• Home
  • NAMA property for sale
  • About
  • The Developers
  • The Tranches

NAMA Wine Lake

Click the green link above for latest news and over 2,600 related articles. NAMA – National Asset Management Agency – part of Ireland's response to its banking crisis and property bubble

Feeds:
Posts
Comments
« So you’ve just been made Minister for Finance… Department of Finance releases heavily redacted briefing notes for new minister
Burning bondholders versus concessions on bailout interest rates »

Central Bank data to give steer on deposit flight in March 2011

April 8, 2011 by namawinelake

Following on from new Minister for Finance, Michael Noonan’s puzzlingly ambiguous reassurance about deposits at AIB and Bank of Ireland since last week’s stress test and restructuring announcements, numbers released by the Central Bank of Ireland (CBI) later today are set to give a steer on changes to deposit levels in March 2011. We will need root out the deerstalker and meerschaum though, because the data will not show new deposit levels, merely the amount of support to the Irish banking sector from the ECB and CBI, but this should be indicative of funding sources and therefore of deposit movement.

Unfortunately the data will be for the period ending 31st March, 2011 and will therefore exclude the aftermath of the presentations on the stress tests and bank restructuring, given by governor of the CBI, Patrick Honohan and separately the Minister, to the Dail – both were delivered after the markets closed on 31st March. We will need to wait for the second week in May at the earliest to officially find out from scheduled releases how ECB and CBI funding reacted to the announcements.

So what today’s publication will show will be the extent of ECB and CBI support to the total Irish banking sector, including foreign banks that don’t service the domestic economy. This funding has been at an elevated level since September 2008 but has been at more than €150bn combined since last September 2010. There seems to have been a trend in recent months whereby CBI support has increased whilst ECB exposure has reduced. This entry will be updated later today and I leave you with the recent history of ECB and CBI funding.

UPDATE: 8th April, 2011. The latest release from the CBI is now available here. In brief it shows that to the 25th March 2011, both ECB and CBI funding of Irish banks had dropped by €2.4bn and €3.3bn respectively. Total central bank support to all Irish banks stood at €181.3bn at the 25th March. On the face of it, this shows an easing in funding pressures on Irish banks but I wonder if the AIB receipt of €3.2bn in respect of its disposal of Polish operation Bank Zachodni might have made it into the March numbers. Also it is still unclear how the €7bn deposit in February 2011  from outgoing Minister Lenihan might have affected figures.

Advertisement

Share this:

  • Twitter
  • Facebook
  • Reddit

Like this:

Like Loading...

Related

Posted in Banks, Irish economy | 6 Comments

6 Responses

  1. on April 8, 2011 at 1:53 pm Rob S

    The March figures are perhaps a bit of an anti-climax given all the good stuff has taken place from March 31st onwards.

    Would you expect April’s figures to show a shift away from the ELG Banks’ relaince on the more costly CBI ELA Funding to the cheaper ECB Funding now that the restrictions on collateral have been lifted?


    • on April 8, 2011 at 2:41 pm namawinelake

      Hi Rob, you are right to say that the period of most interest is that period in the aftermath of the stress tests and restructuring announcements and the publication from the CBI today doesn’t help us in this regard. We’ll need wait until mid May 2011 for the earliest scheduled announcements.

      If and when confidence returns to Irish banks I would expect a “wall of cash” to flow into Irish banks because we must now be one of the most poked, examined, stress-tested, regulated (1200 staff now at our Central Bank) banking sectors in the world with intense oversight domestically not to mention from our creditors in the EU and IMF. Add to this regulation the fact that Irish banks offer better deposit interest rates than those in Germany or Switzerland and sure you’d have to be crazy not to put your deposits into Irish banks. When confidence returns.

      When will confidence return? As the briefing note from the Secretary General of the Department of Finance, Kevin Cardiff to incoming Minister for Finance, Michael Noonan said, the primary consideration with all policy now is to instil domestic confidence. Minister Noonan delivered an ambiguous speech about deposit behaviour since last Thursday but he intended it to be upbeat and at a minimum he seems to have been saying that the pace of deposit flight had moderated since last Thursday.

      So what will happen in April? I would think that deposits will still reduce but at a more moderate rate whilst we all size up the stress test results and “two pillar” strategy. There may be some shocks ahead. Did you know that the Department of Finance has declined to provide a date for the recapitalisation of the banks? Bondholders are still a hot issue, even if the ECB would prefer it otherwise. I’m not sure we’ll get an interest rate reduction this weekend by the way. And beyond our shores, I think the problems in Spain are understated. From a property perspective, I cannot believe the official property indices in Spain. I know the south coast of Spain and if that area is representative then the indices are just rubbish which means that Spanish banks have much bigger problems.


  2. on April 8, 2011 at 3:46 pm Rob S

    Ok so you won’t speculate.

    I wager the CBI ELA in Aprill will fall because the Irish banks will be able to use ‘crappier’ assets as collateral to borrow from the ECB at 1% (or os it 1.25% now?).

    When you say DoF refused to set a date, do you mean they haven’t mentioned it or they told you so in a personal query? Not overl concerned there If I am honest, Anglos hasn’t actually been given 30bn yet but we don’t doubt the commitment anymore.


