Greek bank-run threat splits analysts One crucial uncertainty hanging over a Greek exit is whether it would lead to a deposit flight, with customers and companies rushing to withdraw money from banks in other eurozone countries. Analysts are divided over just how serious the threat really is of bank runs in economies such as Italy and Spain. Huw van Steenis, banking analyst at Morgan Stanley, said if Greece were to exit the euro, concerns would clearly spill over into other southern European countries. The question would then be what policy measures could be put in place to stop potential capital flight and restore confidence. There is a risk the market could be underestimating how dislocating an exit by Greece could be to the financial system without a major upgrade to the firewall. Analysts at JPMorgan estimate Italy's bank deposits at €1.4tn and Spain's at €1.6tn. In the past six months, neither country has seen big deposit outflows, confounding the expectations of some observers. Helen Haworth, head of European interest rate strategy at Credit Suisse, says the prospect of bank deposit flight remains a fundamental concern. But others are more sanguine about the possibility of bank runs. Carlo Mareels, senior banking analyst at RBC Capital Markets, says the risk of deposit flight outside Greece was "significantly mitigated" after the funding support to eurozone banks provided by the European Central Bank. Hundreds of lenders across the eurozone borrowed more than €1tn from the ECB under its longer-term refinancing operations (LTRO) in December and February. The moves, in response to liquidity problems plaguing banks at the end of last year, allowed lenders to refinance maturing debt. "Before the LTRO I would have said a run on bank deposits was one of my biggest fears," says Mr Mareels. But a Northern Rock-style bank run is now much less likely. Many investors expect the ECB to have to play a bigger role, whether through another LTRO or direct government bond-buying, if Greece exits the euro. Analysts say they are keeping a careful eye on bank deposit levels for early signs of possible capital flight. While overall bank deposit growth has remained stable across the eurozone, deposits have fallen in Ireland and Greece over the past few months. Figures for March show a 4 per cent year-on-year drop in deposits in Spain. Spanish banks" use of the ECB's deposit facility has also fallen, illustrating how the country's lenders are quickly using up the LTRO money to finance redemptions and purchase sovereign debt. Beyond concerns over individual banks and countries, the links within the eurozone financial system are such that there will always be unexpected outcomes. If we see Greece pull out of the euro, it is unlikely to be an orderly exit. You can't plan for it. There is always likely to be an unpredictable collateral issue," says Mr Mareels.