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Headline deposits at covered banks remained stable in February

Consolidated Deposits at Covered Banks

Headline deposits at covered banks remained stable in February at €154.8bn, increasing by c.€0.5bn (c.+0.3%) during the month due to inflows of deposits from Corporate and Non-Banking Financial Institutions. On a constant currency basis, underlying deposits were c.€1.1bn higher month on month in February, however some volume was lost in the UK.

While headline deposits during February increased, the weakening of Sterling against the Euro since December has affected deposit values significantly. Headline UK Retail deposits are down c.€3.1bn since December with volume fluctuations only accounting for only c.€0.8bn of this movement, with the remainder attributable to unfavourable foreign exchange movements.

The cumulative growth for the last 12 months (i.e. Feb 2012 versus Feb 2013) remains strong with headline deposits up c.€7.7 bn (5.2%) year on year although the pace of year on year increase has moderated somewhat.

The stability in customer deposit volumes among the covered banks comes at a time when the cost of deposit funding is reducing and the ELG scheme for new liabilities is being ended. While still very early in the process, there have been no negative trends or unusual deposit volume movements as a result of announcement to end the ELG scheme on 28th March 2013.

Usage of ECB facilities by banks in Ireland

Banks operating in Ireland (i.e. both covered and non-covered banks) continue to reduce their level of borrowing from the ECB. During February total utilisation of ECB facilities by banks in Ireland declined by €8.2 billion (c.12%) to €61.9 billion – it’s lowest level since September 2008.

Year-on-year, funding drawn from the ECB has reduced by €25.2 billion or 29%. The reduction from peak of €136.4 billion (end November 2010) is €74.6 billion or 55%.