Biggest decline in private sector deposits at covered banks for over a year

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 29th June 2012 and shows that during the month of June 2012, deposits by ordinary households and businesses reduced substantially at the so-called “covered” or State-supported banks – essentially the two pillar banks, Bank of Ireland and AIB, and also Permanent TSB. The decline of €3.0bn from €107.5bn in May 2012 to €104.6bn in June 2012 was the biggest monthly decline since May/June 2011. Deposits are now back at May/June 2011 levels which marks something of a reversal in the recent trend of deposit growth and is down over €20bn from October 2010, the month before the IMF/EU bailout. Private sector deposits have actually risen by €1bn at covered banks in the past 12 months , with a trend of gently growing deposits interrupted by a leap in Mar/April 2012 reversed by today’s decline. The CBI commentary on the figures is here and this is what it says about private sector deposits:

“There was a month-on-month decrease of €3.2 billion in Irish resident private-sector deposits during June. This decline was dominated by developments in repo deposits vis-à-vis OFIs, which fell by €2.8 billion during the month as positions entered into in April 2012 were, as expected, unwound. This repo position with an entity in the OFI sector was replaced by a similar arrangement between credit institutions. Household deposits increased by €120 million during the month of June 2012, while NFC deposits decreased by €38 million”

The CBI doesn’t provide an analysis of private sector 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 €103m in June, which brings such deposits to €92.1bn, the same as the June 2011 level. Total deposits from all sources in all Irish banks increased by  €0.3bn in June..

Although the Department of Finance appears to have published its “Deposits Trends” series for June 2012, it isn’t yet available from the Department’s website, but the excellent Daily Business Post has reported that it will show retail deposits at Irish banks increased by €600m in June 2012 to now stand at €153bn, well above the floor reached last year. These figures include deposits at overseas operations of Irish banks eg the Bank of Ireland/Post Office joint venture in the UK. However the Department does say that one half of the increase in the month is from deposits at Irish branches. But the bouquet is positive, and should be welcomed as good news.

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 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)