Greeks, Spaniards withdraw euros by the billions

A bank customer is seen at an ATM machine in Athens, Greece, June 13, 2012. / Milos Bicanski/Getty Images

(AP) ATHENS, Greece - In Europe's most economically stricken countries, people are taking their money out of their banks as a way to protect their savings from the growing financial storm.

Worried that their savings could be devalued, or that banks are on the verge of collapse and that governments cannot make good on deposit insurance, people in Greece, Spain and beyond are withdrawing euros by the billions — behavior that is magnifying their countries' financial stresses.

The money is being hoarded at home or deposited in banks in more stable economies.

It's a steady bank "jog" at the moment, not a full-bore run. But it threatens to undermine the finances of those countries' already-stressed lenders. And if it does turn into a full bank run after Greece's crucial election on Sunday, it could hasten financial disaster in Europe and help spread turmoil around the world.

Since the Greek debt crisis broke in late 2009, deposits have fallen by 30 percent cent, as savers have slowly pulled some 72 billion euros ($90.24 billion) from local lenders, with total household and corporate deposits standing at 165.9 billion euros ($207.94 billion) in April, according to the latest data from the Bank of Greece.

Spanish deposits have fallen about six percent over the past year. They dipped suddenly in April by about 3.1 billion, euros or 1.8 percent, to 1.624 trillion euros as problems with the country's troubled banks stated to grow to alarming proportions.

This is despite the fact that deposits are guaranteed by the government up to 100,000 euros across the eurozone.

Spain's financial turmoil quickly worsened in late May, when the country's second-largest lender announced it needed capital of 19 billion euros to stay afloat. Bankia denied reports of a rush by its customers to withdraw, but the bailout scared Spaniards who assumed their money was safe.

Bankia client Rosa Monsivais panicked and decided she had to move her savings from Bankia to one she thought would be safer. She chose a foreign bank with Spanish operations, the Dutch owned ING bank.

It took longer than she thought, leading to anxious days until she knew her money was in her new account.

"It scared me a little. I took all my money out and put it in ING," said Monsivais, a 41-year-old graphic artist who would not say how much money she moved. "But it took a full week to do this kind of transaction. I was reading the newspaper each day and it worried me."

The money across Europe is headed different places.

Some has simply been withdrawn and spent out of urgent need as people lose their jobs due to recessions. Some is winding up in bank accounts or invested in countries that are more stable such as Germany. The rest is being invested in property or bonds being issued by other eurozone countries.

In the U.K., the eurozone crisis was seen as one factor pushing up central London house prices, according to Knight Frank, a real estate agency dealing in high-end property.

"While it looks very much that the surge in Greek buyers has fallen off sharply since the beginning of the year — those who had the funds to buy have done so — we are now seeing a noticeable uptick in interest from France, Italy, Spain and even German-based purchasers looking at the prime London market," the company said in its Prime Central London Index report.

Meanwhile, some money appears to be simply hoarded at home, despite the risk of theft. Last month, police in Athens arrested a gang that specialized in breaking into basement storage spaces under apartment blocks, netting a rich haul in stashed cash and valuables.

"What the average Greek has in mind is to secure the euros they currently hold," said Theodore Krintas, managing director at Attica Wealth Management. "That has been going on for a long time, and will continue as long as the uncertainty increases concerning Greece's position in the near future in the eurozone and the European Union."

Sunday's vote could determine whether Greece stays in the euro or leaves in chaos. Since 2010, Greece has been dependent on two bailouts totaling euro240 billion in loans to pay its bills. In return, the government had to promise to make deep spending cuts to lower its deficit. That has helped put the country in a deep recession. Leading political figures have called for renegotiating or rejecting the bailout deal, which could lead to a payment cutoff from mistrustful eurozone governments and the IMF.

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[nojoy01]

"This is despite the fact that deposits are guaranteed by the government up to 100,000 euros across the eurozone."
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Are the deposits of ALL of the banks guaranteed by ALL of the governments of the eurozone? If the deposits are guaranteed by the individual governments for their nations banks, w-e-l-l, if your government is broke then the "guarantee" is worthless.

[1stlttightwad]

Duh, Where is the CBS, MSNBC, CNN coverage of the pending charge of contempt of congress of AG Eric Holder for the white houses role in Fast and Furious. He is about to be charged with contempt , a true historical event and not a peep of coverage....Wonder Why.

[chromenun]

I am just waiting for the whole world to realize that "money", nay, Capitalism, is the wrong headed idea, and that Socialism is the true way to treat each other...one day soon, I hope we get it right...

[1stlttightwad]

Yup, Obama is doing his best to help you get your way. Jamestown settlement tried socailism 300 years ago in the US..It failed for the same reason it always fails..Those that don't work want those that work to give them the fruits of their labors..At some point the leeches destroy the host and they both perish. I guess you are not smart enough to see the correlation of events in Europe occuring and realize it didn't work for them and you want us to do the same..Do your part..get a job and don't expect me to pay you to sit on your.....

[44wonder]

Capitalism producted the greatest nation ever...USA...Be careful what you wish for my friend..You are about to witness the collapse of Socialism in some countrys in Europe.

[smittyc]

This news article and others on socialisms failures is the biggest reason to get the current leadership in the whitehouse Barrack Obama out of office. Obama is a socialist.

[knewsteerrrrr]

"It's a steady bank "jog" at the moment, not a full-bore run. But it threatens to undermine the finances of those countries' already-stressed lenders. And if it does turn into a full bank run after Greece's crucial election on Sunday, it could hasten financial disaster in Europe and help spread turmoil around the world."

You can be SURE that's what will happen now as a result of letting the cat out of the bag with this article! most people would have had no idea others were taking their cash out of the banks, Now thanks to the article they DO, and they will panic too and do the same.

[darkhorseky]

I wonder what his is going to do to our stock market? But this smells of melt down. We will just have to be.

[audemus]

Sounds like the U.S. around '33.

[bradkt1]

This is why a joint currency involving several countries...or an entire continent...is a very bad idea. All it takes is one or two totally irresponsible countries who keep spending wildly to prop up their semi-socialist economies to pull down the economies of every country that shares that common currency.

Then there are also the Third World countries whose socialist economies went down the toilet and now they just want handouts from the IMF and World Bank...as if the rest of the world is somehow responsible for their problems.

All of this is why the biggest bill of goods ever sold to the American people was economic "globalism."

[1stlttightwad]

In other words..They want everyone that is successful and prudent in their spending to, Ummm, "SHARE THEIR WEALTH" Sound familiar...Obama Lovers. You Obama supporters fell for his promises and his "gift" of oratory..it's time to come out from under the ether and take a clear look at what his policies really mean and are doing to the US.

[Ourdoc1]

Money is the root of all evil, and the RepukliCONS are evil.

[vsmit]

The republicans are in charge of Europe. It is their fault. Republicans are responsible for the deficit spending in Europe which led to this crisis. Democrats are gods and always spend ONLY what comes in.

[1stlttightwad]

Yes and Obama really hates money, doesn't he...West coast celebrity parties raising "MONEY". East coast, NY parties raising "MONEY". Spending our "MONEY" that we are having to borrow. Never learned that "MONEY" comes from people that have worked hard to become successful and not the Government printing presses. Get your biblical quote right..The LOVE of money is the root of all evil......not the money itself.

[joaquinwalking]

An excellent example of the current lack of leadership and irresponsibility of the press in publishing this story.

Now there will be a run on the banks.

[jtf1--2008]

Ah, the old "Shoot the Messenger" theory. I suppose you want to stick your head in the sand and not find out anything bad is happening. Your logic is moronic at best.