Greek Banks On Verge Of Total Collapse: Bank Run Surges "Massively" As Depositors Yank €700 Million Today Alone

Tyler Durden's picture

While the Greek government believes it may have won the battle, if not the war with Europe, the reality is that every additional day in which Athens does not have a funding backstop, be it the ECB (or the BRIC bank), is a day which brings the local banking system to total collapse.

As a reminder, Greek banks already depends on the ECB for some €80.7 billion in Emergency Liquidity Assistance which was about 60% of total deposits in the Greek financial system as of April 30. In other words, they are woefully insolvent and only the day to day generosity of the ECB prevents a roughly 40% forced "bail in" deposit haircut a la Cyprus.

 

The problem is that a Greek deposit number as of a month and a half ago is hopefully inaccurate. It is also the biggest problem for Greece, which has been desperate to prevent an all out panic among those who still have money in the banking system.

Things got dangerously close to the edge last Friday (as noted before) when things for Greece suddenly looked very bleak ahead of this week's IMF payment and politicians were forced to turn on the Hope Theory to the max, promising a deal with Europe had never been closer.

It wasn't, and instead Greece admitted its sovereign coffers are totally empty this week when it "bundled" its modest €345 million payment to the IMF along with others, for a lump €1.5 billion payment, which may well never happen.

And the bigger problem for Greece is that after testing yesterday the faith and resolve of its depositors (not to mention the Troika, aka the Creditors) and found lacking, said depositors no longer believe in the full faith (ignore credit) of the Greek banking system.It may have been the Greek government's final test.

Because accoring to banking sources cited by Intelligent News, things today went from bad to horrible for Greek banks, when Greeks "responded with massive outflows to the Greece's government decision to bundle the four tranches to IMF into one by the end of the June."

According to banking sources, the net outflows sharply increased on Friday and the available liquidity of the domestic banking system reduced at very low and dangerous levels.

 

The same sources estimate the outflows on Friday around 700 million Euros from 272 million Euros on Thursday. The available emergency liquidity assistance (ELA) for the Greek banks is estimated around 800 million Euros. In addition, the outstanding amount of the total deposits of the private sector (households and corporations) has declined under 130 billion Euros or lower than the levels at early 2004.

 

The total net outflows in the last 7 business days are estimated 3.4 billion Euros threatening the stability of the Greek banks.

This means 2.5% of all Greek deposits were pulled in just the past 5 days! Indicatively, this is the same as if US depositors had yanked $280 billion from US banks (where total deposits amount to about $10.7 trillion)

As further reported, the Bank of Greece is set to examine on Monday if Greece will urgently ask additional ELA. However, since one of the main conditions by the ECB to keep providing ELA to Greece is for its banks to be "solvent" (a condition which is only possible thanks to the ECB), one wonders at what point the Troika, whose clear intention it has been from day one to cause the Greek bank run in the process leading to the fall of the Tsipras government, will say "no more."

For those interested, according to IN, the deposit (out)flows in the last 7 business days are as follows:

 

Finally, for those who missed it, here is the first hand account of the Greek bank run from precisely a week ago as retold by ZH contributor Tom Winnifrith:

Witnessing the great bank run first hand as I deposit money in Greece

Jim Mellon says that the Greeks should build a statue in my honour as on Friday I opened a bank account in Greece and made a deposit. Okay it was only 10 Euro, I need to put in another 3,990 Euro to get my residency papers so I can buy a car, a bike and a gun, but it was a start. But the scenes at the National Bank in Kalamata were of chaos, you could smell the panic and they were being replicated at banks across Greece.

For tomorrow is a Bank Holiday here and if you are going to default on your debts/ switch from Euros to New Drachmas a bank holiday weekend is the best time to do it. And with debt repayments that cannot be met due on June 5 (next Friday) Greece is clearly in the merde. If it defaults all its banks go bust.

But I had to open an account and make a deposit. Outside the bank in the main street of Kalamata there are two ATMs. The lines at both were ten deep when I arrived and when I left an hour later. Inside I was directed to the two desks marked "Deposit". You go there to put in money, to open an account or if you are so senile that you cannot do basic admin of your account without assistance. As such it was me depositing cash and four octogenerians who had not got a clue about anything. Actually I lie. These folks may have been gaga but they were not so gaga that they were actually going to deposit cash, I was the sole depositer.

