BANKS IN Ireland continued to record a fall in deposits in March, according to figures published by the Central Bank yesterday, while bank lending also declined.
By the widest measure, there was an outflow of money on deposit of €16.7 billion last month when compared to February (see chart). The total deposit base stood at €630.7 billion last month.
That is a significant decline on the middle of last year. A loss of international investor faith in Ireland from September has resulted in the large withdrawals.
Cumulatively in the seven months from September of last year to March of this year, almost 30 per cent of deposits have been withdrawn.
The figures are broken down into three residency groupings – Ireland, the euro area and the rest of the world.
Residents in the rest of the world category have pulled deposits from banks in Ireland at the fastest rate over the past half year, with Irish residents making the smallest withdrawals.
However, in March the trend reversed. Of the total €16.7 billion withdrawn, Irish residents accounted for almost €9 billion of the overall fall in money lodged in banks here.
The figures for Irish resident deposits are disaggregated further. Irish banks’ deposits with their rivals – a normal practice – fell by more than €12 billion month-on-month in March. The effect of this on the total deposit base was partly offset by a €5 billion increase in the amount placed on deposit by the Government.
Retail depositors’ faith in the banking system has been least affected by the banking crisis over the past half year. This was also the case in March.
Household deposits fell by just €438 million, the smallest decline since December. In total, they stood at just below €93 billion in March, down just €4 billion since the middle of last year.
Irish companies, in contrast to households, accelerated the pace of their withdrawals in March.
Collectively, they pulled almost €1 billion from accounts in March. Their total deposits stood at just over €32 billion.
Bank lending also continued to fall in March, with households and business paying down bank debt.
Total bank lending to companies fell by more than €1 billion month on month in March. Companies now owe banks just under €90 billion in total.
As recently as 2007, companies’ outstanding bank loans stood at €170 billion. Much of the decline is accounted for by developers’ loans moving to Nama.
Total bank lending to households in March fell by almost half a billion euro on the month to stand at €130 billion. Households have paid back a net €27 billion in bank debt since 2008.
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