Banks in no rush for end of capital controls

Greek banks are concerned about the prospect of the full lifting of the capital controls, as they would prefer that they remain in place for the time being. Bank chiefs expressed this view at a meeting on Friday with Bank of Greece Governor Yannis Stournaras, which focused on the roadmap for lifting the restrictions. On Monday they are expected to meet with government officials, possibly including Prime Minister Alexis Tsipras, to discuss the so-called Katseli law for the protection of primary residences. 

As regards capital controls, which were imposed in the politically turbulent summer of 2015, Local lenders’ chief executives have agreed to the gradual easing of restrictions but have expressed misgivings about an immediate full lifting of the so-called third pillar, which concerns the transfer of money abroad. This is because of the uncertainty that may arise due to the upcoming elections, and they have concluded that the conditions are not right for such a move.

Despite the increase in deposits last year, the bank chiefs stressed last Friday that lifting all restrictions against a backdrop of political uncertainty could halt the inflow and render its resumption very difficult; they therefore said talks should continue on that.

Deposits amounted to 134.5 billion euros at the end of 2018, posting an annual increase of 8.1 billion, or 6.4 percent. A year earlier the figure had stood at 126.4 billion, up 4.1 percent from the year before.

BoG Deputy Governor John Mourmouras also referred to the issue on Friday while addressing a conference on nonperforming loans in Athens: He said a date ought to be set for the full lifting of the controls, such as the end of this year.

The ban on exporting capital is the main subject of the capital controls still in place. Any large transfer by an individual or a corporate entity beyond those allowed – for purposes such as trips, the payment of university or hospital bills or trading activity – requires the approval of the competent committee at the Finance Ministry, which convenes twice a week. The committee examines requests for transfers in excess of 1 million euros, while those between 100,000 and 1 million euros are examined by the committees each commercial bank has.

The main step toward the lifting of controls was made last summer, with the easing of the limit for cash withdrawals from bank branches and cash machines to 5,000 euros per month and allowing the opening of new accounts.