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As Irish ECB Borrowings Surge, The Country's Bank Run Picks Up Speed

Tyler Durden's picture





 

Following the publication of the monthly Central Bank of Ireland flow statistics for November, that the country's bank ended up borrowing another massive amount of capital from both Europe and the central bank itself, should not be surprising. After all it was in November that Ireland followed Greece into the insolvency abyss, a place where none other than Olli Rehn guarded the gates to feudal hell. However, one much more troubling factor is that the depositor run from Irish banks, a development which many have cited as potentially being the catalyst for the next major step down in the European house of cards tumble, is accelerating. From the report: "Deposits from the Irish resident private sector were 6.7 per cent lower on a year-to-year basis in November 2010. The annual rate of change in deposits from Irish households was minus 4.5 per cent, whereas deposits from Irish NFCs fell by 14.9 per cent on an annual basis in November." What this means simply said, is that as more deposit capital is withdrawn from Irish banks, the more they will need to rely on ECB and ICB funding, the more distressed they will be perceived as, the more capital will be withdrawn and so on... But that is a 2011 story.

From Reuters:

The European Central Bank lent banks in Ireland, including foreign lenders, 138.2 billion in November, an increase on the 136 billion euros Ireland's central bank said lenders had received up to November 26.

Domestic banks accounted for 97.3 billion euros of the total, a rise of 13.7 percent during a month that ended with Ireland securing an 85 billion euro IMF/EU bailout, the central bank said in a statement on Thursday.

However, as every financial transaction in Europe has a secondary central bank intermediary, the realy bulk of money actually came from the Irish Central Bank (which in turn had also borrowed from the ECB):

On top of the ECB funding, Ireland's central bank had lent the country's banks nearly 45 billion euros in exceptional liquidity assistance by November 26, a 10 billion euro increase on the previous month. No update was provided for this figure.

Before one dismisses these amounts, keep in mind that Irish GDP is about $170 billion (assuming one can believe any such numbers out of Europe)...

Yet lending is easy: all the ECB would need to do is get Germany to finally agree to print some more paper: if Merkel is uncomfortable with this process, she can merely retain the services of one Brian Sack: he will be sure to explain all the nuances. What is far more difficult is to convince people that their deposits in the banking system are safe. And that's where Ireland is failing:

Deposits from the Irish resident private sector were 6.7 percent lower on a year-to-year basis in November, separate figures showed.

Allied Irish Banks (ALBK.I), which Ireland effectively nationalised last week, said last month that it had lost 13 billion euros in deposits since the end of June.

Larger rival Bank of Ireland (BKIR.I) shed 10 billion euros of deposits in the third quarter while bancassurer Irish Life & Permanent (IPM.I) said it had suffered a 600 million outflow in the same period.

Some 35 billion euros of the 85 billion euro bailout will be channelled to the country's banks. Around 10 billion euros will be used for immediate capital injections, and a further 25 billion be kept as a back-up in case further injections are needed.

Details directly from the Bank report:

  • Deposits from the Irish resident private sector were 6.7 per cent lower on a year-to-year basis in November 2010. The annual rate of change in deposits from Irish households was minus 4.5 per cent, whereas deposits from Irish NFCs fell by 14.9 per cent on an annual basis in November. Deposits from OFIs and insurance corporations and pension funds (ICPFs) declined by 4.3 per cent over the period.
  • There was a negative net monthly flow of Irish resident private-sector deposits during November totalling €5.2 billion, bringing the three-month average net flow to minus €2.1 billion. This is in comparison to an average net monthly flow of Irish resident private-sector deposits of minus €677 million in the three months ending October 2010. The negative net monthly flow of Irish private-sector deposits in November was primarily due to a fall in household and OFI/ICPF deposits.
  • Developments in overnight private-sector deposits have remained volatile. The net monthly flow of overnight deposits averaged minus €479 million in the three months ending November 2010, compared with €987 million over the three months ending October 2010. During November, overnight deposits from households fell by €504 million, which is likely due in part to seasonal factors as it is a common occurrence in November in previous years. Almost the entire decline in OFI deposits during the month was in the overnight category. Total overnight deposits from the Irish private sector were 5.3 per cent lower on an annual basis in November 2010.

