Run on Greek Banks Spreads; Four Banks Request Emergency Liquidity; €77 billion in Nonperforming Loans Another Reason to Get Out

On January 9, 2015 I posted Another Run on Greek Banks Begins; Get Out While You Still Can; Buy Gold.

On the same day, Greek finance minister Gikas Hardouvelis said "Probability of a Bank Run is Small and Deposits are Safe".

I propose Hardouvelis' statement was one of those "lie when it's serious moments".

"Don't Worry, It's Only a Precaution"

The clear picture of which one of us is right emerged when two Greek banks requested Emergency Liquidity  Assistance (ELA) from the Central Bank.

In another potential "lie when it's serious moment" both banks said "It's only a precaution".

Greek Banks Request Emergency Liquidity as Outflows Grow

Bloomberg reports Greek Banks Request Emergency Liquidity as Outflows Grow.

Two Greek lenders asked to borrow from the nation's central bank emergency line as deposit outflows already exceed 4 billion euros ($4.6 billion) this month.

Eurobank Ergasias SA (EUROB) and Alpha Bank (ALPHA) AE requested to tap the Emergency Liquidity Assistance, or ELA, said a senior Greek government official with knowledge of the matter. The request was filed following Bank of Greece instructions, according to officials at the two banks.

Both officials said neither lender plans to use the liquidity boost at this stage and the request was submitted based on the central bank's estimate that they might need it over coming weeks. All three officials asked for anonymity because the matter is private. A Bank of Greece spokesman declined to comment.

Savers, seeking safety for their cash amid concern about the outcome of parliamentary elections on Jan. 25, are accelerating deposit outflows and draining liquidity from the country's lenders. Net withdrawals were about 3 billion euros in December and have increased since then, thus exceeding 7 billion euros since speculation on snap elections began, according to a Greek official with knowledge of the matter.

Total deposits in Greek banks stood at 164.3 billion euros in November, according to the latest available data from the Bank of Greece. (TELL)

Investor Unease

The Wall Street Journal has a few more interesting details in its synopsis Investor Unease Hangs Over Greece Ahead of Vote.

Eurobank and another lender, Alpha Bank SA, have requested access to an emergency cash facility run by the central bank. Both said the moves were only a precaution and that neither faced an immediate funding crunch.

People familiar with the matter said the banks are seeking a few billion euros between them. The move has again evoked fears over the stability of Greece’s banking system as the country lurches through another period of political uncertainty.

On Friday, Greek government bond prices sank and stocks declined. The Athens Stock Exchange General Index fell 1.8%, with banks leading the drop.

According to the latest data from Greece’s central bank, nonperforming loans, those for which debtors have failed to make payments for more than 90 days, total €77 billion.

As a "Precaution"

On the "slim" chance that that "€77 billion in nonperforming may possibly matter", and the equally slim chance that I am correct about runs on the bank, I repeat as a caution Get Out While You Still Can; Buy Gold.

Don't worry, my recommendation is "just a precaution".

By the way, ZeroHedge just reported Greek Bank Run Spreads To Four Largest Banks, all of them requesting ELA.

Clearly "just precautions".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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