As Greece scrambles for deal with creditors, bank deposit drain adds pressure

ATHENS, Greece – Greek bank deposits dropped by more than 7.5 billion euros ($8.2 billion) in February, ramping up pressure on the country’s teetering financial system as its government scrambles to reach a deal with creditors within days.

The central bank of Greece said Thursday that private and business deposits dropped to 140.5 billion euros ($154.2 billion) by the end of February.

Deposit levels have plummeted by nearly 100 billion euros ($110 billion) since the start of Greek financial crisis in 2010 but had stabilized over the past two years. Savers then began to pull money out of their accounts again this year, when the new radical left party won general elections on the promise to take a hard line against creditors’ demands for budget austerity measures.

Some feared the clash could push Greece to bankruptcy and even cause it to fall out of the euro, a move that would devastate the country’s financial system in the short term.

Prime Minister Alexis Tsipras’ government is in talks with European creditors on what the reforms should be and has promised to submit a suitable list of measures by early next week.

The creditors want to approve the changes before releasing the remaining bailout funds.

Greece has its back against a wall as it badly needs money — it faces debt repayments and rollovers of nearly 3 billion euros ($3.3 billion) in April, mainly in the middle of the month. That sum will rise to about in July. Not being able to raise money on bond markets, Greece depends on bailout creditors for the money to meet those obligations.

Economy Minister Giorgos Stathakis said he expects eurozone lenders to grant preliminary approval to the new Greek reforms sometime “early next week.”

“I think many difficulties have been overcome and that … the political atmosphere is now excellent,” Stathakis told private Antenna television.

The Tsipras government says its priority is to reform the country’s inefficient tax administration, and on Thursday resumed talks with the Swiss government, after a year’s interruption, on efforts to crackdown on tax evasion.

Jacques de Watteville, Switzerland’s state secretary for international financial and taxation, was in Athens to meet senior government officials.

“We had a two and a half-hour discussion about the situation in Greece and international efforts to fight tax crimes,” de Watteville told reporters in Athens.

Shares on the Athens Stock Exchange closed down 3.74 per cent Thursday amid losses across Europe.


Raphael Kominis in Athens and Geir Moulson in Berlin contributed to this report.


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