Two of Greece’s biggest lenders, Eurobank Ergasias and Alpha Bank, have formally requested access to an emergency cash facility run by the country’s central bank, amid concerns that liquidity conditions in Greece’s banking sector were tightening in the run-up to national elections tomorrow (Sunday).
Banking officials from the two lenders said Friday that the moves were only a precaution and that neither faced an immediate cash crunch.
“We have made an application to the central bank,” a senior executive at one of the banks said, “but it is strictly on a precautionary basis.”
A Bank of Greece official also confirmed the requests, saying that a decision will likely be taken by next week. People familiar with the matter have said that Greece’s two other systemic lenders – National Bank of Greece and Piraeus Bank – may follow suit in the coming days. Sources have also said that the two lenders were seeking a few billion euros between them.
Although the amount being sought is small, the move has again evoked fears over the stability of Greece’s banking system as the country lurches through another period of political uncertainty ahead of polls scheduled for January 25. The last time the banks started tapping the central bank’s Emergency Liquidity Assistance fund was in August 2011 during the depths of Greece’s protracted debt crisis.
Since the start of the crisis in late 2009, Greek banks have been hit hard. Over the past five years, skittish depositors have withdrawn some €70 billion ($US81 billion) from Greece’s banking system; nonperforming loans now account for more than a third of banking system loans; and the banks have had to write down billions in euros in losses from an unprecedented €200 billion sovereign-debt restructuring in early 2012.