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Financials

Greek bank deposits rise in October, still stuck at 13-year lows

ATHENS, Nov 28 (Reuters) - Greek bank deposits rose in October after a fall in the previous month, remaining at levels last seen 13 years ago and keeping banks hooked on central bank funding, data released by the country’s central bank showed on Monday.

Business and household deposits rose by 1.16 billion euros, or 0.94 percent month-on-month to 124.63 billion euros ($132.43 billion), their lowest since November 2003. They had dropped by 423 billion euros to 123.47 billion in September.

Greek banks have seen only a trickle of deposit inflows in more than a year after the country clinched a third bailout to stay in the euro zone. They remain dependent on central bank borrowing to plug their funding gap.

The gap between outstanding loans and deposits has forced Greek lenders to rely on borrowing from the European Central Bank and the Bank of Greece to plug their funding holes.

Greece’s banking sector saw a 42 billion euro deposit outflow from December to July last year. Capital controls imposed on June 28 last year helped contain the flight but sharply increased banks’ dependence on emergency liquidity assistance (ELA) from the Bank of Greece.

The government eased capital restrictions in June this year after making headway on bailout-mandated reforms and improved confidence in the banking system.

As part of the relaxation of controls, “mattress” cash that are returned to banks are not subject to the restrictions, meaning amounts deposited can be fully withdrawn.

Banks have been offering higher interest rates to attract back billions of euros that savers pulled out in cash last year, paying up to half a percentage point above what existing time deposits earn. ($1 = 0.9411 euros) (Reporting by George Georgiopoulos)

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