Greek central bank seeks standby ECB funding line

Greece’s central bank has moved to protect its banks from any fallout from the general election, asking the European Central Bank to approve a standby domestic emergency funding line, a Bank of Greece official said yesterday.

The move comes after two major banks applied to be able to tap an emergency liquidity assistance (ELA) window on Friday as Greeks withdraw cash before the snap election on January 25.

“We have sent a request to the ECB on ELA approval for all four major banks to have a shield for the banking system,” the official said.

“It is up to each bank to decide whether it will use the funding line,” the official added.

Greece’s radical left-wing Syriza party is leading polls. It wants to end austerity and renegotiate debt with its European partners.

Under ELA, central banks can lend to commercial banks but have to get ECB approval to do so.

Greek banks relied on it heavily at the peak of the debt crisis in 2012 but had repaid it by early last year.

On Friday, executives at Eurobank and Alpha Bank said their banks’ requests for an ELA funding line were precautionary and partly related to their exposure to Swiss franc mortgages.

National Bank, the country’s biggest lender by assets, has no plans to tap ELA as it has sufficient collateral to draw cheaper funding from the ECB if needed, its spokesman said.

Second-largest lender Piraeus Bank does not expect it will need to do so either, a senior executive at the bank told Reuters.

“We are not planning to use ELA funding,” the senior executive said.