Bloomberg News

Deutsche Bank’s Banziger Sees Insolvency Risk for Greek Lenders

December 06, 2011

Dec. 6 (Bloomberg) -- Deutsche Bank AG Chief Risk Officer Hugo Banziger said Greek lenders are at risk of insolvency if retail customers withdraw cash and inter-bank lending dries up.

“Greece is an accident waiting to happen,” Banziger said today at the RiskMinds conference in Geneva. “People don’t trust the banks anymore,” he said, “so they take out 500 euro bills and hide it somewhere in their apartments or houses.”

Should customers keep withdrawing deposits, Greek lenders will have fewer assets to secure loans from the central bank and foreign institutions, according to Banziger. “Then they become insolvent,” he said.

Outflows from Greek banks totaled as much as 14 billion euros ($18.7 billion) in the two months to the end of October, George Provopoulos, head of the country’s central bank, said on Nov. 29. He said the decline continued in early November and has since stabilized. National Bank of Greece SA, the nation’s biggest lender, and two smaller rivals posted nine-month losses in November as they wrote down their holdings of government debt and clients pulled deposits.

--Editors: Dylan Griffiths, Keith Campbell.

To contact the reporter on this story: Giles Broom in Geneva at gbroom@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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