Irish banks reduce dependence on ECB

New figures from the Department of Finance show that Irish covered banks are continuing to reduce their dependence on the European Central Bank, with borrowings from the ECB down by 44 per cent, or €27 billion, in the twelve months to July to stand at €33.87 billion.

“The steady decline in reliance on ECB funding reflects the continued strengthening of the banking system and has been achieved through managed deleveraging, deposit gathering and the return of AIB, BOI and PTSB to international funding markets,” the Department of Finance said in a statement.

During July, total utilisation of ECB facilities by banks in Ireland (ie both covered and non-covered banks) declined by 5 per cent, or €2.5 billion, to €43.6 billion. This is the lowest level since September 2008.

While borrowings from the ECB continue to fall, Irish deposits remained stable in July 2013 at about €152.1 billion. Deposits were flat month-on-month due to seasonality effects with activity moderating across the sector over the summer months.

According to the Department of Finance, the moderation in the rate of growth of deposit volumes is “not unexpected”, given the deposit gathering initiatives by the covered banks in 2012, together with the substantial completion of their deleveraging programmes.

“These factors have resulted in a lower balance sheet funding requirement among the covered banks, which is supported by the return of the covered banks to market issuance in the Q2 of this year,” the Department said.