FRANKFURT (Reuters) - A rush by firms and consumers to pull their money out of Greek banks accelerated to record levels in May, European Central Bank data showed on Friday, piling further misery on the country’s already crippled banking system.
Speculation about Greece possibly quitting the euro was at its most intense in May when anti-bailout parties saw a strong showing in elections, and analysts and bankers said the situation might have improved since then.
After slight increases in the two previous months, private sector deposits in Greek banks fell almost 5 percent last month, the ECB data showed.
Deposits fell to 163 billion euros, the lowest level in six years and about one third below their peak hit in December 2009.
“The deposit flight will be linked to the messages coming of Greece and the euro zone with respect to Greece’s continued chances of membership,” Cyprus’s Hellenic Bank economist Michalis Florentiades said.
“Interest rates Greek banks are paying are fairly high, so it’s quite attractive to park money, but if the risk of Greece exiting the euro zone (is there), it obviously makes sense to take your money out of the Greek banking system.”
Greek bankers have said that deposits are trickling back since a pro-bailout party’s victory in elections earlier this month.
Private-sector deposits also fell sharply in Spain, dipping 2 percent to their lowest level since October 2008, the ECB data showed.
But the Bank of Spain said that 25 billion euros of the fall was due to reclassification of some deposits as held by financial institutions.
Stripped of this, deposits dropped only 6 billion euros, or less than half a percent, the nation’s central bank said.
Other countries at the sharp end of the region’s debt crisis fared better, with deposits Ireland rising slightly, Italian deposits roughly stable and Portuguese deposits dropping less than 1 percent.
Monthly fluctuations in the figures are common, though sharp consecutive drops in countries with stable banking systems are unusual.
The data, which are for all currencies combined, are not seasonally adjusted and differ slightly from national central bank figures. The measure excludes deposits from central government and financial institutions.
Reporting by Marc Jones and Sakari Suoninen; Editing by John Stonestreet