Irish lenders' ECB borrowings rise to €119bn
Irish-based credit institutions’ borrowings from the European Central Bank rose 25pc in under a month to September 24, the Central Bank in Dublin has said.
The ECB funding reliance by lenders including international and domestic companies in Ireland rose to €119.1bn from €95.1bn at the end of August, according to statistics published on the Central Bank’s website today.
The bank only gives an update on ECB funding reliance of domestic institutions at the end of every month.
Irish banks are growing more dependent on the ECB after the Government nationalised Anglo Irish Bank last year, and said the cost of bailing out its lenders may be as much as €50bn.
Investor concern about the ability of the Government to meet its debt repayments pushed up sovereign debt yields to a record last month.
The extra yield investors demand to hold 10-year Irish bonds over German bunds was 423 basis points today, down from a high of 449 basis points on September 28.
While some Irish lenders have sold debt securities in private sales in recent months, no government-guaranteed lender has sold a benchmark bond since April, when Irish Life & Permanent found buyers for €1.25bn of bonds.
Credit rating cut
The government will take majority ownership of Allied Irish Banks Finance Minister Brian Lenihan said on September 30.
The same day Taoiseach Brian Cowen said he was canceling bond auctions for October and November because of the yields the market was asking.
Ireland’s credit rating may be cut from Aa2, Moody’s Investors Service, said this week.
Fitch Ratings on October 6 reduced Ireland’s credit to A+ from AA-, the lowest of any of the major rating companies, citing the “exceptional and greater-than-expected cost” of the nation’s rescue of its banking system.
Fitch downgraded the government-guaranteed notes of AIB, Anglo, Bank of Ireland, EBS Building Society and Irish Nationwide Building Society to A+/F1 from AA-/F1+ the following day.