts to BoG funding

Piraeus Bank was forced on Wednesday to make use of emergency funding from the Bank of Greece after running out of eligible collateral that allowed it to access cheaper European Central Bank funds.

“We have accessed the ELA mechanism in the third quarter,» a Piraeus Bank official said, after the bank reported a first-half after-tax loss of 820 million euros.

“It gives us more room to move, more flexibility. It?s more expensive than ECB borrowing. The cost is about 3.5 percent versus 1.5 percent at the ECB,» he added.

Emergency liquidity assistance (ELA) constitutes loans by the national central bank to illiquid but solvent banks.