THE FALL in bank deposits in April was the smallest since a partial run on banks here began last September, according to new figures from the Central Bank.
By the widest measure, which includes both resident and non-resident deposits in on-shore and off-shore banks, the total amount on deposit stood at €618.5 billion in April. This was a decline of just over €12 billion on March.
Deposit flight reached its peak in the final three months of 2010. In October, the month in which withdrawals were greatest, more than €67 billion was withdrawn from Ireland-based institutions.
In January 2009 deposits reached an all-time peak at just under €1 trillion (€1,000 billion). Significant inflows of deposits took place following the September 2008 government bank guarantee.
As the credibility of that guarantee disappeared in the autumn of last year, deposits began flowing out of the system. The deposit base is now less than two-thirds its 2009 peak.
In April, €10 billion of the total €12 billion loss of deposits was accounted for by other euro zone residents withdrawing cash.
The central bank gives three categories of depositor residency: Irish; euro area; and the rest of the world.
As the accompanying chart shows, the largest fall in deposits since last year has been in the rest of the world category. Irish residents’ deposits have been least affected.
The Central Bank also differentiates between the widest measure of banking activity, which includes the international financial services centre (IFSC), and a narrower gauge, which includes those banks serving the domestic economy.
These figures show that the domestically focused banks have suffered less deposit erosion since August than the IFSC sector.
Total deposits in the former fell by 22 per cent over that period, to stand at just under €400 billion last month.
The IFSC sector experienced a 42 per cent decline over the same period. In April, its deposits totalled €219 billion.
Of the €320 billion of Irish resident’s deposits in the entire system in April, just €124 billion was accounted for by households and non-financial businesses. Most deposits were accounted for by other financial institutions and intermediaries.
Household deposits have been little affected by concerns about the stability of the financial system which have been in evidence since last summer.
In April households’ deposits totalled €92.8 billion. This was largely unchanged on March and represents a decline of just 4 per cent since August 2010.
Although the figures do not give a breakdown of household deposits by Irish-owned banks, some of the figures released yesterday suggest some shift from those banks and foreign-owned banks located here. Irish businesses, in contrast to households, continue to show greater wariness about leaving money on deposit in the banking system. Their aggregate deposits fell by €570 million between April and March.
