# Funding the Irish Banks



## dewdrop (29 Nov 2010)

I am sure I am not the only one confused with the status of different bondholders and the suggestion that they should be burnt. As a  long retired bank official i had a simple notion of how things worked in the distance past. Banks took in deposits usually in small sums and some of the clients had memories of banks closing down overnight and unable to pay back the deposits. Banks only lent out very carefully a proportion of these deposits and the balance was held in cash and secure government securities. Sometime in the seventies or eighties banks tried to attrract more deposits by offering higher interest for fixed terms. It is around this period i begin to get confused because Banks began lending for longer periods and their deposits were either on demand or for a short term. I often wondered how banks could cope with a sudden demand for repayment. It now appears Irish banks were the receiptments of billions of deposits (called bonds i assume) from foreign banks probably on a short term basis and these funds were lent on to the developers etc. While the rest is history why did no one in Government shout stop as the late John Healy said years ago about the West of Ireland. apologies if this is all wide of the mark.


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## Protocol (29 Nov 2010)

Not wide of the mark at all.

Loan growth > deposit growth, so the banks borrowed from abroad.  Massively.


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## jpd (29 Nov 2010)

dewdrop said:


> It now appears Irish banks were the recipients of billions of deposits (called bonds i assume) from foreign banks probably on a short term basis and these funds were lent on to the developers etc.



They were'nt really "recipients", they actively went looking for this money.


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