Greeks Scramble To Pull Out €8 Billion From Local Banks As Greece Responds With Money Control Measures

We previously wrote about the possibility of a bank run in Greece following unsubstantiated reports that Greek citizens don't trust the Greek financial system all that much anymore, courtesy of the whole bailout and GDP reporting fraud thing. The rumor was not only just confirmed and also quantified: Dow Jones reports that in the past three months Greeks have moved about €8 billion out of local banks "fearing a possible new tax on bank accounts, increased government scrutiny on assets and a run on the banks if Athens is forced to turn to the International Monetary Fund." This represents over a quarter of the money held by private banks in the country. This also represents about €400 billion in total money leaving the system courtesy of fractional reserve banking and the money multiplier. Yet the worst news for Greeks: money controls are coming.

"There is a lot of uncertainty out there," said a senior private banker at a Greek bank. "We've had a number of customers asking to move funds out of Greece, mostly to Cyprus, Luxembourg and Switzerland."

Clients of private banks also fear that Greece may be unable able to raise the EUR54 billion it needs this year to pay back maturing bonds and will therefore have to turn to the IMF for help.

"Some of our clients are concerned about a run on the banks if the IMF gets involved," said another private banker, this one from a foreign bank. "They believe the situation in Greece will get worse before it gets better. There is also very little clarity from the government about its intentions on new tax measures."

"We estimate that €8 billion has moved out of Greece to accounts abroad since December. It's money from bank accounts, stock sales, property sales and other sources. This is pretty substantial considering that there is only €30 billion under management in private banks here," he added.

All is fine and well if this was all: just your plain vanilla run on the bank. But it's not - the Greek response to this capital outflow: upcoming money controls.

Wealthy individuals may have good reasons to be concerned, however. Finance Minister George Papaconstantinou earlier this month urged Greeks with accounts abroad to repatriate their money and said the capital will be taxed at a 5% rate. He said those who choose to keep their money abroad should declare their deposits and pay a tax of 8% for the first six months.

Thereafter he threatened that Greece will use all laws at its disposal, such as double-taxation agreements, to ask foreign banks for information on Greek account holders.

"For us this is the first step towards taxing all accounts in Greece," said the chief financial officer of a major Greek shipping company. "The line is minimum deposits here and moving all assets abroad,"

By Submitted by Tyler Durden
From Zerohedge

Meanwhile In America "What's up with Citibank"

Citi Notice Causes Customer Angst

If a recent notice in your bank statement from Citigroup has you fretting that you won’t get your money out when you need it, the bank has a message for you: Don’t sweat it.

Citi recently sent notices to a large majority of its checking account customers informing them – in no uncertain terms – that the bank has the right to require account holders to provide advanced notice before withdrawing money. The notice had some customers buzzing over whether the cryptic language meant Citi was preparing for an onslaught of customer withdrawals – an old-fashioned, “It’s a Wonderful Life” kind of bank run.

“Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change,” the notice read.

But according to Citi officials there is nothing nefarious behind the notification, which they say amounts to nothing more than a technical requirement for all banks that offer interest on checking account balances. Citi says that when the FDIC began offering unlimited account protection in 2009, the bank converted all of its interest- and promotion-eligible accounts that did not currently pay an interest payment into what is known in bank circles as a Demand Deposit Account to take advantage of the FDIC change.

When the bank moved back to standard FDIC coveragethis year, it converted the accounts back to interest-eligible accounts – known as NOW accounts – triggering the account notification. According to a spokeswoman for Citi, all banks that offer NOW accounts are required to reserve the right to require advanced notice of withdrawals.

“However, we have never exercised this right and have no plans to do so in the future,” according to a statement from the bank explaining the notice.

It was unclear if the notice caused Citi customers to attempt to withdraw funds at a higher rate than normal. However, a person familiar with the notice pointed out that customers would have been notified by their branches that it was a technical matter.

Spokespeople for Bank of America (BAC: 16.21, n.a., n.a.%) and JPMorgan Chase (JPM: 40.87, n.a., n.a.%) did not immediately return calls for comment.

LINK...