Greek banks re-open, urging restraint

By Helen Pooper

Head of the banking association appeals to savers not to empty accounts as banks re-open.

ATHENS – A semblance of normality returned to Greek high streets on Monday as banks reopened after a three-week shutdown, but it will take a lot longer to restore confidence among rattled savers and hard-hit local businesses.
Capital controls, including strict limits on withdrawals from ATMs, remain in place despite last week’s deal with creditors to unlock up to €86 billion in bailout financing and avert a “Grexit” from the eurozone.

Instead of being allowed to withdraw €60 per day from their accounts, customers can now take out up to €420 per week in a single withdrawal. Cash will also be dispensed inside branches and most counter services will be available.
Greek bankers, however, remain concerned about dwindling deposits even after a fresh injection of liquidity from the European Central Bank and are urging customers not to run down their accounts.
“The liquidity of our banking system depends on all of us,” the president of the national banking association, Louka Katseli, said late Sunday. “The money that stays in the banks is the life-blood of the economy… It means loans can be given, the economy moves and unemployment falls.”
“Confidence in Greek banks is guaranteed,” Katseli, who is also chairman at leading lender, the National Bank of Greece, told local television.

“I think the capital controls will last for a long time” – Costas Douvotzanis, a teacher.

Initial relief about the last-ditch bailout agreement has been replaced by a gloomy sense of déjà vu among recession-weary Greeks, who elected anti-austerity Prime Minister Alexis Tsipras in January on a wave of optimism for change.
Some people were alarmed by just how close their country came to exiting the eurozone and fear the Grexit threat could soon return if the government drags its heels on promised reforms or if the ailing economy fails to recover.
The feeling of uncertainty has been fueled by last week’s cabinet reshuffle and talk of early elections in September or October.
On Monday morning, customers queued on the pavement outside an Athens branch of Alpha Bank, which had been shuttered since June 26.
“It’s positive that the banks are open again but I think the capital controls will last for a long time, maybe seven or eight months, and people are still scared that their deposits could get a ‘haircut’,” said Costas Douvotzanis, 60, a high-school teacher.
“We’re back to the daily struggle and people are still worried. (But) the most important thing is to stay in the European Union, that is our safety net,” he added.
In other European countries that imposed capital controls in response to the eurozone crisis, they remained in place for years. Cyprus introduced limits on transfers abroad in 2013 and only lifted them this year, while Iceland is now in the process of lifting capital controls that have lasted nearly seven years.

Death and taxes

Increases in value-added tax on a plethora of goods and services, ranging from sugar and tampons to bus tickets and funerals, also came into force on Monday.
Many businesses that have seen their profits eroded by a combination of higher taxes and shrinking revenue say they have no choice but to put up prices, risking a further decline in sales.
“There are far too many taxes nowadays. In the past, we broke even but now it’s difficult to survive,” said Dimitris Asfisis, a butcher who has run his small neighborhood shop in the capital for 40 years. He was unhappy about the VAT hike on beef to 23 percent from 13 percent before the bailout deal.
The three-week bank closure alone cost the Greek economy some €3 billion in lost output, according to an estimate by the Kathimerini newspaper, money the bankrupt nation can ill-afford to lose after a five-year slump that has wiped a quarter off gross domestic production. July is the most important month for tax revenue in Greece, exacerbating the impact of the shutdown.
Olive oil exporters were forced to halt operations because farmers were refusing to sell, opting to hoard their stocks while the uncertainty lasted. Retailers reported a 70 percent drop in sales and some businesses slowed down as much as possible or took an early summer holiday.
That was not an option for undertakers like Ekaterini Botsi, who has seen more and more clients struggling to pay for relatives’ burials since the economic crisis took hold in 2010.
With the banks closed, some of her clients were unable to withdraw enough cash to pay for funeral expenses that start from about €1,100, so she had to give them credit. Now she fears she will never get the money back.
“When someone dies here we have to pay the cemetery on the spot in cash in order to bury him. The priests, everyone involved, has to be paid there and then, so you need cash,” Botsi said at her office in Athens.
Botsi had also just been notified of the tax hike on funeral services: “From 13 percent to 23 percent VAT on funeral services; what can I say?”
“It’s not only hard in this business … if you have a shop and people don’t come in, the bills catch up on you.”