Man! One day after the President of Greek Banks Association, Louka Katseli, said that Capital controls would be lifted by end of the year, there comes Fitch-ratings agency and warns that Greek systemic banks would default if the deposit restrictions are lifted.
Fitch Ratings affirmed the Long-Term Issuer Default Ratings (IDRs) of Greece’s systemic banks National Bank of Greece S.A. (NBG), Alpha Bank AE (Alpha), Piraeus Bank S.A. (Piraeus) and Eurobank Ergasias S.A. (Eurobank) at ‘Restricted Default’ (RD). At the same time the agency has affirmed the four Greek banks’ Viability Ratings (VRs) at ‘f’.
“The affirmation of the four Greek banks’ VRs at ‘f’ reflects Fitch’s opinion that these banks would default if the deposit restrictions are lifted. The economic and political environment in Greece remains fragile. The Greek banking system has not yet regained confidence from customers and investors to restore the banks’ funding and liquidity profiles, and ultimately the viability of their business models,” Fitch writes in a statement issued on Tuesday.
In fact, Katseli said that “most part of the capital controls would be lifted by end of 2016.” In Movember 2015, Katseli was “seeing” lifting of capital control in the first quarter of 2016, a couple of months later – I think in February or March – the lifting was postponed for the end of the second quarter. Now it moves towards the end of the year.
Of course, nobody blames directly Louka Katseli for her wrong predictions. For the simple reason that no businessman around believes, the capital controls would be lifted soon – or at least not before 2 years of imposition. The point is thought: why Katseli, who is also President of the National Bank of Greece, does indeed make such predictions. To have customers’ restore their confidence to Greek banks and bring back their money under the mattress? Probably.
Meanwhile a friend was telling me that Greek banks are seeking to have their customers bring back the deposits they had withdrawn before the capital controls. “Large amounts or small amount, it doesn’t matter,” he told me “and they even give better interest of up to 0.90% for amounts over 5,000 and for deposits closed for a time period of 2 months or up to 12 months.”
The average interest is currently at 0.50 percent.