INVESTORS ARE taking their cash out of the Republic’s banks, but the amounts are “not critical”, Minister for Finance Brian Lenihan said yesterday.
The Minister made the statement hours after the value of shares traded on the Irish stock market hit a 14-year low.
Prices recovered from that point yesterday, but the total value of the shares on the Irish market stood at €28 billion when the Dublin market closed.
This figure was €130 million less than when it opened.
Just under €100 billion has been wiped off the value of Irish shares over the last two years, and about 55 per cent of that loss is attributable to the collapse in Irish banking stocks.
Stockbrokers have been acknowledging for several weeks that international financial institutions and pension funds have little or no interest in Irish shares.
Individual retail traders are responsible for most of the activity in these stocks.
Speaking on RTÉ Radio yesterday, Mr Lenihan said that there has been some “outflow of funds” from Irish banks, but stressed that it had not reached a critical level.
However, he would not give the amounts involved.
The Minister was responding to claims made earlier by Senator Shane Ross that investors had taken billions of euro from the system last week.
Mr Lenihan pointed out that he gets regular reports on the amounts of money being moved in and out of Irish banks from abroad.
“Billions are transferred in and out of the Irish banking system every day,” he said.
The Minister added that the collective balance sheet of the six leading Irish banks came to €420 billion.
“What’s crucial for Ireland is that we retain international confidence to attract these funds,” Mr Lenihan said.
“It’s a battle for financial survival. We have to keep working at it.”
The Government is planning to raise more funding in the international markets.
The National Treasury Management Agency (NTMA) is planning to sell three-year bonds, according to Bloomberg.
Stockbrokers Davy and a number of financial institutions including HSBC, Dutch bank ING and Royal Bank of Scotland are managing the sale.
The Government is planning to raise €23 billion this year, €3 billion more than expected, due to the increased deficit in the exchequer finances.
The NTMA is moving faster than expected as Ireland’s top AAA-credit rating is coming under increased pressure due to the state of the public finances.
The Irish banks have said that wholesale funding is proving more difficult to source due to growing fears among international investors about the deterioration in the State’s purse.
The Government raised €6 billion of the €23 billion required this year through the sale of five-year bonds last month.
