bank drain

ei.sdraob

Well it wasn't a bank run but its something

DEPOSITS continued to seep from banks last month, while lending to households and businesses declined again, according to the latest data from the Central Bank.

Deposits, traditionally a key source of bank funding, fell by 6.7 per cent in November, according to the Central Bank. Household deposits were 4.5 per cent lower, while business deposits dropped by 14.9 per cent.

Overall, the negative net monthly flow in deposits was €5.2 billion in November, bringing the three-month average to minus €2.1 billion and forcing banks to increase their reliance on funding from the European Central Bank.

Lending to households was down 4.8 per cent on an annual basis, with stark cutbacks seen in loans for “consumption and other purposes”.

Lending was 15.6 per cent weaker in this category, with mortgage loans 1.7 per cent down on levels seen a year earlier.

Businesses also borrowed less, with loans down 1.9 per cent in November compared to the same month of 2009. This followed a revised annual fall of 1.8 per cent in October.

article

well done the Irish banks :rolleyes: keep up the confidence, sure who needs customers when daddy state has a blank checkbook

johnnyskeleton

Are those figures in addition to the drop off in institutional deposits?

ei.sdraob

johnnyskeleton wrote: »

Are those figures in addition to the drop off in institutional deposits?

I presume its this document here they are talking about
the graph on page 4 is scary, shows how little confidence there is in the banking system here, how can banking system survive without customers and confidence is beyond me

JTMan

More analysis of what is going on here: http://www.zerohedge.com/article/irish-ecb-borrowings-surge-countrys-bank-run-picks-speed

motherriley

If the euro is not going to survive why is Estonia joining it is beyond me.

http://www.bbc.co.uk/news/10264800

ei.sdraob

motherriley wrote: »

If the euro is not going to survive why is Estonia joining it is beyond me.

http://www.bbc.co.uk/news/10264800

They are also being run by imf, anyways what does it have to dovwith thread

Noreen1

ei.sdraob wrote: »

I presume its this document here they are talking about
the graph on page 4 is scary, shows how little confidence there is in the banking system here, how can banking system survive without customers and confidence is beyond me

In all honesty, I'm not surprised.
I think it's fair to say that the banks (or at least senior management within the banks), have earned neither consumer confidence, or loyalty.

Add the fact that many newly unemployed people are dipping into their savings to make ends meet, pay off debts, etc., and this scenario was entirely predictable.

digme

it's called deflation.

Anonymous1987

ei.sdraob wrote: »

They are also being run by imf

Source?

ei.sdraob

Anonymous1987 wrote: »

Source?

ooh sorry got mixed with latvia

gonedrinking

the figures for the drop in deposits in December will be interesting

JTMan

Firstly, it is important to remember that the Central Bank of Ireland stats only cover deposits that have left the country. They do not show deposits that have moved from an Irish bank to a foreign bank based in Ireland. e.g. AIB to Rabo.

Hence, the figures are just the tip of the iceberg with regard to what happened to deposits in November 2010.

zig

Has any of this much relevance any more though seeing as we can tap into bailout money when we like. Wasnt the bailout (well the banking part of it) not for this kind of situation?

Anonymous1987

The more deposits fall, the more money the government must pump into the banks to keep them solvent.

If deposits continue to fall possibly combined with further losses on loans, then the money needed to pump into the banks to keep them solvent may run the risk of exceeding the bailout fund.

So yes it remains an issue.

JTMan

It is important to ask the question, how much longer can the Central Bank of Ireland prop up the 6 Irish banks with liquidity to cover the deposit drain? Where are the Central Bank of Ireland getting the 44 billion to prop up the Irish banks? Will we ever see the 44 billion again?

Also, can the bank drain, as David McWillams said, "become terminal"?

Again, the ICB figures do not cover deposits that moved from the 6 Irish banks to Rabo, NIB, NUK etc etc as the ICB only counts deposits that have left the country.

ei.sdraob

Fungus wrote: »

It is important to ask the question, how much longer can the Central Bank of Ireland prop up the 6 Irish banks with liquidity to cover the deposit drain? .

Yeh as we seen in another thread (out of date by now) 20 billion was handed over already without the media barely noticing

macannrb

Fungus wrote: »

Will we ever see the 44 billion again?
QUOTE]

The money the central bank has given the banks is mostly in the form of a loan. The CB is a lender of last resort.

But like any other loan, the CB will only get it back if the people they gave the money to have to money to give it back.

They don't have the money to give back, but its likely in the future that someone will buy the one or more of the banks and one of the conditions would be to write off some if not all of the loans, as an incentive to buying the bank(s).

put simply if we ever see the money again, i'd be surprised

irishh_bob

Anonymous1987 wrote: »

The more deposits fall, the more money the government must pump into the banks to keep them solvent.

If deposits continue to fall possibly combined with further losses on loans, then the money needed to pump into the banks to keep them solvent may run the risk of exceeding the bailout fund.

So yes it remains an issue.

this will probabley come across bad but eventually people will have to return to irish banks with thier money if we as a country wish to have any kind of a future in this country , i believe that since this present wretched goverment has zero credibility , its understandable why people looted thier accounts but as soon as we get a new goverment , thier should be a fresh start made and hopefully an inflow of savings back into irish banks

Chris_5339762

I have an account at Ulster Bank NI, and have some of my savings up there. Now I know that NI isnt the safest place ever, but its better than down here.

At the first sign of big trouble over here or IMF account freezing, I am 20 minutes away from transfering the lions share of my savings to the north via a Swift transfer.

