Greece Aims to Clear Bank Funding By May 24 as ECB Loans Halted

A Greek official said the nation
should clear a 18 billion-euro ($23 billion) capital boost for
its four biggest banks by May 24, paving the way for a return to
European Central Bank funding.

“I hope that all technical and legal issues will be
resolved up to next Thursday,” Panayotis Thomopoulos, head of
Greece’s bank recapitalization fund, said in a phone interview
today. “After that I can release the 18 billion euros, but it
takes a couple of days until the money will be disbursed.”

Greek banks, which were already battling with shrinking
deposits, were cut off yesterday by the ECB from direct
borrowing pending the recapitalization, as central bank chief
Mario Draghi signaled he won’t compromise on key principles to
keep the nation in the euro area.

Banks are relying on the Bank of Greece’s Emergency
Liquidity Assistance program for their funding needs, adding to
pressure on deposits as some politicians threaten to scrap the
nation’s bailout agreement in the wake of an inconclusive
election on May 6. A new vote is scheduled for June 17.

Thomopolous said that while the Hellenic Financial
Stability Fund received a 25 billion-euro first tranche of
bonds, issued by the European Financial Stability Facility, to
recapitalize the banks last month, the legal and technical
issues have prevented the HFSF passing the bonds onto the banks.
He declined to elaborate on those issues.

Stability Fund

“In the run-up to the June election there could be more
bad news and speculation,” said Alexander Kyrtsis, a European
bank specialist at UBS AG in London. “It’s a precarious
situation. It could become challenging to instill a sense of
security among depositors given the political noise.”

Greek bank deposits dropped about 23 billion euros in the
nine months through March, or about 13 percent, to about 160
billion euros, central bank data show. Greek President Karolos
Papoulias said on May 14 that about 700 million euros had been
withdrawn, without specifying over how many days.

“The reaction of the average depositor is expected given
the failure to form a government,” said George Aronis, a
general manager at Alpha Bank SA and member of the lender’s
board. “New elections won’t be held for four weeks and the
polarization of the electorate makes a permanent solution in the
immediate future difficult.”

ECB Fund Access

The recapitalization fund will disburse funds earmarked
from Greece’s 130 billion-euro second bailout from the European
Union and International Monetary Fund. The ECB can only lend to
sound banks and therefore won’t allow undercapitalized
institutions to access its refinancing operations, a euro-area
official said yesterday.

“The bigger issue of euro membership goes above and beyond
the issue of the levels of capital,” said Daragh Quinn, an
analyst at Nomura International in London. “Deposit outflows
have gone on for several years.”

Greece’s four biggest banks posted a combined loss of 27.9
billion euros for 2011 from losses arising out of Greece’s
sovereign debt restructuring, the biggest ever.

The HFSF will get the second 25 billion-euro tranche of
EFSF bonds for the recapitalization in September, when the banks
will need to have raised their core tier 1 capital ratios to 9
percent, Thomopoulos said.

To contact the reporter on this story:
Christos Ziotis in Athens at
[email protected]

To contact the editor responsible for this story:
John Fraher at
[email protected]


Euro crisis: Should I cancel my vacation?


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Tourists enjoy crystal-blue waters at Balos beach in northwestern Crete.Tourists enjoy crystal-blue waters at Balos beach in northwestern Crete.

Despite protests elsewhere in Athens, tourists visit the Parthenon on the Acropolis in February 2012.Despite protests elsewhere in Athens, tourists visit the Parthenon on the Acropolis in February 2012.

A man walks along the waterfront in Aigio, Greece, on March 31, 2010 A man walks along the waterfront in Aigio, Greece, on March 31, 2010

The statue of King Leonidas of ancient Sparta stands over the battlefield of Thermopylae, some 170 kilometres north of Athens.The statue of King Leonidas of ancient Sparta stands over the battlefield of Thermopylae, some 170 kilometres north of Athens.

Ancient Olympia in Greece, pictured in 2007 during a spate of brush fires, is the site of the original Olympic Games.Ancient Olympia in Greece, pictured in 2007 during a spate of brush fires, is the site of the original Olympic Games.

Tourists enjoy clear blue sky amid palm trees on an unusually quiet Costa del Sol Carihuela beach in Torremolinos, Spain in August 2009.Tourists enjoy clear blue sky amid palm trees on an unusually quiet Costa del Sol Carihuela beach in Torremolinos, Spain in August 2009.

Tourists visit Sao Jorge Castle in Lisbon, Portugal in July 2008.Tourists visit Sao Jorge Castle in Lisbon, Portugal in July 2008.


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(CNN) — In the last decade of the 20th century, the Turkish lira fell in value 1,000 times against the U.S. dollar, meaning that tourists returning to that country after several years found that any old money they still possessed since their last visit had become almost worthless.

