Saving savings

Vangelis Kritikos has no trouble staying busy. He's in the shipping business, and he started out as a shipyard owner in Ghana. Today, back home in Greece, among other things, he offers tourist trips to the Greek island of Kos.

Twelve years ago, Kritikos also started an organization to protect credit seekers and small investors. He helps banking customers find their way out of debt. But small investors, who are worried about their savings, also seek his help - and that's been happening more often lately.

At the beginning, it was mainly rich people who wanted to move their money abroad, partly because part of their income wasn't taxed. But now, Kritikos says, normal investors and savers are emptying their bank accounts.

"There are even people out in the countryside, who are burying their money in their own gardens, like in old times," he said. "A lot of people are being forced to dip into their savings to get by, because that's all the money they've got. This run on the banks is continuing."

A safe home for savings

The Greek Banking Association has repeatedly said that savings of up to 100,000 euro per customer are backed by the state. However, many Greeks are nervous of what might happen if the looming government bankruptcy actually happens.

Opening an account in another European country is legal, so the government can't do anything as billions of euros are moved to Cyprus or Switzerland. German and British banks are profiting from the risk-shy Greek investors as well. Others, though, don't want to move their money abroad, but would rather invest in secure bonds.

Vangelis Haratsis, a financial analyst and head of an Athens financial services company, says conservative investors favor German state bonds. People who want to see higher returns are investing heavily in corporate bonds.

"People are worried about the capital they've saved," adds Haratsis. "Many small investors with 20,000 or 30,000 euros in the bank are looking for alternative investing possibilities where there is as little risk as possible."

Greek banks feeling the pinch

Whether the money is needed now, is moved to a foreign bank, or is invested somewhere else - the result is that Greek banks are running low on capital for their day-to-day business.

Since the start of the debt crisis in Greece, private savings have sunk by 45 billion euros. If bank customers continue to drain their savings at this rate, Haratsis warns that many banking institutions will dry up.

"Greek banks are being attacked from all directions," he said. "They have high credit failure and a large quantity of Greek government bonds. A lot of the credit institutes are being reduced to junk status by the credit agencies. If the customers leave too, many banks will stumble and won't be able to finance the real economy."

A rock and a hard place

Businessman and borrowers' spokesman Vangelis Kritikos sees another problem. The tax policies of the Greek government are hitting many bank customers hard and practically forcing them to empty their accounts.

He says it's been one bad piece of news after another: first, people with certificates of deposit were warned that they would have to pay more tax and undergo more tax checks. Then, it was that people who owed the tax authorities money would have their accounts seized.

"These were the same people that had to be carefully convinced to put their money in the banks in the first place back in the 1990s," said Kritikos. "Now we're headed completely in the opposite direction."

Author: Jannis Papadimitriou / mz
Editor: Michael Lawton