Central Bank Balance Sheet April 2011

The Central Bank balance sheet for the end of April 2011 has been released. It shows a decline of €12.6 billion in the famous “Other Assets” category which is where the Bank’s ELA operations show up. It also shows a decline of €8 billion in lending under the Eurosystem umbrella. These are large declines for a one month period and it’s not clear how they came about, i.e. whether there was a large increase in deposits at the guaranteed banks, whether any new market funding was sourced (unlikely) or whether there were significant deleveraging deals involving selling off foreign loan books and using them to pay off central banks.

As Namawinelake notes, these questions will be clarified at the end of this month when the balance sheet of the guaranteed banks for April will be released. Certainly, the decline in emergency borrowing from central banks is welcome and is a first concrete sign that the March 31st announcements have had a positive effect on the health of the banking system.

Update: Thanks to Eoin and Lorcan for coming up with the real story. NTMA have deposited €19 billion in cash resources into the banks. Reuters have a story here while Lorcan had already figured it out. NTMA apparently couldn’t be bothered putting out a press release.  So all of the above out positive effects etc. is hereby withdrawn.

16 replies on “Central Bank Balance Sheet April 2011”

@ Karlos & El Lorko

NTMA released a statement earlier (i didn’t get it, was on Bloomberg….I know, I know, their communication policy could be better) saying they had put in €19bn in deposits into the “stressed (tested?) banks” until 31st July when they would be returned for use in the recapitalization operations.

Ireland’s NTMA Says EU19 Billion Placed on Deposit with Banks

By Dara Doyle
     May 13 (Bloomberg) —  Ireland’s National Treasury
Management Agency said an aggregate 19 billion euros was placed with the Irish banks, pending their recapitalization at the end of July.
     “On or before July 31, the deposits will be returned to
the State to provide the funds necessary for the
recapitalisations,” the Dublin-based agency said in an e-mailed response to questions. “It should be noted that the deposits have no unusual features and are not restricted in any way.”

@ Lorcan

no worries.

Re El Lorko – i’m just a big fan of nicknames, figured you and Karl should get in on the act. 😀

@ Pollyanna Whelan – thats you back in your “the banking sector is recovering nicely” box. 😀

RE:The other liabilities of €150 billion.

Is that the much talked about ECB liability of €150 billion? Is it owed directly to the ECB? What collateral do the ECB hold in respect of it. Is it subdivided. How come we don’t get detail on the make up of such a large figure?

@ Pollyanna Whelan – thats you back in your “the banking sector is recovering nicely” box.

And what else? Dr. Doom McHale? Sunshine Kelly?

@ Bond, Eoin Bond
Go easy now. You’re the man who has ruled out default from Day 1 but here you are drawing attention to events that make it seem even more inevitable.
Thanks for pointing out just how fubbard the banks really are.

@ All

I would refer you to my comments on the Maarten Van Eden thread (John McHale) below.

@ Karl, Eoin & Lorcan

Great stuff and congratulation on the site Lorcan.

Off topic well done Leinster and good luck for next week.

We do not have a Central Bank.

Yes, but we are still putting all of out money into one.

So, first it was the National Pension reserve, now it’s the entire kitty. The NTMA has just put all €20 billion of Ireland’s very last reserves of emergency cash into the Irish branch of the ECB. Which means of course that the state can now never default on, or even restructure, its debts without risking the ECB appropriating its every last shilling in response.

Ireland has no more buffers left. We’re out of rope. The state has just handed over the last independent bargaining chip it had and the NTMA didn’t even bother with so much as a press statement. Somers’ boys earn their banker-esque salaries, that’s for sure.

You know, at least the Shinners wanted to actually _spend_ the national cash reserves on …. whatever. FG and Labour have just handed them over to the ECB. And now when the state finally does go bankrupt, it’s adieu to everything but the shirts on our backs. Parish GAA clubs will have more in petty cash than the state will have at that point.

Only question now is whether the Minister for Finance was aware of this, or was it all done over email by ECB quislings in the NTMA and the Central Bank? I for one want some answers!

You are being a bit unfair on the very well paid NTMA boys (any girls?).
The ‘bail out -loss of sovereignty deal’ last Novemebr clearly specified that the NPRF would have to go into the banks, and it would have to go in pretty much immediately.
The ECB knew what they were doing. They were making sure that the State would have no running away money left.
They also knew that the sale of assets by the NPRF, would be at fire-sale prices.
For instance, the dollar assets just sold by the NPRF must have taken a real hammering due to the recent fall in the dollar. So too any bond sales they had to made, particularly Irish/Greek/Portugese/Spanish bonds.
Shares in Japanese companies reeling after the earthquake were probably also on the block.
In other words the ECB just forced losses onto the State to ‘save’ ‘our banks’.
But its all ok. The ATMs are still working!
Ireland is now in a large bondholders scrap yard with the ECB supervising the operation of the giant metal crushers.

So the business plan is

Borrow from the EU/IMF at 5.8%

Place on deposit at banks which are in receipt of 1.25% ECB funding and presumably won’t want to pay any more for these deposits

Incur a loss of €800m per year (5.8%-1.25% * €18bn assuming the €18bn from the EU/IMF is being held for bank recaps).

Okay there have been delays to the recap, but that’s effectively what’s happening, no?


€19 billion! This is our ‘real’ money – and it has just WHOOSH with a silent murmur …. great little serfdom!

@ OBM,

“You know, at least the Shinners wanted to actually _spend_ the national cash reserves on …. whatever. FG and Labour have just handed them over to the ECB. “:

As I understand it, we had emergency borrowing via the Irish CB, which in effect was emergency borrowing from the ECB or some such facility. Transferring 20 bn euro from reserves to that account would merely be making a payment on that short term loan – which is what is supposed to be done with short term loans. It might also make our borrowings look a little less terrible. And there is, as JS says, the interest gap between where it was and where it is, OBM.

Do you propose that we should treat the common currency solely as if we were individuals – as an island – without any regard for those with whom we share the currency?

As I’ve been opinioning, where we are is largely a consequence of FF culture of eroding standards. How they treat standards, is perhaps the main thing that differentiates FG from FF, and it’s probably about time that theory got some exposure. Perhaps then there might be some long term hope for us. This probably involves an unravelling back to 1932, much as Germany once had to do.

Do elaborate on your apparent view that we should “spend it on …whatever”, when we are already up to our eyes in debt? For instance, do you have an idea how it could be spent that would repay itself or do you just mean to flog it? The “Shinners” have been propounding that message long enough, so perhaps you can relate it here? (And we’ve already _spent_ about ten times that much).

(What do they programme ye in school-college?)

However, I do empathise with your horror at where we are.

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