merrion street

Banks operating in Ireland (i.e. both covered and non-covered banks) continue to reduce their level of borrowing from the ECB. During May total utilisation of ECB facilities by banks in Ireland declined by €5.9 billion (c.11.1%) to c.€46.9 billion – it’s lowest level since September 2008.

Year-on-year, funding drawn from the ECB has reduced by €37.6 billion or 44%. The reduction from peak of €136.4 billion (end November 2010) is €89.5 billion or 65.6%. However, also important is the mix of funding obtained from the ECB.

Covered Banks usage of Eurosystem funding

Drawings from the ECB by Covered Banks declined by c.€3.9bn (or c.-9.9%) during the month of May. ECB borrowings declined during the month of May which reflects a reduction in the balance sheet funding requirement within the Covered Banks during the month, with issuances in the market most notably BOI issuing an unsecured senior bond at the end of the month, and the Covered Banks also used cash reserves to pay down some of their ECB borrowings.

Year-on-year borrowing from the ECB is down c.€29.1 billion (c.-45%) to stand at c.€35.55 billion at end-May. The steady decline in reliance on ECB funding reflects the continued strengthening of the banking system. The reduction in borrowing from the ECB has been achieved through managed deleveraging, deposit gathering and the return of AIB, BOI and PTSB to international funding markets

Share of total ECB funding

The share of total ECB funding by banks in Ireland has declined steadily from a peak in November 2010 of c.26.5% immediately after the bailout to 5.6% at end-May 2013. The covered banks account for c.4.3% of total Eurosystem funding at end-May 2013, down from a peak of c.18.8%.