Figures released by the Central Bank of Ireland (CBI) this morning for the month of April 2011 show that the flight of domestic private sector deposits from Irish banks reversed in April 2011. Deposits in the six state-guaranteed financial institutions were up nearly €2bn to €108bn, the first month-on-month increase since October 2010. This will be particularly welcomed because the April 2011 deposit figures are the first to show the aftermath of the stress test and bank restructuring announcements on 31st March, 2011. Although the two other metrics advanced by Minister Noonan at the start of April 2011 to demonstrate the positive reaction to the banking announcements, the 10-year bond yield and the two pillar bank share prices, both show deteriorations; in the case of the 10-year bond, it had closed at a record mid-point of 10.22% on 31st March, 2011 and although that interest rate declined by a full percentage point in the following week, the mid-point as I write this is 11.03%; in the case of AIB’s share price it closed at a record low of €0.19 at the end of March 2011 and is at €0.18 this morning and BoI closed at €0.22 in March 2011 and is now at €0.17 this morning.
From an Irish perspective, possibly the most significant figure to watch is the total of private sector deposits in the six State-guaranteed financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS). The total which represents businesses and households rose to €108.2bn in April 2011 from €106.3bn in March 2011 and €108.6bn in February 2011 and is now down €21bn from a year ago, €9bn since the IMF/EU bailout in November 2010 but is up €2bn over the course of just one month. The CBI and ECB continue to provide substitute funding for Irish banks which replaces this flight of deposits and Irish banks continue to provide extensive State-backed guarantees on deposits.
Overall deposits were up in all three of the following category of banks but if you strip out the NTMA’s deposit of liquidated NPRF funds and IMF/EU bailout funds, the overall deposit figures are slightly down.
So, looking at the deposit figures produced by the CBI. First up is the consolidated picture for all banks operating in Ireland including those based in the IFSC which do not service the domestic economy.
Next up are the 20 banks which do service the domestic economy and include local subsidiaries of foreign banks like Danske, KBC and Rabobank. There is a list of all banks operating in Ireland here together with a note of the 20 that service the domestic economy.
And lastly the six State-guaranteed financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS)
(1) Monetary Financial Institutions (MFIs) refers to credit institutions, as defined in Community Law, money market funds, and other resident financial institutions whose business is to receive deposits and/or close substitutes for deposits from entities other than MFIs, and, for their own account (at least in economic terms), to grant credits and/or to make investments in securities. Since January 2009, credit institutions include Credit Unions as regulated by the Registrar of Credit Unions. Under ESA 95, the Eurosystem (including the Central Bank ofIreland) and other non-euro area national central banks are included in the MFI institutional sector. In the tables presented here, however, central banks are not included in the loans and deposits series with respect to MFI counterparties.
(2) NR Euro are Non-Resident European depositors
(3) NR Row are Non-Resident Rest of World depositors (ie outside Europe)
NAMA Wine Lake 
Well, I suppose that I must eat my words about the Minister being liberal with the truth in the beginning of April; the deposits have indeed increased, albeit by a very slim margin.
Non residents are still running for the hills, but it looks like Irish people (and businesses?) have finally run out of space under their mattresses.
However, I remain obstinate: I still think it’ll all end in tears for ordinary depositors in Irish banks.
@OMF, I think the deposit figures might surprise many. Bank of Ireland indicated in its recent interim management statement that customer deposits had increased since December 2010. The cynical response was that this must have included the government’s deposits of IMF/EU bailout funds, but it seems to be the case that personal and business deposits have increased, at least during April. Reuters is reporting now that “compared with the previous month, there was an underlying increase of 2.3 billion euros in Irish resident private sector deposits in April driven almost entirely by financial firms transferring deposits internally and an 11 million euro increase in deposits by households.”
http://www.reuters.com/article/2011/05/31/ireland-cbank-deposits-idUSDUL00014520110531
It’s not quite clear what this means and a request for clarification has been made to the CBI.
UPDATE: The CBI’s April Money and Banking Statistics published this morning state “There was an underlying increase of €2.3 billion in Irish resident private-sector deposits during April. This was driven almost entirely by deposits from OFIs [other financial intermediaries], which increased by €2.8 billion during the month and largely reflects inter-affiliate transactions. Household deposits increased slightly during the month, by €11 million, while NFC deposits fell by €292 million and ICPF deposits fell by €230 million.”
