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Fitch: Greece’s 4 systemic banks would default if Capital Controls are lifted

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Meanwhile a friend was telling me that Greek banks are seeking to have their customers bring back the deposits they had withdrawn before the capital controls.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.

Full list of Fitch’s rating actions of Greek systemic banks is here at the end of rating commentary.

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  1. Hahaha katseli is a politician! She has no business dealing with banks!

    • Katseli is an economist, professor in the Univ of Athens. Her brief political career was not successful. She has every business dealing with banks — as opposed to German crook-politicians who know nothing.

  2. Then why is she lying about capital controls being lifted?

    • I don’t know that she is lying. The fact is that Greece needs to lift capital controls in order to have any investment or hope of economic recovery. This is unlikely to happen for as long as the Troika insists on extorting money from a bankrupt economy, instead of helping it to recover.

      • if you hate the troika so much, default and print drachmas. hello Venezuela!

        Greece cant lift capital controls until people trust the country again.

        • Yes, most all of southern Europe hates the Troika, plus Ireland and all of the UK. That does not mean that we can print another currency: it means that the german mafia running the eurozone need to ne kicked out quick, rather than waiting for another world war to remove germans from abusive behaviour patterns. Two world wars should be enough, even for bone-headed Krauts to get the message.