Greeks have been withdrawing hundreds of millions of euros (dollars) from banks in recent days as the prospect of the country being forced out of the European Union’s common currency zone seems ever more real — although there has so far been no sign of a run on bank branches in Athens.
Political leaders failed to form a government following an inconclusive parliamentary election on May 6, leaving the state with its coffers almost empty and no elected cabinet in place to satisfy lenders it deserves the money needed to stay afloat.
After meeting President Karolos Papoulias, whose powers as head of state are limited, heads of various parties which won seats in parliament named the new interim leader as Panagiotis Pikrammenos, who runs the supreme administrative court.
A new poll confirmed what other surveys have shown: that radical leftists who reject a bailout agreed with the European Union and International Monetary Fund are now poised for victory, and the establishment parties that agreed the rescue are sinking further after an historic wipeout 10 days ago.
The leftists argue they can tear up the bailout and keep the euro, but European leaders say if Greece fails to meet promises to them, lenders will pull the plug on financing, driving Athens to bankruptcy and a swift exit from the EU single currency.
On Monday, according to an official account, the president told party chiefs that figures collated by the central bank headed by George Provopoulos showed savers withdrew at least 700 million euros ($890 million) from banks.
“Provopoulos told me there was no panic, but there was great fear that could develop into a panic,” minutes of the cabinet meeting quoted the president as saying.
“Withdrawals and outflows by 4 p.m. when I called him exceeded 600 million euros and reached 700 million euros,” he said. “He expects total outflows of about 800 million euros, including conversions into German Bunds and other such things.”
Several banking sources told Reuters similar amounts had also been withdrawn on Tuesday. Nevertheless, there was no sign of panic or queues at bank branches in Athens on Wednesday. Bankers dismissed suggestions that a bank run was looming.
A senior executive at a large Greek bank told Reuters: “There is no bank run, no queues or panic. The situation is better than I expected. The amount of deposit withdrawals the president mentioned referred to three days, not one.”
Still, some were taking no risks. A 60-year-old textiles store owner who gave his name only as Nasos said he had transferred 10,000 euros over the phone to a bank in fellow eurozone state Cyprus on Tuesday afternoon.
“Any way you see it, things are difficult. If they call elections on June 17—a Sunday—then everyone will take their money out on the Friday.” That June 17 date was
Greeks have already been withdrawing their savings from banks at a sharp clip — nearly a third of bank deposits were withdrawn between January 2010 and March 2012, reducing total Greek household and business deposits to 165 billion euros.
A senior bank executive said there had been withdrawals in recent days but there was no sign yet of a panic, as had happened in April 2010 when 8 billion euros were withdrawn just before Greece obtained its first foreign bailout.
Analysts predicted Greece would avoid a bank run, if only because so many people have pulled out their savings already.
“We have witnessed periods of tension before when the banks experienced large outflows. In my view, the majority of people with these concerns would have done so by now,” said Alex Tsirigotis, Greek banks analyst at Mediobanca.
Greek banks have made up for vanishing deposits on their balance sheets by accepting costlier European Central Bank financing through the Greek central bank.
The spectre of Greece quitting the single currency sent the euro and European shares to a fresh four-month low on Wednesday and raised the yields on Spanish and Italian debt, reflecting the risk that other European countries will be hurt.
Patience is wearing thin among EU policymakers exasperated that a country which accounts for barely 2 percent of the euro zone’s economy should drag the bloc into deep crisis yet again.
“The 16 other governments in the euro zone really are at the end of their patience with Greece. There isn’t room or any willingness to move,” said one official involved in talks over Greece at the European Commission. “The decisions are really in Athens’s hands. But it doesn’t look good.”
European Commission President Jose Manuel Barroso told a news conference in Brussels that Greeks must realise what was at stake in their election: “It is important that the Greek people now take a decision fully informed about the consequences.”
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