PM Alexis Tsipras orders closure of banks as cash machines run dry

Greek prime minister Alexis Tsipras has announced the country’s banks will be shut until July 6, pleading for calm after anxious citizens emptied ATMs in a dramatic escalation of the country’s debt crisis.

In a statement, Mr Tsipras said the Bank of Greece had recommended a 60-euro ($87) restriction of bank withdrawals after international creditors refused to extend the nation’s bailout beyond its June 30 expiry date, sparking default fears over an IMF loan repayment due the same day.

Greek banks are expected to stay shut until 7 July, two days after Greece’s planned referendum on the terms it had been offered by international creditors for receiving fresh bailout money.

Fears are growing over the health of Greek banks after indications that savers have withdrawn billions of euros in the past week.

Capital flight from beleaguered Greek banks this week alone could be more than €4bn (£2.9bn), reports say.

Savers are moving funds as time runs out to resolve Greece’s debt crisis.

 

The Athens stock exchange will also be closed on Monday.

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Greece’s capital controls

  • A maximum of €60 (£42; $66) can be withdrawn from an account in one day

  • Overseas transfers of cash prohibited, except for vital, pre-approved commercial transactions.

Amid growing concern the country was headed for financial collapse and a possible eurozone exit, the European Central Bank (ECB) said it would not increase its financial support to Greek banks.

In a bid to stave off panic, Mr Tsipras said the stock market would remain closed on Monday and he added that Athens had again requested a “prolongation of the [bailout] program”.

Urging calm, he assured Greeks their deposits were “totally safe”.

“Equally safe is the reimbursement of salaries and pensions,” he said.

“Any difficulties that may arise must be dealt with with calmness. The more calm we are, the sooner we will get over this situation.”

Uncertainty over how events will unfold in coming days prompted long queues of up to 100 people to form outside some ATMs in Athens.

“I tried many machines — five, six, eight, 10 — I am not sure,” said Voula, who was on the lookout for a working ATM in central Athens.

“I feel anxious, sad, angry about the government,” she said.

“They put Greece on a very dangerous adventure.”

Since Friday night alone, 1.3 billion euros ($1.88 billion) had been withdrawn from the Greek banking system, according to the head of the bank workers’ union Stavros Koukos.

A banking source in Greece said only 40 per cent of cash machines had money in them and a host of European governments including London and Paris advised citizens travelling to Greece to carry money with them.

As well as the 60-euro ATM limit applied to Greeks, online transactions will be allowed within Greece but foreign transfers will be prohibited.

The government said there was no limit on ATM withdrawals for foreign tourists.

Two sides remain at odds over economic reforms

The Frankfurt-based ECB’s governing council earlier held a crisis telephone conference and pledged to maintain emergency liquidity assistance — keeping open its life-support for Greek banks and, by extension, the Greek state.

But it pledged no extra cash for banks, amid signs a bank run was gathering pace.

Greece’s repayment schedule

  • June 30: IMF repayment, 1.5 billion euros
  • July 10: Greek Treasury T-bill redemption, 2 billion euros
  • July 13: IMF repayment, 450 million euros
  • July 17: Greek T-bill redemption, 1 billion euros
  • July 20: ECB and national central banks repayments, 3.5 billion euros
  • August 1: IMF coupon payment, 175 million euros
  • August 7: Greek T-bill redemption, 1 billion euros
  • August 20: ECB and national central banks repayments, 3.2 billion euros
  • September 4: IMF repayment, 300 million euros
  • September 4: Greek T-bill redemption, 1.4 billion euros

The long festering crisis took a sharp turn for the worse on Friday night after months of deadlocked negotiations between the new hard-left government of Mr Tsipras and the country’s creditors.

The two sides have been at odds over the economic reforms demanded by the creditors in exchange for fresh cash needed to keep the Greek state afloat.

Mr Tsipras stunned Europe with a surprise call for a July 5 referendum on the latest cash-for-reforms package and advised voters against backing a deal that he said spelled further “humiliation”.

For Mr Tsipras, austerity has been a “humanitarian catastrophe” for his country of about 11 million people, which has endured five years of recession, turmoil and skyrocketing unemployment.

Exasperated eurozone members, suspecting a further play for time, responded by refusing to extend the EU’s funding program beyond a Tuesday deadline.

This will almost certainly mean Greece will be default on more than 1.5 billion euros due to the International Monetary Fund on Tuesday.

French prime minister Manuel Valls warned of a “real risk” of Greece leaving the eurozone if it citizens vote against the EU’s bailout proposals in the referendum planned for next weekend.