GREEK banks operating on the island yesterday assured customers and depositors that their money was in safe hands and they had nothing to fear from the ongoing global credit crunch.
The reassurance came a day after alarmist allegations by AKEL deputy Stavros Evagorou, claiming to have information that a subsidiary of a Greek bank in Cyprus was in imminent danger of collapse.
The deputy said he could not name names, and instead urged the Association of Commercial Banks to clarify the situation.
The Central Bank intervened, saying: “All banks operating in Cyprus, including subsidiaries of Greek banks remain solid and secure and do not face any problems, and their liquidity is very satisfactory.”
Far from insisting, Evagorou – an economist by profession – issued what sounded like a retraction yesterday.
“We consider that the banking system is robust and that, with the right handling, it is in a position to absorb any shocks from the global crisis,” Evagorou said.
And in all but a redundant statement, Evagorou added that AKEL had “full confidence in the economy and in government’s economic management”.
Responding to Evagorou’s initial claim, Piraeus Bank yesterday released a statement from its Athens headquarters, clearly targeted at its customer base, noting that both its liquidity and profits remained on a solid footing.
It cited the latest report by Standard & Poor’s, which rated positively Piraeus’ credit worthiness, assets and growth strategy, mentioning a major increase in deposits during the first half of the year.
The fallout from Evagorou’s comments seems to have been minimal.
“We’ve had a few calls from concerned customers, but nothing big,” claimed Michalis Louis, CEO of Eurobank Cyprus.
At any rate, there had been no mass panicking by depositors rushing to take their money out, either before or after Evagorou’s remarks.
“No, there hasn’t been any significant outflow of deposits. This bank has solid liquidity and an immediately accessible capital of some €5 billion. So we aren’t worried, and neither should our customers be,” Louis told the Mail.
And a senior executive with the National Bank of Greece, who wished to remain anonymous, said what few jittery clients picked up the phone yesterday were promptly reassured their savings were secure.
“I certainly have no idea which subsidiary Mr. Evagorou was referring to. To be honest, I don’t know why he would say a thing like that,” the source said.
As expected, the AKEL deputy took flak from political opponents, with DISY’s no.2 Averoff Neophytou calling Evagorou “irresponsible”.
Economic analyst Dr Stelios Platis said everyone, “including politicians, should be careful when making such statements, especially in a climate where there’s a lack of confidence in the banking sector.”
Platis suggested the AKEL deputy had been overzealous in banging the alarm bell.
He explained that a rumour was started that one of the Greek banks was faltering, after Standard & Poor’s revised its outlook for two banks downwards. Alpha Bank’s credit outlook was changed from stable to negative, while Piraeus’ from positive to stable. However, the actual credit rating of the banks remained the same.
“This is standard practice, and was to be expected, since under the current crisis banks are sure to take a hit in the long term. But when someone here comes out and says that one bank is about to fold, then you can imagine frantic pensioners calling their bank.”
