And unable to access the international money markets, they will be in a similar position to the Greek god Telephus, who was wounded by Achilles and yet needed Achilles to return as a doctor before he could be healed.
The Greek banks, stripped of many of their assets by the European Central Bank, will need the ECB to make a reappearance in Athens to aid their recovery.On a day when the Greek banks opened their doors for the first time in three weeks, the debate about future funding needs seemed far away.
Allowing access to the unknown treasures found in countless deposit boxes triggered a cheer, especially among the better off over-60s, if a quick glance at the queues outside branches was anything to go by.
A couple of months from now, the story could take a grim turn. Not only will hundreds of millions of deposits have been withdrawn in that time, the weakening effects of a broader economic slowdown will have taken their toll.For one thing, the economy is likely to be another 5% smaller by the autumn than when the banks were stress-tested last time.
Many businesses and personal customers will have acquired bigger debts with their banks. Others will have declared themselves bankrupt. And this deterioration in loan quality will be reflected in a lower credit rating and a bigger need for replacement funding.
The big four – Piraeus, Alpha Bank, Eurobank and National Bank of Greece – are already underpinned by €130bn of ECB funds.
As their liquidity squeeze intensifies, that figure could soar. Swiss investment bank UBS warned that the stress tests may reveal a situation that is so bad the government will be forced to follow Cyprus and impose a haircut on all deposit accounts containing more than €100,000 .
Even the hint of such a move will cause more panic. No doubt the ECB is working hard to limit any further harm.
theguardian.com
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