Exclusive: ECB rejected Greek funding line request for extra 6 billion euro - sources

By George Georgiopoulos and John O'Donnell

ATHENS/FRANKFURT (Reuters) - The European Central Bank rejected Greece's request for 6 billion euros of additional emergency funding on Sunday but is expected to keep the funding line used by Greek banks open until the July 5 referendum, people with knowledge of the matter said.

Greeks rushed to withdraw their money from banks, piling pressure on the banking system, after Prime Minister Alexis Tsipras said on Saturday he would call the snap vote on the bailout proposed by creditors.

Concerned at the withdrawals, the Bank of Greece asked the ECB's Governing Council to add an extra 6 billion euros to an 89-billion-euro emergency credit line on Sunday, to cover the expected shortfall of cash.

"The request by the Bank of Greece was for 6 billion euros of ELA (Emergency Liquidity Assistance)," said one of the people with knowledge of the talks. "The recommendation submitted to the ECB was signed by the governor (of the Bank of Greece)."

"After the call for a referendum and the breakdown of talks, one could not do anything different than what did happen."

The ECB, which has been increasing the amount of funding available to the banks, froze the funding line on Sunday, meaning the banks were unable to open on Monday given the deposit withdrawals and prompting Tsipras to impose capital controls to protect the banks.

Although a formal proposal has yet to be made and the situation is fast-moving, people who spoke to Reuters said they now expected euro zone central bank chiefs and ECB President Mario Draghi to keep the remaining support open at the current level when they meet on Wednesday.

Capital controls have stopped panicked savers from withdrawing large sums of money, which means that the current level of emergency liquidity, used to make such payouts, may now be enough to see Greek banks through the week.

Commenting on the expected extension of existing emergency funding, one person said: "It doesn't make sense to stop it now. The banks are not able to pay it back anyway. So if you froze it for another two or three days, it wouldn't make any difference."

"With the referendum, you then have some sort of indication as to how things will go forward."

(Reporting By George Georgiopoulos and John O'Donnell; editing by Anna Willard)