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 With less than two weeks left before Greece will default on an IMF
loan unless the government reaches a deal with creditors, financial
markets fear the authorities may have to impose capital controls to
prevent savers from emptying the banks.
The governors of the European Central Bank, which is keeping the
Greek financial system on life support by providing emergency funds,
were due to hold a telephone conference to discuss how much cash it
could continue to provide.
Including the billion withdrawn on Thursday, savers have pulled 3
billion euros from Greek banks since talks between Athens and its
creditors collapsed over the weekend, the banking sources told
Reuters. That represents about 2.2 percent of household and
corporate deposits held by Greek banks at the end of April. The
figures were provided on condition of anonymity as the statistics
were not yet officially published.
Failure to clinch a deal with creditors by the end of this month
would see Greece default on a 1.6 billion euro loan payment to the
IMF, making it the first euro zone member to go broke and
potentially driving it out of the single currency.
Tsipras's government has refused creditor demands that it impose tax
hikes and spending cuts, particularly to pensions, which Athens says
would deepen one of the worst economic depressions of modern times
and make its debt problems worse.
Nevertheless, Greek share prices rose after Tsipras's office issued
a statement saying there would be a solution that would return
Greece to growth while keeping the euro. He welcomed plans for an
emergency summit on Monday of the currency zone's leaders as "a
positive development on the road toward a deal".
"All those who are betting on crisis and terror scenarios will be
proven wrong," he said. "There will be a solution based on
respecting EU rules and democracy which would allow Greece to return
to growth in the euro."
Euro zone finance ministers met in Luxembourg on Thursday and were
joined by non-euro EU colleagues on Friday. But officials have made
clear scant progress on Greece is expected at those talks with
leaders preparing to convene next week.
Two officials with knowledge of the Luxembourg talks said ECB
executive board member Benoit Coeure told the finance ministers he
was unsure whether Greek banks would open next week.
"Tomorrow, yes. Monday, I don't know," the sources quoted Coeure as
telling the ministers on Thursday, when asked whether banks would
open on Friday.
The IMF's chief also raised the stakes on Thursday by telling Greece
there would be no grace period for its June 30 deadline to make the
1.6 billion euro payment.
"We have entered the 11th hour of this Greek crisis and we urge the
Greek government to do a deal before it is too late," British
finance minister George Osborne told reporters on entering the EU
meeting. "We hope for best but we now must be prepared for the
worst."
Tsipras was due to meet President Vladimir Putin on the second day
of a visit to Russia on Friday - a trip that has raised eyebrows
given the EU is at loggerheads with Moscow over the violence in
eastern Ukraine. Russia's deputy prime minister said Moscow could
consider giving financial aid to Greece, although Russia has
previously played down such prospects.
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UNTIL THE LAST MINUTE
So far, there have been no signs of panic on the streets of Athens
or queues forming outside bank branches.
But if deposit flight continues faster than the extra emergency
liquidity assistance (ELA) that the European Central Bank has
granted Greek lenders, it could force Athens to impose capital
controls, as Cyprus did in 2013, to curb withdrawals.
"There are no lines or panic, it has been a quiet and gradual phase
of withdrawals," said one of the bankers who disclosed the figures
for withdrawals. "They are due to worries whether a deal will be
clinched with the country's lenders."
The Greek central bank, which oversees Greek banks as part of a
system for the single currency led by the ECB, declined comment. A
government spokesman has previously denied plans for imposing
capital controls.
European Council President Donald Tusk has convened Monday's
emergency euro zone summit to discuss Greece "at the highest
political level".
"We are asking for the clearest possible commitment for a solution
that will allow Greece to breathe and render its debt viable,"
Dimitris Papadimoulis, a lawmaker from Greece's ruling Syriza party
in the European parliament told Greek Skai TV. "Efforts are being
made to bridge the differences."
A senior ally of German Chancellor Angela Merkel, who faces growing
resistance from her own ruling conservatives to granting Greece more
cash, said Berlin was willing to negotiate with Greece "until the
last minute". But he urged Athens to follow the example of Spain,
Portugal and Ireland in implementing economic reforms.
Although fed up with years of austerity, the majority of Greeks want
to stay in the euro zone. Thousands took to the streets on Thursday
night calling for a deal.
"The silent majority has spoken: we are staying in Europe," the
conservative Greek daily Eleftheros Typos said, commenting on the
rally.
(Additional reporting by Angeliki Koutantou in ATHENS, Robin Emmott
in LUXEMBOURG, Caroline Copley and Paul Carrel in BERLIN; Writing by
Matthias Williams; Editing by Peter Graff)
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