INVESTEC IRELAND lost €120 million in customer deposits, primarily from small and medium-sized business, in the 12 months to the end of March as a result of rivals being covered by the Government’s bank guarantee scheme.

Chief executive Michael Cullen said the bank had been chasing more personal deposits, which are guaranteed by the UK deposit protection scheme up to £50,000 per person, after the loss of deposits since the Irish guarantee was introduced last September.

He said deposits at the bank, which employs 102 people in Dublin, fell to €780 million from €900 million and that funding costs were the biggest challenge facing the bank given the competition for deposits in the industry.

The bank’s loan-to-deposit ratio widened to 89 per cent in March from 75 per cent a year earlier.

Pretax profits at Investec rose 9 per cent to €36 million, despite a 19 per cent fall in revenues from its private banking operations.

Mr Cullen said the bank’s private banking unit had been hit by the decline in Irish and global economic conditions and the unprecedented destruction of wealth. “As a result, activity levels in our private banking business are greatly reduced.”

Mr Cullen said the bank had taken a loan impairment charge of 5 per cent of its loan book to cover losses on property loans. The bank has a property loan book of €600 million, split equally between development and investment.

Investec’s subprime lender, Nua Homeloans, has ceased offering new loans in general.

Net revenues rose 6 per cent to €71 million and its loan book rose by 6 per cent to €702 million.

Mr Cullen said the results were a solid performance against a challenging economic backdrop.