Monday 23 October 2017

Irish Life says ECB funding rose on drop in corporate deposits

Irish Life & Permanent said its banking unit’s reliance on European Central Bank funding rose to €11.7bn as deposits fell in the third quarter.

Corporate deposits declined to €4.8bn from €5.4bn in the second quarter, the mortgage lender said in a statement today.

Deposits have been stable since the end of September and are expected to remain so, it said. ECB funding to the unit was €8.1bn at the end of June.

“It’s clear that Irish banks’ funding challenges have increased significantly in recent weeks as evidenced by” the drawing from central banks at the end of October, Glas Securities analysts including Fergal O’Leary and Jim Ryan said in a note to clients today.

Irish lenders have become more reliant on ECB funding after being frozen out of wholesale markets.

The amount of ECB loans to Irish banks rose 7.3pc to €130bn in October from the previous month, the Central Bank in Dublin said on November 1.

The data include both international and domestic banks operating in Ireland. European finance ministers started work yesterday on possible aid for the debt-laden Irish banks, while stopping short of an immediate bailout package.

“The good progress made in the first half of the year in refinancing long-term debt has been impacted by the deterioration in debt markets from May,” the company said.

Irish Life rose 0.4pc to 82.2 cents in Dublin trading at 9:55am, giving it a market value of €227.5m.

Irish Life’s retail deposits continued to “record good growth” in the second half and inflows are “expected to be at similar levels as the first half at between €700m and €800m,” the company said.

The lender currently has €5.5bn of net “ECB eligible securities” and this will be increased “as further loan pools are securitised,” it said today.

Bank of Ireland said on November 12 it has €20bn of net borrowings from “monetary authorities,” compared with €8bn at the end of June.

Irish Life said today it forecasts full-year impairment provisions for the banking unit will be about 10pc to 15pc below that of 2009 and group operating earnings will be “significantly better” than last year.


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