Friday was also the day when pensions are paid into bank accounts. On the Wednesday and Thursday it was reported that Greeks withdrew 800 million Euro from checking accounts. Friday's number will dwarf that. Whe you go to a Greek bank you pull off a ticket and wait for your number to be called. The hall in my bank contains about 60 seats all of which were filled. There were folks standing behind the seats and in fact throughout the hall, all wanting to get their cash out before the bank closed at 2 PM.

At the side of the room, shielded by a glass screen sat a man behind a big desk. He tapped away at his screen and made phone calls. Ocassionally folks wandered over, shook papers in his face and harangued him having got no joy elsewhere. So I guess he was the bank manager. I rather expected him to end one phone call and stand up to say "That was Athens - all the money has gone, its game over folks." But he didn't. He may well do so at some stage soon.

Eventually I got the the front of my five person queue of the senile and opened my account. Passport, tax number, phone number all in order. I handed over a 10 Euro note and the polite - if somewhat stressed - young man gave me about ten pieces of paper to sign and stamped my passbook. I have done my bit for Greece and have given it 10 Euro which I will lose one way or another in due course. So Jim - time to lobby for that statue.

The Government did not put up a default notice on Friday as I half expected. The can kicking goes on. The ATMs will be emptied this weekend and on Tuesday and in the run up to a potential default day next Friday the banks will be packed again with folks taking out whatever money they can.

It is not just the bank coffers that are being emptied. To get to The Greek Hovel where I sit now from my local village of Kambos is a two mile drive. On my side of the valley there is some concrete track but it is mainly a mud road. On the other side of the valley there is a deserted monastery so to honour the Church - even if there are no actual monks there - a concrete road was built in the good times. By last summer it was more pothole than road.

By law, since I have water and electricity, I can demand that the road be mended and so last summer I went to the Kambos town hall (4 full time staff serving a population of 536) and did just that. They said "the steam roller is broken and we have no money but will try to do it in the Autumn." They did not.

But last week a gang of men appeared and the road is now pothole free, indeed in some places we have a whole new concrete surface. And as I head towards Kalamta there are extensive road mending programmes. At Kitries, the village has found money to renovate its beach front. It is a hive of activity across the Mani.

Quite simply each little municipality is spending every cent it has as fast as it can. The Greek State asked all the town halls to hand over spare cash a few weeks ago to help with the debt repayment. The town halls know that next time it will not be a request but an order. But by then all the money they had hoarded will have been spent. That is Greekeconomics for you.

Everyone knows that something has to give and that it will probanly happen this summer. The signs are everywhere

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Xibalba's picture

DRACHMA BABY!!!

knukles's picture

Credit Default Swaps, baby. 
"Delay is not Default" said somebody with skin in the game

MonetaryApostate's picture

Like dominoes they'll fall, coming to a theater near you, and soon!!!!

keremetski's picture

It is beyond me, why they had 700 millions in banks up to today. They should've taken them long long ago.

LawsofPhysics's picture

exactly, isn't "greek deposit" and oxymoron?

max2205's picture

God forbid! Don't let the MSM see or print this.

 

SRSrocco's picture

The DEATH OF FIAT MONEY is close at hand.  It's just a matter of time.  Which is why investors purchased a RECORD number of Silver Maple Leaf coins Q1 2015:

Canadian Silver Maple Leaf Sales Hit New Record Q1 2015

http://srsroccoreport.com/canadian-silver-maple-leaf-sales-hit-new-record-q1-2015/canadian-silver-maple-leaf-sales-hit-new-record-q1-2015/

Headbanger's picture

Annnnnnddd.....  ITS GONE!!!

 

Welcomen to Ze Country Formerly Know as Greece.

sodbuster's picture

> In other words, they are woefully insolvent <

If the truth were told, it's pretty much the same here- except here, we have a print button.

