Thursday, September 1, 2011

Deposits in Irish banks

The pattern of the total deposits in all banks operating in Ireland paints a dramatic picture.  Since August 2010 deposits have fallen from €893 billion to €577 billion.

Total Deposits

The fall has been dramatic but it has not been confined to domestic banks.  Deposits in other banks (mainly those operating in the IFSC) have also fallen and these have little effect on the domestic economy.

Total Deposits by Banks

Deposits in domestic banks have fallen from €524 billion to €349 billion and it can be seen that this has mainly occurred in the six covered banks (AIB, BOI, EBS, PTSB, Anglo, INBS).  While deposits in non-covered domestic banks (Ulster Bank, National Irish Bank, Investec etc.) have fallen, it has not been as pronounced as in the covered banks.

Total Deposits by Covered Banks

The main driven of the fall in deposits in the covered banks has been the withdrawal of deposits from outside the eurozone.  Eurozone deposits have remained low.  Deposits from Irish residents have been trending down but seem to have taken an accelerated drop in July.

Total Deposits by Origin in Covered Banks

After falling dramatically in the six months after the expiry of the original bank guarantee deposits from non-residents in the covered banks have been relatively stable in 2011 and actually increase by €1 billion in July.  We have already examined the reason for the drop in Irish resident deposits in the covered banks.

Irish Resident Deposits in Covered Banks

In July the government moved nearly €20 billion of deposits out of the covered banks and used this money to recapitalise the banks.  Apart from this somewhat artificial movement deposits in the covered banks were unchanged in July (down €0.3 billion).

1 comment:

  1. Some of the fall in deposits in domestic banks could be due to the payment of preliminary corporation tax 50% of which is now due six months after the year end date (now due June 21st for Dec year end). Corp tax June 2011 ytd was approx 200 million behind June 2010 at the end of June but had caught up by end of July.

    It looks like some very big payer either changed the accounting year to January 31st or was late paying the Corp tax or alternatively offsetting losses are beginning to be washed out of the system.

    I would expect the corp tax returns for August to be very positive.

    PS: Has the legislation 'ring-fencing' the bank losses so that 'tax-losses' would not have to be refunded made been enacted yet?

    I noticed that AIB has a tax credit of of €351 million in its account for the first half of 2011 (and a credit of €363 million in 2010).
    AT this rate the abnks will be getting tax refunds of billions if this does not stop!!