And just in case anyone is wondering what the source of all the capital is that is pushing the EURCHF to fresh all time highs day after day, not to mention spreads of PIIGS CDS closing 2010 at near all time wides, please refer to the chart above.

h/t Ciaran

 


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Thu, 12/30/2010 - 13:42 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

2010: the year the revolution started

London Madrid

Palermo Moscow

Athens Dublin

Paris Rome

http://www.youtube.com/watch?v=koa1B1ls2hg&feature=related

 

 

http://www.youtube.com/watch?v=koa1B1ls2hg&feature=related

Thu, 12/30/2010 - 13:46 | Link to Comment TexDenim
TexDenim's picture

"Irish GDP is about $170 billion"

You have to wonder if the Irish economy isn't about half that size, because financial transactions that have no real economic impact get mis-counted in these totals. Ireland is cooked. It needs a financial restructuring, not more rolled over debt.

Thu, 12/30/2010 - 14:04 | Link to Comment EscapeKey
EscapeKey's picture

I'm more dubious of the American GDP, considering hedonics and imputations. No other country employs such blatantly fraudulent accounting tricks to boost GDP.

Thu, 12/30/2010 - 14:13 | Link to Comment Hephasteus
Hephasteus's picture

Debt is always bigger than GDP in any country. Since the federal reserve BORROWED the gold it confiscated in 1933. It has to pay it back. Trick is FORCING congress to collect from the FED and issue the currency.

Thu, 12/30/2010 - 14:40 | Link to Comment pcrs
pcrs's picture

yes, congress are a group of people who responsibly deal with money. If you start giving them YOUR money and leave it voluntary for me, I'll start chipping in when things are going in the right direction.

Thu, 12/30/2010 - 15:35 | Link to Comment dracos_ghost
dracos_ghost's picture

I'm more dubious of the American GDP, considering hedonics and imputations. No other country employs such blatantly fraudulent accounting tricks to boost GDP.

 

Except maybe China. You know, the country that doesn't even have a real currency(yuan = US food stamp) that everyone is gaga over.

 

http://www.reuters.com/article/idUSTRE6B527D20101206

Thu, 12/30/2010 - 14:08 | Link to Comment M.B. Drapier
M.B. Drapier's picture

It's widely suggested that Ireland's debt/GNP may be more meaningful than its debt/GDP when it comes to the question of debt sustainability.

Fri, 12/31/2010 - 02:32 | Link to Comment Buck Johnson
Buck Johnson's picture

Your spot on, their economy isn't 170 billion more like 60 billion.  I didn't know that they borrowed more money after the 45 billion they where lended back in november.  This shines a light on the Western banking system being in a conspiracy of silence.  If you lend someone or something 45 billion dollars and within 40 days it needs at least 10 billion more, what will happen with the 45 billion dollars?  The prospect of getting any money back is almost nil.  This is another massive money pit, thats it.  How can a country of 3 to 5 million people be able to pay back not only the debt it has but the debt they borrowed to prop up the banks.

Thu, 12/30/2010 - 13:46 | Link to Comment SheepDog-One
SheepDog-One's picture

The bombs in Greece are blooming like madness in the spring.
http://www.youtube.com/watch?v=fcodegghjPA

Thu, 12/30/2010 - 14:42 | Link to Comment MachoMan
MachoMan's picture

can you please not post this in every thread...

Thu, 12/30/2010 - 15:23 | Link to Comment Horatio Beanblower
Horatio Beanblower's picture

False flag folly?

Thu, 12/30/2010 - 14:03 | Link to Comment Bam_Man
Bam_Man's picture

Just in case anyone was wondering "Why do they insist on protecting senior bondholders?"

