Two Greek lenders request extra liquidity aid from Greek central bank

Two of Greece's four major banks, Eurobank and Alpha Bank, requested extra liquidity aid from the Bank of Greece in the context of the Emergency Liquidity Assistance (ELA) mechanism, bank executives said on Friday.

A total of 5 billion euros (5.8 billion U.S. dollars) was expected to be released to the two banks, while the two other banks may follow soon, officials told the Greek national news agency AMNA.

The European Central Bank (ECB) was expected to examine the request next week.

ELA is offered only to viable banks on collateral. Banks resort to ELA when they do not have adequate collateral to borrow funds from the ECB. As a result, funding comes at higher interest rates.

Greece's banking sector successfully passed the latest stress tests in late 2014 and all sides reassured on Friday that there was no need for capital in the near future.

The applications for additional funding were made as a precautionary step amidst a volatile environment in case they needed the extra help. Greece holds general elections on Jan. 25 and amidst refuelled scenarios of a potential bank run, a default and exit from the eurozone in case the leftists come to power, the lenders' liquidity has come under pressure.

In addition to a drop in deposits in recent months, and the load participation in monthly treasury bill auctions by the Greek state, Greek officials took into account the pressure from the Swiss central bank's intervention this week.

The scrapping of the Swiss cap on the euro cost the Greek economy about two billion euros, according to early estimates.

It was not the first time Greek lenders turned to ELA, Kathimerini daily newspaper noted. At the height of the debt crisis three years ago, as Greece was holding double national polls, they borrowed more than 120 billion euros. Two years later, Greek banks had reduced their ELA financing to zero. Enditem