Greek banks hurt by Cyprus news, no sign of runs
ATHENS, Greece (AP) — Banks stocks fell sharply on the Athens Stock Exchange on Tuesday, as trading resumed for the first time in Greece since Cyprus announced a shock plan to seize a part of bank deposits. There were no signs of bank runs, however.
Following losses among financial stocks across Europe, Greece’s main stock index was down 3.7 percent in early afternoon trading, with banking stocks down as much as 7 percent.
After a public holiday Monday, Greek branches of the Cypriot lenders the Bank of Cyprus, Laiki Bank and Hellenic remained closed Tuesday and Wednesday. Trading in the shares of Bank of Cyprus and Laiki was also suspended for two days on the Athens Stock Exchange.
Public activity at Greek banks appeared normal Tuesday.
“I wouldn’t expect a bank run (in other countries) … Because different nationalities have their own belief in their own banking systems,” said Theodor Krindas, managing director at Attica Wealth Management.
However, the deposit grab sets a dangerous precedent. “It creates a problem of trust in the European banking system as a whole.”
Greek officials have made repeated assurances that all deposits in the country are not in danger.
“The deposits at all Greek banks and at the branches of Cypriot banks in Greece are totally safeguarded,” Deputy Foreign Minister Dimitris Kourkoulas told state-run NET television.
He noted that Cyprus’ problems were completely different from Greece’s. Cyprus has a huge banking system that will collapse without rescue money. In Greece, the problem was overspending by the government.
To help in Cyprus’ rescue operation, Greek banks are expected to purchase the operations of Cypriot banks in Greece. Those operations have estimated combined deposits worth €13 billion and loans totaling more than €20 billion, with more than 300 branches and more than 4,500 staff.
Asked about the expected acquisitions, Finance Minister Yannis Stournaras said: “We are ready,” but refused to elaborate.
Conservative Prime Minister Antonis Samaras will meet later Tuesday with the heads of parties in the government coalition to discuss the Cypriot crisis and the ongoing deficit-cutting efforts in Greece.
Greece has strong ties with Cyprus, which is majority ethnic Greek. With an economy more than 11 times larger than that of Cyprus, Greece has been surviving on rescue loans for past three years as it struggles to make its national debt sustainable.