Tension over Greek Banks' Health

Capital flight from beleaguered Greek banks this week alone could be more than €3bn (£2.1bn), reports say.

Savers are moving funds as time runs out to resolve Greece's debt crisis.

It is understood the European Central Bank (ECB) will hold a telephone conference later to discuss more emergency assistance for the banks.

The pace of withdrawals has gained speed as talks between the government and its creditors have collapsed.

Greece has less than two weeks remaining to strike a deal or face defaulting on a €1.6bn (£1.1bn) loan repayment due to the International Monetary Fund (IMF).

The country has already rolled a €300m payment into those due on 30 June.

If it fails to make the payment, it risks having to leave the eurozone and possibly also the EU.

But the European Commission, the IMF and the ECB are unwilling to unlock bailout funds until Greece agrees to reforms.

They want Greece to implement a series of economic changes in areas such as pensions, VAT and on the budget surplus before releasing €7.2bn of funds, which have been delayed since February.

'Too little' progress

On Monday, an emergency summit of leaders from eurozone nations will be held after the latest attempt to resolve the Greek debt crisis failed.

 

A meeting of eurozone finance ministers on Thursday made no breakthrough.

The head of the Eurogroup of finance ministers, Jeroen Dijsselbloem, said that "too little" progress had been made and that "no agreement as yet is in sight".

Mr Dijsselbloem stressed that "very little time remains" for Greece.

Valdis Dombrovksis, European Commissioner for the euro, told BBC Radio 4's Today programme that there had been "a strong signal" from the Eurogroup to Greece "that it's [the] last moment to engage seriously in negotiations".

Responding to the reports of big cash withdrawals by Greek savers, he said: "It's very clear that one of the most urgent things Greece needs is financial stability."

'Quiet withdrawals'

The Reuters news agency said withdrawals by Greek savers between Monday and Thursday reached about €3bn, which represents about 2.2% of household and corporate deposits held by Greek banks at the end of April.

"There are no lines [queues] or panic, it has been a quiet and gradual phase of withdrawals," one banker told Reuters. "They are due to worries whether a deal will be clinched with the country's lenders."

A fully fledged run on the banks could upset the plans of the Greek government and its creditors, says BBC Europe correspondent Chris Morris.

"Will there be capital controls? In the end, that's not going to depend on British newspaper headlines, it's going to depend on whether people in Greece vote with their feet," he said.

"If the outflow of deposits from banks reaches alarming levels which no-one can really cope with, then the decision is taken out of policymakers' hands."

Greece - deal or no deal?

• Option 1: No deal: Greece defaults on IMF and ECB repayments; ECB pulls plug on emergency bank assistance leading to run on Greek banks, capital controls and potential Grexit
• Option 2: Greece agrees reform deal with creditors at last minute and avoids default, staying in euro
• Option 3: No deal reached but both sides paper over cracks and Greece stays in euro for now