Greek Bank Deposits Shrank 5.2% in May on Euro Exit Fear
Greek bank deposits by businesses and households decreased by 8.6 billion euros ($10.8 billion), or 5.2 percent, in May after an inconclusive national election raised the prospect of the country’s exit from the euro region.
Deposits fell to 157.4 billion euros from 166 billion euros in April, the biggest drop since the country joined the 17- nation currency bloc in January 2001, according to a statement by the Bank of Greece on its website today. Deposits have declined 52 billion euros, or 25 percent, since December 2010.
Greece held a second election in six weeks on June 17 after an inconclusive poll on May 6 showed gains for parties that rejected the terms of the country’s bailout loans from the European Union and the International Monetary Fund.
“Deposit outflows reached a new historic high” after the May election led to “heightened sovereign risk” and political uncertainty, Manos Giakoumis, a research director for Euroxx Securities SA (EX) in Athens, said in an e-mailed note. “A reversal of the negative trend is anticipated in the post-election period.”
Greece’s new finance minister, Yannis Stournaras, said on June 26 that 2 billion euros of deposits had returned to the country’s bank system since the June elections produced a three- party coalition government committed to honoring the country’s bailout terms.
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