Two Greek banks are requesting emergency liquidity assistance (ELA) from the Bank of Greece, according to local media.
The ELA offers emergency assistance to stop banks that are still solvent, but are having temporary liquidity problems from failing and endangering the financial system. There’s a good Reuters rundown of what that means here.
Three of Greece’s four major banks failed the ECB’s stress tests last year. Alpha Bank narrowly passed, but Eurobank, National Bank of Greece and Piraeus Bank all fell short.
The news has sent Greece’s 10-year government bond yields jumped a little and shares tumbled, especially for Eurobank. Greek newspaper Proto Thema says that the banks that have requested assistance so far are Alpha Bank and Eurobank, and that more are expected.
Snap elections on 25 January have been a problem for Greek banks, with the uncertain result resulting in major outflows from accounts. Based on current polling, there is a strong change that radical left-wingers Syriza will win. The party has suggested bank nationalization and wants to abandon Athens’ bailout agreement and austerity programme.
Here’s how Eurobank’s shares look right now:
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