The Greek Bank Runs Have Begun: Two Greek Banks Request Emergency Liquidity Assistance

Tyler Durden's picture

The first time the phrase Emergency Liquidity Assistance, or ELA, was used in the context of Greece was in August 2011, when Greece was imploding, when its banking sector was on (and past) the verge of collapse, and just before the ECB had to unleash a global coordinated bailout with other central banks including global central bank liquidity swap and unleash the LTRO to preserve the Eurozone.

As a reminder, this is what happened back then: "In a move described as the "last stand for Greek banks", the embattled country's central bank activated Emergency Liquidity Assistance (ELA) for the first time on Wednesday night."

"Although it was done discreetly, news that Athens had opened the fund filtered out and was one of the factors that rattled markets across Europe. At one point Germany's Dax was down 4pc before it recovered. The ELA was designed under European rules to allow national central banks to provide liquidity for their own lenders when they run out of collateral of a quality that can be used to trade with the ECB. It is an obscure tool that is supposed to be temporary and one of the last resorts for indebted banks."


Raoul Ruparel of Open Europe told The Telegraph: "The activation of the so-called ELA looks to be the last stand for Greek banks and suggests they are running alarmingly short of quality collateral usually used to obtain funding."


He added: "This kicks off another huge round of nearly worthless assets being shifted from the books of private banks onto books backed by taxpayers. Combined with the purchases of Spanish and Italian bonds, the already questionable balance sheet of the euro system is looking increasingly risky."     

As a further reminder, this is how cryptically little the ECB has to say about its "last-ditch" liquidity bailout program:

Euro area credit institutions can receive central bank credit not only through monetary policy operations but exceptionally also through emergency liquidity assistance (ELA). ELA means the provision by a Eurosystem national central bank (NCB) of

  1. central bank money and/or
  2. any other assistance that may lead to an increase in central bank money

to a solvent financial institution, or group of solvent financial institutions, that is facing temporary liquidity problems, without such operation being part of the single monetary policy.

We bring this up because things in Greece just went bump in the night. Again.

Recall that as we reported three days ago, while Greece refused to admit that it was suffering a bank run ahead of a potentially game-changing election, it did report that "most taxpayers have chosen to delay their [tax] payments, given that the positions of the two main parties leading the election polls are diametrically opposite: Poll leader SYRIZA promises to cancel the ENFIA and even write off bad loans, while ruling New Democracy acknowledges the difficulties but is avoiding raising issues that would generate problems and fiscal consequences."

Well, yesterday we got some more details on the collapse in tax payments when Kathimerini reported that indeed as feared, Greek tax remittances have plunged by up to 80% compared to last year, in the process making a mockery of any Greek reforms.

Finance Ministry officials believe there will be no problem meeting the targets of the bailout program as far as the general government primary surplus, which amounts to 1.5 percent of gross domestic product for 2014, is concerned. There are, however, worries regarding the 2015 budget, as the year has got off to a terrible start in terms of revenue collections.


The target for January is 4.5 billion euros, but tax officials report that they saw no activity that would support that goal in the first 10 days of the month. Sources say that the decline compared to the first 10 days of 2014 ranges between 70 and 80 percent.

That's not the bad news. The bad news is that as we also speculated, and as Greek officials tried to cover up as usual, the Greeks have resumed doing what they do best any time their country is facing a grand crisis: walking to the bank and withdrawing what little deposits they have left. Or rather running to the bank.

Which brings us back to the topic of the Emergency Liquidity Assistnace, which as Kathimerini reported moments ago, at least two Greek systemic banks have reportedly resorted to, indicating that the liquidity situation in Greece is once again as dire as it was in the depth of the European collapse.

To wit:

Two Greek systemic banks reportedly submitted the first requests to the Bank of Greece for cash via the emergency liquidity assistance (ELA) system on Thursday, in response to the pressing liquidity conditions resulting from the growing outflow of deposits as well as the acquisition of treasury bills forced onto them by the state.


Banks usually resort to ELA when they face a cash crunch and do not have adequate collateral to draw liquidity from the European Central Bank, their main funding tool. ELA is particularly costly as it carries an interest rate of 1.55 percent, against just 0.05 percent for ECB funding.


The requests by the two lenders will be discussed by the ECB next Wednesday.


Bank officials commented that lenders are resorting to ELA earlier than expected, which reflects the deteriorating liquidity conditions in the credit sector.


Besides the decline in deposits, banks were dealt another blow on Thursday with the scrapping of the euro cap on the Swiss franc. Bank estimates put the impact of the euro’s drop on the local system’s cash flow at between 1.5 and 2 billion euros.


Deposits recorded a decline of 3 billion euros in December – a month when they traditionally expand – while in the first couple of weeks of January the outflow continued, although banks say it is under control.


A major blow to the system’s liquidity has come from the repeated issue of T-bills: In November the state drew 2.75 billion euros in this way, in December it secured 3.25 billion euros, and it has already tapped another 2.7 billion in January. Of the above amounts, a significant share – amounting to 3 billion euros according to bank estimates – was in the hands of foreign investors who will not renew them, so they have to be bought by the Greek banks.


Local lenders had also resorted to ELA in 2011 to cope with the outflow of deposits and consecutive credit rating downgrades of the state (and the banks) that made Greek paper insufficient for the supply of liquidity by the Eurosystem. In May 2012, due to the uncertainty of the twin elections at the time, local banks drew 124 billion euros in ELA to handle the unprecedented outflow of deposits.

And just like that, it's deja vu all over again, and the worst days of the summer of 2011 are ahead of us once more, only this time Draghi's "Whatever it takes" unconditional OMT bazooka has conditions, and anyway after today's SNB fiasco, what a central bank threatens, warns, begs or even does, may no longer even matter.

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knukles's picture

Hah ha ha ha ha ha ha ha
And they said it was all fixed

wallstreetaposteriori's picture

well they are certainly not pulling the money to pay taxes...  Long Syriza. Short Europe.

Looney's picture

If you like your liquidity, you can drone some folks. Period. ;-)


McMolotov's picture

The ZH articles in gray boxes are beginning to stack up. Starting to think there are lots of flashing red lights telling everyone the entire system is reaching critical wonkiness.

nope-1004's picture

It's the story that won't go away.  Like Einstein said about insanity:  "Insanity is defined as repeating the same action only expecting a different result".

These bankers truly are insane.


Soul Glow's picture

If insanity is such than the people that have faith in the banking system are the same.

Keyser's picture

EU Bank Holidays in 3...2....1..... 

BurningFuld's picture

I want to see a youtube video of the Banks running. Awesome!

El Oregonian's picture

Bank runs in Greece?

I know when I have the 'Runs' it aint a good thing...

Money Boo Boo's picture

Doesn't Greece look like they're about to collpase every 7.3826 hours, only to mysteriously come back from the dead?

Oracle of Kypseli's picture

The run on the bank is staged to induce fear. Friends there tell us that it is all a gambit for Syriza to loose strength. There are no lines.

7.62x54r's picture

Not staged. Just no lines. Idiots in the majority are standing pat. People with real assets are making massive withdrawels.

Greece is on the verge of getting kicked out of the euro-zone. Smart people want their euros in their hands, before the government waves their theiving wand and converts all accounts to drachmas ( or whatever they will call their new wastepaper ) at par.

People are delaying tax payments in order to pay those taxes later in Drachmas instead of euros.

Not hard to figure out.

Zero Point's picture

IQ test:

Do you have your "B" grade Euros in the bank?

If answer is yes, you are a drooling moron.

Haus-Targaryen's picture

Looking forward to the incoming Target2 divergence -- and Ghordos defense as to why its misunderstood and its actually a good thing for the Germans, because all the Spanish and Greeks can purchase brand new BMWs.  


Ghordius's picture

even Mr. Sinn had to retract some of his conclusions on Target2, and claimed he was misunderstood. and he, the founder of "Allianz für Deutschland" if memory serves me well, was the original critic of Target2 imbalances

I applaud the work of Mr. Sinn. I did read it, and I was among it's critics. all knowledge is based on one courageous man putting up a new theory and the others tearing it apart. what is left is the result of peer review. it's the academic/scientific method, and it's very good... in academia

Mr. Sinn is, though, not only an academic, he is also a politician. a difficult marriage of methods and scopes. interestingly, there is a tradition in Germany to distrust such overlaps of "social fields"

the net result of Mr. Sinn's "attack", though, was excellent. T2 imbalances are now monitored (more), and the ECB has changed it's policy on them

Mountainview's picture

Apparently lots of Greek tourists will come to Switzerland. Why otherwise would they change their EURO's in Swissies?

LawsofPhysics's picture

Interesting, right back where we started.  Hey, let's do it again!!!..


KnuckleDragger-X's picture

I'm actually a bit amazed that the run didn't start sooner and this may be a bellweather for the future of the EU.

sun tzu's picture

Anyone with money in Greek banks is about to get Cyprus'd

margaris's picture

There is a difference between insanity and stockholm-syndrome.

People who have faith in the banking system don't do so out of their own choice. They are forced to use fiat money and pay taxes with it.

