Little change in Irish banks' borrowings from ECB last month


BORROWING BY financial institutions in Ireland from the European Central Bank (ECB) remained little changed last month, while emergency loans issued by the Central Bank increased by almost €1 billion, new statistics show.

The level of ECB drawings stood at €84.6 billion on June 29th compared with €84.5 billion on May 25th, according to updated banking statistics released by the Central Bank.

The level of exceptional liquidity assistance (ELA) loans provided by the Central Bank to Irish banks and guaranteed by the Government rose to €42.4 billion from €41.5 billion over the period.

Stephen Lyons, analyst at Davy stockbrokers, said the increase in ELA lending reflected the two bond redemptions by the former Anglo Irish Bank during June.

Irish Bank Resolution Corporation, the new name for Anglo, repaid €1.15 billion of senior unsecured and unguaranteed bonds originally issued by Anglo and Irish Nationwide Building Society.

ECB drawings for June cover all financial institutions in Ireland, including international banks operating from the International Financial Services Centre in Dublin.

The Central Bank does not break out the ECB drawings for the Government-guaranteed banks for June until updated statistics are published later this month. The guaranteed banks had drawn €65 billion from the ECB in May.

“It’s difficult to read anything into what is only a marginal increase in ECB borrowings,” said Mr Lyons.

Assuming the Irish banks have continued the trend of reducing ECB borrowings due to deleveraging of assets and deposit stability, Mr Lyons said the increase was due to borrowing by foreign banks operating in Ireland. This “wouldn’t be too surprising given euro area stresses and rounds of bank downgrades,” he said.

ECB loans to Spain’s embattled banks rose 17 per cent to a record €337.2 billion in June, according to the Bank of Spain, as the country’s banks struggle to raise funding from other banks and in the debt markets.

Borrowings from the ECB rose from a previous record in May of €287.8 billion and a low point of €42.2 billion in April 2011.