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Private sector deposits fall €4bn after 'intra-group movements'

IRELAND's bailed-out banks suffered a surprise €4bn fall in private sector deposits in June, marking their biggest outflow since last October.

The revelations in Central Bank data follow repeated claims that deposit levels had "stabilised" after the March stress tests triggered a €24bn recapitalisation of Ireland's banking sector.

The Central Bank said that €2.5bn of the fall in private sector deposits across both foreign and Irish-owned banks stemmed from "movements in intra-group deposits".

A spokeswoman last night declined to break out how much of that activity involved Ireland's six bailed-out banks, making it impossible to work out 'underlying' deposit fall.


Even if the entire €2.5bn was linked to the six covered banks, the underlying fall would have been €1.5bn, the worst drop since January.

Private sector deposits across Ireland's entire banking sector, including foreign-owned banks, fell by an underlying €1.8bn in June, suggesting the drop in deposits was largely contained to bailed-out banks.

The slump left private sector deposits at just €103.5bn in the six 'covered' institutions, the lowest level since May 2006.

General government deposits remained artificially high at €21.1bn, reflecting about €19bn of deposits to be converted into this week's bank bailout.

More encouragingly, deposits from financial firms rose almost €3.5bn to €85.3bn. The 'rest of world' deposits in the six banks were down another €4.9bn, while deposits from the euro area fell another €100m, bringing them down to just €2.8bn.

Irish Independent