In a run on banks associated with recent elections and government economic insolvency, Greek depositors withdrew €700 million ($898 million) from local banks Monday.
President Karolos Papoulias warned Greek political leaders on Tuesday that banks were in trouble and that withdrawals plus buy orders received by Greek banks for German bonds totalled some 800 million, according to a Wall Street Journal report.
In a transcript, Mr. Papoulias said "the strength of banks is very weak right now;" The President cited a conversation he had with Greek Central Bank Governor George Provopoulos.
Greece is preparing for new elections after political party leaders in that economically embattled country failed to reach an agreement to form a coalition government. Prospects for a political solution to the impasse faded in recent days and markets tanked on under financial markets' concern that Greece will ultimately be forced out as a euro zone member. Financial analysts fear such an event will wreak havoc on the currency bloc's weakest economies.
Deposits in Greek banks have been in decline since the start of the country's debt crisis in 2009. Nevertheless, tens of thousands of Greeks have rioted in the streets in opposition to austerity measures. Financial chaos fueled by political chaos is prompting depositors to transfer their money to overseas markets and the failure of that government to form a governing coalition after the elections means things could get much worse before they get better.
During the past two years, offshore transfers have generally averaged between €2 billion and €3 billion per month - however, in January they topped the €5 billion mark.
The latest data reported from Greece's central bank shows that total domestic residential and commercial deposits were about €165.36 billion as of March.