The Greek banking system suffered a 14-pct decline in its saving deposits portfolio last year, with savings in Greek banks falling by 40 billion euros in 2010, a report by National Bank revealed on Tuesday.

The report, by the bank’s strategic and economic analysis department, said Greece and Ireland suffered the heaviest losses in savings among Eurozone members, while it also stressed that this trend was expected to continue this year, although at a significantly slower pace and predicted that saving deposits would recover gradually by the end of 2012.

The report said Greek banks suffered a capital outflow totaling 34 billion euros in the period January-July 2010, with pressure easing after the beginning of an Economic Stabilisation Programme. National Bank’s analysts said non-residents withdrew 10.2 billion euros to foreign banks last year, particularly in the January-July period, while capital outflows in the remaining period August-December 2010 were around 1.0 billion euros.

Greek residents withdrew 8.0 billion euros from banks and channeled this money, mainly to banks in the UK and Cyprus, with two-thirds of the outflow occurring during the first half of 2010. Around 3.5 billion euros were invested in other assets, such as treasury notes and gold.

Greek households and enterprises, hit by a deep economic crisis, were forced to make use of their reserves to fund their operations. Private consumption in nominal terms fell around 1.2 pct last year, while available income dropped around 7.0 pct. The private sector suffered a negative funding gap of 13 billion euros, or 62 pct of capital outflows from Greek banks last year.

The report expects Greek banks to suffer a 19-bln-euro decline in saving deposits portfolio this year. It also stressed that this trend was adding to liquidity problems facing the Greek banking system.

National Bank said that Greek residents’ saving deposits at Greek banks grew 132 billion euros in the 2000-2009 period, for a growth rate of 24 percentage points of GDP, sharply up compared with a 15 pct rate in the Eurozone over the same period. This trend mainly reflected an 85 billion euros increase in time deposits (from 28 pct to 60 pct of GDP), while option and saving deposits grew by 47 billion euros but remained stable at 40 pct of GDP.

Non-residents’ deposits grew by 40 billion euros, or 14 pct of GDP in the 2003-2009 period.

Business briefs...

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