Greece's government has given the country's cash-strapped lenders until Friday to explain how they will finance themselves over the next two to three years, bank officials say, a move many fear is the first step towards tightening their access to easy European Central Bank funding.

The need to put forward medium-term liquidity plans comes as the government prepares to extend a further EUR30 billion in loan guarantees to the banks--the latest infusion in a two-year old, EUR60 billion support program--that are now heavily dependent on the ECB for their cash needs.

So far, the government hasn't set any further conditions on that aid, apart from the liquidity plans. But senior officials at Greece's four leading banks--National Bank of Greece SA (NBG), EFG Eurobank Ergasias SA (EUROB.AT), Alpha Bank (ALPHA.AT) and Piraeus Bank SA (TPEIR.AT)--say it is a matter of time before that happens.

They say that could include conditions to cut lending and sell assets in an effort to make the banks more self-reliant on their core, albeit shrinking, deposit base and less so on the ECB.

"The banks have been required to submit a draft liquidity plan to the Finance Ministry by the end of this week," said a senior official at one of Greece's big four lenders.

"I don't have many doubts that [those plans] will be subject to quarterly reviews. The question is whether the plans will be acceptable or will come with conditions?" he said. "And if we don't make our targets, will we be asked to sell assets? I fear that may happen."

Since the start of the Greek economic crisis in late 2009, Greek banks have been hit by a double blow that has squeezed their liquidity and made them increasingly reliant on cheap ECB funding to survive.

On one hand, the banks have seen a steady outflow of deposits that totaled about EUR40 billion last year and represented about 14% of all Greek banking system deposits combined. On the other, the Greek banks' heavy EUR55 billion exposure to Greek government bonds--now rated at junk status by the world's three leading ratings agencies--has effectively frozen them out of interbank market.

As a result, Greek banks have had to increasingly turn to the ECB for their cash needs. According to the latest data from the Greek central bank, Greece's lenders borrowed EUR97.7 billion from the ECB in December, almost double what they borrowed a year earlier.

But the ECB is growing uncomfortable with that dependence, especially alongside the growing demands of Irish and Portuguese banks who have also been tapping ECB funding. Amid those concerns, many analysts expect the ECB to roll back some of its easy money policies at its next governing council meeting on Thursday.

"The ECB clearly has some concerns about its exposure building over time to the Greek economy," said the Greek bank official. "And the level of concern is increasing as the amount of lending to the Greek banks increases."

To be sure, individual Greek lenders have made efforts in the past year to cut, or at least restrain, their cash demands on the ECB. In February, for example, Greece's second-largest lender by assets, Eurobank, sold a 70% stake in its liquidity-dependent Polish operations to Austria's Raiffeisen Bank International AG (RBI.VI) in a move to save itself some EUR2 billion a year in cash.

Likewise, state-owned and deposit-rich Hellenic Postbank (TT.AT) says it could cut its dependence on ECB funding to zero this year, down from a EUR5 billion peak in May 2010.

Even so, the ongoing recession in Greece means that the stock of deposits in the Greek banking system is expected to shrink by another 8% this year as individuals and businesses tap savings to cover their cash needs.

As a result, say bank officials, the need for liquidity will remain, if not grow, in the year ahead. That means the banks will need to be more aggressive in cutting their liquidity needs to convince the ECB, they say.

Although the details will vary from bank to bank, in practice the banks effectively have two choices: scaling back lending, or selling off assets such as their fledgling foreign operations where there is a gap between deposits and loans.

"The message is clear: there won't be further ECB financing without conditions. It's a new regime that is coming with tighter conditionality standards," said a senior official at a second Greek bank. "And if the banks can't reduce their liquidity dependence on their own, they will be forced to by the ECB."

-By Alkman Granitsas, Dow Jones Newswires; +30 210 331 2881; alkman.granitsas@dowjones.com