Goldman Sachs: ELA Running Low For Greece, 'No Vote' Won't Bring Liquidity

The European Central Bank's General Council will meet on Monday and is expected to make a decision on the ELA (Emergency Liquidity Assistance) cap for Greek banks following a "no" win in the Greek referendum held over the weekend. Other topics scheduled for discussion include the non-payment of the IMF tranche and the expiry of the EU assistance program. In a note published Monday, Goldman Sachs analyst Pawel Dziedzic noted that Greek banks have remained closed for the past week which has "effectively frozen" the balance sheets of Greek banks. The daily withdrawal limit of 60 euros per account is the sole source of liquidity and remaining cash buffers are "running low." Dziedzic continued that bank buffers could come under strain "at any point" and also cited media reports and speculation that banks could exhaust their residual cash buffers in the next few days. The analyst further suggested that even an increase in the ELA program would offer only temporary liquidity relief to the banks for two reasons. First, the unpledged assets eligible for ELA discount is down to roughly 24 billion euros. Second, each 10pp increase in a haircut on sovereign exposure reduces the pool by a further eight billion euros. "We expect the relaxation of imposed capital restrictions to be a prolonged and gradual process constrained by depleted liquidity buffers," Dziedzic concluded. "While circumstances in Cyprus were different, it took less than one year to remove ATM limits and less than two years to lift the remaining restrictions."