ECB raises emergency liquidity to Greece banks

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The European Central Bank on Tuesday raised the limit on the emergency liquidity assistance available to Greek banks to about €89bn as depositors continued to withdraw funds.

The move has become a daily operation as tension mounts amid negotiations to secure an eleventh-hour deal to unlock €7.2bn in bailout funds and prevent Greece defaulting on its debts at the end of the month.


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The extension of a little under €1bn in ELA funding, according to people with knowledge of the decision, is less than half Monday’s €2bn figure. The reduction follows rising optimism for a deal after eurozone leaders, meeting in Brussels on Monday evening, welcomed reform proposals by the Greek government that included its first substantial concessions in months.

Eurozone finance ministers are scheduled to meet on Wednesday to finalise a deal ahead of a long-planned EU summit that starts on Thursday.

Jean-Claude Juncker, European Commission president, said after Monday’s emergency summit that he was “confident” of a positive outcome.

“I am convinced that this is not only our intention to finalise the decision-making process this week — we will finalise the process this week,” he said.

Even Wolfgang Schäuble, the German finance minister, on Tuesday softened this tough verdict of the previous morning, describing the latest Greek proposals as a starting point for further negotiations.

However, Berlin is concerned at the warmth of the welcome the plans have received from some in the European Commission. “They don’t see it as positively as many in Brussels do,” said one EU diplomat.

Greek banks need central bank loans to pay back depositors who have been withdrawing their money for fear that Athens and its creditors will prove unable to strike a deal.
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Some €1.6bn of deposits left the Greek banking system on Monday following withdrawals of €2bn on Friday and over the weekend. Despite the slowdown in the rate of withdrawals, Barclays analysts said on Tuesday the banks “remain under high pressure”.

Officials said another meeting on extending ELA funding was planned for Wednesday.

Optimism for a deal extended to Greek equities, which were 3.67 per cent higher at 778.96 at lunchtime on Tuesday, their highest level in seven sessions.

The rise, led by consumer goods and bank stocks, builds on Monday’s gains, when the main Athens stock index rose 9 per cent and bank stocks jumped more than 20 per cent.

Alpha Bank posted the biggest gains, up 10.59 per cent, while Piraeus Bank and the National Bank of Greece rose 4.8 per cent and 6.6 per cent respectively.

Currency traders reacted on Tuesday by selling the euro, a sign analysts said of market relief. The single currency was down 0.8 per cent at $1.1245 in early trade.

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