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Ongoing Greece Deposit Run Forces ECB To Boost Greek ELA Ceiling Yet Again
Despite the imploring of Greek bankers for Greeks to "take your money out of your chests and houses – which are not safe in any case – and deposit at banks," it appears the Greek bank deposit run continues. As The ECB just announced another €900 million increase in Emergency Liquidity Assistance, strongly suggesting that in the 2 days since the last increase, banks are once again insolvent facing a liquidity crunch as the "banks are trustworthy" propaganda falls on very deaf Greek ears.
As we noted yesterday, Katseli, a former PASOK Minister, appealed to citizens to return their deposits to the banks “now that the banks are open” after a three-week holiday and capital controls.
“Banks are absolutely trustworthy,” Katseli told Mega TV “as guaranteed by the ECB and the Bank Association, but they would have been even more powerful if 40 billion euros had not been withdrawn in the last months.
“Let’s all help our economy,” Katseli urged Greeks.
“There will be no need to “haircut” deposits in the future if we all act responsibly,” she added - cheerfully I suppose.
It is not working.. as ECB ELA continues to soar...
Incidentally, this is just as we predicted last week. In "Greek Banks Just Became A "Strong Sell" At Any Price" we wrote:
... even as an "unsustainable" Greece meanders day to day with yet another capital infusion to avoid a sovereign default, its insolvent banks just became the first casualty of reality. However, they may not be the only ones: recall that bank depositors are nothing more than unsecured creditors. If and when the reality of the Greek economic collapse is fully tabulated (as the IMF appears to have finally done) it won't be just the equity that is wiped out - depositors themselves face the risk of creeping haircuts to their "liabilities."
Which is why we doubt that Greek savers will rush to put their money in the banks, and why we think Draghi is taking a huge gamble by putting even more ELA into Greek banks just before the same banks will announce at any possible moment they are forced to liquidate existing shareholders. The popular outcry against the banking system once a bail in is confirmed, even if it does not involve depositors initially, will send shock waves through society and rekindle the bank run once more.
Ironically, the one thing that would help preserve confidence in the Greek banking system, is more transparency about the "performing" nature of Greek bank loans: if this amount has hit 50% (or more) on the total €210 billion of loans, then depositor haircuts become virtually inevitable - anything well below that and there would still be a modest cushion before bail-ins have to go up in the cap structure.
Which is also why we fear no transparency will be forthcoming and why we expect that people may be fooled once again into believing their savings are, well, safe only to find out the hard way they are anything but - a hard lesson that investors in insolvent Greek banks are about to learn first hand.
Sure enough, so far the score is transparency 0 - propaganda: +∞. And as duly predicted, the bank runs continue.
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If you keep your money at home you could be illegally robbed.
In a bank it's legal.
pods
The banks are really f'ed now.
no, but the fedsters & ilk are really pounding the keys creating the digit paper to wipe the worlds ass before flushing
“There will be no need to “haircut” deposits in the future if we all act responsibly,” she added - cheerfully I suppose.
Meaning there will be haircuts at the rate we're going.....but only if you are the last greater fool who still has 'money' in the Greek banks when they all fall down.
Greece is leading the world in the return to the advanced cash only society.
The increase of VAT to 23% will act as afterburners to the growth of the parallel (cash only) markets. All these idiots who blame bad tax morals for the financial implosion have no clue what 23% VAT does. In Spain they jumped from 16% to 23% a few years back to pay for "austerity". This massive VAT inflation is likely necessary to nullify tax competition and unify the tax system for easier wealth exraction by Europe's new overlords in Brussels
Greece is going old school and when pessimism is the new optimism and there is no hope left, basic survival takes over......
Besides basic survival, nothing else matters.
It doesn't get any more advanced than that, truly.
That's the thing, they are all screwed. In 2011 the Brady plan was put in and then e-v-e-r-y-o-n-e bought them. Pension funds, Mutual fund managers, Stock brokers, SDR's, etc. While no one will admit what size their portfolio was, the fact is here we are a couple of years later and they aren't worth two ply tissue nor is a trillion dollars worth a trillion dollars anymore.
Let's do this step by step:
1) In 2011 the Greek's get their first ugly haircut.
http://www.zerohedge.com/article/here-comes-greek-brady-plan-together-35...
2) Then the ECB banned shorting the bonds in round about way to force the bond rate up to 188% (seriously can't make shit up it's completely fucked)
http://www.zerohedge.com/news/european-cds-ban-sends-1-year-greek-bond-y...
3) Then the Greeks take another haircut by passing all the laws on the books to pay the bond holders and ignore the existing creditors.
http://www.zerohedge.com/news/greeks-restart-bond-haircut-negotiations-d...
4) To pay for the mess, Germany cooks their books to shuffle derivatives around that account for roughly 1% of it's nationalized GDP.
http://www.zerohedge.com/news/germany-raises-%E2%82%AC555-billion-or-1-i...
5) Why was Germany so concerned about it to begin with? They had boat building contracts owned by German companies with Greek ship builders. Secretly though in back room deals, the ECB had 'restructured' 3 trillion of the German debt issue. Restructure incidentally is a double speak government word for 'write off'. Makes you wonder why one country gets a write off and no one else does because 3 trillion is a fuck tonne of money to write off for a single country. The word 'payoff' might also be used. Because a write down is just as good as a bribe isn't it?
http://www.zerohedge.com/news/guest-post-why-isnt-anyone-talking-about-w...
