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Capital Controls Hit Greek Banks: FX Trading Curbed As Credit Lines Cut

Tyler Durden's picture




 

While officials have begun their own versions of capital controls by raiding pension funds, confiscating local government cash, and surcharges on withdrawals (and transfer ceilings); it appears the market participants themselves have now imposed their own share of capital controls. As Bloomberg reports, international securities firms are curtailing trading with major Greek banks - pulling credit lines and restricting FX trading limits - as fear of Grexit looms.

Bloomberg reports,

Greek banks are increasingly being hampered from trading currencies, one of most liquid markets, as international dealers cut back credit lines and costs soar, according to people with knowledge of the trades.

 

International securities firms are curtailing trading with Greece’s major lenders that may expose them to the risk of a default by the nation and the possible use of capital controls to stem outflows from banks, the people said, asking not to be named because they are not authorized to speak publicly. Those threats are adding to concern that the euro would decline in the event of a default or a Greek exit from the currency region, leaving counterparties exposed to multiple risks, said the people.

 

A months-long impasse on Greece’s bailout talks with creditors has prompted depositors to withdraw funds from the nation’s lenders, leaving banks no choice but to rely on emergency funds for liquidity. The ECB on Wednesday raised the limit on Emergency Liquidity Assistance, people familiar with the matter said, a sign the financial system remains under strain.

 

“The latest sign the market is attempting to fortify itself against a Greek default is playing out in the FX market,” said Mark Williams, a former bank examiner for a Federal Reserve bank and now a lecturer at Boston University’s Questrom School of Business. “The market has increasingly become aggressive in preparing for a Greek default and in protecting itself from the potential financial impact.”

 

* * *

While they’re still in a position to trade in the currency market, Greek banks are assuming additional risk as they struggle to hedge some of their positions and dealing costs have risen, said the people.

 

On some transactions, the bid-offer spread is as much as 50 percent higher than it was a year ago, said one person. Limited access to interbank trading has forced Greek banks to hoard an additional 5 billion euros to 6 billion euros in liquidity because they need to maintain higher buffers of cash, according to a Greek banking official.

 

One London-based FX sales trader said his bank continues to provide credit lines to Greek counterparties, but these are to just cover day-to-day foreign exchange needs, accommodating transactions on tenors that are no longer than a week, on a case-by-case basis.  

Officials for National Bank of Greece SA, Alpha Bank AE and Piraeus Bank SA declined to comment; officials for Eurobank Ergasias SA didn’t immediately return calls

A central bank official in Athens said he didn’t have a comment.

And all this happens an hour after the ECB announced it has boosted total Greek ELA by another €2 billion to €78.9 billion. Considering total Greek household and corporate deposits were €131 billion as of the end of March, the unspoken message to Greeks is that should they push too hard, the ELA gets yanked leading to an immediate 60% haircut in Greek deposits.

 

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Wed, 05/06/2015 - 13:56 | 6066412 The Bell Rang
The Bell Rang's picture

No comment......Hint....HELPPPPPPPPPPPPPPP

Wed, 05/06/2015 - 14:12 | 6066467 Wolferl
Wolferl's picture

Throw those worthless pathetic Greeks out of Europe already.

Wed, 05/06/2015 - 14:13 | 6066472 Model T
Model T's picture

While you're at it; don't forget to throw out the worthless French, too.

Wed, 05/06/2015 - 14:19 | 6066491 NoDebt
NoDebt's picture

Hey, look up there.  What are those birds circling overhead?  Eagles?

No.  They're vultures.

Wed, 05/06/2015 - 14:55 | 6066640 kaiserhoff
kaiserhoff's picture

About damn time.

On to Italy.

Thu, 05/07/2015 - 08:47 | 6068693 Brazen Heist
Brazen Heist's picture

Dude you've been peddling that one line too many times.

Who took them in, in the first place?

Europe deserves this shitshow.

Wed, 05/06/2015 - 14:12 | 6066468 Model T
Model T's picture

None of the factors you mention is a "Capital Control". A Capital Control is a restriction on the outflow of funds by a Govt. to prevent currency flight; such as the generation long limit on British Citizens not being able to leave England with more than;XXX; arbitrary amount of Pounds; for example.

 

 

 

Wed, 05/06/2015 - 17:21 | 6067138 Butterflying
Butterflying's picture

My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do... www.jobs-review.com

Wed, 05/06/2015 - 13:57 | 6066415 Yen Cross
Yen Cross's picture

  The euro is going to get absolutely fucking drilled, as soon as this fx hedging finishes unwinding.

Wed, 05/06/2015 - 13:58 | 6066416 kowalli
kowalli's picture

Italy, Spain,Portugal, ... NEXT

Wed, 05/06/2015 - 14:12 | 6066469 angel_of_joy
angel_of_joy's picture

Haven't you forgotten something ? Like Ireland and (Mon Dieu, quelle horreur)... FRANCE ?!?

Wed, 05/06/2015 - 14:18 | 6066489 valley chick
valley chick's picture

Ok you got my attention with Italy.  please be next....tired of waiting for this inevitable mess to blow up. Until then....back to my nap.

Wed, 05/06/2015 - 18:52 | 6067369 Dead Canary
Dead Canary's picture

Then Japan then Ireland, yada, yada, yada then...... Us!

Wed, 05/06/2015 - 13:58 | 6066417 Cpl Hicks
Cpl Hicks's picture

At some point it's going to be over. So let's get on with the final act of this circus, already.

