Local banks have drawn liquidity of more than 15 billion euros from foreign lenders through the interbank market in recent months, as, after a long period of exclusion, Greek credit institutions are gradually reverting to normal operation conditions.
Until recently it was only the European Central Bank (ECB) that offered cash flow to local lenders. However, now that the country risk has significantly eased, foreign banks are happy to revive transactions with their Greek peers, which use bonds from their portfolios as collateral.
The cash flow of local banks is further strengthening the trend for the return of deposits. Over the last 12 months some 20 billion euros of savings have returned to local banks. Greek lenders have reduced by 50 billion euros or 37 percent their liquidity dependence on the Eurosystem (emergency liquidity assistance of the Bank of Greece, or directly from the ECB).
With the completion of their share capital increase, domestic banks expect to be able to draw more liquidity from the interbank market by using the European Financial Stability Facility (EFSF) bonds they have received, amounting to 20 billion euros, for repos.