Private sector bank deposits increased by nearly six billion euros in December, 2017, leading the credit ratings agency Moody’s to give Greek banks a credit positive rating today.
In December, there was on the part of households and non-profit organizations a 2.6 billion euro increase in bank deposits.
In the same month, there was a 105 million euro decline in enterprises’ deposits.
«An increase in deposits strengthens Greek banks’ efforts to eliminate their dependence on the Emergency Lending Assistance mechanism (ELA), which negatively affects their profitability. Increased deposits are credit positive for Greek banks,» Moody’s said.
Deposits rose to 126.3 billion euros at the end of 2017, the highest level since the imposition of capital controls in June 2015.
ELA borrowing down
The report states that measures were taken to reduce borrowing from the central bank to 13 percent of total assets in December from 22 percent a year earlier. Borrowing from the ELA mechanism fell from 14 percent to eight percent.
«An increase in deposits and continuing access to the interbank repos market is of vital importance for the Greek banks’ efforts to terminate the use of ELA which comes with an increased cost of around 1.5 percent,” the Moody’s said.
The National Bank of Greece was the first to stop relying on ELA in December, while the three other major, systemic banks will repay their borrowing from the mechanism by the end of 2018,» Moody’s said.
The rating agency stressed the deleterious effects of the enormous amounts of Non-performing Exposures (NPE’s) is viewed as a disaster for the economy, as banks issued very limited loans to the real economy.