Monday 18 February 2019

Banks' reliance on ECB funds fell during August

Thomas Molloy

IRISH-based lenders' reliance on European Central Bank funding fell during August, according to the Central Bank.

The lenders borrowed €79.1bn at the end of August, down from €80bn a month earlier, the Central Bank said yesterday.

The bank's "other claims on euro-area credit institutions in euro'' fell to €40.8bn from €41.6bn a month earlier, according to the data. This category is predominantly made up of so-called extraordinary liquidity assistance for banks - an attempt by the ECB to support banks around Europe.

Under the terms of the IMF/ECB bailout, banks here must shrink their balance sheets to cut their borrowing from the ECB. The lending peaked at €187bn in February 2011.

The Central Bank figures also show that outstanding loans from banks to the public fell to €120bn in August from €122bn in July; implying that people are continuing to repay debts rather than borrow. The tendency to repay debts is one of the reasons why retail sales have tumbled in recent years.

Separate Central Bank figures issued yesterday show that average rates on mortgages fell by 12 basis points to stand at 2.86pc by the end of July.

The bank says this is much lower than the eurozone average of 3.72pc. Many borrowers have tracker mortgages which means that they are benefiting while rates are low. Most Europeans like to take out fixed rate mortgages which sets their repayments regardless of the ECB.

The figures also show that savers continue to be hammered as average deposit rates fell to 3.6pc in July.

Irish Independent

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