[ATHENS] European Central Bank funding to Greek banks rose 47 per cent in January from a month earlier, Greek central bank data showed on Tuesday, as deposit flight squeezed liquidity and forced the country's lenders to increase their borrowing from the ECB.
ECB lending to Greek banks against collateral rose to 82.24 billion euros (US$92 billion) in January from 56.04 billion euros in December.
Jitters over a standoff with Greece's eurozone partners ahead of a Jan 25 election that swept a new leftist government into power led to deposit outflows of 12.2 billion euros in January, according to European Central Bank data.
The sharp drop in deposit balances, coupled with purchases of state T-bill issues and the refusal of foreign banks to renew repo lines, forced Greek lenders to draw emergency liquidity assistance (ELA) from the Bank of Greece.
ELA funding reached 5.2 billion euros in January from nearly zero in December, the data showed.
Emergency liquidity is expected to have increased sharply in February after the ECB stopped accepting Greek government bonds as collateral for funding on Feb 4, shifting the burden onto Greece's central bank to finance its lenders.
Last month the ECB Governing Council raised the cap on ELA funding from the Bank of Greece to 68.3 billion euros as deposit ouflows continued.
The European Central Bank is willing to again accept Greek bonds for funding if Athens keeps to reform pledges, its president said last month, defending the eurozone central bank's treatment of Athens.