Daniele Nouy, the chair of the European Central Bank’s Supervisory Board, said Greek banks are capable of surviving the current market turbulence.
“The Greek banks are facing a difficult situation right now because of the recent elections, but they are pretty strong,” she said in an interview with Bloomberg Television on Wednesday. “A lot of good work has been done to strengthen their balance sheets during the last years. They will go through this crisis like they went through the previous ones.”
Greek bonds and stocks slumped for a third day on concern the nation’s new government will backtrack on austerity, setting up a clash with European governments and creditors. In his first week in office, Prime Minister Alexis Tsipras stood by pledges to renegotiate the terms of Greece’s bailout and appointed ministers who said they’ll cease the sale of some state assets.
The sell-off this week eroded 44 percent of the value of Greek bank stocks, effectively wiping out the more than $11.5 billion in additional share sales the lenders concluded in 2014 to boost their balance sheets. Piraeus Bank SA and Alpha Bank AE plunged to fractions of their pre-crisis peaks.
Greek bank-deposit outflows last week accelerated to record levels amid concern about lenders’ liquidity and the outcome of the nation’s negotiations with creditors, according to a person familiar with the matter.
Withdrawals from Greek banks exceeded 14 billion euros ($15.9 billion) in the run-up to the snap elections that catapulted the anti-bailout Syriza party to power, including 11 billion euros that were taken out in January, the person said. Between Jan. 19 and Jan. 23, outflows were greater than in May 2012, when Greece was on the brink of exiting the euro area.
Greek banks are being closely monitored in light of a “situation that is not as exactly business as usual,” said Nouy. The country’s lenders “need to manage, in a conservative fashion, their liquidity positions,” she said.