Now as fears grow about whether Greece will stay in the euro, and the possible domino effect this could cause, many prospective holidaymakers appear to be having second thoughts about visiting that country and other economically troubled members of the 17-nation eurozone, such as Spain or Portugal.

And while tourists may be bulking up their cash reserves in the case of a euro exit, others may be concerned about safety if violent street protests resume against austerity cuts.

What is the financial situation now?


Greeks withdraw cash from banks


What’s next for Greece?


Greek eurozone departure a done deal?


Greece bracing for trouble

Political deadlock is leading to fears that Greece will not have a government in place when it needs to make critical debt payments, which could in turn jeopardize its place in the eurozone.

On Monday, Greeks withdrew up to €800 million from Greek banks, and the threat of a banking panic heightened concern of a default. Fears of contagion spilled over into bond markets in Spain and Italy.

The idea that has investors around the globe worried is the so-called “Grexit” — or Greek exit from the eurozone — a tricky scenario that is now looking like a real possibility.

English bookmakers Ladbrokes stopped taking bets after gamblers lined up to put money on it last week. Other betting companies are giving odds on Greece leaving the euro as low as 1/10, while the odds on Spain leaving are about 6/1.

What effect is uncertainty having on tourism within the eurozone?

Many in the travel industry admit bookings to Greece are lower than in previous years, with other countries benefiting.

Hotel reservations on popular holiday destinations such as Corfu and Crete are down by up to 50% compared to the same period before last month’s indecisive election, according to the Hellenic Hotel Federation.

Sean Tipton of the Association of British Travel Agents blames some inaccurate coverage of concerns about Greece’s financial problems as a factor. “This is having a positive effect on Spanish travel, for example, with bookings higher than normal,” he told CNN.

“Travelers are advised to take spending money in cash, as in the event of Greece leaving the euro there may be questions about whether you could still pay by credit or debit cards.”

Despite tourism contributing about $10,5 billion, or about 16% of Greece’s gross domestic product, officials brushed off concerns. “There was also a financial crisis in Greece last year as well and we had a record year with a 10% increase in the number of visitors,” said Konstantinos Zikos, president of the Greek National Tourism Organization.

“Because of the crisis, early booking are down around Europe at the moment. However, Greece is a beautiful and safe country so we are optimistic that tourism won’t be strongly affected.”

In the longer term, if Greece does leave the euro, it could mean it becomes a much cheaper country to visit, as Britain’s biggest travel company Thomas Cook pointed out. “We believe there are positives and negatives for the travel industry in the event that Greece were to leave the euro,” the firm said.

Should tourists be worried about buying euros for foreign travel?

On the face of it, tourists haven’t had it so good for a long time: The euro is at a three-year low against the British pound and is as weak against the U.S. dollar as it has been since 2010. This should mean the cost of hotels and restaurants is lower than it has been for a few years.

Travel experts say that whatever happens with Greece and the euro this summer, tourists visiting economically troubled European countries, such as Greece, Italy, Spain and Portugal — all major tourist destinations — are unlikely to lose out.

If Greek does leave the euro this could lead to contagion, and other countries joining them, but few analysts believe the whole euro project is likely to collapse in the next year or so. In other words, it’s safe to buy euros, but keep an eye on the exchange rate, which is continuing to strengthen in favor of world currencies.

How can travelers ensure they don’t lose out?

Travel writer Simon Calder said he planned to visit Greece this summer, and was taking two precautions.

“The first was to add an extra €100 to my estimated spending,” Calder wrote on his blog. “Normally I rely on plastic for emergencies, but were Greece to leave the euro, electronic banking could freeze for up to a week and prevent debit and credit card transactions.

“Next, I insisted on €5, €10 and €20 notes. If Greece leaves the euro, the most likely interim currency is the existing euro overprinted with a Greek delta symbol (for “drachma”), or possibly with a corner clipped.

“The value of the Greek euro would fall by perhaps 40 per cent. While traders sort themselves out, and before a market in the Greek currency begins, tourists are likely to pay in euros but be given change in new money. Pay for a €15 round of drinks with a €50 note, and you could get back change in Greek currency worth only €20. That is why low-denomination notes are so useful.”

Do street protests against austerity cuts mean Greece or another country is unsafe?

No. There have been occasional protests in big cities, such as Athens and Thessaloniki, but most say Greece remains safe. Posts on online forums were scathing about what they said was the media blowing the unrest out of proportion, although there are some warnings that strikes could disrupt travel into and around the country.

ABTA’s Sean Tipton said “There’s an element of concern about personal safety with sporadic unrest in Athens, but most places where tourists visit are safe.

“In reality this is one of the best times to visit Greece, as prices should come down, thanks to supply and demand.”

