We’re starting to see signs of a bank walk in Greece as election nears. The FT reports:
Two Greek banks have applied for emergency funding from the European Central Bank as a “precautionary measure” against a possible run on deposits ahead of a critical general election later this month.According to a senior banker in Athens the requests for a total of €5bn from the ECB’s emergency liquidity assistance scheme were made by Alpha Bank and Eurobank, the smallest of Greece’s “big four” lenders.“The ELA funding is seen as a buffer against a growing liquidity squeeze on the banks, caused by political uncertainty over the election outcome,” the banker said. “It’s a precautionary measure being taken now because of the ECB procedures involved.”
Another banker said the squeeze was worsening as foreign banks moved to reduce exposure to Greece.
The smart money is tiptoeing out of Greek banking system. That doesn’t mean Syriza is going to win the election, and doesn’t mean that its victory would inevitably mean a crisis. But it does mean that some sophisticated investors don’t see the point of unnecessary risks. Will what is now a quiet trickle of money out of the system put more banks in trouble and threaten the stability of the Greek financial system? Hopefully not, but it’s worth keeping an eye on the situation.