Sunday 25 February 2018

Capital control under way in Greece

People line up at ATMs outside a National bank branch in the northern Greek port city of Thessaloniki (AP)
People line up at ATMs outside a National bank branch in the northern Greek port city of Thessaloniki (AP)
Elderly people, who usually get their pensions at the end of the month, wait outside a closed bank in Athens (AP)
People use an ATM machine in Monastiraki in Athens (AP)

Anxious pensioners have swarmed closed bank branches in the hope of getting their pensions, while queues formed at cash machines as they gradually began dispensing money again following the imposition of strict controls on capital throughout Greece.

As global markets plunged following one of the most dramatic weekends in Greece's five-year financial saga, the country woke up to a changed financial landscape that many in the markets fear could be a prelude to a messy debt default and a damaging Greek exit from the euro.

The banks and the country's stock market have been closed for the week after prime minister Alexis Tsipras' surprise call for a referendum next Sunday on budget and reform proposals creditors are demanding Greece should take to gain access to blocked bailout funds.

Mr Tsipras is urging Greeks to reject the proposals in the popular vote, which increasingly has the look of a vote on euro membership itself.

The sense of unease was evident in the number of pensioners lining up at bank branches hoping they might open.

Many elderly Greeks do not have bank cards and make withdrawals in person at the till, and so find themselves completely cut off from their money. One of the most onerous controls is a daily limit of 60 euro (£42) on cash withdrawals from ATMs.

"I came here at 4am because I have to get my pension," said 74-year-old Anastasios Gevelidis, one of about 100 OAPs waiting outside the main branch of National Bank of Greece in the country's second largest city of Thessaloniki.

"I don't have a card, I don't know what's going on, we don't even have enough money to buy bread," he said.

"Nobody knows anything. A bank employee came out at 8am and told us 'you're not going to get any money,' but we're hearing that 70 branches will open."

The finance ministry said the manner in which pensions would be paid would be announced later on Monday afternoon.

Deputy minister of state Terence Quick said special arrangements would be made for pensions, telling private Antenna television that pensions would be dispensed in full as many pensioners do not have bank cards.

The capital controls are meant to staunch the flow of money out of Greek banks and spur the country's creditors to offer concessions before Greece's international bailout program expires Tuesday.

Without a deal to extend the bailout program, Greece will lose access to the remaining 7.2 billion euro (£5.1 billion) of rescue loans, and is unlikely to be able to meet a 1.6 billion-euro (£1.13 billion) debt repayment to the International Monetary Fund due the same day.

The accelerating crisis has thrown into question Greece's financial future and continued membership in the 19-nation shared euro currency - and even the 28-country European Union.

Investors around the world are worried that should Greece leave the euro and say it cannot pay its debts, which stand at more than 300 billion euro (£212 billion), the global economic recovery could be derailed and questions would grow over the long-term viability of the euro itself.

"The images of queues at ATMs in Greece are stripping traders of what little confidence they have left in the nation, and the financial earthquake that happened in the eurozone over the weekend can be felt around the world," said David Madden, market analyst at IG.

Among the major markets in Europe, the CAC-40 stock index in France was down 3.6% at 4,877 while Germany's DAX fell 3.5% to 11,088.

Aside from developments at the banks in Greece, massive queues formed at petrol stations, with worried motorists seeking to fill up their tanks and pay with credit cards while they were still being accepted.

Although credit and cash card transactions have not been restricted, many retailers were not accepting card transactions on Monday morning.

Electronic transfers and bill payments are allowed, but only within the country. The government also stressed the controls would not affect foreign tourists, who would have no limits on cash withdrawals with foreign bank cards.

For emergency needs, such as importing medicines or sending remittances abroad, the Greek Treasury is creating a Banking Transactions Approval Committee to examine requests on a case-by-case basis.

Mr Tsipras announced the capital controls in a televised address on Sunday night, blaming the eurogroup, the gathering of the eurozone's finance ministers, and its decision to reject an extension request for the bailout programme.

He has asked again for the extension to allow for the referendum.

French finance minister Michel Sapin said talks with Greece could resume at any time, while Pierre Moscovici, the European commissioner for economic affairs, said negotiations were cut off when an agreement seemed within reach.

The situation now largely rests on a 'yes' vote in Greece, Mr Moscovici said.

The referendum decision, ratified by Parliament after a marathon 13-hour session that ended in the early hours of Sunday, shocked and angered Greece's European partners.

The country's negotiations with its European creditors have been suspended, with both sides accusing each other of being responsible for talks breaking off.

Greece is dividing into two camps ahead of the referendum. A demonstration is planned in Athens later Monday by those against the proposals from the creditors.

Another one is planned for Tuesday by those who want to make sure that Greece's position in Europe is not threatened.

Mr Tsipras also blamed the European Central Bank's decision not to increase the amount of emergency liquidity the lenders could access from the central bank - meaning Greece has no way to replenish fast-diminishing deposits.

"It is now more than clear that this decision has no other aim than to blackmail the will of the Greek people and prevent the smooth democratic process of the referendum," Mr Tsipras said.

"They will not succeed."

Press Association

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