Greek banks plan to cut ECB reliance

Financial Times
April 15, 2011

Greek banks have presented plans to reduce their dependence on funding from the European Central Bank in another signal that the country is struggling to avoid a debt restructuring.

Job cuts, further reductions in lending, disposals of non-core assets such as tourist hotels and the sale of profitable banking networks in south-east Europe are among measures that could help boost domestic liquidity, according to Athens bankers.

The plans, which are still at a preliminary stage, were submitted last week to the Greek central bank and the “troika” – experts from the European Commission, International Monetary Fund and ECB.

Banks have already made substantial cuts in lending to offset a steady outflow of deposits.

Greek savers have withdrawn deposits amounting to more than €40bn over the past year – equivalent to about 14 per cent of total deposits held in Greek banks. The withdrawals have added to the banks’ funding problems, increasing their reliance on the ECB.

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