ECB raises Greek banks' emergency funding cap by 200m euros

[ATHENS] The European Central Bank on Wednesday raised the maximum emergency funding that Greek banks can obtain by 200 million euros (S$297 million), a Greek banking source said.

The move lifts the ceiling on Emergency Liquidity Assistance (ELA) to 80.2 billion euros, but it marks one of the smallest increases yet in a series of ECB moves in recent months to step up the amount of cash available to banks in debt-mired Greece.

Taking into account other unused amounts, the banks now have around 3.0 billion euros in funding available, the source added.

Greek banks are dependent on the ECB for financing, but the eurozone's central bank no longer accepts Greek sovereign bonds as collateral for loans.

It had done so previously under a special waiver mechanism, but rescinded that waiver in February until Athens' new anti-austerity government under Prime Minister Alexis Tsipras agrees a new debt deal with its creditors.

Without the waiver, Greek banks now rely solely on ELA, which is more expensive than normal central bank refinancing operations.

Greek banks have a desperate need for cash. Individual account holders and business account holders withdrew more than 26 billion euros between early December and late March, according to figures from the Bank of Greece, amid fears of the country defaulting under Tsipras' radical government.

Wednesday's ECB decision comes as the Greek government is locked in tough talks with international creditors who are demanding stringent reforms in return for the final 7.2 billion euros in bailout funds Athens urgently needs.

AFP