Drachma alert – no hassle for ATM’s

The fear of a massive reaction by depositors on the new drachma scenario that was ignited on Friday evening by the prestigious Spiegel magazine, sounded the alarm over the weekend both at the headquarters of banks and the government.

Having the previous experience of the two emails that brought a large number of depositors in Greece to the brink of panic, Friday’s publication caused a nervous breakdown both to the government and bankers, who are anticipating market and depositor reactions on Monday in case the fear about the drachma prevails.

However, the Eurozone exit scenario did not seem to persuade domestic savers, as they give more chances to restructure, despite the fact that the vast majority has insufficient knowledge of its consequences.

Most people have developed a view that a restructure will have consequences for banks and this is why they feel anxious about their deposits.

Nevertheless, there was no unusual movement in ATM's throughout the weekend.

Moreover, as a bank market agent says, the most gullible have already withdrawn their money, either to send it abroad, or stash it in cupboards and hiding places at home. Until now, Greek banks have suffered significant reduction in deposits at around 40 billion, but the output in recent months is primarily due to depositors’ everyday coverage needs, and not to knee-jerk reactions which send their deposits abroad.

Moreover, keeping returns at relatively high levels so that bankers can either attract customers or reduce the output makes deposits attractive enough, provided that depositors keep their cool.

This strategy, however, has a significant cost for banks. In the competition game, smaller banks offer 3-month or 6-month interest rates of around 4,5% in fixed deposits.

Faced with this competition, large banks cannot remain untouched, given the difficulty in raising liquidity; thus they offer tempting rates that range from 3,5% to 4% and with a raising attitude when it comes to new deposits of large amounts.