Flight of private sector deposits from covered Irish banks seems to be slowing

“retail deposits have seen some momentum in September following the stabilization of the banks and their recapitalization” briefing by the Department of Finance in October 2011

This morning the Central Bank of Ireland (CBI) released its monthly data on banks, deposits and loans in Irish banks as at 30th September 2011. During the month of September 2011, deposits by ordinary Irish households and businesses continued to decline but at a reduced rate compared with previous months. In terms of the so-called covered banks (essentially the two pillars, AIB and Bank of Ireland, and also Permanent TSB) these deposits were down just €133m from the previous month and now total €102bn; the decline over the last 12 months is €23bn, so the monthly rate of decline has slowed considerably. It hasn’t yet reversed, mind. The CBI doesn’t provide an analysis of deposits at the covered banks – about the only analysis it doesn’t provide – but in terms of all banks operating in Ireland including foreign and IFSC banks, Irish household deposits increased by €500m in September but ordinary Irish company deposits fell by €2.5bn in the month.

Non-Irish residents deposits in the covered banks rose in September 2011 by over €500m – only the second monthly rise in the past year, the other being in July 2011. One possible inference is that confidence in the Irish banking system is returning more quickly outside the country than within it. It might require another few months of increases though before that inference would be reliable.

Deposits in the covered banks overall increased – for the second month running  – by €2bn in September 2011, as a result of deposits from the Government and Monetary Financial Institutions (MFIs –see below). The CBI is not particularly helpful with its definition of MFIs which is reproduced at the bottom of this blogpost but it seems to include credit union accounts.

Here is the full set of deposit statistics for the different categories of bank operating in Ireland.

First up is the consolidated picture for all banks operating in Ireland including those 450-banks 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 – Anglo and INBS have now been merged to form the Irish Banking Resolution Corporation, IBRC)

(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)