Greek/Spanish Bank Deposit Flight

L

Lightning

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Interesting and worrying developments in Greece, with regard to deposits, in recent day.

Depositors are moving money, en masse, to German and Swiss bank accounts.

Obviously what is happening in Greece is of significance to all of the Eurozone. However, is what is happening with deposit holders in Greece, just isolated, for just the time being, to Greece?

From the WSJ:

Greek President Karolos Papoulias told the country's political leaders that bank withdrawals plus buy orders received by Greek banks for German bunds totaled some €800 million on Monday, a transcript of his comments said. A central bank official confirmed the figures.
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From the FT:

Athens-based bankers said withdrawals exceeded €1.2bn on Monday and Tuesday – 0.75 per cent of all deposits – as President Karolos Papoulias failed in two final meetings with conservative, socialist and leftwing leaders to form a national unity government.
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From ZeroHedge:

While the long-term decline in bank deposits over the past 3 years has been well documented both on Zero Hedge and elsewhere, it is the most recent, acute post-election phase that has not gotten much coverage. Greece may be on the verge of the final collapse. And courtesy of Russian_market, here is a picture of the first Greek ATM lines.
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And if you think Irish deposit rates are high, Greece is at over 6 times base ...

Greek Deposit Rates:

6.50% AER for a 6 months term deposit.
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Brendan and or CiaranT

Would you also be surprised that people in Ireland would still have deposits at the moment in Irish banks?

Interested.

Has the EU abandoned funding to some of the Greek banks? I'm reading some rumours online.


Marion
 
People take out their money when they have no confidence in their politicians to deal with the situation, this country is no different, money was flying out of here not too long ago.

Politicians are going to have to learn they can't spend tomorrows money today and live within their means and ours, governments have become far too fond of borrowing huge sums of money to buy elections, bertie, blair , brown to name a few.

I don't see any way out for greece, but the have a fairly modern well supplied army so god knows what could happen yet, i believe the main eu monitor on the ground in greece had his car and house burnt out last night.
 
The Brits wont want to bail out a non-UK bank.

If the collapse of Greece / Ireland / Spain causes a run on their domestic banks they will make sure that UK banks are protected first, long before any foreign banks are.

I live in London, and my own family in Ireland transferred most of their savings over here to UK banks at about £1 = €1.16. Its gone to €1.25 this week.

As the euro split unfolds, the rate will only get worse. If you have spare money in Ireland, get it out now and in to pounds, dollars, or anything but euros
 
cashier said:
I don't agree with you views at all. If everybody were to remove their savings from Irish banks the country would very quickly go to the wall.
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And you don't that people aren't moving money out of Irish banks already to address this risk? That's a pretty naieve view.

If the Eurozone implodes - Ireland will very quickly go to the wall anyway so why risk your life savings?

Get any spare cash you have out of Ireland as soon as you can. The rate against sterling has fallen dramatically in the last month or two, so you may want to look at opening an offshore account with one of the German banks. That way, in the event of a eurozone break up ,your savings would likely be denomintated in Deutsche Marks or a similarly strong currency.

cashier said:
As regards Santander UK, are you aware that this is the third largest bank in the UK in terms of deposits, the second largest in terms of mortgages held, and the fourth largest in terms of branches operated. As of January 2010, Santander UK has 25 million customers.
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Too big to fail, eh?
 
cashier said:
I never said they were too big to fail. You stated the British Government wouldn't bail out foreign banks however, as stated above Santander is currently in a much healthier position than a lot of other British institutions.

I have no doubt that the Euro will survive the current crisis, it would help somewhat if people stopped the scare mongering and started speaking positively about the whole situation.
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Again, I think you are being highly naive if you dont recognise that there is a very real risk of the Euro falling apart and plan to protect yourself and your family accordingly.
 
CiaranT said:
Where are all the eurozone deposits going?

Bloomberg: Switerland Saw 400% Increase in Inflows Last Week
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The concern I'd have about Swiss Francs is that the Swiss are already actively intervening to keep the value of their currency artificially low.

