Greek banks reduced their borrowings from the European Central Bank in March to EUR87.9 billion, data released by the Greek central bank showed Thursday, extending a downtrend for a third month after hitting a peak at the end of last year.

In February, Greek banks had borrowed EUR90.4 billion as part of a continuing emergency lifeline the ECB extended to Greek and other banks in Europe facing liquidity squeezes. In December, that borrowing peaked at EUR97.7 billion.

In May last year, the Greek government narrowly avoided default with the help of a EUR110 billion bailout from the European Union and the International Monetary Fund, but its bonds have been downgraded to junk status.

Since then, Greek banks have been effectively frozen out of European interbank markets amid fears that a Greek sovereign default would drag down the country's banks.

Greece's four major lenders--the National Bank of Greece SA (NBG), EFG Eurobank Ergasias SA (EUROB.AT), Alpha Bank SA (ALPHA.AT) and Piraeus Bank SA (TPEIR.AT)--have all been under pressure to reduce their dependence on ECB liquidity.

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