Ireland reassures on bank deposits

By Lorraine Turner

DUBLIN (BestGrowthStock) – Irish officials reassured savers on Thursday that their deposits were safe amid fears over what a possible IMF/EU bailout would mean for the country’s banks.

Irish lenders have suffered outflows of corporate deposits, necessitating exceptional funding from the central bank, but Bank of Ireland and Irish Life & Permanent said this month that levels had stabilized at the end of the third quarter when the government extended its guarantee of corporate deposits.

In parliament, Finance Minister Brian Lenihan said retail deposits were also protected by government guarantee.

“I want to reassure all depositors in the guaranteed banks and building societies in Ireland that their deposits continue to be safe and secure,” he said. “That guarantee is underpinned by the membership of the euro system.”

Dublin is expected to receive “tens of billions” in loans from European partners and the IMF to shore up its battered banks, central bank governor Patrick Honohan said in a radio interview on Thursday.

Honohan also said the central bank had provided exceptional funding to the banks to plug “a steady drain of deposits.”

Central bank data showed it had made exceptional liquidity assistance lending of nearly 35 billion euros at the end of October, up from 21.2 billion at end-September.

The European Central Bank (ECB) has also lent banks in Ireland some 130 billion euros. Analysts at Glas Securities estimate around half of that figure is for domestic Irish banks and the other half is for foreign lenders based in the country.

The prospect of an IMF/EU bailout for Ireland’s banks and global headlines about the country’s financial woes have triggered some concern among savers.

“I have had … constituents ringing me to know whether they should open sterling accounts and move their money out,” said Michael Noonan, finance spokesman from the main opposition party Fine Gael.

The chief executive of building society EBS told Reuters it had not seen any unusual activity. “Our customers are definitely worried … (but) we’ve seen no unusual activity,” Fergus Murphy said on the sidelines of a press briefing. “Thankfully so far, we’ve seen nothing leave us.”

Allied Irish Banks will give details of its funding position in a trading update on Friday.

(Editing by David Holmes)

Ireland reassures on bank deposits