Answer: With senior bondholder "haircuts" come depositor "haircuts".

Reply: "But what about deposit insurance?"

Answer: "Don't make me laugh."

It seems as though Irish bank depositors have this one figured out and are acting accordingly. 

Thu, 12/30/2010 - 14:06 | Link to Comment topcallingtroll
topcallingtroll's picture

Ok even the troll is scared. Is civilization getting a little toppish right now? I'm calling it.

Thu, 12/30/2010 - 14:20 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Bulls make money!!!

Bears make money!!!

PIIGS get slaughtered!!!!!

 

Right, Jim Cramer and your "charitable trust?"

Fri, 12/31/2010 - 00:58 | Link to Comment twittering as s...
twittering as stocktradr's picture

"Jim Cramer and your "charitable trust"

 

up 26% for year.

 

and yours?

 

 

Thu, 12/30/2010 - 14:27 | Link to Comment Sinatra_98
Sinatra_98's picture

EURCHF to fresh all time highs day after day?

Thu, 12/30/2010 - 14:34 | Link to Comment VeloSpade
VeloSpade's picture

That's it, I've had enough.  Can't take it any more.  I am going to go rape someone tonight.

Thu, 12/30/2010 - 14:49 | Link to Comment MachoMan
MachoMan's picture

Don't leave your underwear on the floor with your nametag in em.  (caught a guy that way...  tracked him to his mom's basement...  of course, he tried to rape a fiesty granny who grabbed his sack and started twisting and he got scared and ran away...  he had an icepack on his crotch when police arived).

Or, alternatively, when the decoy is in the driveway and motions you to come in, LEAVE THE CONDOMS AND MIKE'S HARD LEMONADE IN THE CAR!

Seriously though, there's no need to rape anyone...  you can just go to the meat market and bullshit a little around last call time and pick up someone...  I would suggest talking first about something superficial like some interesting made-up job you think he/she would like...  and then move on to talking about how you don't like your father...  you'll be a shoe-in.

Thu, 12/30/2010 - 15:39 | Link to Comment VeloSpade
VeloSpade's picture

Thanks for the encouraging words, but just look at my face.  I have a ballsack for a chin and a perpetual pubic hairdo.  How am I going to score any chicks with that?

Thu, 12/30/2010 - 16:39 | Link to Comment MachoMan
MachoMan's picture

Can't catch anything but your hand in your mom's basement.  Get out and mingle.  Chris Farley got laid...  find a way.

Thu, 12/30/2010 - 14:45 | Link to Comment Future Jim
Future Jim's picture

Yesterday I withdrew $5,000 in cash from my local bank - mostly just to see what would happen. I go in there about once a year, so I don't think anyone could possibly have recognized me, and yet it went very smoothly from my perspective. I only had to speak to the clerk. I did not even have to show my ID. They had to open the vault, but that was no fuss. The clerk did have to make a quick call to a supervisor to get permission because $5,000 exceeded her personal limit, which makes sense from a purely business perspective. I wouldn't want just any of my employees handing out unlimited amounts of cash to their friends either. She said that she ws not allowed to tell what her limit was, which again makes perfect sense.

Now I realize that below the surface things were probably not so innocent. I am now probably in some government databases because of this withdrawal.

Thu, 12/30/2010 - 14:53 | Link to Comment MachoMan
MachoMan's picture

Try this at a branch and you'll get a raincheck...  I get the look of death for w/d $2k at a time...  but, I make those fuckers count every last small bill of it...  helps to go in at a non-busy time too.

Thu, 12/30/2010 - 14:59 | Link to Comment Lets Hang Parliament
Lets Hang Parliament's picture

Please tell me you went straight round to the coin shop and bought some eagles!

Thu, 12/30/2010 - 15:48 | Link to Comment VeloSpade
VeloSpade's picture

"I am now probably in some government databases because of this withdrawal."

