According to Strategist at Deutsche Bank George Saravelos, the Eurogroup could end up offering Greece a third programme.
Key Quotes
“We estimate that Greek bank funding at the ECB financing windows currently runs between 70-80bn EUR, of which approximately 30bn relies on AAA EFSF-based collateral. As a result the remaining funding (or about 50bn) will now have to shift to ELA from next week. Even if this decision is likely to have materialized when the program expired at the end of February, there are two broader implications”.
“First, the decision shows that the ECB is feeling increasingly uncomfortable providing financing to Greek banks while negotiations are under way”.
“Second, the ECB decision shows that the ECB is very unlikely to accommodate increased t-bill issuance from the Greek government”.
“Big picture, the above two developments are likely to further accelerate timelines and pressure on Greece”.
“The situation remains very fluid but as things stand we consider the most likely outcome to be a Eurogroup offer of a new Third program”.
“Greece in any case has lost market access making ECCL eligibility unlikely, and given that the current program expires this February the offer to negotiate a new Third program may provide political room for the government to sit on the negotiating table”.
Key Quotes
“We estimate that Greek bank funding at the ECB financing windows currently runs between 70-80bn EUR, of which approximately 30bn relies on AAA EFSF-based collateral. As a result the remaining funding (or about 50bn) will now have to shift to ELA from next week. Even if this decision is likely to have materialized when the program expired at the end of February, there are two broader implications”.
“First, the decision shows that the ECB is feeling increasingly uncomfortable providing financing to Greek banks while negotiations are under way”.
“Second, the ECB decision shows that the ECB is very unlikely to accommodate increased t-bill issuance from the Greek government”.
“Big picture, the above two developments are likely to further accelerate timelines and pressure on Greece”.
“The situation remains very fluid but as things stand we consider the most likely outcome to be a Eurogroup offer of a new Third program”.
“Greece in any case has lost market access making ECCL eligibility unlikely, and given that the current program expires this February the offer to negotiate a new Third program may provide political room for the government to sit on the negotiating table”.
