Capital Fleeing Eurozone Periphery
September 21, 2012 • 9:39AM

(EIRNS) — According to a Bloomberg wire, a total of EU326 billion was pulled from banks in Spain, Portugal, Ireland, and Greece in the 12 months ending July 31. The flight of deposits from the four countries coincides with an increase of about EU300 billion at lenders in seven nations considered the core of the Eurozone, including Germany and France.

When financing by central banks isn’t taken into account, the data show that Greek deposits declined by EU42 billion, or 19%, in the 12 months through July. Spanish savings dropped by EU224 billion, or 10%; Ireland, EU38 billion, or 9%; Portugal, EU22 billion, or 8%.

There is now a two-tiered banking system in the Eurozone. Some of the decline in deposits is due to German and French banks are reducing their exposure. They cut lending to their counterparts in the four peripheral countries plus Italy by $100 billion in the 12 months ending March 31, according to the latest data available from the Bank for International Settlements.