May 22, 2012
The Greek government will pump 18 billion euros (about $23 billion) into the country’s four largest commercial banks this week to help them guard against losses from a worsening economy, bankers in Athens said on Tuesday, a step that will improve the banks’ ability to raise money but will still leave them unable to lend money normally.
The injection, which has been planned for some time, comes as Greek businesses and consumers continue to withdraw substantial amounts of money from their bank accounts amid uncertainty about the country’s political and economic future.
More than 23 billion euros in deposits was withdrawn from Greek banks in the eight months that ended in March, and 700 million euros more has been withdrawn since an inconclusive parliamentary election on May 6 fueled speculation that the country might exit the euro zone.
The Greek government last week received 25 billion euros from the European Financial Stability Facility, a bailout fund set up by euro zone governments to increase the capital cushions of banks across the currency union. To the frustration of bankers, the Greek authorities delayed releasing a portion of the money to local banks.
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