ELA funding to Greek banks drops 1.35 bln euros in August

Emergency European Central Bank funding to Greek lenders fell by 1.35 billion euros in August, Bank of Greece data showed on Monday, after capital controls helped slow deposit outflows.

Emergency funding, which is more costly than borrowing from the European Central Bank, fell to 83.95 billion euros at the end of last month from 85.3 billion in July, the data showed.

Greek banks have relied on the emergency liquidity assistance (ELA), which they receive from the Greek central bank, since February after being cut off from the ECB’s funding window due to stalled bailout talks between the Greek government and its lenders.

Following the ECB’s September 3 policy meeting, President Mario Draghi said it was still too early to reinstate a waiver that would give Greek banks access to the funding window again, saying Athens would have to first comply with and “show strong ownership” of its bailout program.

The waiver would also in theory admit Greece, despite its low credit rating and status as a bailout recipient, to the ECB’s quantitative easing (QE) sovereign bond-buying program, which began in March.

However, no decision on the waiver is expected until a new Greek government takes office after national elections on Sunday.

The cap on ELA funding that Greek banks can draw, which has fallen steadily over the past month, stands at 89.1 billion euros.

[Reuters]