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Greece reverses payment exemption for pensioners to shield banks

Tuesday, June 30, 2015 - 00:24

[LONDON] Greece backtracked on a pledge to waive pensioners from limits on cash withdrawals, signaling that the strain in the country's banks is now spreading to the very people the government wanted to protect by rejecting a bailout proposal.

An overnight decree to impose capital controls and cap withdrawals at 60 euros a day had originally exempted pension payments. The privilege was revoked about 12 hours later.

The about-face came as industry officials warned that the move to waive limits for pensions would have soaked up much of the remaining liquidity available under emergency lines, according to three banking officials familiar with the decision.

The officials, who asked not to be named because they aren't authorized to speak on the matter publicly, said that even the 60-euro a day limit for depositors is stretching the system.

Greek pensioners who can't access ATMs can instead pull as muhch as 240 euros at some bank branches that will open up for this purpose on Thursday, a Greek government official said on condition of anonymity.

Greek Prime Minister Alexis Tsipras was forced to impose capital controls after his decision to call a referendum on the country's bailout brought five months of contentious talks to an abrupt end, prompting the European Central Bank to freeze its lifeline to Greek banks.

Shut out of the ECB's regular financing and bleeding deposits as bailout talks remained unresolved, Greek banks have been kept afloat by the emergency liquidity lines that were gradually increased since February until they were frozen at 89 billion euros on Sunday.

BLOOMBERG

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