Although the Swiss have very deep pockets, there is always a limit to that too. If the eurozone crisis continues to deteriorate then there will likely be such a huge run on the eurozone banks and funds flowing into the likes of Switzerland that they will be left with no alternative but to let the CHF float up.
 
cashier said:
Please don't get personal and I am not highly naive. You are advocating for mass withdawal from Irish banks, in fact your tone suggest that you would actually enjoy to see this happening. Thankfully not everyone thinks the same as you do.
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Not being personal at all - I just think you are whistling in the dark if you dont think that things in the eurozone are not deteriorating by the day. Thankfully not everyone thinks the same as you do.

If you can't stand your ideas beign critiqued, then posting them on a discussion board might not be such a wise idea.
 
Fantastic piece by Wolfgang Münchau in the FT on the 'Stopping a Eurozone Bank Run'.

In this spirit, it is perfectly rational for Greek and Spanish savers to take their money out of the banks. If, in addition, there is speculation that Greece might leave the eurozone, then it is rational that Greek savers take their money out of the country.

Should Greece leave the eurozone, it will almost certainly have to impose capital controls and deposit freezes. Since the cost of transferring a savings account from Athens to Frankfurt is negligible, such action constitutes cheap insurance against a potentially catastrophic event.

I would go as far as to say that it would be economically irrational for savers to keep their money in Greece under the present circumstances.

Then there is Spain. A Spanish saver in Bankia is confronted with the following questions: Does the balance sheet give a true and fair depiction of the risks? Is the Spanish government’s deposit insurance credible? Is Bankia safe now that it is partly nationalised?
My answers to these questions would be “no”, “no” and “no”. In the absence of a European backstop, Spain has a similar problem to that of Ireland.
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Any chance that an embargo could be put in place on eurozone countries accepting deposits from citizens of fellow states to stop the flight of deposits?
With the flight,the likes of Germany get richer and the under fire Ireland,Portugal etc. see their deposit base shrink
 
58.4% of people on website intrade.com believe that at least one current user of the Euro will drop the single currency before the end of 2013.

However 67.3% currently believe that this will happen before the end of 2014.

This suggests that if the wisdom of the crowd is accurate then a majority of opinions points to changes in the euro zone although interestingly not immediately with only 40% voting for a breakup before the end of this year.

The key question that follows on from this is the best way for savers to protect themselves from the crisis.

The problem here is one of uncertainty to which the correct policy response is always diversification.

No one knows for sure how events will play out and so the best response is always pay down debt, and hold a globally diversified portfolio of securities appropriate for your willingness, need and ability to take investment risk.
 
celebtastic said:
As the euro split unfolds, the rate will only get worse. If you have spare money in Ireland, get it out now and in to pounds, dollars, or anything but euros
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When Greece leaves the Euro that will be a positive thing for the Euro, the same would be the case if Spain or Italy left.
But I agree that you do not want any significant amount of money in a country that may see itself forced to leave the Euro.
 
If you think there's even a 0.01% chance that the euro will collapse, then you are mad not to get your money out of Ireland as soon as possible. Why gamble with your life savings?
 
celebtastic said:
If you think there's even a 0.01% chance that the euro will collapse, then you are mad not to get your money out of Ireland as soon as possible. Why gamble with your life savings?
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Are you not advocating a gamble on sterling? Its not exactly the safest currency either.

Is there not also at least a 0.01% chance that sterling falls significantly against the euro.
 
tradtshirt said:
Are you not advocating a gamble on sterling? Its not exactly the safest currency either.

Is there not also at least a 0.01% chance that sterling falls significantly against the euro.
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Nope - not advocating a gamble against sterling at all.

I am advocating Irish people with savings get them out of the Irish banking system as soon as they can, whether they choose to keep an offshore account in euros, sterling, US dollars, or whatever - it'll be worth a lot more than their saving in an Punt Nua

Once the run starts on the Irish banks - it'll be too late for most folks
 
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