STOCK MARKET WATCH -- Friday, 31 July 2015

[Demeter]

8. Before Raiding The Bank Of Greece, Look At Their Balance Sheet!

http://klauskastner.blogspot.com/2015/07/before-raiding-bank-of-greece-look-at_27.html

One of the so-called Plan B's allegedly called for a take-over of the Bank of Greece so that its reserves could be used to finance the transition from Euro to Drachma. Good plan! However, it might be worthwhile to look at the BoG's balance sheet before embarking on that plan (see the table at the end of this post).

The BoG shows total assets of 176 BEUR. Of those, 127 BEUR are claims against domestic financial institutions, hardly of any value to the government. Then the BoG owns about 8 BEUR of Greek government bonds. Unlikely that they would be a useful source of transition financing. Neither would domestic securities of 6 BEUR be.

When it comes down to it, the BoG has the following assets which could be of value for transition financing:

27 BEUR - securities of foreign issuers
4 BEUR - gold, gold receivables, SDR's and foreign bank notes

The key question is where those assets are being held. I had once suggested that the BoG should open accounts with Central Banks of friendly countries, such as Russia, in order to hold those assets there. I presume, however, that most of those assets are being held in accounts with the ECB and other national Central Banks of the Eurozone.

Picture this: Greece has just unilaterally declared default and the intention to Grexit; it has put a stop on all foreign debt service; and it has repudiated bonds held by the ECB. And now Greece wants to sell some of the above assets to create liquidity for paying governmental bills.

Message from the ECB to the BoG: "Given the unilateral actions you have taken, we have to advise you that we have blocked all balances in your accounts with the Eurosystem until clarification of the current situation".

Answer from the BoG to the ECB: "Gee, we hadn't thought of that. Sorry. Didn't mean it. Please disregard our actions".



Balance Sheet of the Bank of Greece (BoG)
Assets (outstanding amounts at end of period in EUR millions)
End of period Jun 15
Claims on MFIs 128.552
Domestic 126.671
Other euro area countries 1.357
Other countries 524
Claims on non MFIs 7.704
Domestic 7.704
General Government 7.297
of which Central Government 7.297
Other sectors 407
Other euro area countries 0
General Government 0
Other sectors 0
Other countries 0
General Government 0
Other sectors 0
Securities other than shares and derivatives 32.626
Domestic 6.018
MFIs 420
General Government 5.598
of which Central Government 5.598
Other sectors 0
Other euro area countries 23.559
MFIs 3.054
General Government 17.842
Other sectors 2.663
Other countries 3.049
MFIs 152
General Government 824
Other sectors 2.073
Money market fund units 0
Shares and other equity excluding money market fund units 597
Domestic 11
MFIs 0
Other sectors 11
Other euro area countries 565
MFIs 565
Other sectors 0
Other countries 21
MFIs 21
Other sectors 0
Fixed assets 806
Gold, gold receivables, SDRs and foreign banknotes 4.155
Remaining assets 1.893
Total Assets 176.333