Greek Banks Reopen With Restrictions

Greek Banks Reopen With Restrictions

The FINANCIAL -- Greek bank branches reopened their doors Monday after being closed for three weeks to prevent a banking system collapse, but almost all the restrictions on financial transactions remained in place, showing how far Greece remains from economic normality as its turbulent summer continues.

The Greek government is bracing for renewed parliamentary defections as it prepares to enact a second round of austerity measures on Wednesday, a prerequisite to securing a new bailout agreement with the eurozone. This week's vote could heighten concerns about the stability of the government under Prime Minister Alexis Tsipras who is struggling to carry his left-wing Syriza party with him as he accepts international creditors' austerity demands that his government spent much of this year denouncing, according to Nasdaq.

Most capital controls, including limits on cash withdrawals and money transfers, remain in place at Greece's banks. But from Monday depositors are allowed to bundle their €60 ($64.96) daily withdrawal limit over several days and take out a cumulative €420 at the end of the week. The reopened banks are also limited to basic services such as making domestic payments in person, which customers have only been able to carry out online in recent weeks. The branch openings therefore helps those who don't have access to online banking. Clients can now access their safe-deposit boxes again.

The Athens Stock Exchange, which also halted trading from June 29, will remain closed Monday.

Greeks were hit on Monday by substantial increases in value-added tax on goods and services, one of the measures passed by the Greek parliament in a first austerity package enacted last week as a prerequisite for a new bailout.

Greece is set to make a €4.2 billion payment to the European Central Bank due Monday and to clear some €2 billion in arrears to the International Monetary Fund.

On Friday the country managed to secure some â,¬7 billion in short-term financing through the use of a European Union lending facility, the European Financial Stability Mechanism, which is backed by the EU's budget.

Officials from the three institutions overseeing Greece's bailout—the ECB, the IMF and the European Commission—were set to return to Athens Monday to consider the country's economic situation and consult the government on all relevant draft legislation tied to a fresh bailout.

Since Greece was first bailed out in 2010, the "troika" of international inspectors have visited Athens regularly to assess the country's progress in implementing the measures. The negotiations dragged on for months and were heavily covered by Greek media and have been accompanied by frequent strikes and protests.

Since coming to power in late January, the Syriza-led government has tried to keep the troika out of Greece and shift the negotiations to Brussels instead. That stance irritated the troika and eurozone governments, which saw it as an impediment to proper inspections. The return of the troika is one of the conditions the government had to accept this month as a prerequisite for new talks about a bailout.

The Greek government is this week will present a second set of austerity measures to parliament as demanded by creditors in exchange for a new bailout program covering up to €86 billion in financing.

Last week's austerity package, even though was passed with the help of many opposition lawmakers, caused a split in the ruling Syriza party. Among the 149 lawmakers in Mr. Tsipras's party, 32 voted against the measures, including three cabinet ministers and former finance chief Yanis Varoufakis--while six abstained.

Mr. Tsipras announced a small cabinet shuffle Friday to signal that he wanted to govern only with ministers who fully support his government's quest for a new bailout deal. The main hope of the government this week, officials say, is to avoid even more losses during the second vote, which would increase speculation in Greece about how long the premier can stay in power. Many observers in Greece now expect elections this fall, if Mr. Tsipras can finalize a new bailout program with the eurozone and IMF by then.

The second set of austerity measures includes higher taxes on agriculture, which are meeting resistance as lawmakers both from ruling Syriza and opposition parties have threatened to reject them.