Banks to return ECB liquidity
Greece’s four systemic banks will by the end of the year have returned to the European Central Bank excess liquidity of 15.4 billion euros of the €50.6 billion the banking system has withdrawn from the Eurosystem.
The liquidity return takes place in the context of the phasing out of the measures of temporary relaxation of collaterals taken by the ECB to contain the effects of the pandemic and the high repayments by the Greek banks are a sign of strength, indicating the increased levels of liquidity available to the Greek banking system mainly through domestic deposits.
It is recalled that in April 2020 – immediately after the outbreak of the pandemic and the generalized lockdowns that had been applied in European countries – the ECB had implemented the program of targeted long-term refinancing transactions, known as TLTRO III. The program was intended to support banks to channel cheap loans to businesses and households, drawing liquidity from the ECB at a negative rate of -1%.
After the loss of the benefit of the difference between the interest rates for pumping liquidity and redeploying excess liquidity to the ECB in the form of a deposit, the four systemic banks are expected to proceed with high repayments by year-end.
This move, according to banking sources, “gives a positive signal to markets that Greek banks have excess liquidity and will therefore not need to replace TLTRO maturities with other sources” for now, such as repos.
Piraeus Bank is expected to make the largest repayment, returning to the ECB €9 billion from the €14.4 billion it has raised in total through TLTRO. National Bank, which has drawn €11.6 billion from the Eurosystem, made the first repayment of €2 billion in November and will repay an additional €1.5 billion by the end of the year.
Eurobank will this month repay surplus liquidity of €2.9 billion (€1.9 billion expiring and an additional €1 billion) of the total €11.6 billion drawn from the Eurosystem.
Finally, Alpha plans the first repayment in June 2023, returning €8 billion of the total €13 billion.
