Posted: 4/7/2010 4:07:57 AM EDT
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Greek banks hit by wealthy citizens moving their money offshore Greek banks are being hit by a wave of redemptions as the country's most wealthy citizens and corporations look to move their money offshore or to international financial institutions perceived as safer homes for their assets. By Harry Wilson Published: 10:13PM BST 05 Apr 2010 Comments 14 | Comment on this article Pensioners try to break through the police barrier to reach the entrance to the Greek government's headquarters Greece has recently been rocked by mass protests over its huge debt Photo: EPA Wealthy Greeks and companies have been clamouring to move their cash deposits to banks such as HSBC or France's Société Générale, which operate large branches in the country. They are among those to have received several billion euros of new money in recent weeks. HSBC's private banking in the country is understood to have been flooded with business, while the local operations of several other major international banks have already seen large inflows of money. A spokesman for HSBC declined to comment. Eurozone countries are still at loggerheads on bailing out the southern European nation, with Germany believed to be in conflict with other countries in the single currency over how much interest to charge on the emergency loans package. Germany wants interest rates of 6pc to 6.5pc, with other countries willing to accept 4pc to 4.5pc interest. More than €3bn (£2.6bn) of deposits held by Greek households and companies left the country in February, while in January about €5bn of deposits were moved out, according to the latest figures available from the Bank of Greece. Switzerland, the UK and Cyprus have been the largest recipients of the money, with the wealthiest Greeks looking to move their deposits to Swiss banks accounts to escape the more punitive tax measures many fear will be introduced in the wake of the country's economic crisis. John Raymond, a banks analyst at CreditSights, said that on a visit to Athens last week capital flight was the number one issue worrying most Greek bankers. "The banks themselves are concerned by it because they can't get funding elsewhere at the moment," he said. "Greek banks won't be able to increase lending volumes if deposits don't increase, and a continued deterioration in their deposit base will lead them to cut back lending even more, stifling real economic growth." Recent bond issues by the Greek government have struggled to find much demand and fears are growing that the country could become the first Western nation to default on its debt, stoking fears among Greeks over the stability of not just the country's banks but the entire economy. "Most bankers say they are worried about the stability of Greece and Greek banks. This combined with the tax issue is making many people nervous about keeping their money in domestic banks or within the country," said Mr Raymond. Link |
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There was an article a month ago that said about 25% of the country's wealth had already been moved offshore and that the government was cracking down with punitive taxes on attempts to move money out of the national banks and into safer (relative term) European banks (laws called "capital controls").
Something similar was passed in Argentina when they collapsed, only it escalated to the point where you could withdraw only the equivalent of one bus fare per day in cash from your own account. In completely unrelated news that shouldn't worry anyone, the US just passed capital controls as well: 30% withholding on overseas transfers, unless you get a permission slip from the Secretary of Treasury declaring you above suspicion. |
You mean people actually want to make sure they get their money instead of an IOU.