Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest

Central Bank Support for Irish Banks

  • 09-10-2010 2:55pm
    #1
    Closed Accounts Posts: 2,208 ✭✭✭


    ... seems to be increasing. According to the media,
    Irish based banks and other financial institutions raised their borrowings from the European Central Bank by 25pc in just under a month to a total of E119.1 billion, the Central Bank said today.

    The ECB funding reliance by Irish-based lenders including international and domestic companies in Ireland rose to the E119.1 billion level at the end of September from E95.1 billion at the end of August.

    Irish banks are still blocked off from inter-bank lending and rely mostly on the ECB's funds for their capital needs.

    Not a good sign, especially when EONIA rates are so low, yet banks are using the marginal lending facility. Below is a graph showing Irish CB lending over time:

    CBOct10.png

    It's interesting to compare this with the aggregate balance sheet of domestic credit institutions (Excel), which shows €60bn in liabilities for Irish banks ('Borrowing from the Eurosystem relating to monetary policy operations') compared with €95bn in CB lending for August. It would be nice to have a section just for the 'guaranteed institutions', and I wonder which foreign banks are borrowing through the Irish CB to make up that €35bn gap. (Below is a list of banks that appear on the 'aggregate balance ...'.)
    ACC Bank Plc
    AIB Mortgage Bank
    Allied Irish Banks Plc
    Anglo Irish Bank Corporation Plc
    Anglo Irish Mortgage Bank
    Bank Of Ireland Mortgage Bank
    Bank Of Scotland (Ireland) Ltd
    Barclays Bank Ireland Plc
    Danske Branch AS
    EBS Building Society
    EBS Mortgage Finance
    ICS Building Society
    Investec Bank (UK) Limited
    Irish Life & Permanent Plc
    Irish Nationwide Building Society
    KBC Bank Ireland Plc
    Northern Rock Plc
    Postbank Ireland Limited
    Rabobank Nederland
    The Governor & Company Of The Bank Of Ireland
    Ulster Bank Ireland Limited
    Credit Unions As Regulated By The Registrar Of Credit Unions


Comments

  • Registered Users, Registered Users 2 Posts: 126 ✭✭Slippers 2


    Irish banks are still blocked off from inter-bank lending and rely mostly on the ECB's funds for their capital needs.

    How does borrowing increase capital? Isn't capital just a figure for assets minus liabilities, which would both go up if the bank borrowed?


  • Closed Accounts Posts: 2,208 ✭✭✭Économiste Monétaire


    It doesn't increase capital, unless you want to consider retained earnings arising from the profitable use of those borrowings. I agree with your point, the author should have said '... for their short-term financing needs'. You'll learn to ignore the silly errors of Irish journalists for the sake of your sanity; if I hear one more person say 'we have half a million unemployed' I will kill someone... :)


  • Registered Users, Registered Users 2 Posts: 126 ✭✭Slippers 2


    One of my lecturers this year is Karl Whelan and near the start of the course he was lamenting fuzzy journalism and said something to the effect that if anyone so much as hints in the final exam that they don't understand the difference between liquidity and solvency by using the phrase "capital reserves" they will be severely marked down.


  • Registered Users, Registered Users 2 Posts: 27,194 ✭✭✭✭noodler


    if I hear one more person say 'we have half a million unemployed' I will kill someone... :)

    You'd be surprised how often I have to make that differentiation for people on a daily basis...


  • Closed Accounts Posts: 2,208 ✭✭✭Économiste Monétaire


    We should probably have a thread on journo gaffes, might overload the site though :pac:.

    By coincidence, Karl has written something on this topic too:

    http://www.irisheconomy.ie/index.php/2010/10/10/the-irish-banks-and-the-ecb/


  • Advertisement
Advertisement