Greeks fearing collapse of eurozone bailout pulled record sums from bank
A man walks through Athens' main food market. Greece abounds in stories of people lugging suitcases of cash out of the country to banks in Cyprus, London and Switzerland. Photograph: Yiorgos Karahalis/Reuters
The latest figures released by the Bank of Greece reveal that in September and October alone investors pulled €12.3bn (£10.3bn) from domestic banks, spurred by fears of political uncertainty and economic collapse.
Overall, outflows have reached a record 25% since September 2009 – when household and corporate deposits stood at a peak of €237.5bn, the data showed.
Theodore Pelagidis, an economics professor at the University of Piraeus, said: "This is part of the death spiral of the recession as a result of austerity measures. People realise that contagion has come to banks and they are very afraid of losing their deposits. On average around €4bn-€5bn in capital flees the banking system every month."
The extraordinary figures back up anecdotal evidence that it is not just the super-rich behind the flight of funds.
Over the past year, as the eurozone debt crisis has intensified in the nation where it largely began, there have been countless cases of ordinary depositors hauling suitcases stuffed with cash to the safer destinations of Cyprus, London and Switzerland.
The weekly Proto Thema publication reckons that some 500,000 Greeks have moved money abroad, with a record 1.2m bank transfers being made over the last 18 months.
An estimated €40bn, amounting to 17% of the country's gross domestic product, is believed to have been withdrawn from the banking system over the past year.
Foreign banks with branches in Athens were facilitating the cash flight, the newspaper claimed, by encouraging Greek depositors to set up bank accounts abroad. The Swiss banking groups UBS and Credit Suisse had made it much easier for investors to open accounts in Geneva and Zurich by simplifying procedures.
"In this way, they are putting the nail in the coffin of liquidity in the Greek financial system," Proto Thema declared.
George Provopoulos, the governor of the Bank of Greece, recently said the exodus of capital had "stabilised" following the appointment of an interim coalition government, headed by the technocratic economistLucas Papademos.
Tasked with overseeing the latest European Union and the International Monetary Fund-sponsored €130bn bailout for Greece – a rescue package that will include a voluntary write-down on the value of Greek bonds – the new administration appears to have had a calming effect on a populace whose panic levels have risen amid persistent speculation of a Greek default and exit from the euro zone.
"It's not only about capital flight," said one banker, referring to the massive withdrawals. "People have had to tap into their savings as household incomes have declined and they have had to pay bills.
"Instead of moving ahead with privatisations and shutting down useless public utilities, the [previous] government chose to exit the crisis by imposing Taliban tax rates and horizontal wage cuts, which has resulted in liquidity being limited and the Greek economy not operating as it should."