Greek banks reopen as Merkel urges swift bailout talks

Reuters — Greek banks reopened their branches across the country on Monday after a three-week shutdown,while German Chancellor Angela Merkel called for swift aid talks so Athens could also lift withdrawal limits.

The cautious reopening of the banks, and an increase in value added tax on restaurant food and public transport from Monday, are aimed at restoring trust inside and outside Greece after an aid-for-reforms deal last week averted bankruptcy.

Greek Prime Minister Alexis Tsipras is trying to turn a corner after he reluctantly agreed to negotiate a third bailout, allowing the European Central Bank to top up bank credit lines but prompting a rebellion in his Syriza party.

“Capital controls and restrictions on withdrawals will remain in place but we are entering a new stage which we all hope will be one of normality,” the head of Greece’s banking association Louka Katseli said on Greek television.

Greeks will be able to withdraw 420 euros a week at once instead of just 60 euros a day, but the limit will effectively remain the same and capital controls will also stay in place.

“That’s not a normal life so we have to negotiate quickly,” Merkel said in extracts from an interview with German public broadcaster ARD.

Merkel said it would be possible to talk about changing the maturities of Greece’s debt or reducing the interest Athens has to pay after the first successful review of the new bailout package to be negotiated.

Berlin, the biggest contributor to eurozone bailouts, would do all it could to bring talks to a successful conclusion but would “negotiate hard” to ensure Athens stuck to agreements, she said.

“That certainly won’t be easy because there are things that we have discussed with all of the Greek governments since 2010 that have never been done but that have been done in other countries like Portugal and Ireland,” she said.

But while opinion polls suggest the prime minister’s popularity remains high, on the streets of Athens some were sceptical that the bank reopening would change much in a recession-hit country with over 25 percent unemployment rate.

“The banks opening tomorrow won’t change anything for me,” said 31-year old hotel worker Joanna Arvanitaki. “I never used to withdraw 60 euros (42 pounds) a day – 60 euros is what I had a week for my expenditure.”

Greeks will be able to deposit, although not cash, cheques, pay bills as well as have access to safety deposit boxes and withdraw money without an ATM card.

EU officials hope the bailout deal will be in place by mid-August when Greece needs to make new payments to the European Central Bank to redeem its maturing debt. A 7.16 billion euro bridge financing is enough to see Athens through July – including a July 20 ECB repayment – but not through August.