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Tsipras, who promised on Saturday to stick by Greece's financial obligations, is seeking to repair damage after a rocky first week. (REUTERS/Thomas Peter)

Tsipras, who promised on Saturday to stick by Greece's financial obligations, is seeking to repair damage after a rocky first week. (REUTERS/Thomas Peter)

REUTERS

Wolfgang Bosbach, a senior MP in Angela Merke's conservative Christian Democratic Party, said that Germany would not "honour" the scrapping of agreements Greece had reached with its EU partners

Wolfgang Bosbach, a senior MP in Angela Merke's conservative Christian Democratic Party, said that Germany would not "honour" the scrapping of agreements Greece had reached with its EU partners

Party leader Alexis Tsipras helped calm investors' nerves yesterday when he said in a speech that he wanted negotiation, not confrontation, with international lenders (REUTERS/Alkis Konstantinidis)

Party leader Alexis Tsipras helped calm investors' nerves yesterday when he said in a speech that he wanted negotiation, not confrontation, with international lenders (REUTERS/Alkis Konstantinidis)

REUTERS

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Tsipras, who promised on Saturday to stick by Greece's financial obligations, is seeking to repair damage after a rocky first week. (REUTERS/Thomas Peter)

Germany has given a stern warning to the new Greek government that it must live up to its commitments to its creditors.

German government spokesman Steffan Seibert said it was important for Greece to "take measures so that the economic recovery continues".

His comments were echoed by the head of the eurozone finance ministers' group.

The remarks were in the wake of the victory of the far-left Syriza party. Syriza wants to scrap austerity measures demanded by international lenders, and renegotiate debt payments.

Party leader Alexis Tsipras helped calm investors' nerves yesterday when he said in a speech that he wanted negotiation, not confrontation, with international lenders.

"The new Greek government will be ready to co-operate and negotiate for the first time with our peers a just, mutually-beneficial and viable solution," Mr Tsipras said following his election win.

However, Jeroen Dijsselbloem, president of the Eurogroup, said: "There is very little support for a write-off in Europe."

Speaking after a meeting of eurozone finance ministers in Brussels, he said members should "abide by the rules and commitments".

The German government said that Greece's new leadership should take measures to ensure the economic recovery continues.

"A part of that is Greece holding to its prior commitments and that the new government be tied in to the reform's achievements," government spokesman Mr Seibert said.

However, there is still considerable unease at the election result in the financial world. Greek banks have lost a quarter of their value in two days as the dual threats of a bank run and the loss of support from the European Central Bank threaten a liquidity squeeze.

The Athens Bank Index, a weighted index of Greek bank shares, fell to an all-time low of 72.86 yesterday, with banks having lost €15bn - half their value - in four months. Around €8bn worth of deposits has been pulled out of Greek banks since November, according to Moody's, with more withdrawals likely.

Muted

Despite the fact that the market reaction to Syriza's victory has been more muted than many expected, with the Athens stock exchange trading above its 2012 lows, fears over a cashflow crisis at Greek banks mean they are trading well below their values two years ago.

The risk of a full-blown crisis should Greece exit the euro or refuse to honour debt commitments has seen depositors withdraw billions from Greek banks, echoing the crisis of summer 2012 when the Greek central bank was forced to provide up to €124bn of emergency liquidity assistance (ELA).

Greece's bail-out agreements with the troika have provided its banks with access to the ECB's funding scheme, which allows them to access billions in cheap liquidity.

However, banks are running out of collateral to use against these loans, and will be ineligible for such support if Greece fails to extend its bail-out programme, which currently ends on February 28.

Should Mr Tsipras fail to negotiate a new agreement, the ECB would pull funding.

This would come at the worst possible time for Greece's banks, whose use of the scheme is expected to rise to a two-year high this month.

Nondas Nicolaides, vice-president and senior credit officer at Moody's, said that ECB funding will jump from €56bn to €65bn this month, as bank deposits fall to around €156bn.

Mr Nicolaides said that many borrowers close to default will simply refuse to restructure their debts in the coming months to see if the new government will force banks to write them off.

Wolfgang Bosbach, a senior MP in Ms Merkel's conservative Christian Democratic Party, said that Germany would not "honour" the scrapping of agreements Greece had reached with its EU partners.

His views were echoed by Ms Merkel's left-of-centre Social Democrat coalition partners. Thomas Oppermann, the party's parliamentary leader, warned Syriza against reneging on Greece's commitments. "The new government remains bound by Greece's agreements." (© Daily Telegraph, London)

Telegraph.co.uk