Greek bank deposit run continues despite bank recapitalization as election approaches

Bloomberg reports that despite a bank recapitalization, the Greek bank deposit run has continued.

This is further confirmation that bank book capital levels and solvency are irrelevant when there is an implied or explicit sovereign bank deposit guarantee.

It also confirms that the Greek bank deposit run is a result of the EU policymakers' threats to kick Greece out of the EU and force Greece back onto the drachma.  Depositors are responding to the potential for having their savings converted into the lower valued drachma and are moving their money to avoid this devaluation risk.

Greek deposit outflows have accelerated before this weekend’s elections, two bankers familiar with the situation said, on concern the nation may move closer to abandoning the euro. 

Daily withdrawals have increased to the upper end of a 100 million-euro ($125 million) to 500 million-euro range this month, one banker said, asking not to be identified because the figures aren’t public. A second banker said the drawdown may have exceeded 700 million euros yesterday. ... 

Greek banks are under strain after individuals and companies withdrew about 72 billion euros since the nation triggered a region-wide sovereign-debt crisis in October 2009. While lenders have access to European Central Bank funding, an exit from the euro would cut them off. Depositors are seeking to preserve their cash on concern Greece may adopt a new currency that would immediately drop in value....