The Central Bank has released the Money and Banking data for the end of April (summary here.)
Looking at the key table 4.2 for the balance sheet of the guaranteed domestic banks, we see some relatively good news. Domestic private sector deposits rose a little in April while the decline in non-resident deposits slowed considerably. This confirms various statements from Michael Noonan and others that the situation with deposits improved after the March 31 stress test announcements. Of course, the situation with falling supplies of credit looks as grim as ever.
9 replies on “Money and Banking Data for April”
The accompanying report states
“There was an underlying increase of €2.3 billion in Irish resident private-sector deposits during April. This was driven almost entirely by deposits from OFIs [other financial intermediaries], which increased by €2.8 billion during the month and largely reflects inter-affiliate transactions. Household deposits increased slightly during the month, by €11 million, while NFC deposits fell by €292 million and ICPF deposits fell by €230 million”
I’m not sure why the release and other commentary focuses so much on Irish resident private sector deposits. The vast majority of the deposit flight that caused such difficulties was non-resident.
I suppose that you could argue the most persuasive indicator that Ireland is regaining a banking system which can sustain itself is when deposits from residents (personal and business) start coming back in.
Mind you with an average of just €8 put on deposit by each household and some €0.5bn withdrawn by businesses (NFCs) and insurance corporations and pension funds (ICPFs), it’s hardly a normalisation.
There is an assumption that there is a kind of graduated stickiness on these deposits – with the most sophisticated long gone, right through to those that wouldn’t move if Noonam went on the telly to advise that deposits were going to be halved by the state a week next Thursday.
Where the banks are on that motivation vs stickiness curve is quite important imho.The Ganley, Gurdgiev media roadshow could have a bit of an effect on that.
“if Noonam went on the telly to advise that deposits were going to be halved by the state a week next Thursday.”
I think he’s going to leave that announcement to Leo!
Is the 2.8b from the NTMA?
@Jagdip & ceteris
I presume this is pension money moving to cash from equities/bonds?
OFI’s include NAMA, so some of it could be their recent asset sales and long cash situation.
@ceteris and hoganmahew
The Central Bak has confirmed that the NAMA operational units are OFIs which may well explain some of the increase in April. NAMA itself is part of general government but NAMA IL and the other operating subsidiaries which generate the cash are OFIs.
As for inter-affiliate transfers, the CBI says “The Money and Banking Statistics covers the developments in the resident offices balance sheet of credit institutions. Many banking groups have business units within them which are not credit institutions, e.g. a stock-broking arm, an insurance company, perhaps some wealth management service, etc. Consequently balances between a credit institution and its affiliated non-credit institution will be reflected in Money and Banking Statistics. Changes in these balances over time would be regarded as inter-affiliate transactions. Similarly changes in balances between affiliated credit institutions would be regarded as inter-affiliate transactions.”
This all seems to suggest that household deposits are stabilising (indeed increasing by €8 per household on average during the month) whilst corporate deposits seem to be continuing to decline though at a reduced rate.