Greek bank deposits fall slightly in July

Greek bank deposits dropped for the second straight month in July, a sign that their gradual increase since the middle of last year has run out of steam, central bank data showed on Wednesday.

Deposits of businesses and households fell 0.2 percent from the previous month to 162.39 billion euros ($217.50 billion) from 162.67 billion in June, according to the Bank of Greece.

Greek banks lost about a third of their deposit base, about 90 billion euros, after the country’s debt crisis erupted in late 2009, partly due to capital flight on fears of a euro zone exit.

More than 17 billion returned to the banking system after mid-June last year, when the election of a new government eased fears Athens would leave the single currency. This helped ease banks’ liquidity strains and their dependence on central bank funding.

But the inflows have dried up in recent months as austerity-hit households and businesses run down bank accounts to pay for higher taxes imposed as part of the country’s international bailout as incomes drop. [Reuters]