UK travel firm Thomas Cook said it was “closely monitoring the evolving situation in Athens. Most of our holidaymakers are on the country’s islands where you’d never know anything was going on.”






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Greece tourism shaken by currency questions, political woes

BERLIN — European travel companies are planning for a possible Greek exit from the eurozone, as the country’s political leaders gave up trying to forge a government Tuesday and announced fresh elections for June.

Thomas Cook Group, a major British travel firm, said Tuesday that while Greece remains a “great value” for holidaymakers, the company is working closely with hotels and other suppliers to position itself for a possible euro exit.

“We believe there are positives and negatives for the travel industry in the event that Greece were to leave the euro,” it said.

The economic and political turmoil in Greece has already hit bookings for this summer, with Greek tourism officials earlier this year noting a drop in demand, particularly from Germany. Europe’s strongest economy has been at the forefront of demands for Greece to make economic reforms, including painful cuts to public services.

Last year tourism contributed about 15.7 percent to Greece’s GDP, amounting to revenues of $13.5 billion.

Some economists have suggested that if Greece drops the euro, its replacement currency would quickly lose value making holidays there cheaper and thus more attractive again.

The chief executive of luxury tour operator Kuoni says the company is looking into renegotiating its contracts to take advantage of a sharp devaluation in any new Greek currency.

“Whatever happens, we want to pay Greek hoteliers a fair price. But we can’t allow ourselves to be left with euro contracts if goods in the country are paid for with a significantly cheaper currency,” Peter Rothwell told Swiss newspaper Sonntagszeitung in an interview published Sunday.

Meanwhile, Europe’s biggest tour operator, TUI Travel PLC, said it would be able to shift bookings elsewhere if necessary, pointing to the experience of last year’s revolutions in Egypt and Tunisia.

“There is no indication that the areas our customers holiday in would be adversely affected by civil unrest,” said TUI. “In the unlikely event that civil unrest does break out near our resorts, we have tried and tested procedures for ensuring that our customers are looked after.”

On Tuesday, police in southern Greece said they had arrested two local men suspected of an apparently random xenophobic attack on an elderly Dutchman walking his dogs on a beach.

A police statement says the 78-year-old retired engineer, a local resident for 17 years, was severely injured Sunday near the medieval town of Monemvasia, a tourist attraction.

According to the pensioner’s deposition, two men in a car drove up and asked if he was German. When he replied that he was Dutch, the men attacked him anyway with stones and kicks, breaking his jaw and shouting: “This is Greece.”


Greece tourism shaken by currency questions, political woes

BERLIN — European travel companies are planning for a possible Greek exit from the eurozone, as the country’s political leaders gave up trying to forge a government Tuesday and announced fresh elections for June.

Thomas Cook Group, a major British travel firm, said Tuesday that while Greece remains a “great value” for holidaymakers, the company is working closely with hotels and other suppliers to position itself for a possible euro exit.

“We believe there are positives and negatives for the travel industry in the event that Greece were to leave the euro,” it said.

The economic and political turmoil in Greece has already hit bookings for this summer, with Greek tourism officials earlier this year noting a drop in demand, particularly from Germany. Europe’s strongest economy has been at the forefront of demands for Greece to make economic reforms, including painful cuts to public services.

Last year tourism contributed about 15.7 percent to Greece’s GDP, amounting to revenues of $13.5 billion.

Some economists have suggested that if Greece drops the euro, its replacement currency would quickly lose value making holidays there cheaper and thus more attractive again.

The chief executive of luxury tour operator Kuoni says the company is looking into renegotiating its contracts to take advantage of a sharp devaluation in any new Greek currency.

“Whatever happens, we want to pay Greek hoteliers a fair price. But we can’t allow ourselves to be left with euro contracts if goods in the country are paid for with a significantly cheaper currency,” Peter Rothwell told Swiss newspaper Sonntagszeitung in an interview published Sunday.

Meanwhile, Europe’s biggest tour operator, TUI Travel PLC, said it would be able to shift bookings elsewhere if necessary, pointing to the experience of last year’s revolutions in Egypt and Tunisia.

“There is no indication that the areas our customers holiday in would be adversely affected by civil unrest,” said TUI. “In the unlikely event that civil unrest does break out near our resorts, we have tried and tested procedures for ensuring that our customers are looked after.”

On Tuesday, police in southern Greece said they had arrested two local men suspected of an apparently random xenophobic attack on an elderly Dutchman walking his dogs on a beach.

A police statement says the 78-year-old retired engineer, a local resident for 17 years, was severely injured Sunday near the medieval town of Monemvasia, a tourist attraction.

According to the pensioner’s deposition, two men in a car drove up and asked if he was German. When he replied that he was Dutch, the men attacked him anyway with stones and kicks, breaking his jaw and shouting: “This is Greece.”