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"Greek banks are going through their passion week, but unfortunately, they will not live to see their resurrection." This is how Michalis Mazourakis, chief economist at Alpha Bank described the state of the Greek financial system some time ago. According to the European Central Bank, deposits of 4.6 billion euro "flow out" from Greek banks every month. In January 2012, this figure was 5.4 billion. Currently, their deposits amount to 170.1 billion euro. Despite the increased interest rates on term deposits, banks have failed to attract new depositors.
    Analysts explain there are three causes for the phenomenon. The continuing recession "eats" people's incomes and they allocate less money for savings. High taxes the state levies on them are difficult for many people and they turn to their deposits in banks to pay them. The third major reason is the fear of the drachma, which makes many people to take their money out of Greece, to keep it in safe boxes or at home.
    The performance of banks on the Athens Stock Exchange is disturbing too as their shares lost 20 per cent of their value only for seven consecutive sessions. The shares of two of the largest financial institutions in the country are at less than 1 euro - a share of Piraeus Bank is worth 0.3150 euro now, while Eurobank EFG’s is worth 0.6760 euro. A share of the National Bank of Greece is worth 2.08 euro. Financial analysts explain the depreciation of bank shares with the uncertainty over the procedure for their recapitalization, which is still unclear and is hiding the risk of nationalization.
    What is known so far is that recapitalization should be completed by September 2012, but the statements of Prime Minister Lucas Papademos and representatives of the supervisory Troika make it clear that the conditions under which it will proceed will become clear before the parliament is dissolved. According to capital.gr, the Minister of Finance Filipos Sahinidis will present the bill for the recapitalization of Greek banks at tomorrow's meeting of Eurogroup in Copenhagen. The main texts in it, however, are not clear yet, as the government and the Troika realize the difficulty of the task.
    For example, it is unclear what the price of common shares will be, which will involve private investors and the financial stability fund, whether or not they have the right of a vote. The rules for their re-purchase are not clear either. Particularly stinging is the situation with the quality of capital that Greek banks are willing to immediately import, because these are large sums of money from countries outside the euro zone and their origin must be clear. The European Central Bank insists on that and closely monitors all contacts and talks of Greek bankers with investors from third countries. Frankfurt is concerned that "vague capital" can take advantage of the situation and can enter the European banking system through the Greek banking system.
    The truth is that Greek banks have not yet recovered from the debt haircut and although the government gave them 20 days grace in which to make their financial accounts for 2011, their damage due to the PSI is expected to reach 26 billion euro. It is not reasonable to expect that only private investors will cover these amounts and therefore, the involvement of the financial stability fund, which has allocated 50 billion euro for the recapitalization of Greek banks, is considered certain.