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Greek deposits trickle into banks after election

A Greek man holds 100-Euro bills


Deposits are trickling back into Greek banks after a conservative victory in Sunday's election calmed fears that the country was set to crash out of the euro, several Greek bankers said on Tuesday.

Greeks had withdrawn up to €800-million a day from major banks before Sunday's vote on fears a leftist victory would mean a return to the drachma. They were now bringing back some of the money stashed at home, bankers said.

"The bleeding has stopped," said one Greek banker, who declined to be named.

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One Greek bank that was losing about €30-million a day in the days leading up to the election, more than half of which was taken home or put in safe deposit boxes, found the trend had quickly changed course on Monday, a banker there said.

"Yesterday, we saw a reversal. We had about €15-million of cash brought back," the banker from the second bank said.

However, bankers indicated that private banking clients who had wired money abroad had yet to bring their funds back.

A third Greek banker said inflows of up to €10,000 from small savers who had stored cash at home were returning, but that the lender had yet to see larger sums - of more than €50,000 - being brought back.

"We didn't have any deposit outflows yesterday and we are expecting a similar picture today," the banker said.

"The election result helped."

Deposits have been flooding out of Greek banks since the sovereign debt crisis erupted in late 2009, and the tottering banking system relies for liquidity on the European Central Bank and the Greek central bank.

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Greece's banks have lost €72-billion in deposits since the start of 2010, or about 30 per cent, according to Thomson Reuters data. Five of Greece's top banks saw €37-billion taken out last year, including €12-billion from EFG Eurobank and €8-billion to €9-billion apiece at National Bank of Greece, Piraeus and Alpha Bank.

Eurobank said that on a like-for-like basis, stripping out the deposits of its subsidiary Polbank which was sold in 2011, its outflows were €8.7-billion, in line with other top Greek banks.

"We are seeing clear signs that deposits sitting outside the banking system as cash have started to return and be redeposited," an official at Eurobank told Reuters.

About €10-billion to €20-billion of the total outflow since the start of 2010 was being kept as cash in safe deposit boxes or at home, he said, citing Bank of Greece data.

Outflows from Greek banks picked up pace dramatically before last week's vote as rumours swirled that leftist SYRIZA party was on track to win. The party, which finished second in the poll, had pledged to rip up the bailout package keeping Greece afloat, prompting fears that European partners could cut off funds and push the country back to the drachma, sharply devaluing bank deposits.

Greek bankers said they were optimistic money would continue to return in the coming days as the conservative New Democracy party made progress in putting together a coalition government to steer the country away from bankruptcy.

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"We've seen people bringing back cash that they had withdrawn and mostly taken home," said a banker at a mid-sized foreign-owned lender.

"We expect this trend to pick up in the coming days."

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