National Bank, the country’s largest lender, has increased its holding in Greek government bonds by 1.8 billion euros since the beginning of November, it said yesterday. The bank’s investment in Greek government bonds totaled 18 billion euros, or 16 percent of total assets, it said in a statement. «During the recent period of high volatility in spreads, the bank protected its large investment position in Greek government bonds and supported the market in the belief that fears concerning the Greek economy, banks and government were excessive,» it said. «Later developments in the bond market and a sharp fall in bond spreads against the German Bund justified our choice.» Last Friday, premium investors’ demand to hold 10-year Greek government bonds rather than benchmark German Bunds hit a seven-month high of 217 basis points. It eased to 172 bps yesterday. The prospect of the withdrawl of abundant European Central Bank-provided liquidity, which has funded a spending spree on the periphery, has weighed particularly heavily on Greek bonds with concerns over the country’s fiscal situation coming back into focus. Speaking at a conference in Athens yesterday, Gikas Hardouvelis, an economist with Eurobank, said, «Greek banks’ reliance on ECB liquidity was overblown by the markets.» Greek banks have borrowed about 40 billion euros under the European Central Bank’s liquidity support measures.