ECB emergency loans to State banks halved in the last 12 months

The number of emergency loans delivered from the European Central Bank (ECB) to the State’s bailed-out banks has fallen by almost 50 per cent in the last year, according to new figures from the Department of Finance.
 
ECB borrowing fell two per cent last month, but was down 46 per cent on June of last year; and is now at its lowest level since September 2008.
 
The department spoke positively about the strengthening of Ireland’s banking system due to the steady decline of borrowing from the ECB.
 
Year-on-year borrowing from the ECB is down €30bn, with levels now standing at approximately €34.76bn at the end of June.
 
"The reduction in borrowing from the ECB has been achieved through managed deleveraging, deposit gathering and the return of AIB, Bank of Ireland and Permanent TSB to international funding markets," the department said.
 
It has long been a priority to reduce Ireland’s dependency on ECB loans under the EU/IMF bailout, and it will be one of a number of factors considered during the final assessment of the banking system before the conclusion of the banks’ rescue later this year.
 
The end of the banking guarantee does not appear to have had a significant impact on deposits, with volumes remaining stable last month at €152.03bn – only fractionally down on June 2012.
 
However, the weakening of sterling continued to affect deposit balances in the UK.
 
The department added: "Deposit balances – other than UK – remain flat, most notably due to the lower interest rate environment and the improving funding position of the covered banks, which has eased competition for deposits."
 
Aside from UK balances, underlying deposits are up €1.4bn in the year to date, offset by lower deposits in the UK of approximately €2.9bn.


Image: Jim Woodward

Date published 24 Jul 2013 | Last updated 24 Jul 2013