GREEKS BANK RUN WITHDRAWING OVER 3 BILLION EUROS IN PANIC OVER CURRENCY FEARS

Greeks withdraw money from banks as worries grow

Greeks have been taking cash out of their bank accounts amid fears the country may not keep the euro

16 May 2012 Last updated at 12:33
http://www.bbc.co.uk/news/business-18086419

Greeks withdrew 700m euros ($894m; £560m) from the country’s banks in the week ending on Monday, according to the Greek president.

The action comes as fears increase that the country may be forced out of the eurozone and on to a weaker currency.

Greece’s president Karolos Papoulias revealed the outflows of cash in talks with rival political leaders.

He said the head of the Greek central bank had told him there was no panic yet, but that this could change.

Mr Papoulias said that the central bank governor, George Provopoulos, had said that the banks’ situation was very difficult and that the banking system was currently very weak.

“Mr Provopoulos told me there was no panic, but there was great fear that could develop into a panic,” the president was quoted as saying in minutes of the meetings with political leaders.

Uncertainty about the country’s future has intensified after Greece’s political parties failed to form a coalition government this week.

Recent elections saw votes widely split between parties, and another round of elections will now be held in June.

In February, former finance minister Evangelos Venizelos said Greeks had deposited 16bn euros overseas, including “32% in British banks and 10% in Swiss banks”.

8 comments

  •  
    The Bank Runs In Greece Will Soon Be Followed By Bank Runs In Other European Nations

    http://theeconomiccollapseblog.com/archives/the-bank-runs-in-greece-will-soon-be-followed-by-bank-runs-in-other-european-nations

    The bank runs that we are watching right now in Greece are shocking, but they are only just the beginning. Since May 6th, nearly one billion dollars has been withdrawn from Greek banks. For a small nation like Greece, that is an absolutely catastrophic number. At this point, the entire Greek banking system is in danger of collapsing. If you had money in a Greek bank, why wouldn’t you pull it out? If Greece leaves the euro, all euros in Greek banks will likely be converted to drachmas, and the value of those drachmas will almost certainly decline dramatically. In fact, it has been estimated that Greek citizens could see the value of their bank accounts decline by up to 50 percent if Greece leaves the euro. So if you had money in a Greek bank, it would only make sense to withdraw it and move it to another country as quickly as possible. And as the eurozone begins to unravel, this is a scenario that we are going to see play out in country after country. As member nations leave the eurozone, you would be a fool to have your euros in Italian banks or Spanish banks when you could have them in German banks instead. So the bank runs that are happening in Greece right now are only a preview of things to come. Before this crisis is over we are going to see bank runs happening all over Europe.

    If Greece leaves the euro, the consequences are likely to be quite messy. Those that are promoting the idea that a “Grexit” can be done in an orderly fashion are not being particularly honest. The following is from a recent article in the Independent….

    “Whoever tells you a Greek exit would be no big deal is an idiot, lying or disingenuous,” said Sony Kapoor of the European think-tank Re-Define. Economists fear that a disorderly exit would prompt a huge run by investors on Spanish and Italian debt, forcing those countries to seek support from an EU bailout fund, which, with a capacity of just €500bn, is widely regarded as too small to cope with those pressures.

    A Greek exit from the euro would not only result in a run on Spanish and Italian bonds, but it would also likely result in a run on Spanish and Italian banks.

    If Greece is allowed to leave the euro, that will be a signal that other countries will eventually be allowed to leave as well. Nobody in their right mind would want their euros stuck in Spanish or Italian banks if those countries end up converting back to national currencies.

    Fear is a powerful motivator. If Greece converts their euros back to drachmas, that will be a clear signal that all euros are not created equally. The race to move money into German banks will accelerate dramatically.

    And a Greek exit from the euro is looking more likely with each passing day. Even the IMF is now admitting that it is a very real possibility….

