Bank of Ireland and AIB, Ireland's two biggest banks, saw their deposits rebound "significantly" after the government's stress tests last week, Minister for Finance Michael Noonan said
The Government last week ordered the two lenders to raise as much as €18.5 billion between them following stress tests on the nation's lenders. Private-sector deposits shrank 9.8 per cent in February from the year earlier, the Central Bank said in March.
"The total amount of deposits withdrawn from the pillar banks has been very significantly reduced," Mr Noonan said today. "Since Thursday's announcements, the net deposit position of the pillar banks has improved significantly."
Lenders are relying on emergency funding from the European Central Bank after clients pulled money from their accounts and investors shun bank debt. The Central Bank last week ordered four of the country's lenders to raise €24 billion to bolster confidence in the financial system.
Bank of Ireland will have to raise €5.2 billion and AIB €13.3 billion. EBS Building Society, which is being folded into AIB, requires €1.5 billion, and Irish Life and Permanent €4 billion.
The fundraising timetable will be discussed in the next 10 days, Ireland's financial regulator Matthew Elderfield said at a Reuters conference in London today.
Anglo Irish Bank, the first lender nationalised, may not require any more capital, the head of financial regulation at the Central Bank Matthew Elderfield said today. The lender has received €29.3 billion of State aid so far.
"There is no immediate prospect of that number changing," Mr Elderfield said at the conference.
The government will only seek to shares losses with Anglo's senior bondholders if more capital is needed, Mr Elderfield said. He ruled out forcing losses on Bank of Ireland, Allied Irish, EBS and Irish Life's senior bondholders.
"They represent the basis of the restructured banking system for the future," he said. " There has been considerable debate about this point, but the markets now have certainty about government policy."
Bloomberg
