The European Central Bank remains opposed to an increase in the exposure of domestic lenders to treasury bills, while its verdict tomorrow on the possible extension of the emergency liquidity assistance (ELA) mechanism for Greek banks is eagerly anticipated.
The deal between Athens and the eurozone has failed to ease depositor concerns as the uncertainty over Greece’s finincial problems remains and Moody’s has estimated that it will taken between 12 and 18 months for deposits withdrawn in the last quarter to return to Greek bank accounts.
In an interview with Bloomberg, Eurobank CEO Fokion Karavias said on Monday that “the ECB has asked us not to increase our exposure to T-bills. We can therefore refinance our portfolio and that is what we intend to do. What I am expecting to happen in [Wednesday’s] and the following T-bill issues is refinancing without an increase, unless there is a different line from the ECB and the Bank of Greece.”
Karavias added that the outflow of deposits has stopped but time is money: “It is important that since the Eurogroup decision on Greece we have seen a stabilization in deposits. Last week was in fact the first with a slight increase since December and we hope there are more such weeks. But, being realistic, there are still some challenges ahead and no one can underestimate them. The trend will depend on how quickly the government and our European partners proceed to a new agreement. Time is a crucial parameter, as the sooner we have concrete developments, the better it will be for the banking system and the economy in general.”
In its analysis Moody’s said that Greek banks continue to face high risks due to the liquidity situation. It added that it will proceed to a rating revision for National, Piraeus, Alpha, Eurobank and Attica Bank, with a negative outlook.