Greek Banks Lost EUR300M From Deposits In Third Quarter

12.01.2011 By Ciprian Botea

The local subsidiaries of Greek financial groups lost deposits with a cumulated value of EUR300 million in the third quarter, despite the fact that they pay the most generous interests on the market.

Alpha Bank, Bancpost, Piraeus, and Banca Romaneasca, the largest Greek-controlled players on the banking market, had deposits worth a cumulated EUR4.97 billion at the end of September, which compares with EUR5.27 billion in mid-year.

The biggest decline was recorded by Piraeus Bank, controlled by the Greek group of the same name, which had EUR1.06 billion worth of deposits in September, 10% less than in June. Banca Romaneasca also lost 8% of the value of its deposits, to EUR800 million.

Alpha Bank, the largest Greek-controlled bank, had EUR1.27 billion worth of deposits in September, 5% less than in mid-year.

On the other hand, deposits attracted by Bancpost fell by around 2% in the third quarter, to EUR1.84 billion. "They include deposits in lei. The volume of deposits has remained steady if we consider the exchange rate fluctuations," Bancpost representatives explained.

Greek banks have at least in the last two years set themselves apart from other banks thanks to the generous interests paid for deposits. For instance, Piraeus tempts its clients with interests of 8% a year on leu deposits and of 4.8% a year on euro deposits with five-month maturities. In turn, Banca Romaneasca pays 7.9% a year on leu deposits and 4.9% a year on euro deposits with seven-month maturities.

The aggressive policy of attracting deposits pursued by the subsidiaries of Greek banks comes at a time when clear directions have been laid out for them in view of reducing their dependence on external financing. Banks are now seeking to rebalance their ratio of loans granted and of financing attracted from clients, after in the past they had relied on money from parent banks.

But they only fight over a limited pool of resources. Competition is very tight, so most banks are willing to pay higher interests to clients who want to withdraw their money from deposits, to persuade them not to take their money out.

(English version by Daniela Stoican)