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US Fed gave Irish banks €8bn in emergency loans

Data compiled by Bloomberg shows that Ireland’s banks got emergency loans from the US while being capitalised back home.

Image: Vahid Salemi/AP

IRELAND’S TWO ‘PILLAR BANKS’ received €8bn in emergency liquidity loans from the US Federal Reserve at the height of the financial crisis, as the US sought to stave off a prolonged global recession.

Data compiled by Bloomberg, which obtained the data through Freedom of Information requests in the United States, shows that Allied Irish Banks borrowed billions from the US’s central bank between the spring of 2009 and the spring of 2010.

At its peak, AIB’s borrowing totalled some $9.4 billion (€6.53 billion) – amounting to nine times its total stock market value at the time. The loans were paid off in full by March 2010.

Bloomberg’s charts appear to indicate that the loans were taken out in the middle of February 2009 – around the same time as the government announced its first €3.5bn recapitalisation of the bank.

In Bank of Ireland’s case, the bank began to borrow from the Federal Reserve in mid-March 2009 – again, shortly after its first recapitalisation – but its lending was on a lesser scale, and peaked at $2.1 billion (€1.45 billion) – or around a quarter of its market value at the time.

Bank of Ireland’s loans were paid back within the first weeks of January.

Bank of Ireland declined to comment on the lending. AIB said it did not comment on market-based facilities.

Bloomberg’s data in full showed that the Federal Reserve had issued over $1.2 trillion to banks worldwide, including a large number of European institutions.

That total, it said, was three times the US government’s budget deficit at the time.

The lending came amid Fed fears that inter-bank lending was beginning to dry up, which could potentially have led some banks to go to the wall but for its input.

Read more from Bloomberg on the emergency lending >

Examine the data using Bloomberg’s interactive tools >

About the author:

Gavan Reilly

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