Report: Greek banks to suffer more outflows in saving deposits this year

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...

* Members of the Association of Greek Venture Capital Enterprises made new investments worth 50 million euros last year, while they raised investment capital worth 115 million euros for three funds that mainly invest in renewable energy sources, Vasilis Takas, president of the Association, told the 11th International Venture Capital & Private Equity Forum in Athens.

* Athens hotels reported mixed figures for their occupancy rates in February, with five- and four-star hotels showing improvement, while three- and two-star hotels continued their decline for one more month. Five-star hotels’ occupancy rates grew 11.2 pct to 50 pct, while four-star hotels grew 11.4 pct to 62 pct. On the other hand, three- and two-star hotels’ occupancy rates fell to 53.8 pct, with a decline of 10.5 pct in February.

* Business expectations in the retail sector improved slightly in March, recovering for the fourth consecutive month, IOBE announced on Tuesday. In a report, the Institute for Economic and Industrial Research (IOBE) said the retail sector was currently undergoing a restructuring process following an excessive growth in the previous year. However, expectations remained largely negative, with business expectations over current sales rising slightly to -43 points and expectations over short-term sales also improved to -23 points.

* Expert Hellas on Tuesday said it sought court protection from creditors, in a move aimed to deal with extremely adverse conditions prevailing in the Greek economy and in the electrical appliances sector, as it said.

* Hellenic Telecommunications Organization (OTE) on Monday successfully completed a book-building process for the issuing of a three-year bond worth 500 million euros. The bond issue carries an annual coupon of 7.250 pct with a fixed interest rate.

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