The cash shortage in the credit system, bank clients’ constant uncertainty, fears of a deposit haircut and the concern that one of the systemic banks may find itself out of money earlier than expected are exacerbating the problems of the banking system and the economy in general.
Bank officials are reiterating the need for an immediate agreement between Athens and its creditors, stressing that the problems are growing with every day that passes. They warn that unless the country’s future in Europe is confirmed, the entire Greek credit system may collapse.
Senior staff say that for now banks are facing a liquidity problem, and not one of solvency, due to the massive wave of withdrawals that led to the imposition of capital controls.
Monday’s meeting of the European Central Bank’s Governing Council regarding an extension in the emergency liquidity assistance, as desired by Athens, will be crucial for the local credit system’s short- and long-term prospects, but bank officials say there are three ways for lenders to deal with the situation if the problem evolves into one of solvency: recapitalization, liquidation, or streamlining through splitting the bank into good and bad parts, which a number of people consider to be the best option.