Saturday 22 July 2017

Deposits up €1bn as Irish bailed-out banks 'stable'

Laura Noonan

Laura Noonan

BAILED-out banks gained almost a billion euro of ordinary Irish deposits at the expense of foreign lenders in December, new figures reveal.

The boost marks the first time the 'covered' banks' deposit performance has been significantly better than that of other lenders with retail operations here.

But analysts last night stressed that the overall state of bailed out banks' deposits could best be described as "stable" and that there was no evidence vast sums were flowing into the Irish banks.

The latest data shows our bailed-out institutions saw their overall deposits drop by €29bn in 2011, leaving the banks with €154.5bn of customers' cash on their books.

The drop was led by non-eurozone deposits, which plummeted another €33bn as Ireland's falling credit rating prompted big corporations to pull their money out.

Recent figures

The most recent figures show total deposits in Irish banks fell by more than €4.5bn in December; experts last night pointed out that this was triggered by a €4.7bn fall in intergroup deposits held by banks.

In the core area of 'private sector Irish deposits' -- a measure of how comfortable ordinary individuals and companies feel with Irish banks -- bailed-out banks gained more than €1bn in December.

The entire universe of foreign lenders and bailed-out banks gained just €103m in deposits that month.

This suggests that Ireland's foreign lenders actually saw their private sector deposits fall by more than €900m in December, that fall was then offset by the €1bn rise at the bailed-out banks, giving a net rise of €103m.

The trend marks a reversal of November's performance, when bailed-out banks lost €408m of private sector money and foreign lenders only lost €194m.

"Deposits aren't flowing in but they have stabilised," Davy's financial analyst Emer Lyons said last night, adding that Irish banks were "still paying very attractive rates".

In a note issued to clients, Goodbody's pointed out that the latest Central Bank dispatches included the "surprise" information that Irish banks had not increased their reliance on European Central Bank funding despite taking three-year money from the ECB in December.

ECB funding

ECB funding to the bailed-out banks fell just over €1.5bn to €67.1bn in December. Goodbody's suggested that Irish banks might have extended existing one-year ECB loans to three years rather than drawing brand new money.

"Clearly, deleveraging, as well as stability in deposits is resulting in a lower (albeit still-high) dependence on central bank funding," the note added.

Irish Independent

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