Relentless101's picture

Shit is showing some fraying. Fraying that affects the wallet is what finally will peoples attention. The band-aid over the open heart surgery that was 08' is about to fall off.

eatthebanksters's picture

Politicians need to be included with bankers....politicians give bankers way to much room to do dangerous and stupid shit, all so together they can keep the world growing.  By doing this politicians can give away free shit tokeep getting elected and bankers can make huge profits.  Definitley croney capitalism.  The problem arose when they all gave away to much free shit and took on to much debt to stay in office.  There's no fucking hiding from the looming disaster now.  Obama can try and put lipstick in his pig, but its still his pig.

Ukraine is just about cooked, Japan is close and Italy, Spain, Portugal and Russia are queuing up.

demur's picture

Just look at the corrupt system as the GMC (goverbank media complex). 

RadioactiveRant's picture

Are the bankers insane for believing that they won't be bailed out, or us for expecting the system to collapse?

noben's picture

All that CTRL-P is bullish for HP ink and Dell pixels.

Buck Johnson's picture

Spot on, spot on.  We are at the point of breaking and the system is screaming it and CNBC and others are trying to hide it.  Oil going down just to "hurt russia" yea right.  Somebody either conned the president into trying to bust the bubble and blame it on russia or the president truly thought that doing this to oil would work on Russia.  I truly think that the world economy isn't as well as they say including the US.



WonderDawg's picture

The president? Dude, the first thing you need to understand is that the president isn't allowed to make any big decisions. He's a puppet, nothing more. He's an idiot, a liar, and a sociopath, true enough, but don't believe for a second that he is in control of any of this shit. The bankers make the rules, get it?

Cognitive Dissonance's picture

Well, on the bright side Greece and the EU kicked the can down the road for four years. Long enough for certain people to move their money somewhere 'safer'.

InvalidID's picture


 I dunno about you but I'm not holding any drachma's... Although now seems like a good time to buy property on the coast...

Cognitive Dissonance's picture

Greek islands for (next to) nothing and the chicks are free.

new game's picture

wow, euro landmines

watch your step.


InvalidID's picture


 I haven't been to Greece in a long time to be honest. I wonder if it's still nice? And do you know a good realtor over there? IT really might be worth the effort to buy a small island now.

pgroup's picture

And the minute you buy it, they'll do the xenophobic shuffle and repo it cause you're a furrinner.

Or they'll let you keep it but tax the blood right out of your veins cause you're a furrinner.

Either way, you'll wish you bought one of those nice yachts you see in travel magazines.

7.62x54r's picture

Not repo. Something worse. Jail for not paying outrageous property tax. They won't sieze the land because then they can't inflict more tax on you.

The land is cheap for a reason. Owning any of it makes you a slave to the government.

Ghordius's picture

"I wonder if it's still nice? " huge amounts of Germans and other Northern Europeans went to Greece for their summer holidays of 2014. the tourism season went reasonably well, and they came back quite satisfied

PrecipiceWatching's picture

Is there the equivalent of an American 2nd Amendement in Greece?


You don't really own property you can't defend.  Especially in a society on the borderline of meltdown.

Overfed's picture

I strongly doubt they have anything resembling gun rights in Greece. However, due to their proximity to eastern Europe and MENA, I would be willing to bet that an AK is easier to lay hands on in or around Greece than in the US.

Escapedgoat's picture

In Crete they have them hidden and any new AK  from Albanians costs 400 euros in Albania and to smuggle it across 750 euros and over.

You do have a choice.

Greeks do not use the guns lightly though, the country is full of hunting guns as well. Italy used to be as well I do not know for today.

NuckingFuts's picture

I lived in a border country with Greece for a couple years in the mid 90's ..... From my experience then, you could acquire almost anything easier then in the US. Even if it was illegal the police take a friendly bribe and go away. Yes, I would venture to say that AK's flow readily from Macedonia and Albania.

Government needs you to pay taxes's picture

Agree, dont forget the corollary:  When you confiscate private property, you must also be capable of defending it when the owner decides to have a go at you.

Escapedgoat's picture
" must also be capable of defending it when the owner decides to have a go at you.



for the next couple thousand years. lololol

7.62x54r's picture

Bad idea.

The Greek government is inflicting incredible property taxes on landowners, and jailing people for non-payment, instead of siezing the property.

And you can't sell the property, because no one wants the tax burden.

zorba THE GREEK's picture

By "safer" do you mean to something "shiny"?

Cognitive Dissonance's picture

I do.

But if you watch CNBC 'safer' means US Treasuries.

LawsofPhysics's picture

Wait what?  Is the treasury actually buying gold again?  Inquiring minds want to know...

Greenskeeper_Carl's picture

Speaking of 'safer' , wouldn't you know it, gold and silver both opened down this evening. I guess everything is already fixed...