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Greek bank deposits drop in July after two-month rise

Greek bank deposits dropped slightly in July after a rise in the previous two months, data released by the countrys central bank showed on Friday.

Business and household deposits fell by 160 million euros, or 0.13 percent month-on-month to 122.58 billion euros ($138.3 billion), their lowest level since November 2003. They had risen by 1.04 billion euros to 122.74 billion in June, Reuters reported.

Greek banks have seen only a trickle of deposit inflows a year after the country clinched a third international bailout to stay in the euro zone. They remain dependent on central bank borrowing to plug their funding gap.

Greeces banking sector saw a 42 billion euro deposit outflow from December to July last year. Capital controls imposed on June 28 last year helped contain the flight but sharply increased banks dependence on emergency liquidity assistance (ELA) from the Bank of Greece.

Last month Greece further eased capital restrictions after making headway on bailout-mandated reforms and improved confidence in its banking system.

As part of the relaxation of controls, "mattress" cash that are returned to banks will not be subject to the restrictions, meaning amounts deposited can be fully withdrawn.

Banks are offering higher interest rates to attract back billions of euros that savers pulled out in cash last year, paying up to half a percentage point above what existing tiome deposits earn.

Greeces deputy Finance Minister George Chouliarakis told parliament last month that the government projects a three to four billion euro capital injection into banks as a result of hoarded cash being redeposited.
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