Archive for June 30th, 2011

Figures released by the Central Bank of Ireland (CBI) this morning for the month of May 2011 show that the flight of private sector deposits from domestic Irish banks, which had reversed in April 2011 for the first time since October 2010, has resumed. The flight has resumed at a modest pace. Deposits in the six state-guaranteed financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS) were down just €753m from €108,235m to €107,482m; though such deposits are still up €1bn from the low of €106,309m in March 2011. The banking authorities might take some small comfort from the fact that the pace of private sector withdrawals from the covered banks has slowed considerably from the €3-4bn monthly declines that we were seeing earlier this year and late last year.

However the picture generally is still pretty dismal. All deposits (including Private Sector, Govt, Monetary Financial Institutions, and non-Irish resident) at the covered banks are down €26bn in the month to €285bn, the largest monthly drop since last November 2010 and are now down €130bn on a year ago.

It is noteworthy that the Government has €21.2bn on deposit with the covered banks. The NTMA refuses to disclose if it is paid interest on these deposits.

These deposits are presumably the bailout funds earmarked for the bank recapitalization in July 2011. We are paying the IMF/EU 5.8% on this funding which amounts to nearly €4m per day and which is arguably being totally wasted.

Looking at the total Irish banking system there is one curiosity in the May figures – private sector deposits in Irish-based banks that don’t service the Irish economy (those in the IFSC) increased by nearly €8bn.

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.

So, looking at the deposit figures produced by the CBI. First up is the consolidated picture for all banks operating inIreland 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 outsideEurope)


Read Full Post »

This morning the Irish Central Statistics Office (CSO) has released its preliminary analysis of the five-year census that was undertaken on 10th April, 2011. In the so-called inter-censal years, we rely on estimates from the CSO and the Economic Social Research Institute, so the actual census results are eagerly awaited. Here are the highlights

(1) The population in April 2011 was 4,581,269 which is considerably up from the inter-censal estimate of 4,470,000 for April 2010. It is also 8.1% from the last census in 2006. The reason : world-beating birth rates, very low mortality rates and strong inward migration for 2006-2008 partly offset by subsequent outward migration.

(2) For interest and this is not in the census results today : add in the estimated 1,789,000 souls in Northern Ireland and the island of Ireland now has a population of 6,370,269 which compares with an all-time high of 8,175,000 in 1841 just before The Famine and 6,552,000 in 1851 and 5,798,000 in 1861 and an all-time low of 4,228,000 in 1926. Contrast that with the population ofEngland,ScotlandandWaleswhich was 18,500,000 in 1841 and is over 60m today.

(3) There are 2,004,175 dwellings in the State, up from 1,769,613 in 2006. That’s an impressive increase of 13.3% or 234,562 dwellings.

(4) Vacant dwellings which were estimated at 300-350,000 last year are actually 294,202 which is slightly below estimates. Unfortunately we do not have information at this stage about holiday homes, which will feature in the full census reports in 2012. So it is not possible to determine the level of overhang of vacant property inIreland. Overhang is the amount of vacant property excluding holiday homes and what is termed the normal vacancy rate, and is taken to indicate the particular problem thatIreland now experiences as a result of the construction boom in the early/mid 2000s. The overhang was estimated at over 100,000 dwellings last year. Most of the overhang is not in ghost estates where only 33,000 completed or near-completed dwellings are vacant.

(5) The vacancy rate, the percentage of dwellings not occupied, actually dropped from 15% to 14.7%. That might raise eye-brows. Population increased by 8.1% in the period from 2006, whereas dwellings increased by 13.3%. So a decrease in the vacancy rate means there are fewer people on average living in each dwelling. In 2006 there were 2.82 people living in each occupied dwelling, in 2011 that had dropped to 2.68.

(Click to enlarge)

Read Full Post »

The Nationwide Building Society has this morning published its UK House Price data for June 2011. The Nationwide tends to be the first of the two UK building societies (the other being the Halifax) to produce house price data each month, it is one of the information sources referenced by NAMA’s Long Term Economic Value Regulation and is the source for the UK Residential key market data at the top of this page.

The Nationwide says that the average price of a UK home is now GBP £168,205 (compared with GBP £167,208 in May 2011 and GBP £162,764 at the end of November 2009 – 30th November, 2009 is the Valuation date chosen by NAMA by reference to which it values the Current Market Values of assets underpinning NAMA loans). Prices in the UK are now 9.6% off the peak of GBP £186,044 in October 2007. Interestingly the average house price at the end of June 2011 being GBP £168,205 (or €183,005  at GBP 1 = EUR 1.1108) is 1.6% below the €185,993 implied by applying the CSO May 2011 index to the PTSB/ESRI peak Irish prices.

With the latest release from Nationwide, UK house prices have risen by 3.34% since 30th November, 2009, the date chosen by NAMA pursuant to the section 73 of the NAMA Act by reference to which Current Market Values of assets are valued. The NWL Index is now at 885 (because only an estimated 20% of NAMA property in the UK is residential and only 29% of NAMA’s property overall is in the UK) meaning that average prices of NAMA property must increase by a weighted average of 13.0% for NAMA to breakeven on a gross basis.

The short-term outlook for UKresidential remains bumpy. Interest rates may need to rise to contain inflation that is beginning to take hold –  4.4% in February 2011, 4% in March 2011, 4.5% in April 2011  and 4.5% in May 2011 – all on an annual basis. The UK target is 2% so the base rate which has been at 0.5% since February, 2009 may need be raised. The UK March 2011 Budget estimated growth in GDP of 1.7% and 2.5% in 2011 and 2012 and inflation of 4-5% this year falling to 2.5% in 2012.  Net debt will be 60% of GDP this year rising to 71% in 2012. Scary for the UK but paradise compared to the 100%+ in Ireland. The UK is also struggling with a deficit that was 11% last year (compared with 12% in basket-caseIreland) but there are swingeing cuts to public services in prospect to bring the deficit down to 4% by 2014/5. What all of this means for property prices is uncertain of course but the betting is that prices will come under modest pressure and may fall by less than 5% in 2011 – the Office for Budgetary Responsibility was saying 2.7% late last year but finances have deteriorated since then. TheUK has plenty of micro-markets and the betting would be thatLondon and the south-East will fare better than the North of England and elsewhere,Northern Ireland in particular.

This morning also sees the publication of the Q2, 2011 Nationwide’s quarterly series which provides a little more information on regional variations.

Read Full Post »