€40 Billion Deposit Flight In December Brings Total Irish Bank Run To €110 Billion For 2010

No matter how hard the ECB is trying to mask the fact that the only way to rescue Europe is through yet another ponzi scheme, which has a CDO in its foundation no less, depositors refuse to be fooled. According to the ECB, in December Irish banks lost deposits worth €40.3 billion, over 50% more than November, when €26.7 billion evacuated the banking system. The brings the total deposit flight from Ireland's 15 retail banks to a massive €110 billion, a number which if indexed to the US, would be well in the trillions. And as the Independent points out, "The most dramatic element of the latest data, however, is the sharp acceleration in the fight of deposits from the so-called 'domestic group' of banks." In other words, Irish banks are likely operating on liquidity fumes, and all of their operations continue to be funded on a day to day basis by the ECB and possible the IMF. And what is even worse, is that just like in the US, Irish consumer refuse to relever: "Yesterday's figures also show another contraction in banks' lending, as loans to households fell by 5.2pc and loans to non-financial companies fell 1.2pc in the year to December."

From The Independent:

AN unprecedented €40bn of deposits was withdrawn from Irish banks in December, dwarfing the flight in deposits earlier in 2010.

December's massive deposit exodus means a total of almost €110bn has been taken out of Ireland's 15 retail banks since the start of 2010.

The figures are revealed in monthly reports from the Central Bank, which show a marginal fall in lending in the year to December, as well as a €2.7bn fall in reliance on cheap cash from the European Central Bank (ECB).

In November, the group of 15 banks lost €26.7bn and by December the monthly rate of deposit loss soared to €40.3bn.

Not surprisingly, the Irish are all too aware ofjust how bad the situation is:

The depositors have little motivation to keep their funds in Ireland, and many have been spooked into withdrawing money as the credit ratings of Irish banks deteriorated.

The impact has been most sharp for deposits from outside the euro area, which fell by almost €34bn in December and €81bn in the full year.

Naturally, the ECB has been forced to step into the fray to prevent a wholesale Irish bank wipeout:

Banks have dealt with collapsing deposits by increasing their reliance on funds from the ECB, and emergency cash from Ireland's Central Bank.

Yesterday's data confirms the ECB's support to the domestic group fell by €2.7bn to €94bn in December.

The year-end position is still well ahead of ECB advances at the start of 2010, when supports were €58.5bn. Emergency support from the Central Bank of Ireland totalled about €49bn, up from €43bn in November.

And in summary:

"There is very little good news in these latest banking figures," said Bloxhams' chief economist Alan McQuaid.

"Until the banking sector crisis is fully resolved and things improve on the labour market front then the supply/demand for credit will remain subdued."

h/t Henri