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As Greece Scrambles To End Its Bank Run, JPM Throws A Wrench: Says Deposit Outflows Continued After "Deal"
Now that Greece and the Eurogroup are back on the same page and "cooperating" to use a game theory term, and any attempts of Eurozone "defection", pardon the pun, by the Syrizia government have been postponed until the 4 month bailout extension runs out in June when the entire charade is set to repeat, it is critical for Greece to undo the mess that the Troika did when heading into the mid-February negotiations, the ECB did everything in its power to foment a massive bank run by spooking both banks and citizens that their funds may be Corzined, or otherwise capital controlled, thereby crushing any negotiation leverage the Tsipras government may have (just as we had laid out previously).
What we do know, is that it didn't take much, and sure enough in the month of January, Greek banks suffered the biggest deposit outflow in both absolute and relative terms in Greek history.

One can only guess how bad it must have gotten in February, when rumors of €1 billion daily outflows were a daily occurence, and when even the likes of Stratfor reported (incorrectly as per official denials) that one of the largest Greek banks, Piraeus had run out of cash into month end.
As a result, everyone in Greece is now in full-blown confidence rebuilding mode in a desperate attempt to restore some of the deposit outflows, which have pushed total Greek deposits back to 2005 levels, even though nothing has been resolved vis-a-vis long-term Greek sustainability. As the WSJ reported late last week, "according to one senior banking official, more than €800 million ($905 million) in deposits have been put back into the Greek banking system since Monday when Greece’s banks were closed for a public holiday. “We saw €700 million return on the first day and another €150 million yesterday,” the banking official, speaking on the sidelines of central bank conference, told journalists. “Things are going well.”
Maybe, or maybe this is just yet another attempt to play off the public mood, because while as recently as 2 weeks ago the western media was desperate to see lines in front of Greek ATMs to accelerate the Greek government's folding to the Troika's demand (which ultimately happened), now it is just trying to talk back some of these destructive, confidence-crushing innuendos.
To be sure, the WSJ noted as much: "But, in fact, the money that has dribbled back since last Friday’s deal, pales in comparison with the amount withdrawn in the past three months, say analysts, and it will take several months of inflows to confirm that the trend is here to stay. And, if past experience serves as precedent, many of the deposits that have left, may never come back."
“These figures are a good starting point but a reversal of this trend will take a few more quarters to appear,” said Nikos Magginas, a senior economist of National Bank of Greece . “People are waiting for more signs of stability, such as the successful review of the country’s reforms program. Two to three more supportive events are needed to secure this stability but this takes time.”
There is an even less pleasant possibility: namely that Greek bankers and media outlets, knowing just how close they are to total collapse if the deposit outflow continues, which itself is a function of confidence in the local financial system (or lack thereof), even as the ECB refuses to grant Greece any further funding, are simply lying.
This is the possibility articulated, in more politically correct phrasing of course, by JPM's Nikolaos Panigirtzoglou, in his latest "Flows and Liquidity" piece:
Our daily proxy of deposit outflows based on the purchases of offshore money market funds by Greek citizens, which is one way for Greek citizens to deploy their withdrawn deposits, was €64m this week (Mon to Thu), sharply lower than the €153m during the previous week (between Feb 13th and Feb 20th), €104m during the week between Fed 6th and Feb 13th, and €62m between Jan 30th and Feb 6th. While it is encouraging that the latest Eurogroup agreement with the Greek government caused a sharp decline in deposit outflows this week, our deposit outflow proxy suggests that Greek banks have not stopped bleeding. This is inconsistent with the statement by the Greek finance minister that €700m returned to Greek banks after Eurogroup’s deal.
So yet another accusation, as diplomatic as it may have been phrased, that Varoufakis lied. There seems to be quite a few of those lately...
Of course, maybe Varoufakis did not lie: he simply forgot to let the European Commission check the math (they seem to do a good job of at least converting his doc files to pdfs).
It is possible that the rise in retail deposits referred to by the Greek finance minister included the month-end payment of pensions which typically results in a transfer of bank deposits from government organizations to households.
So what does the math come out to?