    • on April 8, 2011 at 7:19 pm namawinelake

      @Rob, no I’m happy to speculate. I think CBI ELA and ECB funding will tend to reduce in the coming months with State injections of capital (the €24bn) and deleveraging (sales of operating units and loan portfolios) but I think deposit outflows will continue for the immediate future despite Minister Noonan’s curiously equivocal words. Will

      ([state injections] + [deleveraging]) > deposit outflows?

      I would think so, yes, but it will depend on the timing of state injections. In response to your question about the timing of the injections, I am relying on press reporting (Laura Noonan at the Independent, mostly).

      So my speculation is that deposit outflows will continue in net terms for the next few months, but that state injections and deleveraging will exceed deposit outflows and that banks will therefore need to rely LESS on ECB and CBI funding. So the €180bn CBI and ECB liquidity funding might fall to €175bn in April and €165bn in May AND that ECB funding may fall slower than CBI funding for the reason you mention, the easing of eligibility rules – there, is that speculation enough?!


  3. on April 8, 2011 at 9:23 pm CiaranT

    Lorcan has some good analysis here:
    http://blog.cornerturned.com/2011/04/08/irish-central-bank-ela-small-drop/

    I bet the stats do not include the 7,000,000,000 EUR deposit in March.


  4. on April 11, 2011 at 11:28 am Rob S

    Excellent speculation.

    Ciaran, I note those DoF notes to mentione the 7bn was deposited by the Minister (as suspected) in anticipation of the psotponed recaps.

    The source is still a mystery but personally I think it is simply borrowed from the 18bn we took from the troika so far.



Comments are closed.

  • Recent Posts

    • Test – 12 November 2018
    • Farewell from NWL
    • Happy 70th Birthday, Michael
    • Of the Week…
    • Noonan denies IBRC legal fees loan approval to Paddy McKillen was in breach of European Commission commitments
    • Gayle Killilea Dunne asks to be added as notice party in Sean Dunne’s bankruptcy
    • NAMA sues Maria Byrne and Graham Byrne in Dublin’s High Court
    • Johnny Ronan finally wins a court case
  • Recent Comments

    Wisemama on Eddie Hobbs’s US “partner” fir…
    Dorothy Jones on Of the Week…
    Sean Bean on Eddie Hobbs’s US “partner” fir…
    John Foody on Of the Week…
    Wisemama on Eddie Hobbs’s US “partner” fir…
    otto on Of the Week…
    Frank Street on Of the Week…
    Wisemama on Eddie Hobbs’s US “partner” fir…
    John Gallaher on Of the Week…
    John Gallaher on Of the Week…
    who_shot_the_tiger on Eddie Hobbs’s US “partner” fir…
    Sean Bean on Eddie Hobbs’s US “partner” fir…
    otto on Of the Week…
    Brian Flanagan on Of the Week…
    Robert Browne on Gayle Killilea Dunne asks to b…
  • Twitter Updates

    • Funniest case in Irish legal history? 1. ex-Cllr Fred Forsey convicted of RECEIVING a corrupt payment 2. developer… twitter.com/i/web/status/1… 4 years ago
    • Really looking forward to this at 9pm tonight, esp the first Garda on the scene. Well worth reading this background… twitter.com/i/web/status/1… 4 years ago
    • Tea time on the day the president of the ECB tells us we [in Ireland] are paying more interest on our loans than th… twitter.com/i/web/status/1… 4 years ago
    • “I am grateful for you to refer to Mr Sugarman...on the specific question of Unicredit, responsibility at ECB lies… twitter.com/i/web/status/1… 4 years ago
    • @JMcGuinnessTD now confronts ECB about "the honest whistleblower" @WhistleIRL and his disclosures of liquidity issu… twitter.com/i/web/status/1… 4 years ago
    • Details, including court documents of class action in New York against Ryanair and CEO Michael O'Leary.… twitter.com/i/web/status/1… 4 years ago
    • Draghi tells @paulmurphy_TD the ECB doesn't remove govts, the people do, that's democracy. Bet the people will be m… twitter.com/i/web/status/1… 4 years ago
    • Wow! Draghi says there is no net interest cost for the Anglo bonds whilst they're held by the Irish central bank. T… twitter.com/i/web/status/1… 4 years ago
    Follow @namawinelake
  • Click on date for that day’s posts

    April 2011
    M T W T F S S
     123
    45678910
    11121314151617
    18192021222324
    252627282930  
    « Mar   May »
  • Blog Stats

    • 5,114,120 hits

Blog at WordPress.com.

WPThemes.


Privacy & Cookies: This site uses cookies. By continuing to use this website, you agree to their use.
To find out more, including how to control cookies, see here: Cookie Policy
  • Follow Following
    • NAMA Wine Lake
    • Join 1,326 other followers
    • Already have a WordPress.com account? Log in now.
    • NAMA Wine Lake
    • Customize
    • Follow Following
    • Sign up
    • Log in
    • Copy shortlink
    • Report this content
    • View post in Reader
    • Manage subscriptions
    • Collapse this bar
 

Loading Comments...
 

    %d bloggers like this: