Business Irish

Tuesday 24 October 2017

Non-financial firms take on additional €420m debt

Laura Noonan

Laura Noonan

IRELAND's non-financial businesses took on an additional €420m of bank debt in June, as loan draw-downs outstripped repayments for the second month in a row.

The figure is revealed in the latest Central Bank Monthly Statistics, and leaves outstanding borrowings by so called 'non-financial corporations' at close to €120bn.

The report also shows that the level of short-term borrowing by Irish business, including overdrafts, fell in June for the first time since early 2004.

The fall in loans with terms of less than one year was just over 1pc, but the trend is seen as significant. Loans for more than five years fell 11pc, while medium-term loans to businesses were up 4.8pc.

But even though ordinary businesses' borrowings are growing on a month-by-month basis the figures are still down for the rolling year, with volumes down 2.5pc in the 12 months to June.

The figures also show that the reliance of Irish banks on cheap money from the Central Bank dipped almost €5bn in June as European funding markets eased.

Ireland's 22 'domestic' banks had €54.7bn of European Central Bank (ECB) money on their books at the end of June, against €59.5bn at the end of May.

The level of ECB money on the institutions' balance sheets is seen as a litmus test of the health of the money markets, with less central bank money implying more "normalised" funding markets.

A year ago the 22 Irish banks had almost €85bn of central bank money on their books -- this has fluctuated between €64bn and €50bn this year. The true test of the banks' reliance on ECB money will not come until September, when five of them go to the market to refinance €74bn in senior debt.

Irish Independent

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