Figures released by the Central Bank of Ireland (CBI) yesterday show that in the month of February 2012, the reliance by Irish banks on central bank funding fell substantially for the second month in a row and is now back to levels last seen in August/September 2010. Overall central bank funding fell from €138.2bn in January 2012 to €132.3bn at the end of February 2012, a monthly decline of €5.8bn, and this follows a monthly decline of €13.3bn in January 2012. Central bank funding at the end of February comprised funding directly from the ECB of €87.1bn, down €5.5bn from €92.6bn in January, and funding from the CBI understood to be Emergency Liquidity Assistance (ELA) of €45.2bn which represents a small decline of €0.3bn from the €45.5bn in January.
What does this mean for Irish banking and the wider economy? If our banks are to return to some degree of normality, they will rely more on deposits from customers and lending from other banks. So today’s figures indicate (though don’t absolutely prove) that deposits and inter bank lending are increasing which suggests good news.
The figures from the CBI cover the period to 24th February 2012 and therefore exclude the second Longer Term Refinancing Operation on 29th February 2012 which saw €530bn pumped into EU banks by the ECB. This funding was for three years and an interest rate which is presently 1% per annum. Ironically, it seems as if Irish banks didn’t take a significant proportion of the LTRO funds as it seems that our NAMA and recapitalisation processes might have largely rescued our banks. Remember our banks had about a quarter of all ECB non-standard assistance during the past couple of years. Well done Europe/ECB for coming to the rescue of European banks after the Irish nation has borne the burden of our domestic banks!
We will get deposit information on Irish banks for February 2012, at the end of March. Deposit analysis for Irish banks for January 2012 is available here.
NAMA Wine Lake 
@NWL
Why is ELA still so high at ~45 billion? Now with the LTRO loans of three years, shouldn’t the only recipient of ELA be IBRC? The rest of the Irish banks should have switched from ELA to LTRO loans?
I don’t think the IBRC ELA amounts to ~45 billion, or does it?
@Joseph, I think the Anglo/INBS, or IBRC as the new entity following the merger is called, have about €30bn of extant promissory notes. So there’s an additional €15bn there (not all might be ELA) which might represent lending on assets that are still not acceptable to the ECB as collateral for lending.
Yor are watching the wrong fields. You have to watch this.
31/01/2012 Table A.6 Loans to Irish Residents – Outstanding Amounts (Incl. Securitised Loans)
That’s freaky. Though if this decline of CBI-funding was a sign of normality the ECB balance sheet had to quintuple.
Did tables
1) Table A.4 Credit Institutions – Aggregate Balance Sheet
and
2) Table A.2 Financial Statement of the Central Bank of Ireland
used to match? (in terms of total system reliance on ECB funding)
The figures seem to be slightly different