Tuesday 12 December 2017

State-backed banks holding €151bn in cash on deposit

Donal O'Donovan

Donal O'Donovan

THERE was €151bn in cash on deposit at the four taxpayer-backed Irish banks in April, according to new figures from the Department of Finance.

Deposits at AIB, Bank of Ireland, Permanent TSB and the Irish Bank Resolution Corporation, known as the "covered banks" because they are covered by a state guarantee scheme, rose by €2.1bn, or 1.4pc in April.

"While wider euro-area issues are very concerning, April's Central Bank data suggests deposit stability continued in Ireland," said Dermot O'Leary of Goodbody Stockbrokers.

It's the highest level in 14 months, and is in contrast to elsewhere on the "eurozone periphery" where nervous savers have been pulling cash out of banks in Greece and Spain, which are seen as vulnerable to economic shocks over the same period.

That trend was seen in Ireland in 2010 in the run-up to and pre-empting the bailout here. Deposits in the banks hit a 2011 low of €140bn in June, July and August, last year.

Irish domestic deposits have now risen for three months in a row and the total amount of cash on deposit with the state-backed banks increased for a second month in a row in April.

The total deposits figure was boosted by cash deposits made in the UK to a joint venture saving initiative of Bank of Ireland and the Post Office there.

"There have been steady increases recorded across the covered banks each month since last September, though as outlined, euro weakness during April provided an added translation boost for deposits sourced in the UK," the Department of Finance said.

Lending to business continued to fall in March, according to the Central Bank. Lending to "non-financial" companies declined by 1.8pc, though there was a modest increase in short-term overdraft-style facilities to companies.

The lending figures are in line with the trend of "deleveraging" at the banks -- the term for cutting the loans they have outstanding while at the same time increasing their capital.

The lending figures do not break out the amount of debt repaid over the period, or give any real indication of real "new lending" to business.

The reliance of all Irish banks on European Central Bank funding rose by €2bn in April, to €77bn, according to the Central Bank.

Irish Independent

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