###POV Can An Eonia Spike Happen Again? -.....>

EONIA: ###POV Can An Eonia Spike Happen Again?

- Prior to the Nov month-end Eonia spiked, which Bloomberg reported as the

National Bank of Greece (NBG SA) finding itself with EUR450mln excess liquidity

that it lent to peers. The report said this was linked to salaries deposited by

Greek civil servants; likely the annual Christmas bond, known as the 'doros'. 

- Greek banks access the Emergency Liquidity Assistance facility. We do not know

the interest rate but is thought to be 1-1.5% over the ECB main refi (0.25%).

- Let's assume that the eonia market is E5bln in size (it dips as the month-end

approaches). Hypothetically, if NBG SA lent E450mln to another Greek bank at

1.1%, then mathematically, this boosts Eonia by 6bp, roughly what happened on

Nov 29th.

- With Greek bank household lending still heading downward (96.9bln in Oct), but

household deposits (E101.7bln) and non-finl corps rising (+19.7bln), individual

Greek banks will occasionally (and increasingly) find themselves with capacity

to lend into overnight markets. Yet, the threat still looks low, aside from

large bonus payment months like xmas.