There are selloffs, and then there’s the recent flight from Greek bank stocks.
Since Greece’s stock market reopened after a five-week hiatus on Monday, the country’s banking-sector index DTR, -27.00% has shaved off 64%, in increments of almost 30% a day, the daily loss limit. This comes as the wider Athex Composite Index GD, -2.53% “only” has lost 19% so far this week, as investors grapple with what’s next for the country’s stock market after the government averted an 11th hour default in July.
“It’s only been open three days, so investors have to reassess the risk in terms of Greek banks and the risk of their holdings. It is obviously not a pleasant scenario and the selloff has been quite considerable,” said Richard Perry, market analyst at Hantec Markets.
And here a few stats to go with the “considerable” selloff: For the banking index, the weekly loss is on track to be the biggest ever, far exceeding a 40% wipe out in May 2013, when angry workers took to the streets in Athens in anti-austerity protests. For the benchmark Athex, it’s on pace to suffer its second worst week ever, after putting in its biggest one-day slide in the index’s history on Monday.
“The longer term scenario remains pretty bleak for Greece and its banks. Nothing particularly positive has come out of [the bailout discussions], there has been no write-down of debt and there’s been no real long term solution. It’s just effectively kicking the can down the road,” Perry said.
The biggest losers in Greece this week are Piraeus Bank SA TPEIR, -29.59% down 66%, Alpha Bank AE ALPHA, -29.56% off 65%, Eurobank Ergasias SA EUROB, -26.76% 64% lower and National Bank of Greece SA ETE, -24.29% down 62%.
The banks have been surviving on a crisis lifeline from the European Central Bank, through the emergency liquidity assistance. The ECB on Wednesday decided to keep the emergency funding unchanged at around €90 billion ($98.5 billion), which was widely expected as the Greek government reportedly hadn’t asked for an increase in the ELA.
Since the Greek banks reopened on July 20, customers have deposited about €1 billion in Greek banks, Bloomberg reported on Tuesday, easing some of the pressure on the banking system.