A New Run On The Banks? Spaniards Pulling Cash Out At Record Rates
August 28, 2012
Spanish consumers are pulling their cash out of banks at record levels, according to figures released on Tuesday.
Private sector deposits fell by nearly 5 percent in July to €1.509, the Telegraph reported, citing European Central Bank data, as public confidence in the banking system reached all-time lows amid a worsening economic situation.
The news comes after bond markets continued to hammer the debt-ridden euro zone nations Spain and Italy last week.
On Friday, the interest rate on a 10-year loan to the Spanish government briefly topped 6 percent — a level that forced Greece into a default earlier this year, despite massive financial support from international sources — before settling back to 5.96 percent.
“The pick-up in yields is a clear negative headline for Spain,” Jo Tomkins, an analyst at 4Cast, a consulting firm, told the New York Times. “The country is facing a double-whammy of low growth and tough austerity, and [there are] doubts that it will be able to hit already optimistic deficit targets.”