What do the above offshore money market fund purchases imply about Greek bank deposit outflows? The rule of thumb we used before based on December flows was that each €100m of purchases of offshore money market funds are associated with around €3bn of deposit outflows. January data point to a somewhat lower ratio with €562m of offshore money fund purchases corresponding to €12bn of deposit outflows. Applying January’s proportionality to February, we calculate that the €292m of purchases of offshore money market funds in February were associated with bank deposit outflows of around €6bn. This week’s €64m of purchases of offshore money funds mechanically point to deposit outflows of around €1bn.
In other words, if JPM is correct, not only did the January outflows not cease in February, but what's even worse, is that in the last week of the month, when after the "deal", people would feel confident enough to return to their banks, another €1 billion of deposits were withdrawn. In total, this means that Greek deposits will have fallen to just about €140 billion as of today - the lowest level since March of 2005.
Worse, assuming an NPL ratio of around 40%...

... the continued deposit flight suggests that Greek banks indeed have at most a few days of cash left, and the Cyprus "blueprint" scenario is increasingly likely, unless the ECB either boosts its ELA allotment for Greece, or once again allows Greek debt to be used as collateral in ECB operations. So far, the ECB has been mum on the possibility of either of those.
All of this, of course, assumes that Greece somehow manages to get its already unconfident citizens to resume paying taxes, or else the government will have no remaining cash with which to either run the country or repay the IMF's significant loan maturity in March, which as we preciously noted, is an increasingly possible outcome.
In short: assuming JPM's math is accurate, not only is Greece not out of the woods despite the "bailout extension deal", but the woods are getting darker and more deadly with every passing minute.
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"You can fool some people sometimes, but you can't fool all the people all the time." - Peter Tosh
"Down presser man, where you gone run to, coooome judgement day" ? - Peter Tosh
Whoda thunk that the Greek populace would not have panicked or reacted negatively upon hearing that they were thrown back under the crushing treads of the EU monolith grinding them to dust neath it's metal unfeeling tracks covered in the blood and body parts of the innocents immediately after all wealth, possessions, thoughts and indeed their very souls have been farmed by the bankers for redistribution amongst the 0.001% of galactic proportions. Not to worry. The holes in Siberia are from God's tears as he acknowledges evil that the few dispense upon the innocent peasantry, the many, but moments before His decision to break the 7th Seal bringing Armageddon Down upon the Really Nasty Fucks of the World.
You might be right about Greeks thinking Knukles,
but you're off base with the Siberian earth holes. They must be caused by ....wait for it -- Global Warming (or is it now more PC to put as global earth change). Just wait, it won't be long before the MSN (and government funded academicians) find a way to not only connect the two, but to show that moar QE and a global carbon tax will set things right.
So the holes in the Greek banking deposits are also caused by GW ?
By golly, I think thats grant material right there.
Take the money and run, seems to be what the Greeks are doing.
After proper risk analysis: Why should someone hold cash in a Greek bank account?
Amen !
R-amen.... fsm
that dumb hippie was quoting abraham lincoln. give credit where credit's due.
There's still 150 billion euros that can be Cyprus'd
my co-worker's mom makes $87 an hour on the laptop . She has been without work for 8 months but last month her pay check was $15653 just working on the laptop for a few hours. try this website... www.globe-report.com
It's Saturday?
GFC, the world does spin.
Just auction off the debt, it has to sell at some price.
Alexis, you can't trust the euro-hyenas!
"The bank official, speaking on the sidelines told journalist--Things are going well"...
LMFAO- sure
Translation: "The rape of the commoner happily proceeds apace, as planned."
or... We will help the "little people" as long as they drop trow and bend over and let us Greek them with impugnity...
If you are into drones check out this site http://pickyourdrone.com/
Greek Banks....lets analyze this...last time I checked all the above mentioned banks are private listed companies. Without exception nearly 50% of their shares are held by foreign investors, the rest is owned by Greek Mega-rich individuals and institutions (including the mega wealthy Greek church) which themselves also have foreign investors...so lets correct this and DONT call them Greek banks...lets just call them banks.
And I ask this...if we (The Greek people) withdraw all our money from these banks tomorrow and deposit them in locally owned Credit Unions or the Russian banks...will that make any difference?
The withdrawal was an expected trap set by the Conservative circles of EU with the ex Government of Greece and Mr Samaras...SYRIZA did not fell in it.
Who would be that stupid to keep any money in a Greek bank ?
Soon they will transfer all bank deposits to the EU to pay back debt.
