- Title: GREECE-BANKS/LIQUIDITY Two major Greek banks apply for emergency funding
- Date: 16th January 2015
- Summary: ATHENS, GREECE (JANUARY 16, 2015) (REUTERS) VARIOUS OF EXTERIOR OF ALPHA BANK VARIOUS OF WOMAN TAKING MONEY OUT OF ALPHA BANK ATM
- Embargoed: 31st January 2015 12:00
- Location: Greece
- Country: Greece
- Topics: General
- Reuters ID: LVABZPAYRGDYBDX54H7AHK1OGT6O
- Story Text: Two major Greek lenders applied to tap the national central bank's emergency funiding a year after ending their reliance on it in a precautionary move stemming from deposit outflows before an election this month, bankers said on Friday (January 16).
Greek banks have seen their liquidity tighten as Greeks withdraw cash ahead of a snap general election on January 25 and as foreign buyers shun recent government T-bill issues, according to a Greek banker, adding pressure on local banks.
Executives at both Eurobank and Alpha Bank said the move was precautionary and partly related to their exposure to Swiss franc mortgage portfolios. Both were yet to make use of emergency liquidity assistance (ELA) funds.
ELA is effectively emergency loans offered by euro zone national central banks to strapped commercial banks. Greek banks relied on it heavily at the peak of the country's debt crisis in 2012 but had repaid it by early last year.
Eurobank shares tumbled eight per cent and Alpha Bank fell seven per cent on Friday, pushing the Athens Stock Exchange's banking index down seven per cent.
Greek banks have been putting up collateral to tap European Central Bank funds for their liquidity needs, with their total borrowing rising 2.3 percent to 44.9 billion euros (52.5 billion U.S. dollars) in November. It is expected to have topped 50 billion euros in December.
But increased deposit outflows since Greece called snap elections, coupled with government T-bill issues that have squeezed their liquidity levels, means banks want to have all funding options open.
ELA funding is more costly than borrowing from the European Central Bank and requires approval.
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