Greece: Risk Of Capital Controls ‘Substantial’

While Greece has enough money to get through the end of the month, the risk of capital controls remains “substantial,” says Teneo Intelligence.

“Ahead of the European Union’s eastern partnership summit in Riga, Latvia on May 21-22, Athens is still betting on a political deal.

But Prime minister Alexis Tsipras hopes will likely be dashed, raising the risk of a last minute, “take or leave” deal. Progress in the talks remains limited, and domestic politics is still complicated, all raising the risk of capital controls …

 Greece apparently has enough resources to pay wages and pensions this month as well as possibly the EUR 300 million [$333.5 million] installment due to the International Monetary Fund (IMF) on 5 June.

However, there seem to be not enough resources available for paying the fund the following installment worth EUR 338 million [$375.8 million], due on 12 June. Against this backdrop, the risk of capital controls remains substantial.

Troika resistance to their introduction seems to be weaker now than it was a month ago. However, none of the creditors’ institutions wants to pull the trigger, amid fears of unrest in the streets and a general unwillingness to set a bad precedent – especially given that capital controls would be introduced without a clear plan for Greece’s future within or outside the Eurozone.”

 The Global X FTSE Greece 20 ETF (GREK) is up slightly today, and Greek bank stocks are higher. So far this week, Piraeus Bank (BPIRY) is up 5.7%, while Eurobank Ergasias (EGFEY) is up 9.5%. Shares of Alpha Bank (ALBKY) are down slightly this week, and shares of National Bank of Greece (NBG) are flat to down.

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