File Photo: EPA, ANDREW GOMBERT
A Greek government decision to fully remove capital controls in the country from September 1, announced by Prime Minister Kyriakos Mitsotakis on August 26, is credit positive for Greek banks, Moody’s said in a report on Thursday.
“We expect the removal of capital controls to strengthhen confidence among depositors and help banks improve their financial profile and revenue, a credit positive prospect,” Moody’s said in the report, adding that the full removal of capital controls meant that households and enterprises in Greece will not face any limitations in transferring money abroad any more. “This will probably encourage households and enterprises to bring back to domestic banks money they keep outside the banking system and will probably reduce funding cost for Greek banks with easier access to international capital markets,” the credit rating agency said.
Moody’s noted that a rise in deposits and their access to the interbank repo market helped Greek banks to eliminate borrowing from the ELA mechanism which had reached 87 billion euros, or 22 pct of total assets in June 2015.
The credit rating agency said that the removal of capital controls will strengthen foreign investments in the country.