Greeks urged to return bank savings

The chief of Greece's bank association on Monday urged customers to return savings to their bank accounts, as the branches of most lenders were packed with people withdrawing cash after a three-week shutdown ended.

In an interview on Greek TV, Louka Katseli said banks would function normally again if account holders brought back some of the 40 billion euros ($43 billion) withdrawn since December during Greece's economic uncertainty.

"If we take out the money from our safes and our houses - where, in any case, it isn't safe - and we deposit it in the banks, we will reinforce liquidity," she told the Mega TV channel.

Capital controls remained in force despite the banks opening on Monday; instead of being limited to 60 euros per day from ATM cash machines, Greek customers could now withdraw the full weekly allowance of 300 euros all at once. Still, many customers complained that they couldn't access their whole salary or welfare payment.

"I came today to collect my pension but unfortunately I could only get a small percentage of it," said Spyros Papasotiriou, as he left his bank in a northern Athens suburb.

The temporary limit will remain in force until the end of the week when it will be raised to 420 euros.

Although some other capital controls have been eased, Katseli said it was too early to say how long until the banking system would return to normal.

One key limit still in force was a ban on most transfers to foreign banks, although Greeks can again use their credit cards to make purchases overseas.

Some analysts predicted that restrictions would remain in place for months if not years. They were introduced because negotiations with Greece's creditors had reached a deadlock, fueling increased fears of a bank run if Greece was to enter bankruptcy.

The bank shutdown is estimated to have cost the Greek economy 3 billion euros.

Since 2008, Katseli said, 124 billion euros of deposits have been emptied from Greek accounts.

Tax hikes

Greeks also had to contend with further hikes in sales tax on Monday, which aim to raise around 800 million euros a year for the government in Athens.

The increase in value-added tax (VAT) from 13 percent to 23 percent applies to a wide range of products and services for the first time - including processed foods, along with drinks and food served at restaurants and bars.

Its effects are likely to be immediately felt by businesses and residents, who are already struggling after years of deep austerity.

Dimitris Chronis, who runs a small kebab shop in central Athens, thinks the new taxes could push his business over the edge.

"I can't put up my prices because I'll have no customers at all," he said, adding that sales have slid by around 80 percent since banking restrictions were imposed June 29.

"We used to deliver to offices nearby but most of them have closed. People would order a lot and buy food for their colleagues on special occasions. That era is over."

Other products that saw tax increases from Monday include fresh and frozen meat, coffee, tea, juices, eggs, sugar, rice and toilet paper.

The measures are part of reforms demanded by international lends before talks could begin on a third Greek bailout, worth 86 billion euros, to help the country avoid bankruptcy.

The tax changes also remove special treatment previously afforded to many Greek islands - something the ruling Syriza party tried hard to avoid in recent negotiations with creditors.

mm/msh (AFP, AP)