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Significant slide in Anglo deposits

Anglo Irish has reported a "significant decline" in deposits with the bank finding it "challenging" to meet liquidity rules imposed by the Financial Regulator.

The bank, which is expected to report major loan losses next month in its annual results, says it is waiting for the National Asset Management Agency (NAMA) to improve its funding and liquidity position. In an update for bond investors, the bank said: "A significant decline has been experienced in customer deposit figures across all geographies."

In that context, the bank has established a "special liquidity" facility with the Central Bank to deal with any liquidity issues.

The bank, chaired by Donal O'Connor, said: "The current liquidity conditions remain very challenging."

The Government's guarantee of its liabilities was "central" to its ability to raise funds, and NAMA would "materially improve" both funding and liquidity, the bank said.

Anglo has been forced throughout the period since nationalisation in January 2009 to offer high deposit rates, often leading the Irish market. This is because of difficulties sourcing wholesale funding.

At the end of March 2009, the bank had a loan-to-deposit ratio of 212pc.

This meant that for every euro on deposit, there were two euro out on loan.

While this is one of the highest loan-to-deposit ratios in Irish banking, Irish Life & Permanent is in a worse position with a loan-to-deposit ratio of 311pc, according to figures from last summer.

The Irish Independent also understands Anglo was recently issued with proceedings against it and two of its former directors, but the bank was not prepared to comment on the identity of the other party. No statement of claim has been forthcoming so far.

Anglo, like other debt issuers, has to flag any outstanding legal claims against it, although it is not required to provide lengthy details on the issues involved.

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