ECB Tightens Collateral Terms for Greece Banks

The European Central Bank made it harder for Greece’s banks to access emergency loans, adding pressure on a country whose financial system remains shuttered as it awaits political talks in Brussels.

“The financial situation of the Hellenic Republic has an impact on Greek banks since the collateral they use in Emergency Liquidity Assistance relies to a significant extent on government-linked assets,” the Frankfurt-based ECB said in a statement on its website. “ELA can only be provided against sufficient collateral.”

While the ECB’s Governing Council agreed in a conference call to leave the cap on ELA unchanged at 88.6 billion euros ($98 billion), the change in collateral terms represents a stricter policy overall. That signals officials view the country’s lenders, which have been shut and under capital controls for more than a week, as a greater default risk since voters in Greece’s referendum on Sunday delivered a decisive no to creditors’ bailout terms.