Election Worries See Greek Banks Wanting Capital Controls Kept

FILE- Bank of Greece Governor Yannis Stournaras. (Photo: Eurokinissi/Giorgos Kontarinis)

ATHENS – With the ruling Radical Left SYRIZA keen in an election year to lift the capital controls Prime Minister Alexis Tsipras imposed in the summer of 2015 to prevent a run on the banks, the financial institutions are in no hurry to have them lifted.

Buried under bad loans making up 40 percent of their portfolios and with talk they could need another injection despite having received 50 billion euros ($56.68 billion) in bailouts from international rescue packages, the banks are finding it difficult to loan.

At a meeting with Bank of Greece Gov. Yannis Stournaras they told him not to press for the end of the controls, said Kathimerini, preferring a continued gradual lifting after earlier moves to allow for larger amounts of transfers out of the country.

Many wealthy Greeks hide their income in secret foreign banks accounts so they can evade taxes and there haven’t been any major prosecutions during a more than 8 ½-year-long economic and austerity crisis.

The bankers were said to be anxious that an election year could see another mass exodus of money out of the country because of political volatility and as they are still teetering under the weight of bad loans despite being allowed to hound people who aren’t paying.

That’s except for the former ruling New Democracy and previous PASOK parties which owe 250 million euros ($283.39 million) with the bank officers giving immunity from prosecution after granting the loans without enough collateral.

Deposits amounted to 134.5 billion euros ($152.46 billion) at the end of 2018, posting an annual increase of 8.1 billion, or 6.4 percent. A year earlier the figure had stood at 126.4 billion ($143.28 billion,) up 4.1 percent from the year before.

Any transfer over 1 million euros ($1.13 million) by an individual or a corporate entity beyond those allowed – for purposes such as trips, the payment of university or hospital bills or trading activity – requires the approval of the competent committee at the Finance Ministry, which convenes twice a week.

There was easing of the controls in the summer of 2018, for cash withdrawals from bank branches and cash machines to 5,000 euros ($5,667) per month and allowing the opening of new accounts.