European Central Bank agrees €60bn emergency liquidity assistance for Greek banks

The news came as officials said the eurozone’s finance ministers will hold an extra meeting devoted to tackling the Greek crisis next Wednesday

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The Independent Online

Greece's struggling banks have been granted €60 billion (£44.9 billion) in emergency funding by the European Central Bank as Syriza faced more pressure to stick to austerity.

The ECB sent shockwaves through the nation’s lenders this week by refusing to accept Greek government bonds as collateral for funding as the nation’s Left-wing leadership presses to renegotiate the terms of two bailouts worth a combined €240 billion.

The central bank - headed by president Mario Draghi - is now said to have sanctioned so-called emergency liquidity assistance for the banks, whose worried savers withdrew billions in the run-up to last month’s elections.

The news came as officials said the eurozone’s finance ministers will hold an extra meeting devoted to tackling the Greek crisis next Wednesday.

The emergency funding is sanctioned by the ECB, which declined to comment.


But the risk of the loans sits on the National Bank of Greece’s balance sheet and it is more expensive for the banks involved, being priced at an interest rate of 1.55 per cent.

Members of the ECB’s governing council have to approve the renewal of the emergency funding every two weeks, but it could be pulled if the council decides by a two-thirds majority that it is being used to prop up insolvent banks.

That could set off a catastrophic chain reaction of bank failures, crippling Greece’s central bank and forcing the country out of the single currency. Bank shares were hit again today after double-digit falls yesterday.

The move also comes at a time of heightened political tension between Greece and its eurozone partners over the future of its austerity programme.

Greece’s bail-out from the troika of the ECB, European Union and International Monetary Fund formally ending on 28 February.

Syriza refuses to recognise the deadline and is seeking a bridging loan until the end of May to renegotiate terms.

Finance minister Yanis Varoufakis was faced down by an intransigent Wolfgang Schäuble, who “agreed to disagree” with Greece over a deal.

BNY Mellon analyst Neil Mellor said: "Ultimately [the ECB funding] will be taken away if there is no improvement. The stipulations have not changed.

"It’s not looking good as it stands. It’s very clear that Syriza’s strategy is injecting fears of a Greece exit… but both sides have a mutual distrust of the unknown."

Prime minister Alexis Tsipras will set out his plans to revive the Greek economy on Sunday at the start of a three-day debate culminating in a confidence vote to confirm his government.