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Irish banks continue to wean off ECB's funding

The latest figures show usage of the ECB’s refinancing facilities by the Irish covered banks dropped €13 billion in December.

THE IRISH BANKS covered under the government’s bank guarantee have again lowered their reliance on emergency funding from the European Central Bank.

The covered institutions have lowered their debts to the ECB to just under €50 billion as of the end of December.

This is down by 21 per cent in the last two months of 2012.

Danske Bank Markets senior dealer Owen Callan said the reduction was due to the slow reduction in the amount of overnight or week-long deposits being made by the Irish banks, but also due to the recent bond issuances by AIB and Bank of Ireland which made them less reliant on Eurozone funding.

When emergency funding from the Central Bank of Ireland – which includes the emergency liquidity provided to IBRC and EBS, provided in exchange for the now-infamous promissory note – is included, banks owe a total of €89.2 billion to central banks.

This was down from a peak of €152.86 billion at the end of February 2011, Callan said, marking a fall of 42 per cent in under two years.

“This figure is now proportionate to the scale of the Irish banking system (in relative Eurozone terms) and is no longer looking as dangerously outsized as previously thought,” Callan said.

Irish banks now take up about 4.3 per cent of the total amount lent by the central bank system to the Eurozone’s banks, which was proportionate to their size within the 17-member bloc, he said.

Read: Challenge to promissory notes dismissed, court says TD could bring case

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