And on the face of it, it appeared that market players had reason for concern. Latest Central Bank monthly statistics showed Irish financial institutions had tapped the ECB to the tune of €44.1bn in July – with borrowings from Frankfurt having more than doubled from the same period last year.
Analysts internationally seized upon the figure, highlighting that Ireland’s share of ECB credit ranked second only to Spain on €49.4bn. A back-of-the-envelope job at JP Morgan, the US brokerage, noted that Irish bank borrowings equated to a quarter of the country’s gross domestic product (GDP).
But broken down, Irish retail clearing banks – including AIB, Bank of Ireland, Danske Bank (owner of National Irish Bank) and Ulster Bank – accoun- ted for just €1bn of the total.
Non-clearing banks with predominantly foreign business – mainly IFSC institutions – account for €18.3bn of the total; with non-clearing banks with mainly domestic business making up the remaining €25bn. Under the Central Bank’s categorisation, the domestic non-clearing banks include Permanent TSB – even though it is a member of the clearing system. The bank recently indicated it had less than €4bn of ECB drawings.
While IIB Bank, ESB Building Society, which has revealed €2.2bn of ECB borrowings, and Irish Nationwide Building Society are on this list, the domestic non-clearing banks also include a smattering of IFSC-based firms such as Depfa Bank, Citibank and BNP Paribas.
**Bulk of ECB funding went to IFSC-based banks **
By Joe Brennan, Thursday September 11 2008
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