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Greek banks start to reopen for first time in three weeks Greek banks reopen for first time in three weeks
(34 minutes later)
Some Greek banks started to reopen on Monday morning for the first time in three weeks, with queues expected to form outside branches as customers rush to empty deposit boxes they have been unable to access. Greeks were queueing outside banks on Monday morning, as the institutions opened their doors for the first time in three weeks, amid hopes that the beleaguered nation can reach a swift agreement with its international creditors on a bailout of its wrecked economy.
Withdrawals will still be restricted, but in a slight relaxation of capital controls, Greeks will be able to withdraw a weekly allowance of €420 (£290) in one transaction, rather than being limited to €60 a day. Restrictions on sending money abroad and other controls remain in place. Limits on cash withdrawals remain in place, but have been loosened. Greeks are now able to withdraw up to €420 (£290) a week in one transaction, rather than being limited to €60 a day. But restrictions on sending money abroad and other controls have not been lifted and the Athens stock market is closed until further notice.
Deposit boxes are not affected by the capital controls and customers can take whatever they want from them, bank officials said. “We are expecting queues in our branches in the first two or three days. Many people will ask to open their safe deposit boxes,” said an official at EFG Eurobank Ergasias, the country’s third largest bank. “Capital controls and restrictions on withdrawals will remain in place but we are entering a new stage which we all hope will be one of normality,” Louka Katseli, head of the Greek bank association, said.
The Greek government made the order over the weekend for lenders to pull up their shutters. They were ordered to close on 29 June to prevent the financial system collapsing, as withdrawals skyrocketed over worries that the country’s debt crisis would see it ejected from the euro. The German chancellor, Angela Merkel, said the remaining capital controls were “not normal life” and showed the need for speedy negotiations on a proposed €86bn bailout for Greece.
In the days leading up to the closure, Greeks had been taking out as much as €1.6bn a day in cash. Greece has been given a €7.16bn bridging loan from the EU to see it through July. The government is drawing on these funds to make a €4.2bn debt payment to the European Central Bank due on Monday, but the money will have run out by August.
On Sunday Angela Merkel said the government of Alexis Tsipras would have to move fast to agree new bailout terms. “That is not a normal life so we have to negotiate quickly,” said the German chancellor in an interview with German broadcaster ARD. Eurozone leaders hope to conclude talks with Greece by mid-August
Merkel said Berlin would “negotiate hard” to ensure Athens stuck to reform agreements. “There are things that we have discussed with all of the Greek governments since 2010 that have never been done, but that have been done in other countries like Portugal and Ireland,” she said. Merkel said Berlin would “negotiate hard” to ensure Athens stuck to reform agreements, but indicated that Germany would be prepared to grant Greece some debt relief. In an interview with German public broadcaster ARD, she said there could be flexibility in delaying debt repayments or reducing interest rates, but ruled out debt forgiveness – “a haircut”.
She said Germany would be prepared to grant Greece some flexibility in delaying debt repayments or reducing interest rates, but there could be no wholesale debt forgiveness – or “haircut” – and no action at all before bailout talks were concluded. “Greece has already been given relief. We had a voluntary haircut among the private creditors and we then extended maturities once and reduced interest rates,” the chancellor said.
“Greece has already been given relief. We had a voluntary haircut among the private creditors and we then extended maturities once and reduced interest rates,” said Merkel in the interview.
“And we can now talk about such possibilities again … once the first successful review of the programme to be negotiated has been completed then exactly this question will be discussed – not now but then.”“And we can now talk about such possibilities again … once the first successful review of the programme to be negotiated has been completed then exactly this question will be discussed – not now but then.”
Related: Now a deal has been done, what lies ahead for the Greek economy?Related: Now a deal has been done, what lies ahead for the Greek economy?
The head of Greece’s banking association, Louka Katseli, urged Greeks to return cash they have been storing at home to their banks. Greeks will get a taste of the reforms their government has already agreed with the eurozone to secure the bailout. As of Monday, VAT on food and public transport is now 23%, up from 13%.
“When the banks reopen and normality is restored, let’s all help our economy. If we take our money out of chests and from our homes – where they are not safe in any case – and we deposit them in the banks, we will strengthen the liquidity of the economy,” she told Skai television. Ahead of the re-opening of the banks, officials urged Greeks to put cash they have been storing at home in their banks.
“When the banks reopen and normality is restored, let’s all help our economy. If we take our money out of chests and from our homes – where they are not safe in any case – and we deposit them in the banks, we will strengthen the liquidity of the economy,” Katseli told Skai television.
The chancellor’s remarks came as her counterpart in Paris, François Hollande, called for the creation of what he called a “a government of the eurozone”, reviving an idea originally put forward by former European commission chief Jacques Delors. Writing in the Journal du Dimanche, the French president proposed a government for the single currency “with a specific budget as well as a parliament to ensure its democratic control”. He added: “What threatens us is not an excess of Europe, but its insufficiency.”The chancellor’s remarks came as her counterpart in Paris, François Hollande, called for the creation of what he called a “a government of the eurozone”, reviving an idea originally put forward by former European commission chief Jacques Delors. Writing in the Journal du Dimanche, the French president proposed a government for the single currency “with a specific budget as well as a parliament to ensure its democratic control”. He added: “What threatens us is not an excess of Europe, but its insufficiency.”
In Greece, the cautious reopening of the banks, and an increase in VAT on restaurant food and public transport, are aimed at restoring trust inside and outside the country after an aid-for-reforms deal last week averted bankruptcy. In Greece, the cautious reopening of the banks, and the VAT changes, are aimed at restoring trust inside and outside the country after the aid-for-reforms deal last week averted bankruptcy.
Tsipras is trying to turn a corner after reluctantly agreeing to negotiate on a third bailout, which could be worth €86bn, but will have stringent conditions attached. The prime minister, Alexis Tsipras, is trying to turn a corner after reluctantly agreeing to negotiate on a third bailout, which could be worth €86bn, but will have stringent conditions attached.
It prompted a rebellion in his leftist Syriza party, but Tsipras sacked party rebels in a government reshuffle on Friday and is seeking a swift start to talks on the bailout accord with European partners and the International Monetary Fund, before elections that the interior minister, Nikos Voutsis, said were likely in September or October.It prompted a rebellion in his leftist Syriza party, but Tsipras sacked party rebels in a government reshuffle on Friday and is seeking a swift start to talks on the bailout accord with European partners and the International Monetary Fund, before elections that the interior minister, Nikos Voutsis, said were likely in September or October.
Some in Greece were sceptical that the move to reopen banks would change much. “The banks opening ... won’t change anything for me,” 31-year-old hotel worker Joanna Arvanitaki told Reuters. “I never used to withdraw €60 a day – €60 is what I had a week.”Some in Greece were sceptical that the move to reopen banks would change much. “The banks opening ... won’t change anything for me,” 31-year-old hotel worker Joanna Arvanitaki told Reuters. “I never used to withdraw €60 a day – €60 is what I had a week.”
Greek banks were ordered to close on 29 June to prevent the financial system collapsing, as withdrawals skyrocketed over worries that the country’s debt crisis would see it ejected from the euro.
In the days leading up to the closure, Greeks had been taking out as much as €1.6bn a day in cash.