“As you know Vincent, there are good things starting to happen in this economy, exports are up.. money is actually flowing back into the Irish banks and this time last year money was flowing out of Irish banks like a burst water mains”
Deputy Liam Twomey, Fine Gael TD and vice-chairman of the the Oireachtas Committee on Finance, Public Sector and Reform, speaking on Tonight with Vincent Browne (from 31:00) on 19th January, 2012
“[Karl, is this true?] ..I hate to bring bad news, but the latest figures show the Irish economy contracted by 2% in the third quarter of last year, which I think is far from a healthy stabilisation. Look it’s not surprising, the whole of the European economy is suffering now through the euro crisis. But what do we know about the fourth quarter? We know that taxes fell further behind, the unemployment rate is sort of edging upwards. In the first half of last year, it may have started to stabilise and grow but it does look as if we are in recession again. In relation to deposits, we have stopped the large outflow of deposits that was happening around the time that the EU/IMF deal was concluded and after it, but there’s no big rush of money into this country”
Professor Karl Whelan, economics lecturer at UCD and former central bank employee speaking on the same programme
“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”. December 2011 information note from the Department of Finance
This morning, the Central Bank of Ireland (CBI) has released its monthly snapshot of the state of Irish banks focussing on deposits and lending. The data covers the period up to 31st December 2011 and shows that during the month of December 2011, deposits by ordinary households and businesses actually increased at the so-called “covered” or State-supported banks – essentially the two pillar banks, Bank of Ireland and AIB, and also Permanent TSB. The increase of €1,036m from €101.4bn in November 2011 to €102.5bn in December 2011 was the biggest monthly increase since April 2011, when confidence was high after the publication of the March 2011 bank stress tests. The monthly increase means we are now back at deposit levels seen in July 2011, and that is in general terms, positive news. On this blog the key focus each month is on the movement in private sector deposits at the covered banks, as this is seen as a signal of banks returning to sustainable financing. Private sector deposits fell at covered banks in the past 12 months by €11bn from €114bn to €103bn, but most of that fall took place in the first six months of 2011 and the final six months has looked stable despite the ongoing crisis in the EuroZone. I think it is fair to say there are signs of stabilisation, but it would be a gross exaggeration to claim “deposits were flowing” into Irish banks.
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 rose by €0.6bn in December after a fall of €1.2bn in November. Household deposits at all banks are now back at July 2011 levels. Total deposits from all sources in all Irish banks fell €5.9bn in December, mostly as a result of a decline in €5.7bn in deposits held by MFIs (see below for an explanation of MFIs)
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 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 of Ireland) 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)
