Business World

Monday 25 September 2017

ECB chief Draghi says Irish banks remain a 'source of concern'

Finance Minister Michael Noonan talks to European Central Bank (ECB) President Mario Draghi (R) during an eurozone finance ministers meeting in Brussels
Finance Minister Michael Noonan talks to European Central Bank (ECB) President Mario Draghi (R) during an eurozone finance ministers meeting in Brussels
Donal O'Donovan

Donal O'Donovan

IRELAND'S banks remain a source of "some concern" as we exit the bailout, according to European Central Bank president Mario Draghi.

He was speaking in Brussels as banks across Europe, including here, published masses of financial data detailing how much capital lenders have and where they invest.

The breakdowns of lending to homes, businesses and countries by 160 banks involves more than 700,000 pieces of information.

The publication of detailed information in a single format created by the European Banking Authority is designed to make comparisons easier.

There were few surprises in the data on AIB, Bank of Ireland and Permanent TSB, according to banking analyst Ciaran Callaghan of Merrion Stockbrokers. That's because much of the information was previously reported in the banks' own annual results

The EBA scrapped annual stress tests this year in favour of a review next year of banks' asset quality led by the ECB, which will become the euro area's chief banking supervisor in 2014.

"Reliable and comparable information on EU banks fosters the trust of investors, as well as the proper functioning of the market," Andrea Enria, chairman of the London-based EBA, said in an emailed statement. Taken all together, the EBA results show a sharp reduction in bank assets across Europe of around €1 trillion.

In lay terms, shrinking bank balance sheets means reduced lending.

It comes mostly from banks shedding securitisations and cuts in trading activity, according to the EBA.

In Ireland, Bank of Ireland and AIB decreased their balance sheets in 2012 by selling off so-called non-core loans.

In a statement last night, Bank of Ireland said its "core tier one capital ratio", a standard measure of financial strength based on the volume of easily sold assets that could be turned to in a crisis, was 12.3pc at the end of June, down from 13.3pc at the end of 2012.

Permanent TSB's core tier one ratio at the of June was 15.9pc, down from 18.4pc at the end of 2012, while AIB's measure was unchanged at 15.1pc by the end of June.

Irish Independent

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