Account holders withdraw €23bn from banks this year

MORE than €23.5 billion of deposits have been withdrawn from the three major Irish banks since the start of the year. AIB says it has seen outflows of €13bn in deposits due to withdrawals by nervous corporate and business customers who fear for the Irish bank system.

In a trading update yesterday the bank said lower institutional and corporate balances were primarily the cause of the decline in its deposit base of 17% as international sentiment towards the banks and Ireland got increasingly negative. The bank’s loan-to-deposit ratio of 159% at September 30 is up from 151% at the end of June. Irish lenders are relying on ECB funding as bondholders charge excessive interest rates. AIB is depending on the ECB and other monetary authorities for about €27bn of its funding, the bank said.

AIB said it has increased the size of its planned capital raising to €6.6bn from €5.4bn, an exercise likely to leave the state owning at least 92% of the bank.