Home-loan providers' reliance on ECB funding dips to €34bn
IRISH mortgage lenders' reliance on short-term funding from the European Central Bank (ECB) dropped 18pc to €34bn in November as wholesale funding markets continued to thaw 14 months after the collapse of Lehman Brothers.
Finance Minister Brian Lenihan has repeatedly acknowledged that the ECB kept the Irish banking system afloat earlier this year as global markets turned against the property-focused lenders.
Home loan providers were using around €2bn of ECB funds to finance their activities before the US subprime crisis erupted in August 2007. But the figure had shot up to €39bn a month after Lehmans imploded, before peaking at a record €72bn last June.
In recent months, however, lenders have noted a stabilisation in the banks' funding situations.
This is despite the fact that the markets remain concerned about their capital reserve levels as they face massive discounts on loans bound for the National Asset Management Agency and writedowns on mortgages and other loans that will remain on their books.
For the first year of the original government banking guarantee, Irish lenders were only able to raise wholesale funding that is due to be repaid before the scheme runs out in September 2010.
The Government has extended the guarantee to enable lenders to sell up to five-year bonds.
Still, some lenders, such as Bank of Ireland, Allied Irish Banks and EBS, have been able to sell bonds over the past few months that are not covered by the guarantee.
Monthly statistics out yesterday from the Central Bank showed that overall borrowing by Irish-based lenders from the ECB dropped 11pc on the month in November to €77bn. Much of the borrowings are out to international institutions with a presence in the International Finance Services Centre.
Retail clearing banks -- Allied Irish Banks, Bank of Ireland, National Irish Bank and Ulster Bank, which are also included in the mortgage lenders category -- had €17bn out on loan from the Frankfurt bank at the end of November, down from €22bn from the previous month.
- Joe Brennan
Irish Independent
