Greece in shock as banks shut after snap referendum call

A pensioner shouts outside a branch of the National Bank of Greece along with other pensioners waiting to get their pensions, in Athens yesterday. [PHOTO:AFP]

Greeks struggled to adjust to shuttered banks, closed cash machines and a climate of rumours and conspiracy theories yesterdsay as a breakdown in talks between Athens and its creditors plunged the country deep into crisis.

Prime Minister Alexis Tsipras, who blindsided creditors by calling a referendum on the austerity cuts in the aid package proposed by the creditors, appeared on television on Sunday night to announce capital controls to prevent banks from collapsing.

Their imposition capped a dramatic weekend for Greece that has pushed the country towards a likely default on 1.6 billion euros (Sh106 billion) of International Monetary Fund loans today and closer to an exit from the euro currency bloc.

French President Francois Hollande appealed to Tsipras to return to the negotiating table and German Chancellor Angela Merkel said she was willing to talk to the 40-year-old Greek leader if he wanted. “There are a few hours before the negotiation is closed for good,” Hollande said after a cabinet meeting on Greece.

Lengthy talks

But with Greece’s bailout programme expiring in less than 48 hours, hopes of a last-minute breakthrough were fading fast. Greeks - used to lengthy talks with creditors before a eleventh-hour deal materialises - were left stunned.

“I can’t believe it,” said Athens resident Evgenia Gekou, 50, on her way to work. “I keep thinking we will wake up tomorrow and everything will be okay. I’m trying hard not to worry.” European officials sent confusing signals about their next move.

A spokesman for the European Commission told French radio that Brussels would not make any new proposals on Monday, appearing to contradict comments by EU Economics Commissioner Pierre Moscovici.

He said a new offer was forthcoming and that the two sides were “only a few centimetres” away from a deal. European bank shares fell sharply yesterday. Top banks in Spain, France and Germany were down more than six per cent as the risk of a spillover to banks in other peripheral euro zone countries spooked investors.

The Greek government will keep banks shut at least until after July 5, the date of the referendum, and withdrawals from automated teller machines were limited to 60 euros a day when they reopened at midday.

-Reuters