Greek banks hold steady on ECB emergency funding

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Some light relief?

Greek banks opted not to raise the ceiling on the emergency funds they receive from the European Central Bank this month, having put in the first request to ramp up the lifeline since the country’s bailout deal in the summer of 2015.

The Bank of Greece said that its cap on the ECB’s “emergency liquidity assistance” – an expensive form of bank funding – was unchanged at €46.6bn this month.

Greek banks were forced onto ELA after the ECB withdrew its normal lending to the financial system when Athens’ left-wing Syriza government was elected in early 2015, challenging the measures in its then second bailout programme.

Last month, the BoG requested raising the ELA limit amid a resumption of deposit flight from the Greek banks. Greeks have pulled out more than €2bn from lenders so far this year as the country’s €86bn bailout hit another snag at the end of last year.

Greek banks still lumber under capital controls which limit customer withdrawals and suffer under one of the biggest bad loan piles in the eurozone.

Still, a breakthrough in Athens’ bailout talks may well be in sight. An agreement to unlock around €6bn in rescue cash is just a “breath away”, according to Greek prime minister Alexis Tsipras, who was speaking ahead of a key Eurogroup meeting in Malta on Friday.

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