El Vaquero's picture

I picture a Fed Party as kind of like this:

 

https://www.youtube.com/watch?v=PbI3N2chwww

 

Except it's "PRINT MOTHERFUCKER PRINT MOTHERFUCKER PRINT MOTHERFUCKER PRINT!"

johngaltfla's picture

There once was a man from Nantucket,

Who's Drachma was as big as a Phukit,

He went out to Brussel,

Got into a Tussle,

And told all of the EU to suck it.

boogerbently's picture

That's pretty smart. This kind of stuff always happens on a weekend.

They'll have the massive gold surge under control by Monday.

Socratic Dog's picture

Wait a minute.  There are $10 trillion deposited with US banks?  What the fuck?  Thats about $30,000 per head of population.  I don't know too many people with that much deposited.  And it doesn't include mutual funds, 401K's etc.

A bail-in here would do a lot to prop up the system another decade or two.  I can see it coming....

ZerOhead's picture

Unfortunately so can the people who own most of the $10T

They have to seal the exits before the race is on

Money Boo Boo's picture

when will this nightmare of a train wreck end already????

CPL's picture

An eternity obviously.  Know where you are yet?

MonetaryApostate's picture

The algos will be tripping on Monday... :D

Oh regional Indian's picture

Poor Greeks. Someone, probably the arch rewriters of global history, the Romans, aka the WOEmans, started to refer to the Greeks as the Hellenic people.

Hell, the word obviously derives from Hellenic.

Greece has been, for it's white beauty, known as Hell on earth for 3000 years.

Took a while for them (the Romans, who are of course still in charge and still hate how bad they are the world as it is), but finally, it looks like the Hellenes are going to Hell.

HEAVE-n is merely raised...heave-ho to heave-n!

Guitar heave-ing in case you missed it...

https://www.youtube.com/watch?v=lk1TSBW_368

 

cookie nookie's picture

I've been hearing about the collapse of Greece for ages.  Yet it still stands.  They aren't leaving the Euro.  Meet the new boss.  Same as the old boss.

espirit's picture

I've got Ten Trillion in Zimbabwe Notes, is there an easy conversion to Drachmas?

samcontrol's picture

"they arn't leaving the Euro "

LOL, want to bet cookie?

 

In my experience , this is it, the bank run is the nail in the coffin.

They default in the next 10 days.

Tall Tom's picture

Hades? Gehenna?

 

Oh...What the hell.

 

You can check out anytime you want but you can never leave.

swmnguy's picture

Oh, I get it now.  I thought he was talking about the DMV.  Or a clinic waiting room, or a voice-phone tree.  All kind of the same thing, really.

Pure Evil's picture

You can still buy a gun in Greece?

lordylord's picture

"You can still buy a gun in Greece?"

Of course you can.  I don't know if gun ownership is legal in Greece, but that is not what you asked.

Fod's picture

Gun ownership is not exactly legal in Greece. In order to own a gun you have to get a permit, and that if you have a valid reason to be carrying. The only legal ownership of weapons was by people living in the borders of the country. After finishing with their mandatory army service, those Greeks that lived in the borders were allowed to keep their G3's at home, as a precaution in the case of an invasion by a neighbouring country. 2-3 years ago, the government abolished this law, taking the weapons from those particular Greeks. It is believed this happened because the politicians were afraid of armed revolts.

espirit's picture

My G-3 was lost in a 'boating accident'.

Clever Name's picture

Almost stopped reading right there. Good stat to spread to the masses, even if you still get a blank stare. $10.7T in deposits. How much 'money' is there, exactly? $3T? I would think the average persons perception is that even if they know the bank doesnt have their 'money', that at least the 'money' (as in dollar bills) is sitting somewhere...

SickDollar's picture

non stop Bitchez non stop

Chauncey Gardener's picture

My thoughts exactly. Monkey-hammer that bitch down below $1100.00 again. Jamie Dimon needs another short on PM's.

sodbuster's picture

This is the uber rich .01% attitude toward the rest of us.... https://www.youtube.com/watch?v=avaSdC0QOUM

0b1knob's picture

Boating accident in 5...4...3...2...1    And nothing of value lost.

sodbuster's picture

Well, maybe the boat.........

847328_3527's picture

Those Greek mattresses must be stuffed with drachmas by now, eh.

JRobby's picture

+10,000 World insolvency. Pushing the "default" label (and that is all it is at this point) around the global map.

Agrentina

Greece

etc.

