LONDON/ATHENS May 28 After Greece's inconclusive elections on May 6 led to political deadlock and heightened doubts about the country's future in the euro zone, Nikos, a successful businessman in the pharmaceutical supply industry, sent 7 million euros to a bank in Luxembourg.
"I have worked hard all my life and took risks in business. I am 62 years old now and cannot risk my money becoming drachmas. Most Greeks want to stay in the euro, that's what polls show, but it's better to be safe than sorry," he said.
His precaution reflects a trend among southern Europe's wealthy. Greeks fear devaluation while Spaniards and Portuguese fret about the health of their banks so they are sending money to banks in the stronger economies of northern Europe.
Nikos sent his cash to a Swiss bank offering much lower interest rates than his Greek bank paid but he said the sacrifice is worth it for peace of mind.
Financial advisers and private bankers whose clients have accounts too large to be covered by a Europe-wide guarantee on deposits up to 100,000 euros, are reporting a "bank run by wire transfer" that has picked up during May.
Much of this money has headed north to banks in London, Frankfurt and Geneva, financial advisers say.
"It's been an ongoing process but it certainly picked up pace a couple of weeks ago We believe there is a continuous 2-3 year bank run by wire transfer," said Lorne Baring, managing director at B Capital, a Geneva-based pan European wealth management firm.
"Where there is liquidity it is moving to the safest part of Europe and the perceived safest part of Europe is in the North... It's a no brainer," he said.
Another private banker specialising in Spanish clients at a global banking group said Spain's wealthy remembered Argentina's 'corralito' a decade ago when authorities restricted withdrawals to prevent bank runs.
"We are taking calls from new clients who want part of their money outside of Spain because of the potential risk of a corralito though we don't think that will happen and we don't incentivise our clients to do that," the banker said.
As deposits in European banks are guaranteed up to 100,000 euros, all but the wealthiest savers would get their money back in the event of a bank failure.
But if a country left the euro, as economists think could happen to Greece, bank accounts would be redenominated into a new currency that could then devalue, eroding the value of deposits.
Depositors could also face controls to prevent capital flight and further devaluation, or a freeze on withdrawals to defend the banks.
One senior private banker based in London said colleagues had taken calls from Greeks "very keen" to open accounts in the UK to protect their wealth if Greece leaves the euro and returns to its old currency, the drachma.
However, there is much legal uncertainty surrounding a potential exit from the euro zone and lawyers say moving money abroad may not necessarily protect it from conversion into the new currency.
"It is clear that Greek investors are looking to find ways to hold euros that will not get converted into drachmas," said Damian Bloom, partner at law firm Berwin Leighton Paisner.
"There is a concern whether euro deposits held by a Greek person in a non-Greek account would also get converted, or indeed whether Greek issued euro notes held by non-Greek persons would be converted. I don't know if these practical issues have yet been resolved." (editing by Anna Willard)