About $30 billion of the Greek debt is due in 2015. A 20% haircut on Greek deposits would keep the IMF and EU bankers happy. Greeks beware
You guys here are smart, please dont let me down..Im just a tax evading, greedy, Greek, I can't know better...I expect better form you.
Greece is not Argentina, can you imagine what impact on the confidence towards the Euro it will have if in a EURO STATE, part of the EURO FAMILY,of the GREAT EURO VISION will have such action? Can you imagine the day after one EU country or its masters touches the deposits of EU citizens of EURO savings??/
That will be worst then a Grexit...yes? ...no?
Your memory is too short. What happened in Cyprus?
i dont know about short but some times it can be selective...for example if you lend me money I might forget but I will never forget if you owe me :)
Cyprus?...as far as I remember the TROIKA tried to haircut 6.5% from accounts up to 100K and 9.9 for all others...the suggestions was thrown at their Parliament's WC and then they suggested that the banks should have their accounts haircut d by 40% or something but at the end I thing NOTHING happened...except of-course that all Cypriot banks changed their names and kept on doing business without any losses...mI wrong????
Half your banks including eg..New York Mellon Bank..... Homer !
I suppose local business may have no choice. They need local bank accounts to deposit proceeds and pay immediate expenses. And fools who keep their savings in the bank to get really high interest rates.
1. The surprising thing is that there are any deposits (other than truly trival amounts per account) still remaining in the Greek banking system.
However:
2. FWIW, IMO, if the Greek banking system started to crack on Monday am, by Monday pm Merkel will have arranged (perhaps via more ELA) for more Greek credits.
IMO, if you want the charade to end, then EITHER:
A. Merkel has to be taken out of the decision loop - perhaps because approval for more credits is also required from The Netherlands (who think most of Southern Europe expensive waste of space, so won't approve), OR
B. Greece itself refuses EUR credits and introduces New Drachma. Greek politicians full of pride and emotion could do this, almost by accident (like Hitler getting wound up in a speech and declaring war on US in WW2).
However, my money would be on a back-door fix by Merkel, or even the US if the alternative is Russian influence.
Watson
Hey!, quit picking on Greek banks for being liars....7 million probably was deposited, just the fact that about 3 billion left at the same time is a minor omission...its just truth from a different point of view:).
Greece's new FinMin, Yanis Varoufakis, has an interesting metaphorical idea why the global economy is collapsing and the role of the United States. He calls it "The Global Minotaur"...
http://www.globaldeflationnews.com/the-global-minotaur-a-global-finance-...
Excellent playlist direct link here: http://youtu.be/p7iz346xlb8?list=PLCD07B6D74C75127A
Explains dollar recycling Bretton Woods, 1971 & 2008 clearly & articulately.
It's probably useless info but here it goes....
Long, long, time ago in a Galaxy far far away...every Greek withdrew his/her money form the bank as it is LAW and NORM now that if you owe the state, your money disappear overnight from your bank account and goes to them.
The author of this has lost in the early days 2,500euro in such manner...I wwas faster then them !!!
So when they say..."deposit outflows.." it will be good to clarify..."Who's deposits?"...
Let me give you the answer to this and reviel to you how the EU/Samaras trap was neutralized....the deposits of the Greek goverment Departments such as the IKA, TEVE and other health and retirement funds....!
Don't stress too much Tyler will get it and explain !!
Tyler already got it. Let me help out a bit: http://www.zerohedge.com/news/2013-03-29/guest-post-why-mr-dijsselbloem-...
This is all Greek to me. However, IMHO Greece is toast and the Euro will be right behind it (no pun intended) The greek deal is similar to our Congress funding DHS for a week. It's a stall, and like most stalls it's full of shit.
The ECB strategically and comprehensively ambushed Yanis to stop any deviation dead in its tracks, literally leaving them no choice last week, or face a starving nation with empty cashpoints. I can't see Yanis rolling over though, he's a bright independent thinker who's got to be planning something. As for the inflows and outflows, I can't see any shadow of a chance depositors are returning money to Greece for the forseeable. When Yanis makes his next move I'm convinced it's going to be a gamechanger. Energy is the key - greece can't do anything while homes are lit with candles and industry is at risk of power cuts. For that alone a deal with Russia makes great commercial sense.
but but but, that Greek master of Game Theory declared it was over. I'm so confused.