Greek Bank Deposits Grow as Capital Raisings Near, Official Says

Greek lenders saw deposits rise after capital controls were eased as they prepare to rebuild their buffers battered by the economic slump, said a Bank of Greece official with direct knowledge of the matter.

Deposits increased by about 1 billion euros ($1.1 billion) since banks reopened on July 20, said the official, who asked not to be identified because the information is private. A European Central Bank-led review of the quality of banks’ books and a stress test will be completed by mid-October to help determine capital needs, the official said.

Greece’s four systemic lenders, National Bank of Greece SA, Piraeus Bank SA, Eurobank Ergasias SA and Alpha Bank AE, saw their shares drop by about 50 percent since trading began Monday following a five-week closure as investors adjusted price expectations to reflect the capital needs. Banks need larger cushions to help pave the way for eliminating capital controls that were imposed in June, said the official.

European leaders’ have pledged to shore up the Greek banking system with 25 billion euros of capital, an amount analysts say should be sufficient.

Depositors won’t be called on to help fund the recapitalizations, which are due to be completed by mid-December, nor will levies be imposed on savings, the official said.

Existing bank shareholders have expressed interest in participating in the upcoming capital increases, the official said, without elaborating.

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