Piraeus, the fourth largest bank in Greece, has had to resort to emergency funding from the country's central bank after running out of collateral that would allow it to access cheaper funds from the European Central Bank.
The lender said it accessed the Greek central bank's Emergency Liquidity Assistance mechanism in the third quarter of the year. "It gives us more room to move, more flexibility," the bank revealed, admitting that the mechanism was more expensive that borrowing from the European Central Bank. "The cost is about 3.5 per cent versus 1.5 per cent at the ECB," it said.
Yesterday's disclosure, which came as Piraeus revealed an €820m loss for the first half of the year, reflected the fact that Greece's banks have become increasingly dependent on funding from the ECB as a result of the wholesale market's concerns about the country's debt crisis.