Greek banks fall on concern of capital controls as aid talks end
Greek banks fell in Athens trading after talks among euro-area finance ministers on extending the nation’s bailout ended abruptly, raising concern lenders may need to introduce controls to avert capital flight.
The FTSE/Athex Banks Index fell as much as 9.6 percent at 10:53 a.m. in Athens, led by Piraeus Bank SA, which fell 9.3 percent, and National Bank of Greece SA, which dropped 6.7 percent.
Greece’s banks are relying for their liquidity on funds granted by the European Central Bank. Emergency Liquidity Assistance will be provided as long as there is a chance of an agreement, economists at Barclays Plc including Antonio Garcia Pascual and Thomas Harjes wrote to clients Monday, after the meeting ended.
If the ECB turns off ELA liquidity, the situation will probably precipitate the need to set up capital controls to avoid funds fleeing Greece, and Greek banks would probably have to introduce limits to cash withdrawals, the analysts wrote.
[Bloomberg]
