Greek banks have presented plans to reduce their dependence on funding from the European Central Bank (ECB) in another signal that the country is struggling to avoid a debt restructuring, according to Financial Times. Job cuts, further reductions in lending, disposals of non-core assets such as tourist hotels and the sale of profitable banking networks in south-east Europe are among measures that could help boost domestic liquidity, according to Athens bankers. The plans, which are still at a preliminary stage, were submitted last week to the Greek central bank and the “troika” – experts from the European Commission, International Monetary Fund and ECB. Banks have already made substantial cuts in lending to offset a steady outflow of deposits. Greek savers have withdrawn deposits amounting to more than EUR 40 bln over the past year – equivalent to about 14 per cent of total deposits held in Greek banks.
The withdrawals have added to the banks’ funding problems, increasing their reliance on the ECB. The ECB has warned that a Greek debt restructuring would have a catastrophic impact on the country’seconomy. ECB liquidity is vital for Greece’s banks because they do not have normal access to financial markets. They have borrowed almost EUR 90 bln using government bonds as collateral and have been excluded from interbank markets since the country’s bail-out last May by the European Union and the IMF.