Thursday 22 March 2018

Home loan providers' reliance on ECB funds dips to €42bn

Joe Brennan

IRISH mortgage lenders' reliance on cheap European Central Bank funding dipped more than 8pc in April to €42.6bn, even as the Greek debt crisis went into overdrive.

The figures are contained in the latest monthly statistics from Ireland's Central Bank.

Home loan providers had been using about €2bn of ECB funding lines to finance their activities before the US subprime crisis exploded in August 2007.

The figure jumped to €39bn a month after the collapse of Lehman Brothers sent the wholesale markets into a tailspin.


Levels of ECB drawings have remained volatile since then, peaking at €72bn in June last year as lenders across the eurozone rushed to avail of the Frankfurt bank's first auction of 12-month money. Its previous limit was three months.

While the ECB pulled 12-month funding out of the market in December and whipped six-month money in March, it was forced by fears of contagion from the Greek crisis to reinstate six-month auctions in the middle of May to calm the markets. Market observers warned that the extent to which banks tap the ECB is likely to have turned even more volatile over the course of last month.


Meanwhile, the overall reliance of Irish-based banks on ECB funding dropped to €79.3bn in April from €82.6bn for the previous month.

International banks based in the IFSC account for a significant amount of the total ECB drawings.

The monthly figures show that credit to non-financial corporations fell by 4.5pc to €134.2bn in the year to the end of April, with the transfer of property loans to NAMA and an increase in impairment provisions accounting for almost the entire decline in the figures.

Irish Independent

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