Anonymous1987

irishh_bob wrote: »

this will probabley come across bad but eventually people will have to return to irish banks with thier money if we as a country wish to have any kind of a future in this country , i believe that since this present wretched goverment has zero credibility , its understandable why people looted thier accounts but as soon as we get a new goverment , thier should be a fresh start made and hopefully an inflow of savings back into irish banks

I would disagree. I don't see a new government making much difference.

The issue with falling deposits at the banks is a reflection of peoples confidence in the Irish financial system to remain solvent and the governments ability to guarantee the bank deposits in the event of a bank default.

People aren't withdrawing their deposits because of their lack of confidence in Fianna Fail and the Greens, they are withdrawing deposits because they fear the Irish financial system may fall into a black hole. It is a financial decision not a political one.

A new government unfortunately will face the same issues.

irishh_bob

Anonymous1987 wrote: »

I would disagree. I don't see a new government making much difference.

The issue with falling deposits at the banks is a reflection of peoples confidence in the Irish financial system to remain solvent and the governments ability to guarantee the bank deposits in the event of a bank default.

People aren't withdrawing their deposits because of their lack of confidence in Fianna Fail and the Greens, they are withdrawing deposits because they fear the Irish financial system may fall into a black hole. It is a financial decision not a political one.

A new government unfortunately will face the same issues.

the present goverments ineptitude is what caused the banking crisis which in turn is what created such anxiety among deposit holders , people know that they cant hide thier money in uk , german or belgian banks indefinatley , no country could function along such lines , when they have renewed trust in a goverment , they will want to put thier shoulder to the wheel so as to rebuild the country and will return with thier hard earned savings to irish banks

zig

irishh_bob wrote: »

the present goverments ineptitude is what caused the banking crisis which in turn is what created such anxiety among deposit holders , people know that they cant hide thier money in uk , german or belgian banks indefinatley , no country could function along such lines , when they have renewed trust in a goverment , they will want to put thier shoulder to the wheel so as to rebuild the country and will return with thier hard earned savings to irish banks

I dunno, while I understand FF are "the enemy" right now,, we are going to keep hearing bad news this year from the same banks, combine this with another harsh budget this year , and other miserable economic figures and I believe we will be right back where we are now.

While many out there will be voting a FG/Lab government I really dont think many of these voters genuinely believe in their heart and soul that this new government will be engine for change and improvement.
Also , you say , they cant keep their money in uk , german or belgian banks indefinatley, why not , if they have access here? they can and they will if they think their money is any bit of danger.
People will care ALOT more about their own deposts than they ever will about the well being of our economy.

noodler

Now that I am back at work and looking at the figures, I think it is important to note they are based on the year to November rather than between October and November.

Also, the 6.7% is onlt talking about the Irish Private sector.

EDIT: Also, the figures are talking about all banks in Ireland (including the pointless IFSC), there are figures available for the 'Domestic Institutions (that's be the Irish and foreign owned RETAIL banks).

These actually show that deposits by Irish resident as a whole (Financial Institutions, Goverment and Private sector) only fell by €6bn (compared to a fall of €11bn if you use the all banks category).

However, the private sector deposits actually fell by 8.9% in the year in the 'Domestic' - even worse than the 6.7% figure reported in the article for the broader category.

irishh_bob

zig wrote: »

I dunno, while I understand FF are "the enemy" right now,, we are going to keep hearing bad news this year from the same banks, combine this with another harsh budget this year , and other miserable economic figures and I believe we will be right back where we are now.

While many out there will be voting a FG/Lab government I really dont think many of these voters genuinely believe in their heart and soul that this new government will be engine for change and improvement.
Also , you say , they cant keep their money in uk , german or belgian banks indefinatley, why not , if they have access here? they can and they will if they think their money is any bit of danger.
People will care ALOT more about their own deposts than they ever will about the well being of our economy.

i wasnt aware you can acess savings held in bank of germany via the hole in the wall in a bank of ireland branch

if everyone decided to move thier savings outside the country , while citizens might be cash secure , the country would be a desolate wasteland with an economy that couldnt function half way properly

ei.sdraob

irishh_bob wrote: »

i wasnt aware you can acess savings held in bank of germany via the hole in the wall in a bank of ireland branch

if everyone decided to move thier savings outside the country , while citizens might be cash secure , the country would be a desolate wasteland with an economy that couldnt function half way properly

Some banks give you visa/aexpress cards to access the current accounts from anywhere in world,various fees apply of course

Anonymous1987

Not to mention Ulster Bank which is a subsidiary of Royal Bank of Scotland.

JTMan

Two great articles on the deposit flight:

http://namawinelake.wordpress.com/2011/01/04/continuing-deposit-flight-versus-finite-central-bank-support-what-gives/

http://www.independent.ie/opinion/columnists/david-mcwilliams/david-mcwilliams-swiss-bank-vaults-filling-up-with-our-deposits-2483877.html

noodler

namawinelake is just an excellent website in general.

JTMan

The deposit flight got worse in December 2010:

http://namawinelake.wordpress.com/2011/01/14/central-bank-statistics-indicate-no-slowdown-in-deposit-flight/

JTMan

Even more deposits have left Irish banks ...

http://namawinelake.wordpress.com/2011/01/29/deposit-flight-continues-unabated-in-december-2010-ecb-data-reveals/

ei.sdraob

For those of you expecting a massive inflow of deposits in December as euro deposit holders finally found religion and became confident enough to leave their money in highly regulated, stress-tested on a ferocious scale, high interest paying Irish banks will be disappointed to see that data released by the ECB yesterday showed that deposits fell €6.8bn in December (compared with a fall of €5.9bn in November). So the rate of flight which was already at an elevated level increased.

wow!

ugh oh at this rate the Irish banks will be left with bad loans and not much else on their books