Quarterly Bulletin Q3 2013

Analysis of Recent Monetary Operations &
Financial Market Developments
Quarterly Bulletin 03 / July 13
95
October 2011, before the 3-year LTROs were
introduced.
Chart 7: Irish Covered and Non-Covered Banks
Eurosystem Borrowings
On 13 December 2012, the ECB announced
an extension of the existing temporary US
dollar liquidity swap arrangements with the US
Federal Reserve until 1 February 2014. The
ECB Governing Council also decided, until
further notice, to continue to conduct regular
US dollar liquidity-providing operations with
maturities of approximately one week and
three months.
160
140
120
100
80
60
40
€ bn
4. Ireland Overview
In response to the on-going financial market
turmoil, the CBI, on behalf of the Eurosystem,
continued to supply substantial liquidity
support to the Irish banking system during
2012. Total Eurosystem monetary policy
lending stood at €1.1trn at end-December
2012, (including US dollar operations), of
which €71bn was being provided, via the CBI,
to Irish domiciled institutions (including the
Irish Financial Services Centre (IFSC) based
counterparties). This compares with a total of
€913bn at end 2011, of which €108bn was
provided to Irish counterparties. The number
of counterparties eligible to participate in
operations via the CBI at the end of 2012 was
40, down from 41 in 2011.
With regard to the Irish covered banks 26 , total
Eurosystem borrowings dropped by €18.4bn
in 2012 to €48.7bn or 4.6% of the Eurosystem
total at year end, and fell by a further €13.2bn
in 2013 to stand at €35.6bn or 4.3% of the
Eurosystem total at end May 2013.
In relation to the Irish non-covered banks,
total Eurosystem borrowings fell by €18.6bn
to €22.7bn at end 2012. Since January 2013
outstanding Eurosystem borrowings for Irish
non-covered banks has reduced by a further
€11.3bn to stand at €11.4bn at end May 2013.
20
0
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
2009 2010
2011
2012 2013
Covered Institutions
Total
Source: CBI.
Jan
Mar
May
Jul
Sep
Nov
Non-Covered Institutions
Jan
Mar
May
The CBI also provided Exceptional Liquidity
Assistance (ELA), which was deemed
necessary for financial stability purposes and
amounted to €40.4bn at 2012 year-end, down
from €42.4bn in 2011. On 7 February 2013 the
liquidation of IBRC resulted in the removal of
ELA 27 .
Over 2012, a combination of deleveraging,
asset sales, increased deposit flows and a
return of AIB, BOI and PTSB to international
funding markets has allowed the Irish covered
banks to reduce dependence on central
bank funding. The removal of the Irish Eligible
Liabilities Guarantee (ELG) scheme, which
was effective from 28 March 2013, is another
positive step in the normalisation of the Irish
banking system.
26 The covered banks are AIB Group (including EBS Building Society), Bank of Ireland Group, Permanent TSB and IBRC (until
liquidation on 7 February 2013) who were guaranteed by the Irish government pursuant to the Credit Institutions ELG Scheme,
which expired on 28 March 2013. The non-covered banks are the remaining Irish domiciled counterparties, and include IFSC-based
counterparties.
27 Page 20 of the Central Bank of Ireland Annual Report 2012 available at: http://www.centralbank.ie/publications/Documents/
Central%20Bank%20Annual%20Report%202012.pdf