    Christine Lagarde, head of the IMF, warned she was “technically prepared for anything” and said the utmost effort must be made to ensure any Greek exit was orderly. The effect was likely to be “quite messy” with risks to growth, trade and financial markets. “It is something that would be extremely expensive and would pose great risks but it is part of options that we must technically consider,” she said.

    Meanwhile, banks in other troubled European nations are already on shaky ground. The Spanish banking system is an absolute disaster zone at this point and on Monday night Moody’s downgraded the credit ratings of 26 Italian banks.

    The situation in Italy is especially worth keeping a close eye on. As Ambrose Evans-Pritchard recently noted, things are not looking good for Italy at all….

    Italy’s former premier Romano Prodi said the EU risks instant contagion to Spain, Italy, and France if Greece leaves. “The whole house of cards will come down”, he said

    Angelo Drusiani from Banca Albertini said the only way to avert catstrophe is to convert the European Central Bank into a lender of last resort. Otherwise Italy faces “massive devaluation, three to five years of hyperinflation, and unbearable unemployment.”

    So what can be done about any of this?

    Well, there is actually a lot that could be done if politicians in Europe were willing to think outside of the established global financial paradigm.

    The truth is that Greece could solve their current financial problems in four easy steps. They would have to be willing to stick it to the rest of Europe and to risk being blackballed by the international community, but it could be done.

    The following is my prescription for Greece….

    1) Default on all debts.

    2) Leave the euro.

    3) Issue drachmas that are debt-free and that do not come from a central bank. Instead, have the Greek government create them and spend them directly into circulation.

    4) Enjoy a return to prosperity.

    In such a scenario, the Greek national debt would no longer be a problem, the Greek government would never have to borrow any more money and austerity would no longer be needed.

    Yes, inflation would be an issue with the new currency, but a bit of inflation would be a walk in the park compared to the horrible economic depression that Greece is experiencing right now.

    And once the Greek economy was growing again, it would certainly be possible for them to make the transition to “hard money” if they wanted to.

    It is imperative that we all understand that just because the global financial system works a certain way today does not mean that it must always work that way.

    If you have a few minutes, I want you to watch an incredible speech by a 12-year-old Canadian girl named Victoria Grant. In this 6 minute speech, she details how the bankers are defrauding the people of Canada and how the Canadian government does not actually need to borrow a single penny from the bankers….

    If a 12-year-old girl can figure this out, then why can’t the rest of us?

    Sadly, the financial world still seems enamored with the corrupt central banking system that has gotten us into this mess. In fact, one recent poll found that Federal Reserve Chairman Ben Bernanke has a 75 percent approval rating from global investors.

    Right now, America is going down the same path as Greece, Spain and Italy have gone. Eventually we will hit a wall and our financial system will fall apart.

    We need the American people to understand that the Federal Reserve system is a perpetual debt machine. The U.S. national debt is now more than 5000 times larger than it was when the Fed was first created. It is at the very core of our national financial problems.

    When will people wake up and realize that central banking is the problem and not the solution?

    When will people wake up and realize that national governments do not have to go into debt to anyone if they do not want to?

    In our world today, there is far more debt than there is money.

    It is a system that will inevitably crash.

    But there are other alternatives.

    Unfortunately, politicians all over the globe continue to want to be married to our current debt-based financial system.

    As a result, we will suffer the consequences of that system.

  •  
    Operators prepare for Greece exiting eurozone

    16 May 2012
    http://www.travelmole.com/news_feature.php?m_id=s~~An_rnv&w_id=7824&news_id=2001473

    TUI has revealed it has put contingency measures in place in case Greece exits the eurozone, which is now looking increasingly likely.

    While refusing to reveal what those measures were, a TUI spokeswoman hinted the operator could shift capacity away from the Greek islands if the situation in the country worsens following next month’s elections.

    She said: “We cannot predict what is going to happen, however, the inherent flexibility in our business model gives us the ability to move capacity dependent on where our customers want to go, for example, last year we moved capacity away from North Africa due to the Arab Spring.”