Took Red Pill's picture

"Which is why investors purchased a RECORD number of Silver Maple Leaf coins "

From what I hear Ted Butler say the retail pm market is slow and those sales are JPM stocking up

Captain Debtcrash's picture

Now look closely because the US is nearly as insolvent as Greece.  The Greek people are protecting themselves by taking out cash.  If the Keynesian economists have their way and ban cash, we will not have that freedom. 

DeadFred's picture

I hope someone tells us if anything goes back in on Monday. Cyprus told everyone that keeping it in the bank over a weekend is a BAD idea. Some will go back in on Monday but will it be swamped by other withdrawals?

Pool Shark's picture

 

 

Taking your own money out of your own bank account?

Be careful; that's what got Dennis Hastert indicted:

http://www.nytimes.com/2015/06/06/upshot/when-its-a-crime-to-withdraw-money-from-your-bank.html?smid=tw-share&abt=0002&abg=1

Kirk2NCC1701's picture

No longer convinced that we'll see the end of Western goats or that the USD will get dethroned anytime soon.

Reason being... the trio of trade agreements that the US is fevereshly trying to get enacted, comprise the majority of world economies, and thus ensure the continued dominance of the USD.  Else, if need be, they synchronize and switch to the SDR for Balance of Trade payments between Club Fed & Friends/Serfs.

Under this scenario, which I am now certain the US Neo/Zio-cons are pushing for, the rise of the Yuan will be 'contained' or limited.  And in this version of Risk, I do not think the BRICS will move fast enough. 

The objective and smart person will hedge their bets accordingly, the rest will not.

Tall Tom's picture

Add this to your information and reassess.

 

The Derivatives Meltdown begins...

 

From Bix Weir...

 

Sometimes it takes reading the small print.

When Deutsche Bank announced that they are "internally investigating" $6B of suspected money laundering by their clients it just looked like another run of the mill money laundering case. A big one but one that can be nestled away in the attic with paying a few fines and taking a couple write downs. But what they describe is NOT a money laundering scheme but rather a problem with their derivatives book!

Deutsche Bank Probes $6B Suspected Money Laundering
http://www.reuters.com/article/2015/06/05/us-deutschebank-russia-idUSKBN0OL24220150605

"Deutsche Bank was investigating whether its employees in Moscow may have helped launder at least a triple-digit million-euro amount of money through the purchase and sale of over-the-counter derivatives in Moscow and London."

Hmm...$6B in bad derivative trades and 3 employees already fired at the largest derivative holding entity in the world. Also, Deutsche Bank was the largest bank to fail the latest stress test in the US. Hmm...

This will surely only get worse as the Greek credit default swap holders line up for payment.

It's getting hot out there!

May the Road you choose be the Right Road.

Bix Weir
www.RoadtoRoota.com

  

kaiserhoff's picture

Good catch Tom.

What they forget to mention is always important.

Kirk2NCC1701's picture

Hmm, good info and insight, TT.  Re-assessing... re-assessing...

That's a valid point, i.e. the dangers of extreme over-leveraging in the monstrously huge Derivatives Market, that swamps everything else in comparison.

The goal then would be to (a) Maintain a Dynamic Balance in these markets (offsetting bets), lest you have the DB problem you cited, and (b) use Safety Valves and Firewalls in an extreme and cascading/domino-effect perturbation.

I'd imagine that this is the part where they hire the Best & Brightest to keep the fiat Ponzi Casino going, to keep the likes of Dimon richer than us and Lord Bankfine doing God's work... and keep it going long enough to win against the Chinese/BRICS. 

Tall Tom's picture

Except..uh..Except..uh...What is there to win?

 

A whole bunch of worthless, empty, paper promises to pay 15 times that which actually exists in real and tangible assets?

 

They are absolutely insane.

 

There is no winning. NONE.

 

In Global Thermonuclear War, or in Global Derivative Market Meltdown, the only winning move is NOT TO PLAY. They are both just Weapons of Mass Destruction.

 

(I may dislike Warren Buffet but he was right when he declared that the Global Derivatives Market was a Weapon of Financial Mass Destruction. That was an honest and accurate description.)

