Elderfield: Banks may find it hard to shrink balance sheets next year

IRELAND’S banks will find it harder to shrink their balance sheets next year as European rivals step up their own such efforts, possibly pushing asset prices too low, according to the financial regulator Matthew Elderfield.

Under the country’s EU-IMF bailout, Bank of Ireland, Allied Irish Banks and Irish Life & Permanent need to shrink their balance sheets by €70 billion by 2013 — €34bn of which is to be achieved through asset disposals.

The banks had reduced core and non-core assets by some €13bn by the end of September, according to Central Bank figures.