    The International Monetary Fund warned European leaders yesterday that they should prepared for Greece’s exit from the single currency, which head of the IMF Christine Lagarde conceeded was likely to be “quite messy”.

    There are reports the Greeks are already pulling their euros out of banks, with a reported €700m withdrawn on Monday alone.

    UK tour operators are keeping a very close eye on the situation in Greece, where voters have rejected a political party that had agreed to austerity measures in return for two bailouts by the IMF. A second round of elections will be held next month after days of coalition talks failed to produce agreement on a new government.

    European leaders are threatening to cut off funding for Greece unless the new government imposes the cuts, which analysts believe would mean effective bankruptcy for the country and its exit from the eurozone

    Some analysts believe the country could descend into chaos as the Greek currency would become worthless, but Thomas Cook said there would be positives as well as negatives for the travel industry if Greece left the Euro. However, the operator refused to expand beyond saying that the country remained popular and “great value” for holidaymakers.

    “We’re working with our suppliers and closely monitoring the evolving situation in Athens,” said its spokesman.

    A TUI spokeswoman said: “Greece remains a popular destination for our customers and we anticipate that it will remain so. We have contingency plans in place should the country exit the eurozone and we continue to work with our Greek suppliers and hotel partners as we keep a very close eye on the situation”.

    Referring to recent demonstrations of political unrest in Athens, TUI said there was no indication this would spread to areas visited by its clients. ” The comfort and well-being of our customers is of paramount importance to us,” she said. ” In the unlikely event that civil unrest does break out near our resorts, we have tried and tested procedures for ensuring that our customers are looked after.”

    Sunvil managing director Noel Josephides said bookings had definitely slowed since the Greek elections, which failed to form a new government. He said Sunvil sales were 12% down since the elections, although the operator has cut 7% capacity, mainly in May.

    However, Josephides said it was certain that holidays to Greece would be cheaper if Greece returned to the drachma. “This is a definite, as clients’ spending money will go further,” he said.

    By Linsey McNeill

  •  
    Is the world about to unravel? Investor warns we are going to see bank runs happening all over Europe

    Posted on May 16, 2012
    http://theextinctionprotocol.wordpress.com/2012/05/16/is-the-world-about-to-unravel-investor-warns-we-are-going-to-see-bank-runs-happening-all-over-europe/?utm_source=dlvr.it&utm_medium=twitter

    May 16, 2012 – ATHENS – The bank runs that we are watching right now in Greece are shocking, but they are only just the beginning. Since May 6th, nearly one billion dollars has been withdrawn from Greek banks. For a small nation like Greece, that is an absolutely catastrophic number. At this point, the entire Greek banking system is in danger of collapsing. If you had money in a Greek bank, why wouldn’t you pull it out? If Greece leaves the euro, all euros in Greek banks will likely be converted to drachmas, and the value of those drachmas will almost certainly decline dramatically. In fact, it has been estimated that Greek citizens could see the value of their bank accounts decline by up to 50 percent if Greece leaves the euro. So if you had money in a Greek bank, it would only make sense to withdraw it and move it to another country as quickly as possible. And as the eurozone begins to unravel, this is a scenario that we are going to see play out in country after country. As member nations leave the eurozone, you would be a fool to have your euros in Italian banks or Spanish banks when you could have them in German banks instead. So the bank runs that are happening in Greece right now are only a preview of things to come. Before this crisis is over we are going to see bank runs happening all over Europe. A Greek exit from the euro would not only result in a run on Spanish and Italian bonds, but it would also likely result in a run on Spanish and Italian banks. Meanwhile, banks in other troubled European nations are already on shaky ground. The Spanish banking system is an absolute disaster zone at this point and on Monday night Moody’s downgraded the credit ratings of 26 Italian banks. The situation in Italy is especially worth keeping a close eye on. As Ambrose Evans-Pritchard recently noted, things are not looking good for Italy at all: Italy’s former premier Romano Prodi said the EU risks instant contagion to Spain, Italy, and France if Greece leaves. “The whole house of cards will come down”, he said. Angelo Drusiani from Banca Albertini said the only way to avert catastrophe is to convert the European Central Bank into a lender of last resort. Otherwise Italy faces “massive devaluation, three to five years of hyperinflation, and unbearable unemployment.” –ETF Daily

