Credit Agricole SA, the foreign bank with the biggest risks in Greece, reached an accord with Greek authorities that will let its unit in the country access emergency funding should the need arise, two people with knowledge of the matter said.
Emporiki Bank, the Greek unit of Credit Agricole, will be able to tap so-called emergency liquidity assistance (ELA) from Greece?s central bank under certain conditions, the people said, declining to be identified because the matter is private. Access will probably be restricted to situations where deposits are declining, the people said. Greek banks without a foreign parent already use the facility.
?This takes away risk from the French parent company,? said Jerome Forneris, who helps manage $8.5 billion at Banque Martin Maurel in Marseille and owns shares in Credit Agricole. ?If there ever is a deposit run in Greece, the central bank would provide the funding necessary to keep the unit running.?
Credit Agricole is seeking to curb risks on Emporiki?s 22.9-billion-euro loan book amid escalating concern Greece will leave the euro area. Under ELA, the euro area?s 17 national central banks are able to provide emergency liquidity to banks that cannot put up collateral acceptable to the European Central Bank.
The risk is borne by the central bank in question, ensuring any losses stay within the country concerned and are not shared across all euro members, known as the Eurosystem. [Bloomberg]