Greek banks see outflows pickup as election nears - bankers

ATHENS Wed Jun 13, 2012 10:04am BST

A man makes a transaction at an ATM machine outside a bank branch in central Athens May 24, 2012. REUTERS/John Kolesidis

A man makes a transaction at an ATM machine outside a bank branch in central Athens May 24, 2012.

Credit: Reuters/John Kolesidis

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ATHENS (Reuters) - Greek banks have seen a marked increase in the pace of bank withdrawals as a June 17 general election nears and fears grow that Greece could be forced out of the euro, senior bankers said on Wednesday.

Combined daily deposit outflows from the major Greek banks have reached 500-800 million euros over the past few days, with the pace picking up as the election draws closer and rising noticeably on Tuesday, two bankers said.

Deposit outflows at smaller and medium sized banks were running at 10-30 million euros.

"This includes cash withdrawals, wire transfers and investments into money market funds, German Bunds, U.S. Treasuries and EIB bonds," said one banker, who spoke on condition of anonymity.

Fears that Greece may have to quit the single currency and return to a weak drachma have fuelled a steady stream of withdrawals by companies and businesses alarmed at the prospect of seeing the value of their deposits cut sharply.

The result of the election, called after a previous vote in May failed to produce a government, remains too close to call, with the conservative New Democracy party running neck and neck with radical leftist SYRIZA.

Both groups say they want Greece to remain in the single currency but SYRIZA has pledged to scrap a 130 billion euro bailout agreement signed in March which has imposed some of the toughest austerity measures seen in Europe in decades.

The European Union and International Monetary Fund have warned that Greece, which has only enough cash to last for a few weeks, must stick to the conditions of the bailout deal or risk seeing funds cut off.

A third Greek banker said the withdrawals were manageable and were matched by the Emergency Liquidity Assistance programme provided by the European Central Bank.

"We have stable outflows on a daily basis, which are manageable and covered by the ELA facility," the banker said.

(Reporting by George Georgiopoulos and Lefteris Papadimas; Editing by Catherine Evans)

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