Moodys: eased the pressure on Greek banks
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According to Moodys, reducing dependence on ECB funding, but the increase in deposits from the private sector, show alleviate pressure on Greek banks.
To alleviate the pressures that affect the funding of Greek banks urged by Moodys (13/1/2014), reported a decrease in funding from the European Central Bank and the increase in deposits.
According to the international rating agency, on 3 January, the Bank of Greece announced in November that the funding of the banking system by the ECB and the ELA decreased to 70.1 billion, showing a fall of 46% compared to the same month last year, while deposits of the private sector rose to 161 billion euros, an increase of 3.3%. The decreasing funding from the ECB and the higher deposits, says the firm, mitigate their liquidity and funding pressures on Greek banks is credit positive.
As the Moodys, weak private sector confidence and shrinking deposits due to the highest recession in Greece over the last four years, forced the Greek banks rely heavily on funding from the ECB. However, the possibility of using the EFSF bonds as collateral, has allowed banks to regain access to the interbank market repo, which led to a reduction by 46% annually in funding from the Central Bank.
Therefore, the dependence of banks on ECB funding has decreased significantly over the last year: in November, the ECB funding accounted for 19% of total assets compared to approximately 40% in November. Noted that by 2017 the ECB funding to Greek banks should not exceed 15%, according to a directive of the European Commission.
The increase of 3.3% of deposits in November 2013 compared to November (note that since June deposits have increased by almost 7%) are equally important, especially given the installments for tax in the third quarter but and the stress suffered by deposits from April to October 2013 due to the bail-in of the Cypriot banks. According to Moodys, this shows that depositors gradually returning their deposits in the banking system. As we continue to improve the confidence of depositors, the dependence of Greek banks on ECB funding will continue to decrease.
Of course, none of the two cases should not ypertimontai developments, warns the Moodys. Access to funding secured using external guarantees are only a small step towards the recovery of financial independence. In addition, deposits have long way to go to recover from the record low of 150.6 billion recorded in June (this amount was reduced by 37% compared with the record high of 237.5 billion in December 2009).
The Greek banks continue to face significant structural challenges and political and economic risks, pressures on the quality of their assets by the toss of NPLs, but also very limited lending opportunities.
However, the Moodys expects further improvement in the funding profile and liquidity of Greek banks, which would represent a "key" for their ratings, provided that there are no adverse political developments in Greece and that the country will return to economic growth in from 2014 to 2015.