Greek deposit flight hits record high in May

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FRANKFURT (Reuters) - A rush by firms and consumers to pull their money out of Greek banks accelerated to record levels in May, European Central Bank data showed on Friday, piling further misery on the country's already crippled banking system. Speculation about Greece possibly quitting the euro was at its most intense in May when anti-bailout parties saw a strong showing in elections, and analysts and bankers said the situation might have improved since then. After slight increases in the two previous months, private sector deposits in Greek banks fell almost 5 percent last month, the ECB data showed. Deposits fell to 163 billion euros, the lowest level in six years and about one third below their peak hit in December 2009. "The deposit flight will be linked to the messages coming of Greece and the euro zone with respect to Greece's continued chances of membership," Cyprus's Hellenic Bank economist Michalis Florentiades said. "Interest rates Greek banks are paying are fairly high, so it's quite attractive to park money, but if the risk of Greece exiting the euro zone (is there), it obviously makes sense to take your money out of the Greek banking system." Greek bankers have said that deposits are trickling back since a pro-bailout party's victory in elections earlier this month. Private-sector deposits also fell sharply in Spain, dipping 2 percent to their lowest level since October 2008, the ECB data showed. ... Continue to read.

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