6) Even then there were some annexation requests by Germany.
http://www.zerohedge.com/news/greece-politely-declines-german-annexation...
The whole situation stinks and the only way to fix it is to destroy the money so the rats come out of their holes looking for their cheese.
yeah but it would take a lot longer.
think of the efficiency savings for the looters. store all your society's eggs in one basket.
Can't a Greek just transfer their funds to a Non Greek, EU bank?
I don't think they can.
Turn all their "Y" Euros into "X" Euros?
If you hadn't posted in the past few days, I'd have thought this was you http://gawker.com/cops-find-more-than-1-200-guns-in-home-of-man-discovere-1719377393
Now I wonder what ZH'er this was, RoboTrader perhaps?
Two tons of ammo - no wonder my 9 mm costs so damn much...
Someone is gonna inherit a great fortune.
I sure miss uncle Bill, or whatever his name was.
“There will be no need to “haircut” deposits in the future if we all act responsibly,”she added - cheerfully I suppose.
In other words, when we steal your money it will be your fault.
"If you're already bald, there ain't no hair to cut".
I think we played around with this situation in game theory class. It doesn't work out well for most depositors.
pods
"It ain't your money, it's our money on loan." ECB banker overheard in the ECB exec bathroom.
It will be your fault if we have to send the goon squad to collect and they rape your entire family staring with the males because that is what we prefer.
My in laws are Greek. They told me last week that they had family there freaking out because they could not access money in the bank!
I asked her why on earth would anyone in Greece keep money in the banks after seeing all this crap for over a year.
She told me that they were afraid of getting robbed at home. Unbelievable.
Tell them to take what they can, and GTFO of Greece.
I'm not sure where it is going to be better for much longer though.
Iceland, maybe.
Getting your 25,000 life savings out at €60 a day takes a long time.
Soon it will be too late, "And it's gone".
M'F'in Global, M'F'in Global.
"Come on in, the water's warm"
-Banker
It is sad. It's like trying to manage a bad trade, your stock keeps on falling, so you ( double down ). This is the same....
Just like a casino...if you want to hold on to your money...take the money and run..
Ahhhhh hahahahahahahahahaha! What a shitshow.
Meanwhile, the Greek government is pushing through laws today to speed up the process of foreclosing on mortgages so that people can be kicked out into the street and so no longer count as non-performing loans. I suppose this will also make it simpler to transfer this property to the ECB, as and when required.
Because they are also pushing thrugh the "Single Resolution Mechanism" today as well. So, as from early next year, the ECB will be able to take charge of the Greek banks whenever it wants. Any investors still there at the time (shareholders, bondholders, customers, depositors etc can then be fleeced at will.
What's interesting about the forceclosure / NPL part of the deal is that pushing them out and selling the properties en masse at depressed prices will likely crush the capital ratios of the banks.
All the more reason for the ECB to step in and take them over. Massive yard-sale coming soon.
I love the term "Haircut." It sounds so much nicer than "we're stealing your money."
Run, Forrest, run! IIRC, under the EU bank-resolution setup which Greece just signed up to, the Greek banks can't suffer depositor (or senior bondholder) haircuts until 1 Decmber of this year, right? So if Greek depositors get out before then, and stay out until the Greek banks get "resolved", then they will have successfully front-run the ECB and the EU and left the "institutions" holding the bag. But of course many people don't want to put their life savings under the mattress, and fewer want to keep it there for half a year or more, and the appearance of stability in the run-up to 1 December is likely to tempt people to put their money back in the banks. So if the Greek government was smart, what it would do shortly after it finished voting through the third bailout would be to launch a new Greek bank. Maybe even a fully-backed bank: certainly one that's ridiculously over-engineered for financial stability, holding no Greek sovereign debt and with limited exposure to Greek private-sector debt. Then it should make damned sure that all Greeks understand that their money should be in the lifeboat bank (if in Greek banks at all) come 1 December, and should stay there until after the ECB has finished having its way with the currently-existing Greek banks. Come to think of it, if the Greek government doesn't have the wit or courage to do this, it's something that Greeks could do for themselves. It would be a much more effective blow for Greece and against the Troika than any amount of lighting fires or marching up and down.
"There will be no need to “haircut” deposits in the future if we all act responsibly,"
LOL! If the Greeks are smart, there will be no ABILITY to haircut their deposits! Chew on THAT bitch!
Someone at the ECB is going to get a cramp in their CTRL+P fingers. Then we'll all be in a world of trouble!!!
"which are not safe in any case"
the people have finally caught on to the false dichotomy - you're never comparing risk vs non-risk, you're always comparing relatively more/less better/less understood risk vs other more/less better/less understood risk. if you mattress stuff you MIGHT lose your life savings - if you put it in a greek bank you're effectively GUARANTEED to lose double-digit % of it (to say nothing of the unreliability of access). greece passed the tipping point of the mattress being perceived as the lesser of evils & it's gonna take one hell of a lot more to tip back in the other direction than a bunch of blankfein/dimon wannabes saying "trush us..."
"There will be no need to “haircut” deposits in the future if we all act responsibly and take all our monies out of the system now."
This is actually what she meant to say from the heart. However, since she is an indoctrinated bitch bankster wantabe she did as she was told.
When you can only take it out 420 a week, you still got problems if you have a significant amount left. (But you should still be doing it.)
All those believers, those regular sheeplel, getting fucked. It is so sickening/sad.
Go Greeks and make more troubles to the banks.