 

I am utterly and totally shocked that they allowed this to happen. I did not expect it. I really thought the FED would give them a Backdoor Bailout. Are they fucking stupid?

conscious being's picture

Agreed TT. Winning fiat is not winning. Its about maintaining the system of power over others. Marco Polo decided to leave China when he sensed that Kubla Kahn and his fiat system were looking toppy. Yes it would be dangerous to try to travel back home to Venice, but he reasoned even more dangerous to remain in the chaotic collapse of the Empire.

 

Tall Tom's picture

Oh this gets much worse...

 

Let's add in Housing Crash and Foreclosure Wave II

 

You must undeestand that even if you did not orginate one of these TIME BOMBS and your neighbors did then when your neighbor DEFAULTS then your HOME Eqity declines as a result of the new supply being added to the Real Estate Market.

 

Enjoy...After all...They were only looking out for your best interests, right?

 

from https://homes.yahoo.com/news/265-billion-wave-thats-crush-130038955.html

 

The $265 Billion Wave That's About to Crush Homeowners

 

Millions of consumers will have to absorb a major hit to their household budget in the coming months. About $265 billion in home equity lines of credit (HELOCs) will enter the repayment period in the next few years, according to a study from Experian, and consumers may see their monthly payments spike — in some cases, triple or quadruple what they previously paid.

HELOC originations soared from 2005 up until the start of the housing crisis, and because many HELOCs enter the repayment phase after 10 years, these billions of dollars in outstanding credit balances are just now coming due. This wave of HELOC resets is expected to significantly stress borrowers' finances and the lending industry.

"This analysis is critical as we want to not only help lenders prepare and understand the payment stress of their borrowers, but also give consumers an opportunity to understand what the impact may be to their financial status and how to be better prepared for it," said Michele Raneri, Experian's vice president of analytics and business development, in a statement about the study.

HELOCs are generally divided into two periods: draw and repayment. During the draw period, consumers can use the line of credit while making minimum, interest-only payments. Once the HELOC resets, consumers can no longer borrow from that line of credit, and they must restore the equity they haven't yet repaid.

"Instead of using it like a line of credit, borrowing and then repaying the loan to restore the home equity that had been tapped into, most people simply took the maximum amount in cash and never tried to pay down the outstanding amount for the entire 10-year period," said Charles Phelan, a debt-relief consultant who specializes in HELOC negotiation, in an email. He contributes content on the topic to Credit.com. "In effect, most existing HELOCs are therefore like a huge credit card debt that has been at the maximum limit for years, with only interest expense being paid each month to keep the balance the same and not reduce it."

How much your payment increases depends on many things, like the interest rate and the length of the repayment period — a shorter repayment period generally translates into a larger increase in payment. Some HELOCs have no repayment period and require a lump-sum repayment when the draw period ends.

The HELOCs that are coming due were opened in very different economic times, under the impression that home values would continue to rise. Because that didn't happen, borrowers may not be prepared to handle this significant change to their finances.

"A lucky few will be able to absorb the new high monthly payment without defaulting and thereby risking foreclosure, and some will have sufficient equity to obtain a traditional refinance to a new single mortgage," Phelan wrote. "For a majority of homeowners with HELOCs, however, options are limited due to real estate prices having dropped to the point where the most HELOCs are not covered by equity. This blocks people from refinancing to a single new mortgage at a more reasonable payment level."

Even if refinancing is an option, it requires the borrower to have great credit. Phelan said borrowers without the ability to refinance can look into government loan-modification programs, Chapter 13 bankruptcy or settling the second lien, but he expects HELOC defaults to skyrocket. No matter how you plan to address your HELOC reset, it's crucial to have a grasp on your credit standing so you can better research your options for managing repayment and how those options will impact your credit. One way to get your credit scores for free is through Credit.com, where you'll also get suggestions to help you improve your credit.

"With more than 10 million of these contracts having been issued during 2005-2008, a tsunami of defaults is likely and will be a downward drag on America's housing recovery for years to come," Phelan wrote.

If you took out a HELOC between 2005 and 2008 and you're not sure what you'll be facing when the HELOC resets, it's time to look at your agreement and understand what you're dealing with. Simply by calling your lender, you can get a handle on the situation and prepare to absorb this shock to your finances.