Irish-based banks’ reliance on emergency funding fell to a two-year low in February.
New data shows that emergency funding to the domestic banks, from the European Central Bank dipped to €130 billion in February, from €132.3bn a monthearlier.
Since the beginning of the bailout programme, the country’s banks have been reliant on central bank loans to fund their day-to-day operations, after losing tens of billions of euro in deposits and being largely excluded from wholesale lending markets.
Banks had €85.1bn in outstanding loans from the ECB as of March 30, down from a figure of €87.1bn in February, while emergency loans from the Irish Central Bank fell to €45bn from €45.2bn.
Overall borrowings have fallen by almost a third — from a high of €187bn in February 2011 — as banks began to aggressively shrink their balance sheets.
Separate data, published yesterday, showed that Spanish banks’ ECB borrowings almost doubled to a record €316.3bn.
Meanwhile, Merrill Lynch warned yesterday that Ireland’s weak gross national product levels (GNP) highlight thepotential risks or foreign- owned multinationals lowering their production levels, here, “at some point in the future”.
However, in a report looking at the metrics used to measure the Irish economy, Merrill said that it sees gross domestic product (GDP) — which includes multinational contributions — as “a more appropriate measure of the output of the Irish economy”.
“Any changes in the relatively favourable corporation tax regime could be particularly important.
“Indeed, the crystallisation of such risks could be particularly concerning in the current economic climate, given the dominance of foreign firms in the export sector and the importance of export-led growth in helping Ireland remedy its current fiscal problems,” it said.
The company, which acts as the wealth management arm of Bank of America, said earlier this week that Ireland is unlikely to require a second bailout deal to support its medium and long-term economic growth.
It recently downgraded its own forecasts for Ireland’s GDP growth — from a very bullish 1.6% to a more realistic 0.6% — for 2012.
additional reporting by Reuters