Wed, 05/06/2015 - 13:59 | 6066423 buzzsaw99
buzzsaw99's picture

a whole lotta corzining goin' on right about now

Wed, 05/06/2015 - 14:08 | 6066456 CPL
CPL's picture

Cyprusing in this case...got Bitcoin?

Wed, 05/06/2015 - 14:32 | 6066541 Dollarmedes
Dollarmedes's picture

We Corzined some folks?

Wed, 05/06/2015 - 13:59 | 6066425 Larry Dallas
Larry Dallas's picture

Coming to a democracy near you.

Wed, 05/06/2015 - 13:59 | 6066426 i_call_you_my_base
i_call_you_my_base's picture

All the money is already out. Capital controls wouldn't seem to matter much. If one of Syriza's objectives was to buy time for people to get their money out of the banks, they were pretty successful. They snaked a good amount from ELA.

Wed, 05/06/2015 - 14:11 | 6066466 CPL
CPL's picture

Yes he did, ran a decoy pass by the play book.  Good job on his part, those that didn't follow the cues of the quarterback are about to get crushed.  Why?  Because they are dumb.

\\Got Bitcoin?  Agnostic Option C.

Wed, 05/06/2015 - 14:01 | 6066430 Glass Seagull
Glass Seagull's picture

 

 

Greek "Bank" = oxymoron

Wed, 05/06/2015 - 14:02 | 6066435 Atomizer
Atomizer's picture

Unless the Bank of International Settlements can find ways to laundromat monies, it's a stallmate global debt decision. 

/stupid fucks who think they're controlling the world dynamics.  

Wed, 05/06/2015 - 14:08 | 6066445 Atomizer
Atomizer's picture

The FX market has become OTC pink penny investment bets. 

Wed, 05/06/2015 - 14:06 | 6066447 oudinot
oudinot's picture

Isn't that the point: Greece leaves and the Euro drops?

That's the only game in town.

Unfortunately, it is an entropic process.

Wed, 05/06/2015 - 15:59 | 6066880 Bindar Dundat
Bindar Dundat's picture

If Greece leaves --  the Euro goes up because the average IQ of the zone will go up.

Fuck the greedy dishonest Greeks.......GO GO GO

 

Wed, 05/06/2015 - 14:10 | 6066460 NoWayJose
NoWayJose's picture

When I first saw the little chart for this story on the ZH home page I thought I was looking at the Italian Flag.....  but patience....   Italy's time will come too...

Wed, 05/06/2015 - 14:17 | 6066475 Atomizer
Atomizer's picture

IMF is working with TPP to create a bigger pool to kick the can down the road. Higher unemployed, higher printing to subsidize marginal GDP reporting. 

Wed, 05/06/2015 - 14:22 | 6066500 Atomizer
Atomizer's picture

Don't get overwhelmed with the Government showing you something on one hand, while creating the magic trick on an other. 

Wed, 05/06/2015 - 14:33 | 6066545 GRDguy
GRDguy's picture

Quiet!  Live-test-study in progress. Coming to your city, soon.

Wed, 05/06/2015 - 14:47 | 6066593 GRDguy
GRDguy's picture

""as international dealers cut back credit lines and costs soar,"

Can you remember back when Goldman-Sachs demanded more collateral from a couple of hedge funds, thus setting off the collapse of the over-extended real-estate market?  Sameo-Sameo. Same techniques by the "smart" money.

 

Wed, 05/06/2015 - 14:59 | 6066644 Arius.
Arius.'s picture

it takes a smart man to look through and a man to call it for what it is.

 

look at the way these "smart" tactics even over here are not called for what they are but are called capital controls (which are measures taken by gov.) ... these guys reach everywhere ...

 

goin back, same tactics started the crisis of 2008 with similar collateral demands, or even 1931 Credit Anstalt in Austria which unleashed the great depression all over the world

Wed, 05/06/2015 - 14:55 | 6066595 gwar5
gwar5's picture

Why, oh why, are there still any remaining depositors in Greek banks? GOTFS or urine big trouble.

 

James Turk: "Before Greek deposits trend lower than the amount owed to the Troika the banks will be closed and accounts confiscated. Greek deposits are     dropping fast, which means the EU will have to act soon."

Wed, 05/06/2015 - 16:27 | 6066994 Hongcha
Hongcha's picture

No worries gwar5.  There are plenty of elderly pensioners will not be quite quick enough.  They will see their savings, upon which they rely to eat and stay in four walls, haircutted 50%-70%.

The Brussels bankers are relying on this residual, this windfall from the defenseless elderly.

Wed, 05/06/2015 - 14:55 | 6066638 monad
monad's picture

Time to let Vlad broker the sale of a nice big flat Greek island to China.

Wed, 05/06/2015 - 14:56 | 6066645 q99x2
q99x2's picture

Bitcoin last price $236

Wed, 05/06/2015 - 15:38 | 6066818 ZZR600
ZZR600's picture

Hold on, €131 billion in deposits means less than €13 billion in actual cash, or €1300 per person for a nation of 10M. So in reality, if electronic transfers are barred, and over half of the deposits are owed to the ECB, the average Greek wil be lucky to get €700 in cash if the SHTF

Wed, 05/06/2015 - 16:39 | 6067026 fremannx
Thu, 05/07/2015 - 03:37 | 6068318 Zimscooter
Zimscooter's picture

and she said "sorry, i dont do greek"

Thu, 05/07/2015 - 10:30 | 6069030 therooster
therooster's picture

Some debt-free liquidty might help the situation . Why the hell should we use debt, only ? Make a choice !

BitGold (not BitCoin) can sure help .... fully gold backed

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