CBI April 2011 Deposits Stats Point to Increase ?

Deposits in the six state-guaranteed financial institutions were up nearly €2bn to €108bn, the first month-on-month increase since October 2010. This will be particularly welcomed because the April 2011 deposit figures are the first to show the aftermath of the stress test and bank restructuring announcements on 31st March, 2011. Although the two other metrics advanced by Minister Noonan at the start of April 2011 to demonstrate the positive reaction to the banking announcements, the 10-year bond yield and the two pillar bank share prices, both show deteriorations; in the case of the 10-year bond, it had closed at a record mid-point of 10.22% on 31st March, 2011 and although that interest rate declined by a full percentage point in the following week, the mid-point as I write this is 11.03%; in the case of AIB’s share price it closed at a record low of €0.19 at the end of March 2011 and is at €0.18 this morning and BoI closed at €0.22 in March 2011 and is now at €0.17 this morning.

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“NAMA itself, which is under the auspices of the NTMA, is classified in the “General Government” sector. Meanwhile, NAMA has a minority shareholding in the SPV National Asset Management Agency Investment Ltd (NAMAIL), which would be classified as an “Other Financial Intermediary” or OFI. NAMAIL is a parent company for a number of other SPVs set up by NAMA to achieve its purposes which consequently are also in the OFI sector.”

It is NAMAIL and its subsidiaries that generate the cash, so yes if the implication from your question, could the increase in deposits be a result of NAMA generating cash from the ~€3.3bn of sales it has approved and which give rise to its >€1bn temporary cash mountain, then yes that may be the reason for the increase.

As regards the other reason for the increase, inter-affiliate transactions are further explained by the Central Bank “The Money and Banking Statistics covers the developments in the resident offices balance sheet of credit institutions. Many banking groups have business units within them which are not credit institutions, e.g. a stock-broking arm, an insurance company, perhaps some wealth management service, etc. Consequently balances between a credit institution and its affiliated non-credit institution will be reflected in Money and Banking Statistics. Changes in these balances over time would be regarded as inter-affiliate transactions. Similarly changes in balances between affiliated credit institutions would be regarded as inter-affiliate transactions”

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Household and Non Financial businesses continued to decline in April. Household deposits declined by just €14M (Table A.11.1 from €92,803M to €92,787M with a larger decline in Non Financial businesses.

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From early morning to counter the banks there is serious pressure for withdrawals of deposits, especially small amounts. The pressure on banks began last Wednesday, culminating in yesterday's day.

It is significant that Thursday and Friday, banking sources estimate that rose around 1.5 billion euros in total! According to the same month in May estimated the outflow estimated at least 4 billion from 2 billion in April ...

The majority of depositors rushed to withdraw for pensioners and small savers and amounts ranging from 2-3000 lifted until 10 -15 000 euros. Motivation in most cases it was the fear that led the country into bankruptcy, deposits frozen even temporarily left without cash, or even lose their savings.

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