World Economy

Greek Savers Wary of Tsipras After Tumult

Greek Savers Wary of Tsipras After TumultGreek Savers Wary of Tsipras After Tumult

As Greek Prime Minister Alexis Tsipras braces for another round of tough negotiations with creditors, savers are still reluctant to bet their money that this year’s talks will be less perilous for their country’s place in the euro area than 2015.

Data released from Greece’s central bank this week showed that deposit outflows continued in November for a second consecutive month, even as the nation’s lenders plugged their capital shortfalls, and strict capital controls put in place last summer capped withdrawals and money transfers abroad, Bloomberg reported.

Deposits held by households and businesses in Greek banks fell close to a 12-year-low of €120.9 billion ($131.3 billion) in November, bringing total losses to a record of more than €43 billion, or 26.4% of total savings, in the last 12 months. Savers’ distrust may derail the government’s goal of lifting capital controls by the end of June. Reluctance to return deposits held abroad or under mattresses back to banks hinders the ability of lenders to provide credit to the economy, as the government struggles to lead Greece out of recession in 2016 after a turbulent year which pushed the country to the verge of leaving the euro area.

Separate data also released by the Bank of Greece this week showed that private sector deleveraging picked up pace in November, with outstanding loan balances dropping 2.2% from the previous year.  

Greek lenders cleared the hurdle of a pan-European review in 2014 thanks to capital increases of more than €8 billion and restructuring plans approved by the European Commission, only to see their solvency put to the test in 2015 when Tsipras’s government revolted against the terms attached to the country’s bailout lifeline.