The Monday of the political breakthrough in the Greek crisis brings little relaxation for the country’s banks. While the European Central Bank (ECB) extended the emergency loans, which the ailing banks are kept afloat for months. But keeps at the same time the pressure on Athens upright: The volume of aid loans, in technical jargon under the symbol ELA known remains frozen at almost 89 billion euros
. This is still a dither game, how long can even spend the ATMs in Greece banknotes. Again and again had the last ECB urged to loosen the limit introduced two weeks ago for the ELA loans bankers and politicians of the country. Instead, the ECB had the screws still further tightened last week and higher risk premiums for Greek securities imposed that are pledged as collateral for central bank loans.
Even after the agreement between Greece and the euro-zone countries and the International Monetary Fund (IMF), the central bank is ready now from only once. Only on Thursday will be discussed again on a possible increase in emergency loans, said people familiar with the discussions. The ECB wants to wait and see whether the Greek Parliament, required by Euro Summit preliminary reforms actually decides to Wednesday, thus paving the way for official negotiations on a third rescue program for the country.
In addition, still raises the question of whether the euro zone finance ministers can agree on a bridge financing to allow Greece a due next Monday bond 3, can repay EUR 5 billion to the ECB.
Greek banks are virtually insolvent
The ECB justifies the strict pose with their rules. Thus, although it is part of their duties to keep the banking system liquid in the monetary union. However, this requires that to financing banks are solvent and have most to contend with temporary shortages in their cash. However, the Greek banks hold a lot of experts in view of the enormous risks in their balance sheets for some time for virtually insolvent.
Thus the ECB’s course certainly has a political component. In it, at least the critics from different camps are in agreement, regardless of whether they have an earlier stop of emergency loans requested or castigated the “stinginess” of the ECB in the past two weeks.
The fact is that after the central bank for months admitted that the emergency loans for Greece banks assumed an ever greater extent, it then turned off the tap, as the government Athens end of June finally moved on to a collision course against the creditor. This can be however quite justified economically, finally, the risk of a Greek sovereign default was so evident at the latest. And as long as a third aid package of several uncertain Parliament’s decisions, this danger is the opinion of many economists also far from banished.
Symbol for fiscal state of emergency
A policy which in any case has consequences. The Greek banks have been closed for more than two weeks. Prior to their customers had cleared with ever more dramatic pace their accounts for fear of a collapse of the banks and a withdrawal from the monetary union. Once it became clear that the end of June expiring tool of the euro countries and the IMF would not be extended, finally threatened a panic. The ECB, in turn, made it clear that she was not willing to continue to compensate for the outflows with additional emergency loans.
That left the government no choice but to close the banks. Transfers abroad have since banned, ATM customers get only a maximum of 60 euros a day, just for pensioners without bank card stores were temporarily re-opened. So it should be prevented that more money flows out of the clammy Greek banking system.
Although credit transfers and card payments are still possible in Greece, and the tourists in the country can continue indefinitely draw cash from an ATM. Nevertheless, the bank closure, the already beleaguered Greek economy passed on. The closed switches have become a symbol for the fiscal state of emergency. They signal each Greeks to hold together his money better, only to buy what is absolutely necessary. For the economy is the poison.
Far from stabilizing away
However, should this condition not be over so quickly. Because even after the interim agreement between Greece and its creditors remain many uncertainties. Finally, could a failed parliamentary vote, whether it be in Athens or one of the euro countries, the whole deal again to dust. Therefore
Experts predict that the restrictions for the time being must remain closed in force and the banks. “It is unlikely that the capital controls will soon be lifted”, say the analysts at Deutsche Bank. The risk of high outflows had not yet banned.
In order for the banks remain liquid even without new aid loans from the central bank to deposits and withdrawals, the balance would have but again about keeping – which should only be the case when the Greeks also a part of the banknotes return, they have recently hoarded under the mattress.
From stabilize the Greek banks anyway still far away. Because the supply of liquid funds is just one of their problems. Equally dangerous are the enormous losses that initiate at the institutes of the country. One issue that remained out of sheer debates about alleged idler ATMs long under the radar of the general public. Only at the end of last week, the extent of the misery emerged that turned out to be heavy burden for the summit weekend in Brussels.
integrated economic meltdown threatened
For the Greek banks would not threaten a billion loss only in case of a sovereign default. They also suffer from the dramatic collapse of the Greek economy – and this is far from reality. Finally, the country since the beginning of the long standing dispute with its creditors. An insecure environment in which hardly anyone wanted to invest and the economic output plummeted. For the banks, that means additional loan losses on a large scale.
is how dramatic the situation was at the latest in lit at midnight Saturday. Since the calculations once known as Troika “institutions” (European Commission, IMF and ECB) laid bare how much capital need the Greek banks. Of the total financial needs of more than 80 billion euros thus alone accounts for € 25 billion to the recapitalization of banks. Money that will be used primarily to compensate the accrued or future expected losses.
In order to pay for the rehabilitation of unpopular financial industry in Europe taxpayers even more. Actually, it should no longer give the: After the financial crisis, EU countries have decided that distressed banks will no longer be rescued with public money, but should be liquidated. But first, this system uses not yet complete. Secondly, one would have to the pure doctrine have virtually handle the whole banking system in Greece -. An economic meltdown
negotiations could drag on
So the creditors demand now going from Greece to implement the European Banking Directive. This makes it possible to use the private financiers a Bank for the rehabilitation of the institution. Experts consider it nevertheless unlikely that in the case of Greece happen. After all, unlike in Cyprus, where rich investors from abroad lost a significant portion of their deposits, such a move Greece would meet mainly private customers from the middle class and medium-sized businesses. Wealthy Bank customers have their savings often done in the past few months abroad, capital flight, the ECB made possible by their generous Notkreditpolitik only as Critics.
Also therefore is likely to provide the expensive bank bail for some political dynamite. Of these, in turn, also depends on when the Greek banks the ICU can leave: “A return to a normally functioning banking system is crucial from the timetable for recapitalization depend”, appreciate the economists at Deutsche Bank. Negotiations on the the euro stability mechanism (ESM ) program should last at least four weeks, it is estimated in the circle of creditors.
The ECB will continue to play a central role in the meantime. You will have to decide whether it represents the Greek banks extra money available, even before the ESM funds are disbursed. And it is responsible as the European banking supervisors for the control of four major banks in Greece. So you decide by how much capital the houses need to apply again as stable. And to get some time again normal loans from the central bank.
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