IRISH BANKS ARE borrowing less from the European Central Bank (ECB) than at any time since the introduction of the bank guarantee in September 2008.
Statistics released this morning by the Department of Finance show that borrowing to both covered and non-covered banks fell to €36.6bn during February, down around €0.5 bn on the previous month.
The ECB lends money to European banks at both short and long terms in order to refinance banks, provide liquidity to the market, and to influence interest rates across the bloc.
Borrowings down as banks turn to international lenders
Compared with this time last year, Irish banks are borrowing around €17.5bn less, or 40 per cent, from Brussels. The Department of Finance said:
The steady decline in reliance on ECB funding reflects the continued strengthening of the banking system that has been achieved through managed deleveraging , deposit gathering and the return of AIB, BoI and PTSB to international capital markets.
Irish bank borrowing from the ECB surged to levels of around €140bn per month during 2010-2011, but has been steadily declining since February of 2012. Across the continent, the ECB is lending out around €25bn less to European banks than last year.
Banks covered by the government’s deposit guarantee scheme borrowed €0.8bn less during Feburary. The Department said that this was caused by a reduction in the amount of capital banks needed to hold on their books, as well as improved access to capital markets after the bailout exit.
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