  •  
    ECB Stops Monetary Policy Operations To Some Greek Banks

    Submitted by Tyler Durden on 05/16/2012 11:06 -0400
    http://www.zerohedge.com/news/ecb-stops-policy-operations-some-greek-banks

    Update: some additional color from MNI, as Europe scrambles for damage control:

    The European Financial Stability Facility (EFSF) is expected to approve an E18 billion recapitalization disbursement for Greek banks within the next four days, and the banks should get the money within a week, a senior Eurozone official told MNI Wednesda.

    Earlier today MNI reported that the European Central Bank was growing nervous about delays in the recapitalization program for Greece and was threatening to suspend its lending to Greek banks as a means of expediting the decision.

    “This has been a point of concern for the last month, and it was debated during Monday’s Eurogroup meeting, where ECB President Mario Draghi and EFSF head Klaus Regling were present,” the official said. “Up until then, the EFSF had sided with the Greek Financial Stability Fund, which was delaying the recapitalization process because it disagreed with certain points of the assessment of Greek banks’ eligibility for the funds,” he explained.

    Just as we predicted moments ago, and as Dutch Dagblad warned overnight:

    ECB STOPS MONETARY POLICY OPERATIONS TO SOME GREEK BANKS AS RECAPITALISATION NOT IN PLACE -CENBANK SOURCES

    From Reuters:

    The European Central Bank has stopped monetary policy operations with some Greek banks as they have not been successfully recapitalized, euro zone central bank sources said on Wednesday.

    The ECB declined to comment.

    The ECB only conducts its refinancing operations with solvent banks. With no access to ECB funds, the banks concerned must go to the Bank of Greece for emergency liquidity assistance (ELA).

    It was unclear exactly how many banks were affected.

    One person familiar with the matter said four Greek banks’ capital was so depleted they were operating with negative equity capital. According to its own rules, the ECB cannot provide liquidity to banks in such a situation.

    The beginning of the end? Or just more political posturing? In the meantime, EURUSD tumbles.

  •  
    Update: EFSF To Approve E18 Bln Greek Bank Recap Next 4 Days

    By Angelika Papamiltiadou
    Wednesday, May 16, 2012 – 11:07
    https://mninews.deutsche-boerse.com/index.php/update-efsf-approve-e18-bln-greek-bank-recap-next-4-days?q=acl/update-efsf-approve-e18-bln-greek-bank-recap-next-4-days

    ATHENS (MNI) – The European Financial Stability Facility (EFSF) is expected to approve an E18 billion recapitalization disbursement for Greek banks within the next four days, and the banks should get the money within a week, a senior Eurozone official told MNI Wednesday.

  •  
    Greeks withdraw €3bn in 10 days since election

    Greece’s savers making daily bank visits as analysts warn faster capital flight could push country out of euro before June’s poll

    Helena Smith in Athens and Jill Treanor
    guardian.co.uk, Wednesday 16 May 2012 21.43 BST
    http://www.guardian.co.uk/world/2012/may/16/greeks-withdraw-3bn-10-days

    Greeks have withdrawn €3bn (£2.4bn) from the banking system since the country’s inconclusive elections on 6 May, with tellers saying savers were making two or three visits a day to local banks.

    Savers fear Greece leaving the eurozone and returning to the drachma. An aide to the outgoing prime minister, Lucas Papademos, said there were “serious fears that the banks were running out of money”.

    Greece’s president, Karolos Papoulias, warned on Monday that €700m had been withdrawn but said he had been assured by the governor of the Greek central bank, George Provopoulous, that there was no panic yet.

