Europe News

Greek banks may not re-open any time soon

Will Greece's banks run out of money?
VIDEO2:1702:17
Will Greece's banks run out of money?
What a Greek 'no' vote means for banks
VIDEO2:2002:20
What a Greek 'no' vote means for banks
Optimistic for strong yes vote: Constantine Michalos
VIDEO2:2402:24
Optimistic for strong yes vote: Constantine Michalos
'Grexit' is a one in twenty probability: PNC
VIDEO2:4502:45
'Grexit' is a one in twenty probability: PNC
A lot of hyperbole around Greece: Analyst
VIDEO3:4203:42
A lot of hyperbole around Greece: Analyst

Greece's embattled banks may have to extend their closing time beyond next week, depending on the result of a crucial vote on Sunday.

This week, Greek banks have been shut and citizens can only withdraw 60 euros ($67) a day from ATMs. Prime Minister Alexis Tsipras called a bank holiday late last Friday after announcing Sunday's referendum on a new fiscal program for Greece – a vote which for many has become a proxy decision on Greece's euro membership.

A pensioner reacts after receiving a priority ticket to receive part of their pensions outside a bank in Athens, Greece, July 2, 2015.
Grexit: Why even ‘yes’ could see Greece leave

The outcome of the referendum should help the European Central Bank decide whether to raise its assistance to the Greek banking sector. Its emergency funding has helped to keep the banks afloat as capital bled out of them, but has been capped since talks between Greece and its international creditors broke down.

Yanis Varoufakis, the country's finance minister, said in an interview with Bloomberg Thursday that he thinks the banks will re-open on Tuesday. There are not many who share his optimism.


Sakis Mitrolidis | AFP | Getty Images

Lorenzo Bini Smaghi, former ECB executive board member and chairman of Societe Generale, told CNBC Friday a "no" vote on Sunday would mean that Greek banks have to remain shut.

"With a no vote, Greece doesn't have a (bailout) program and will continue to not have a program unless the European governments decide suddenly to change position. The ECB cannot lend to the banks as long as there is no program, so the banks will have no additional money to serve their customers and will have to remain shut," he argued.

"Without additional liquidity, it's going to be very difficult for the Greek government to survive. Without money, how are you going to pay for basic needs? The only way is to stamp a new currency and take the Bank of Greece out of the eurosystem."


Greek referendum: Buy or dump the euro?

The IMF itself appeared to admit that Greek debt was unsustainable in a preliminary draft Debt Sustainability Analysis published last week.

Constantine Michalos, head of the Hellenic Chambers of Commerce, who favors a "yes" vote, told CNBC Thursday that banking system funds do not exceed 600 million euros, and that banks may not open again until July 20.

"It's absolutely impossible (to reopen) unless there is a deal. A deal that passes all the parliaments of the euro zone, a deal that is struck here in Greece, signed and sealed, and then the ECB has to send funds," he said.

- By CNBC's Catherine Boyle