Greek banks closed after bailout talks break down

Greek banks closed after bailout talks break down

Greek banks have been forced to close after bailout negotiations with foreign creditors broke down over the weekend.

The country’s financial stability council - made up of banks, regulators and government - imposed capital controls on Sunday (28 June) night after the European Central Bank said it would freeze the amount of emergency loans it supplied.

Eurozone finance ministers refused a Greek request on Saturday to extend the bailout programme which is scheduled to end this Tuesday (30 June), reaching an impasse over plans to give €15.3bn (£10.7bn) worth of loans in exchange for austerity measures and structural reforms.

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FTAdviser sister paper the Financial Times reported this morning (29 June) that the break down in debt talks left many depositors scrambling for cash, although Greece’s prime minister Alexis Tsipras reassured the people that their bank deposits were safe.

The bank shutdown is expected to last until at least 6 July, with cash withdrawals limited to €60 (£42) a day according to Bloomberg, citing a statement by the Greek government.

A statement from the ECB read that its governing council welcomed the commitment by ministers from euro area member states to take all necessary measures to improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.

Its president Mario Draghi said: “We continue to work closely with the Bank of Greece and we strongly endorse the commitment of member states in pledging to take action to address the fragilities of euro area economies.”

Yannis Stournaras, governor of the Bank of Greece, added that they will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.

Meanwhile, the International Monetary Fund’s managing director Christine Lagarde, said that she had briefed their board on the inconclusive outcome of recent discussions in Brussels.

“The coming days will clearly be important. I welcome the statements of the Eurogroup and the European Central Bank to make full use of all available instruments to preserve the integrity and stability of the euro area.”

She noted that a balanced approach is required to help restore economic stability and growth in Greece, with appropriate structural and fiscal reforms supported by appropriate financing and debt sustainability measures.