You bet your ass you are.  Its called an SAR (Suspicious Activity Report).  I've had about 40 of them filed on me over the last 10 years.  I know because they are required to tell you after 5 years of filing them on you. 

Now if I show one hair on my ass in any financial transactions, the feds are on my ass like flies on shit.  Fuck me!

Fri, 12/31/2010 - 02:58 | Link to Comment glenlloyd
glenlloyd's picture

Yes you are most likely, when I withdrew 5k they made me fill out a stinkin form they send to the govt. I'm not sure what the threshold is for a withdrawl though.

I called my bank a while back asking if there would be a problem with a 40k withdrawl and they said no, but I would have to speak to the teller super when I came in.

Thu, 12/30/2010 - 15:05 | Link to Comment PigsOnTheWing
PigsOnTheWing's picture

Run, Forest! Run!

Thu, 12/30/2010 - 15:13 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Just a counter-point, because they can be of some utility:

We have gone back and forth on 'money creation' for some time now.

While deflationists are in the distinct minority, most will acknowledge the clearly visible commodity inflation taking place (mostly as a result of speculative return chasing, due to low fixed income yields), while also standing firm on the notion that money is still being destroyed at a brisk clip.

I know ZH had an article a few weeks back that claimed the banks' shadow losses had been satisfied through the monetary ruses and tricks of The Fed's money creation scam, but only time will tell if that analysis is correct or complete because there is still much potential velocity in money destruction, in the form of asset-backed paper being marked down further, and via other causes.

Thu, 12/30/2010 - 16:04 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Most of the Irish government equity in banks is next - the ECB will claim seniority over this via their cash for mortgage collateral swap.

Most of their clients have been made whole as this prevented rollover of senior bank bonds and certain default.

Their policey is to reduce goverment deficits to 3% , preventing the excercise of national determination.

Yet they forget about the agreement to hold government debt below 60% - if this was exercised the Irish Goverment of 2007 (20% national debt) would have to default on the ECBs clients in the shadow bank sector.

The corruption from top to bottom in this stinking continent is beyond belief now.

 

 

 

 

 

 

 

Thu, 12/30/2010 - 16:38 | Link to Comment gwar5
gwar5's picture

Bankers and Financiers have Not changed in 250 years

1750, Franklin:  "We have no poor houses in the Colonies; and if we had some, there would be nobody to put in them, since there is, in the Colonies, not a single unemployed person, neither beggars nor tramps. ....In the Colonies, we issue our own paper money. It is called 'Colonial Scrip.'  In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one."

The information came to the knowledge of the English Bankers, and held their attention. They immediately took the necessary steps to prohibit the Colonies from using their scrip money, ... The first law was passed in 1751, and then completed by a more restrictive law in 1763. Franklin reported that one year after... the streets of the Colonies were filled with unemployment and beggars, just like in England. 

Franklin: "The Colonies would gladly have borne the little tax on tea and other matters had it not been the poverty caused by the bad influence of the English bankers on the Parliament, which has caused in the Colonies hatred of England and the Revolutionary War."

 

Thu, 12/30/2010 - 17:34 | Link to Comment cramers_tears
cramers_tears's picture

The most fun I had recently was the recent acquisition of a business.  I immediately liquidated the BAC cash and requested it in PM.  Of course they wouldn't oblige but I made them give it to me in cash where it was whisked off to my regular tiny bank.  I could see they just hated that.

Hopefully everyone in Ireland is taking money out of the big banks and buying PM or Provisions.  I've started using Pre-1965 quarters in my 2 little bodegas.  I force them onto my customers when I give them their change.  I have a big chart behind the register that shows the current silver spot and each coins daily value. Today's price=$5.50.   I've put $10k face value into each store.   Kind of an experiment at this point but it is raising their awareness big-time.  I'm amazed at how many are opting in.  I figure I might as well get a jump on being a merchant in the hyperinflation age!  The customers told me this morning that the restaurant next door is taking them @ my daily rate.  Since he buys produce off me, I'm getting paid with them now.  I'm working on a little set of pliers that will clink off a gram of silver from a coin.  I'll let you know if the secret service shows up.

