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BoG confirms “two banks requested ELA funding” – Which banks…

Bank of Greece sources confirmed to several media that two Greek banks made a request for Emergency Liguidity Assistance (ELA) funding from the Bank of Greece in December. However, they did not confirm the amount of liquidity that it was asked, neither did they disclose the names of the banks.

Thursday night, online edition of Kathimerini posted the news, noting that the request was made due to growing outflow of deposits as well as the acquisition of Treasury bills forced onto them by the state.

The total amount requested was some 5 billion euro, Greek media report on Friday morning.

“The amount requested was a little over 5 billion euro.

Piraeus Bank and National Bank said that they did not request Ela funding.

Eurobank sources said that the bank proceeded to preventive request for ELA.

(daily Imerisia.gr)

considering Greek has four systemic banks, the name of the second bank that requested ELA funding is not difficult to suggest….

Proto Thema names both Eurobank and Alpha Bank as the banks to have applied for ELA funding, stressing that it was a “preventive move”.

The online edition of the Sunday newspaper claims that “the two remaining banks were expected to apply for ELA funding by Monday, January 19th 2015.”.

Banks usually resort to ELA when they face a cash crunch and do not have adequate collateral to draw liquidity from the European Central Bank. Bank officials commented that lenders are resorting to ELA earlier than expected, which reflects the deteriorating liquidity conditions in the credit sector.

According to Kathimerini, requests from the remaining Greek banks would follow in the next few days.

The article in Kathimerini was pulled off a little later to be uploaded again Friday morning.

“Two Greek systemic banks submitted the first requests to the Bank of Greece for cash via the emergency liquidity assistance (ELA) system on Thursday, sources told Kathimerini.

It is thought that requests from the remaining Greek banks will follow in the next few days.

The move came in response to the pressing liquidity conditions resulting from the growing outflow of deposits as well as the acquisition of treasury bills forced onto them by the state.

Banks usually resort to ELA when they face a cash crunch and do not have adequate collateral to draw liquidity from the European Central Bank, their main funding tool. ELA is particularly costly as it carries an interest rate of 1.55 percent, against just 0.05 percent for ECB funding.

The requests by the two lenders will be discussed by the ECB next Wednesday.

Bank officials commented that lenders are resorting to ELA earlier than expected, which reflects the deteriorating liquidity conditions in the credit sector.

Besides the decline in deposits, banks were dealt another blow on Thursday with the scrapping of the euro cap on the Swiss franc. Bank estimates put the impact of the euro’s drop on the local system’s cash flow at between 1.5 and 2 billion euros.

Deposits recorded a decline of 3 billion euros in December – a month when they traditionally expand – while in the first couple of weeks of January the outflow continued, although banks say it is under control.

A major blow to the system’s liquidity has come from the repeated issue of T-bills: In November the state drew 2.75 billion euros in this way, in December it secured 3.25 billion euros, and it has already tapped another 2.7 billion in January. Of the above amounts, a significant share – amounting to 3 billion euros according to bank estimates – was in the hands of foreign investors who are not renewing their stakes, so Greek banks have to step in to buy them.

Local lenders had also resorted to ELA in 2011 to cope with the outflow of deposits and consecutive credit rating downgrades of the state (and the banks) that made Greek paper insufficient for the supply of liquidity by the Eurosystem. In June 2012, due to the uncertainty of the twin elections at the time, the ELA being drawn by local banks to handle the unprecedented outflow of deposits reached a high of 135 billion euros. By May 2014, Greek banks had reduced their ELA financing to zero. (ekathimerini)

Private Skai TV reported Friday morning that Greek banks requested ELA funding also in May-June 2012, in the period when the two elections took place.

It was interesting to read on Januanry 8th that the Financial Crimes Units (SDOE) of Greek Finance Ministry would double check those who were sending money abroad from their bank accounts. “Those who had not declared the money to the tax office would be punished,” the article read.

I suppose this was a warning to prevent an uncontrolled bank run that was in fact had started already in December 2014….

Athens Stock Exchange is reacting very sensitive to the issue, at 11:46 it records losses of -2.42% at 785.35 units.

Capital.gr has the position of the European Central Bank on the issue, however in Greek…

 

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