I really don’t understand why it is Ireland’s Department of Finance (DoF) producing this information, and not the Central Bank of Ireland (CBI), but regardless, it seems as if we are to get a new monthly informational bulletin from the DoF on deposits held in state-guaranteed or so-called “covered” banks – AIB (including EBS), Bank of Ireland, Permanent TSB and IBRC (the Irish Bank Resolution Corporation, the merger of Anglo and Irish Nationwide Building Society). The new bulletin gives details of what it calls the “consolidated” deposits in Irish banks.
The CBI already produces monthly figures on private sector deposits in the covered banks, but the CBI’s figures exclude deposits held in “overseas subsidiaries” of the covered banks and also include what are described as “intercompany deposits”.
So what do we learn? We see that “consolidated deposits” flowed out of the covered banks for the first six months of 2011 – averaging €2.5bn per month from a base of about €150bn. Deposits remained flat in July and August 2011, and then for the last four months of the year deposits flowed back in at an average rate of €1.8bn per month, so at the end of 2011 there were €147bn of “consolidated deposits”. I use the term “flow back” deliberately – a FG politician recently made that claim in those terms which was disputed on here at the time; that was because it was assumed he was talking about deposits in Ireland in Irish banks but if he was talking about all deposits including those in other jurisdictions then his terminology is correct.
The new figures are to be welcomed, but I really don’t see how deposits in “overseas subsidiaries” have a big impact on the Irish economy. For example, Bank of Ireland has a joint venture in the UK with the Post Office, and the last time I checked the venture had about €10bn of deposits. What does it tell us about the Irish economy if that increased to €11bn. Presumably it can’t form the basis of lending in Ireland, but I suppose it does help support the bank overall which means lessens the State’s potential exposure to it.
The DoF was asked for further information on the quantum of “overseas subsidiary” and “intercompany” deposits. If there is any update, it will be posted here.