Click to access Money%20and%20Banking%20Statistics%20April%202011.pdf
Is NAMA an OFI?
@Frank, this probably won’t answer the question but this is from the CBI’s explanatory notes “Other Financial Intermediaries and Auxilliaries (OFIs) refers to financial corporations and quasi-corporations (except insurance corporations and pension funds) principally engaged in financial intermediation by incurring liabilities in forms other than currency, deposits and/or close substitutes for deposits from institutional units other than MFIs, or insurance technical reserves. Also included are financial auxiliaries consisting of all financial corporations and quasi-corporations that are principally engaged in auxiliary financial activities. This sector includes non-bank credit grantors, investment funds, treasury companies, hire purchase companies, securities and derivative dealers and financial vehicle corporations (FVCs).”
Click to access Money%20and%20Banking%20Statistics%20Explanatory%20Notes_Jan11.pdf
A query has been submitted to the Central Bank about where NAMA might fall under the private sector deposits.
@Frank, for all intents and purposes yes. Here’s the response
“NAMA itself, which is under the auspices of the NTMA, is classified in the “General Government” sector. Meanwhile, NAMA has a minority shareholding in the SPV National Asset Management Agency Investment Ltd (NAMAIL), which would be classified as an “Other Financial Intermediary” or OFI. NAMAIL is a parent company for a number of other SPVs set up by NAMA to achieve its purposes which consequently are also in the OFI sector.”
It is NAMAIL and its subsidiaries that generate the cash, so yes if the implication from your question, could the increase in deposits be a result of NAMA generating cash from the ~€3.3bn of sales it has approved and which give rise to its >€1bn temporary cash mountain, then yes that may be the reason for the increase.
As regards the other reason for the increase, inter-affiliate transactions are further explained by the Central Bank “The Money and Banking Statistics covers the developments in the resident offices balance sheet of credit institutions. Many banking groups have business units within them which are not credit institutions, e.g. a stock-broking arm, an insurance company, perhaps some wealth management service, etc. Consequently balances between a credit institution and its affiliated non-credit institution will be reflected in Money and Banking Statistics. Changes in these balances over time would be regarded as inter-affiliate transactions. Similarly changes in balances between affiliated credit institutions would be regarded as inter-affiliate transactions”
Funny, everyone I know has already taken their money out of Irish banks and only keep enough to pay mortgages and bills or else they are planning to remove what is left of their money.
There is certainly more talk about where do I buy gold than there is about where is the one of the nearest pillar banks. Maybe a thread on Gold and why people should have some would not go astray.
These figures have just got to be wrong. Even Constantin has recently joined GoldCorp and he was no goldbug. Is this spin, I wonder, to slow down the movement of funds out of Irish banks? Someone was bound to come up with the idea of counter propaganda. I am sorry to say it but I stopped believing in most statistics and reports a long time ago.
Household and Non Financial businesses continued to decline in April. Household deposits declined by just €14M (Table A.11.1 from €92,803M to €92,787M with a larger decline in Non Financial businesses.
A mystery: why are Irish bank covered bonds trading at lower yields than the sovereign? Does anyone understand that?
@Reg,
The Sovereign is now more insolvent than the banks. Not a mystery, a mastery of political influence.
the pillars are desperate for cash, do Aprils figures represent a draining of stock brokering arms etc?
the rumor mill from the shires say that the pillars are doing deals of 10c in the € for debt settlement.
@reg – the sovereign is taking the bullets, the banks have thrown the women and kids behind them as they ran up the beach from the sharks.
@Frank and JR:
but if the sovereign tanks, the banks are bust all the same — they are stuffed full of sov bonds, guarantees and nama paper! is there enough senior in front of the covereds to save them in a default scenario?
@Reg,
Not necessarily. Their balance sheets are in better shape than the Sovereign’s. Also, those sov bonds, etc., are collateral for ECB funding. What’s the ECB going to do if that collateral is suddenly worth less?
A good analogy would be a pensioner that borrowed ten times his pension (a pension that he was already unable to live on) to pay off his sons gambling debts. No that the son’s gambling debts are paid off, he’s actually more credit worthy than his dad because he doesn’t have a negative net worth.
@Reg, the problem is that the banks are bust regardless, the contagion has been passed/spread to the state courtesy of the banks themselves and FF. I am continually hearing about people taking their savings/deposits out, this is a kinda slo-mo run on the banks.