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Bank of Greece links recent plunge of banks stocks to “interest rates rises”

The Bank of Greece has linked the latest developments in the Athens Stock Exchange and the plunge of Greek banks stocks to exogenous factors such as rises in interest rates internationally and in Greece’s neighbouring countries in particular.

In a statement issued on Wednesday, the Bank of Greece stressed among others the improvement of the liquidity of the Greek banks.

BoG statement:

On 9 October 2018 the Governing Council of the ECB did not object to an ELA-ceiling for Greek banks of €5.0 billion, up to and including Wednesday, 7 November 2018, following a request by the Bank of Greece.

The reduction of €0.2 billion in the ceiling reflects an improvement of the liquidity situation of Greek banks, taking into account flows stemming from private sector deposits and from the banks’ access to wholesale financial markets.

On this occasion, the Governor of the Bank of Greece Yannis Stournaras stated the following:

“The ongoing improvement of the liquidity situation of Greek banks reflects the improved condition of the Greek financial system. The recent stock market developments in respect of the banking sector are not related to the soundness of Greek banks and are due to purely exogenous factors, such as rises in interest rates internationally and in Greece’s neighbouring countries in particular.”

In another statement issued on October 4, the BoG said that interest rates on new deposits and loans remained unchanged in August.

In August 2018, the overall weighted average interest rates on new deposits and loans remained almost unchanged. The spread* between loan and deposit rates stood at 4.41 percentage points.

The overall weighted average interest rate on all new deposits remained almost unchanged at 0.28%. In particular, the average interest rates on overnight deposits placed by households and by non-financial corporations remained unchanged at 0.09% and 0.14%, respectively. The average interest rate on deposits from households with an agreed maturity of up to 1 year stood at 0.59% from 0.62% in the previous month.

The average interest rate on consumer loans without a defined maturity (a category which comprises credit cards, open account loans and overdrafts) remained almost unchanged at 14.35%. The average interest rate on consumer loans with a defined maturity at a floating rate increased by 39 basis points to 10.71%.

The average interest rate on corporate loans without a defined maturity decreased by 5 basis points to 5.14%. Τhe corresponding rate on loans to sole proprietors remained almost unchanged at 6.93%. The average interest rate on corporate loans with a defined maturity at a floating rate  stood at 3.85% from 3.82% in the previous month.

The Athens Stock Markets seems to recover on Wednesday with the Generla Index to be at 641.42 points and +2.44% with the banking sector to record +7% at 12:33 noon.

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