ECONOMY

Deposits slid in January after December blip

deposits-slid-in-january-after-december-blip

December’s 2.5-billion-euro monthly rise in Greek bank deposits proved to be no more than a blip, as almost half of that money that entered the system then went on to leave it in January. In total deposits have risen by just 1.4 billion euros since the capital controls were introduced in late June.

Bank of Greece data showed on Thursday that deposits declined from 123.4 billion euros in December 2015 to 122.2 billion euros in January 2016, while the year has also started on a negative footing regarding household and corporate borrowing.

The credit contraction strengthened from 2 percent in December to 2.1 percent in January, as the 210-million-euro positive net flow of funding in December was followed by a 512-million-euro negative flow in January, showing that loan issues trailed loan repayments last month.

Corporations in particular saw funding conditions worsen significantly as the corporate credit contraction deteriorated from 0.9 percent in December to 1.4 percent in January. Total debts to banks amounted to 203.5 billion euros, of which 94.1 billion concerned household debts and 13.4 billion the arrears of self-employed professionals.

The decline in deposits is due to the major drop in the corporate account balance: While household savings grew by 161.1 million euros on a monthly basis in January, corporate deposits posted a fall of 1.1 billion euros. Market sources attribute the fall in companies’ deposits to their practice of boosting cash reserves at the end of the year before withdrawing the cash again in January.