    According to minutes of a meeting on Monday, Papoulias said: “Withdrawals and outflows by 4pm when I called him [Provopoulous] exceeded €600m and reached €700m. He expects total outflows of about €800m, including conversions into German bunds [bonds] and other such things.”

    Greeks have been slowly withdrawing cash from the banking system ever since the country first needed a bailout two years ago. Nearly a third of bank deposits were withdrawn between January 2010 and March 2012.

    A crucial €18bn cash injection to stabilise Greece’s banks has been held up at the European financial stability fund’s Greek offshoot, the Hellenic financial stability fund (HFSF), for nearly two weeks with officials in Brussels refusing to release the funds because of the political instability in the wake of the elections. That had still not been released by tonight and is now not expected to be released for another four days despite the efforts of the Papademos government to expedite the recapitalisation of Greek banks.

    The delay to the recapitalisation was said to have forced the European Central Bank to stop dealing with some Greece banks, leaving local banks to receive funding from the central bank until the banks received their cash injection.

    Simon Ward, chief economist at the fund manager Henderson, said there had been a €11.7bn fall in Greek deposits in the first quarter. Domestic private-sector deposits stood at €170bn in late March, of which €66bn was in overnight deposits.

    Ward warned this could be vulnerable. “It is reasonable to expect this instantly accessible cash to leave the Greek banking system amid current political and economic chaos, implying a heightened risk of deposits being frozen and/or redenominated in the event of EMU [economic and monetary union] expulsion,” he said.

    “Faster capital flight could push Greece out of the euro well before next month’s elections, rendering current political manoeuvring irrelevant,” Ward added.

    Some bankers believe Cyprus will leave the eurozone at the same time as Greece and hope that contagion can be prevented from reaching other debt-laden countries such as Portugal when their people see the pain that the Greeks endure.

    Anxiety about the strength of banks across Europe has reached the UK arm of Santander after local authorities – which lost money when Iceland’s banks collapsed – queried the connections between the Spanish bank and its UK arm, which owns Abbey, Alliance & Leicester and Bradford & Bingley.

    John Simmonds, head of finance at Kent county council, said he concluded that the UK arm of Santander was “rock solid” after talks with the bank following the council’s decision to stop using the bank for overnight deposits. He had been reassured that the UK arm could only transfer money to Spain through dividends.

    A Santander spokesman said: “Santander’s UK business is strong and has a standalone credit rating which is one of the highest credit ratings of any UK bank.”

  •  
    Bank Runs In Greece Will Soon Be Followed By Bank Runs In Other European Nations

    17 May 2012

  •  
    SPANISH BANKIA BOUGHT ITS OWN SHARES BEFORE THE BAILOUT
    http://theunhivedmind.com/wordpress/?p=31524

    Investor warns Bank Runs will happen all over Europe
    http://theunhivedmind.com/wordpress/?p=31421

    SPANIARDS BANK RUN AS SPANISH ECONOMY STARTS TO IMPLODE
    http://theunhivedmind.com/wordpress/?p=31522

    BANK RUNS NOW OCCURING IN THE UNITED KINGDOM AT SANTANDER UK
    http://theunhivedmind.com/wordpress/?p=31881

    ECB DIRECTOR CLAIMS THE EUROZONE BANKS NEARLY COLLAPSED AUTUMN 2011
    http://theunhivedmind.com/wordpress/?p=31492

    25% and more of Greek Bank Deposits removed
    http://theunhivedmind.com/wordpress/?p=32176

    OVER £200 MILLION BANK RUNNED OUT OF SANTANDER U.K. & THATS ALL THEY’RE ADMITTING FOR NOW
    http://theunhivedmind.com/wordpress/?p=32339

    GREEK POLICE ARE URGING CITIZENS TO KEEP THEIR MONEY IN THE BANK
    http://theunhivedmind.com/wordpress/?p=32579

    Barclays and Santander hit by online banking problems
    http://theunhivedmind.com/wordpress/?p=32606

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