 

 

 

Thu, 12/30/2010 - 18:59 | Link to Comment Bearster
Bearster's picture

Very cool.  I think it would be a great idea for everyone to think of ways to use gold and especially silver coins as money.  For example, I had been thinking to offer waiters a silver eagle for a tip, but unfortunately the price of silver has gone up so much in a year that this is way too generous now.

Anything to promote precious metals as money in ways that people will want to do is a step forward!

Thu, 12/30/2010 - 17:38 | Link to Comment cramers_tears
cramers_tears's picture

The most fun I had recently was the recent acquisition of a business.  I immediately liquidated the BAC cash and requested it in PM.  Of course they wouldn't oblige but I made them give it to me in cash where it was whisked off to my regular tiny bank.  I could see they just hated that.

Hopefully everyone in Ireland is taking money out of the big banks and buying PM or Provisions.  I've started using Pre-1965 quarters in my 2 little bodegas.  I force them onto my customers when I give them their change.  I have a big chart behind the register that shows the current silver spot and each coins daily value. Today's price=$5.50.   I've put $10k face value into each store.   Kind of an experiment at this point but it is raising their awareness big-time.  I'm amazed at how many are opting in.  I figure I might as well get a jump on being a merchant in the hyperinflation age!  The customers told me this morning that the restaurant next door is taking them @ my daily rate.  Since he buys produce off me, I'm getting paid with them now.  I'm working on a little set of pliers that will clink off a gram of silver from a coin.  I'll let you know if the secret service shows up.

 

 

 

Thu, 12/30/2010 - 18:22 | Link to Comment greenewave
greenewave's picture

Bank of America is a Public Disgrace and Should be PUT OUT OF BUSINESS!! The BANKING ELITE have cost TAXPAYERS TRILLIONS in FUTURE BAILOUT MEASURES and the AMERICAN PEOPLE are SUFFERING!

To find out more about the TRUTH of the recent MORTGAGE SCAM, watch the YouTube video “BANK OF AMERICA ~ A PUBLIC DISGRACE” at (http://www.youtube.com/watch?v=cXDpOBOS94A).

Anonymous-

This is absolutely appalling and I am dumbfounded why the American people aren’t RIOTING in the STREETS as we speak. Thw civil and political unrest we’ve seen in Europe is without a doubt coming to the United States!

Bend over America and enjoy getting SCREWED by the BIGGEST BAILED OUT BANK in the Country!!

Thu, 12/30/2010 - 19:04 | Link to Comment indio007
indio007's picture

Only cash is redeemable in lawful money. Electronic credits are shit. Even the FDIC only promises FRN's. Everything appears convertible into FRN's but only FRN's are redeemable per 12 USC 411. Who knows what they will redeem in though. Probably their debased script commonly called coins. The PTB want the people as many steps removed as possible from something of intrinsic value.

Thu, 12/30/2010 - 20:38 | Link to Comment irishlink
irishlink's picture

The Aussie and the Swissie are now the safe havens for the Irish. Even at these record levels people are buying, as they expect a Euro colapse or the dreaded two tier system. We have gone from the great fear for our money in the banks to total disilusioment with the " new reserve currency" 2011 could start with a lively exchange of ideas and rumours!

Thu, 12/30/2010 - 21:07 | Link to Comment M.B. Drapier
M.B. Drapier's picture

Fun possible fact: that may not include deposits moved from "proper" Irish banks to RBS subsidiary Ulster Bank Ireland Ltd., which is regulated by the CBoI and is one of the country's big High Street banks.

Bonus alleged fact: Allied Irish Bank's 12,000 employees owe the bank an average of €250,000 each. (Source: the Irish /Daily Mail/.)

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