Greek banks to remain shut until July 6 - the day after a referendum on bailout proposals

Greek banks will remain closed until July 6 - the day after a referendum on bailout proposals - and ATM withdrawals will be limited to 60 euros (S$90) a day in the same period.
Greek banks will remain closed until July 6 - the day after a referendum on bailout proposals - and ATM withdrawals will be limited to 60 euros (S$90) a day in the same period. PHOTO: BLOOMBERG

ATHENS (AFP) - Greek banks will remain closed until July 6 - the day after a referendum on bailout proposals - and ATM withdrawals will be limited to 60 euros (S$90) a day in the same period, according to an official decree published early Monday.

The decree on capital controls, published in the official government gazette and entitled "Bank Holiday break", lists the measures imposed on financial institutions lasting from June 28 to July 6 and was signed by President Prokopis Pavlopoulos and Prime Minister Alexis Tsipras.

It cited "the extremely urgent and unforeseen need to protect the Greek financial system and the Greek economy due to the lack of liquidity caused by the Eurogroup's decision on June 27 to refuse the extension of the loan agreement with Greece".

The Greek financial stability council also recommended limiting ATM withdrawals to 60 euros a day once they reopen on Tuesday.

The recommended limit will apply to holders of Greek bank cards. Tourists staying in Greece and anyone with a credit card issued in a foreign country will not be affected by the measures to limit bank withdrawals newly imposed by the Greek government, it said in a statement late on Sunday night.

The statement informed "anyone visiting or about to visit Greece" that the capital control measures announced a few hours earlier "do not apply to those wishing to make transactions and withdrawals with a credit card issued in their home country".

Foreign card holders will be allowed to withdraw the maximum limit set by their banks, the earlier source said on Sunday.

In the first market reaction to the growing risk of a Greek euro exit, the Tokyo and Sydney stock markets plunged almost 2 per cent at the open on Monday morning, while the euro briefly tumbled to less than US$1.1.

The drastic measures to protect Greece’s banking system against the threat of mass panic came after the European Central Bank said it would not increase its financial support to Greek lenders despite early signs of a chaotic bank run.

It capped a weekend of high drama that began with the leftist premier’s unexpected call for a July 5 referendum on creditors’ latest reform proposals after bailout talks in Brussels collapsed.

In response, angry EU and IMF creditors rejected a request to extend the nation’s bailout beyond its June 30 expiry date, sparking fears Greece could default on a key debt payment to the IMF due the same day and possibly crash out of the euro zone.

Uncertainty over how events will unfold in coming days prompted crowds to form long queues outside some ATMs in Greece, leaving many cash machines dry.

Keen to stave off panic, Mr Tsipras assured Greeks their deposits were “totally safe”.

“Any difficulties that may arise must be dealt with calmness. The more calm we are, the sooner we will get over this situation,” he said, adding that Athens had again requested a “prolongation of the (bailout) programme”.

With the Athens stock exchange closed on Monday, other global markets were expected to follow Asia’s lead in what is set to be a highly volatile day of trade as investors return to their desks to find Greece hurtling towards default.

“We have had a slow bank jog in Greece and most thought that there would be an agreement eventually, at the last minute. That is no longer true,” said Ms Emma Lawson, a senior currency strategist at National Australia Bank.

The Frankfurt-based ECB’s governing council earlier Sunday 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.

The move further raised the stakes in Greece’s festering debt crisis after five months of tough bailout talks culminated on Friday night with Mr Tsipras’s shock call for a referendum on creditors’ latest cash-for-reforms offer.

Greek Finance Minister Yanis Varoufakis said there was still time for a compromise, urging creditors to show some “goodwill” and come up with an improved proposal ahead of the plebiscite.

“We remain open to new proposals by the (creditor) institutions,” he told the German daily Bild.

The weekend’s rapid-fire events in the Greek saga set off a flurry of diplomatic activity for Monday.

In a tweet, an EU spokesman said European Commission head Jean-Claude Juncker would hold a press conference to discuss the latest developments on Greece.

In Berlin, German Chancellor Angela Merkel called an emergency meeting with the heads of parliamentary groups and party leaders, while French President Francois Hollande will chair crisis talks with key ministers in Paris.

A banking source in Greece said only 40 per cent of cash machines now had money in them.

A host of European governments including London and Paris advised citizens travelling to Greece to carry ample cash with them to cope with the unexpected.

In Athens, teacher Yiannis Grivas told AFP he had withdrawn his entire 940-euro salary on Friday so he would “have enough to live on for a few weeks”.

He added: “I am not afraid of capital controls, I never take out more than 50 euros a day anyway.”

In the capital’s upscale Kolonaki area, 32-year-old Anna tried in vain to find a working cash machine.

“There is no more money,” she said, adding that she hoped her countrymen would vote in the referendum “to stay in the eurozone and the European Union” and that “the nightmare will finally end”.

Since Friday night alone, 1.3 billion euros (S$1.96 billion) have been withdrawn from the Greek banking system, according to the head of the bank workers’ union Stavros Koukos.

French Prime Minister Manuel Valls warned of a “real risk” of Greece leaving the euro zone if it Greeks vote against the EU’s bailout proposals in the planned referendum.

But Mr Tsipras, whose Syriza party came to power in January on an anti-austerity platform, has advised voters against backing a deal he said spelled further “humiliation” for a country that has endured five years of recession, turmoil and skyrocketing unemployment.

Unless creditors heed Mr Tsipras’s renewed request for a bailout extension, Greece’s rescue plan will formally expire on Tuesday. This will almost certainly mean Greece will default on more than 1.5 billion euros due to the IMF that same day.