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 July 2012 and shows that during the month of July 2012, deposits by ordinary households and businesses increased slightly 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 €0.4bn from €104.6bn in June 2012 to €105.0bn in July 2012 continues a trend of stabilising private sector deposits at the covered banks, and over the past year such deposits have increased by €2.4bn. Deposits are now back at May/June 2011 levels though are still €20bn lower than in October 2010 on the eve of the IMF/EU bailout. The CBI monthly commentary doesn’t appear to be available yet.
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 fell by €119m in July, which brings such deposits to €92.0bn, the same as the July 2011 level. Total deposits from all sources in all Irish banks declined by €24.9bn in July with the main cause being a €25bn decline in deposits by Monetary Financial Institutions and the CBI has been asked for a comment.
The Department of Finance last week published its “Deposits Trends” series for July 2012 which showed, according to the Department “deposits at the Covered Banks rose by €1.5bn (1.0%) month-on-month to €154.4bn. This represents an increase of €14.3bn to €154.4bn since reaching a low-point of c. €140bn in July 2011. This demonstrates depositor confidence in the strength of the banking system following its successful recapitalisation last year” These deposits include deposits at overseas branches, in particular at the Bank of Ireland/British Post Office, so they are of limited use, but trend indicates positive 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)
UPDATE: 31st August, 2012. The CBI commentary on today’s figures is here. There is no comment yet on the €25bn decline in MFI deposits.
NAMA Wine Lake 
I can’t see anything positive in those figures. Who moved 10% (€25 billion) of the covered financial institutions’ deposit base – and why? It equates to a full one third of the MFIs of the 6 State guaranteed banks!
@WSTT, at time of writing the original blogpost this morning, the Bank had not published its commentary. It has now, and is appended to the above as an update. But it is striking that there is no reference to the dramatic decline in Monetary Financial Institutions’ deposits of €25bn in the month. A comment has been requested from the Bank.
@WSTT / @NWL
Truly amazing. One third (25 billion) of MFI deposits disappear in one month. No explanation. Not even in the update!
It could be related to the PN note that IBRC may have discounted in the past and lodged cash. Maybe they no longer need cash. Or maybe the ECB have decided that Ireland is no longer good for the money. Another game of chicken?
Either way, one have thought that the matter is large enough for Mr Honohan to clear his throat.
@Joseph/WSTT, not sure this helps much but the response from the Bank is “The change in the MFI figures simply reflects a change in the accounting treatment of intra-group financing arrangements by a particular credit institution”
@NWL
With respect to the learned people of the CB, that explanation is more rubbish than I believed they were capable of.
If the accounting treatment has changed by such a significant amount, why have the figures not been restated for the previous months or even years?
More importantly, if it is merely ‘accounting’ treatment’, what figure on the asset side of the ‘covered banks’ has been reduced by €25 billion to reflect the €25 billion reduction in MFI deposits. Do the covered banks have €25 billion less cash than we thought they had????
I do not buy the CB explanation at all. There is more to this than a simple change in accounting treatment. It is a change of Kevin Cardiff-ian proportions. It surely requires a better ‘non-explanation’ than is currently being offered.
In the absence of profitability or deposit growth, deleveraging means asset sales and shrinking balance sheets for banks. Investors/depositors realise this deleveraging is still destructive to capital [asset sales are less than book value] but eventually confidence returns and deposits/profitability can rise. It is difficult to see any green shoots of growth until the deleveraging is complete.
@NWL, “The change in the MFI figures simply reflects a change in the accounting treatment of intra-group financing arrangements by a particular credit institution.”
Congratulations to the CB. They would make Sir Humphrey in “Yes Minister” proud. It is straight out of the series. The first response from the politicians handbook of explanations:
Sir Humphrey:
“Seven ways of explaining away the fact that North-West region has saved £32 million while your department overspent:
1. They have changed their accounting system in the North-West.”
The CB has arrived and found a new culture of obfuscation.