The reliance of lenders in Ireland on Irish and European central bank funding fell by €2 billion in the month to April 27th, according to figures published by the Central Bank yesterday.
The total amount of official lending to Irish commercial banks stood at about €128 billion, the Central Bank said, down from €130 billion in March.
Traditionally, central banks are “lenders of last resort” to the banking system, but the Irish banking system’s weakness, since 2008, has left lenders unable to borrow from private sources and forced them to resort to official central bank funding.
Under the EU-IMF bailout the banks must shrink their balance sheets to ease that reliance, which peaked at €187 billion in February last year.
In mid-2007, before the crisis, financial institutions’ borrowings from official sources averaged about €25 billion.
Irish banks had €86.8 billion in outstanding loans from the European Central Bank as of April 27th, up from €85.1 billion in March.
Spain’s lenders saw their ECB borrowings almost double to a record €316.3 billion last month.
Emergency loans from the Irish Central Bank fell to €41.3 billion from €45 billion, although the Central Bank said part of the decrease could be attributed to an accounting reclassification to give a more accurate picture of the so-called Emergency Liquidity Assistance (ELA) it provides.
In the euro system, such funding is resorted to when a commercial bank no longer has collateral to meet the ECB’s standards for lending.
