Greece on verge of default but considering BRICs Bank and Russian Bailouts

European finance chiefs have poured fresh emergency funds into Greek banks in a desperate attempt to keep them afloat after panicking savers withdrew more than £3billion this week.

The amount being offered by the European Central Bank has not been revealed, but it is believed to be around £2billion.

It is the bank’s second intervention in three days, having earlier agreed to make almost £1billion available.

The lifeline came as Greek banking officials insisted they had ‘no financing problems’ despite withdrawals by savers, with around £1billion being taken out yesterday alone.

Greece has to pay back £1.15billion to the International Monetary Fund by June 30, but says it will be unable to meet this deadline – or its obligations to pensioners and state employers – unless it can unlock an extra £5.15billion bailout. However, the money is unlikely to be given unless the country agrees to economic reforms.

Alexis Tsipras will travel to Russia again on Friday to meet Vladimir Putin as questions swirl over whether Moscow could extend credit lines to bail out the Greek prime minister’s embattled economy.

Tsipras will meet Putin on the sidelines of a major economic forum in St Petersburg. The Greek prime minister has been an outspoken critic of EU sanctions against Russia and is seen as one of the Kremlin’s few friends inside the European bloc. Nevertheless, sources in Brussels told news agencies on Wednesday that all 28 EU nations had agreed to roll over sanctions against Russia, which are due for renewal at a meeting on Monday

“A financial deal package to Greece is definitely possible, but it’s unlikely to come as a straight bailout loan, and more likely to be packaged as part of an advance payment deal over gas transfer or something similar,” said Chris Weafer, a Moscow-based financial analyst.

Another possible outcome is that a newly founded development bank for the Brics countries – Brazil, Russia, India, China and South Africa – could ask Greece to join. Athens would pay a token amount to join the new bank and could then receive loans and funding for infrastructure projects.

Greece is days away from potentially missing debt repayments of 1.6 billion euros to the International Monetary Fund, and investors are looking to an emergency meeting next week where euro zone leaders will try to find a way to unlock aid for Athens.

Germany, the biggest European contributor to bailout programs that have kept Greece afloat for five years, insisted it still was not too late for Athens to come to terms with its creditors at the EU and IMF.

The European Central Bank on Friday raised the ceiling on emergency liquidity that Greek banks can draw from the country’s central bank for the second time this week, a banking source told Reuters.

Bankers told Reuters that about 4.2 billion euros had flooded out of Greek bank accounts this week despite central bank efforts to restore calm.

The euro was last off 0.02 percent against the dollar at $1.1355, after sinking under $1.13 to a session low of $1.1294.