In December 2011, the Department of Finance issued what it called an “information note on the reporting of deposit trends at Irish banks” where it claimed “customer deposits in the Irish Covered Banks have been stable since the middle of the year and in more recent months have shown modest growth in aggregate terms”. The note goes on to point out that the monthly publication of deposit and loan information should be treated with caution because the figures are (a) unconsolidated and (b) exclude deposits held by overseas subsidiaries of the covered banks eg in the UK.
It remains unclear why the Central Bank of Ireland (CBI) cannot produce clear statistics on deposits in Irish banks each month, particularly if there is a positive news story to be reported; deposits held by “overseas subsidiaries” eg Bank of Ireland’s substantial deposits held in conjunction with the UK’s Post Office are arguably not relevant to the health of the Irish economy. And with an accountant’s hat on, “unconsolidated” doesn’t mean very much in the context of private sector deposits reported every month. So the Department might claim that “in more recent months [customer deposits] have shown modest growth in aggregate terms” but the figures from the CBI paint a different picture.
This morning, the CBI has released its monthly snapshot of the state of Irish banks focussing on deposits and lending. The data covers the period up to 30th November 2011 and shows that during the month of November 2011, deposits by ordinary households and businesses continued to decline at the so-called “covered” or State-supported banks – essentially the two pillar banks, Bank of Ireland and AIB, and also Permanent TSB. The €408m decline to €101.4bn in private sector deposits in November 2011 is larger than the €255m decline in October, but far less than the average decline of €1.3bn per month over the past year when a total of €15.6bn of private sector deposits “flew” from the covered banks. The decline of €408m compares with a decline of €7bn a year ago in November 2010 when the country entered an IMF programme. I think it’s fair to say that the flight of deposits is continuing to slow. Indeed, the decline in deposits may not have anything to do with confidence in Irish banks but may just reflect the economic reality of there being less spare cash to place on deposit.
Deposits overall in the covered banks fell for the first time in five months by €3.6bn to €262.7bn. The reduction is almost entirely due to a decline in deposits from non-European depositors.
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 fell by €1.2bn in November compared to modest increases in September and October. Total deposits from all sources in all Irish banks fell €4.8bn in November, mostly as a result of depositors outsideEurope removing deposits. Could this be a reflection of doubts in the immediate future of the EuroZone and rumblings about EZ bank ratings downgrades?
Here is the full set of deposit statistics for the different categories of bank operating inIreland.
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 or “covered” 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)
NAMA Wine Lake 
This is akin to someone saying “I see that you don’t beat your wife as much as you used to”
@NWL
Looking at Tables 2 (the 20 banks operating in the Irish economy) and the covered banks allow me to make the following observation.
The total fall of €25 billion (166 to 141) in Private sector deposits since October 2010 has been entirely in the covered banks, where private sector deposits have fallen by that amount almost exactly (125 to 101).
Is the Irish Private sector therefore supporting foreign owned banks in Ireland, while running down deposits in covered banks. And is the lack of funding in Irish banks forcing up interest rates while major European banks benefit from private sector Irish deposits with consequent benefits to their European based borrowers?
In addition, could it be that while the ‘Irish banks’ have tapped ELA/CBI for about €150 billion liquidity with pejorative jibes about being addict banks, large Euro banks keep their Irish premises open, not to give loans to Irish customers but simply to poach deposits.?
@JR, If you had a choice would you really keep substantial deposits in banks whose share prices are 6 cent and 8 cent?
@WSTT
In the Ireland of today, If I had substantial deposits, I would probably keep my deposits in a ‘safe’ European bank if I could find one. I would leave my loans, unpaid, in the ‘Irish’ banks where they will be paid off by the stupid and supine Irish.
But in a republic that concerned itself with res publica, I would expect that depositors, substantial or otherwise, would share the burden of running the country with other citizens. If they chose to remove their substantial deposits for safety, I would hope that they would be asked to remove themselves to keep their deposits company.
@Joseph, Ah, Choices…… Something we all still have.
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Actually, the banks may not care any more. In the week before Christmas the ECB granted approximately €500 billion in three year loans to banks across the European Union and loosened collateral requirements on the liquidity facilities of the Long Term Repo Operation.
The LTRO loosening signals that the ECB is willing to print euros and provide liquidity to the European banking system in any quantity desired.
By being able to borrow unlimited amounts of money at the current ECB interest rate of 1.0%, the Irish banks will have access to cheap money to replace the disappearing deposits.
Of course, this operation involves the ECB printing money 24/7 and constitutes quantitative easing through the back door.
The commitment of the ECB to preserve the euro zone at all costs is showing – and about time too. We can now be certain that if the LTRO doesn’t deliver sufficient monetary stability, a full-scale quantitative easing program of direct sovereign debt purchases will follow.
The stage is set.