Tuesday, 12 March 2013

Ceisteanna (169)

Pearse Doherty

Ceist:

169. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 181 of 26 February 2013, which showed that deposits in Irish banks, based on which these banks hand over 0.2% at the end of each year to be held by the Central Bank of Ireland in its deposit guarantee scheme, had declined from €217 billion at the end of 2011 to €190 billion at the end of 2012, if this is correct; and the apparent discrepancy between this decline and statements from his Department which suggest a stabilization and modest growth in deposits. [12623/13]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The Deposit Guarantee Scheme (DGS) in Ireland was established under Irish and European legislation to protect depositors in the event of a bank, building society or credit union authorised in Ireland being unable to repay deposits (e.g. where a liquidator has been appointed). The DGS is administered under the Deposit Protection Account by the Central Bank of Ireland and is funded by the credit institutions covered by the scheme. The Deposit Protection Account (DPA) at the Central Bank covers retail deposits up to €100,000 for all institutions regulated by the Central Bank of Ireland. This includes branches of Irish institutions operating in other EU Member States. However, it should be noted that Eligible Liabilities Guarantee (ELG) deposits at the covered institutions, amounts above €100,000 held at other institutions or corporate deposits at other institutions are not included.

The operation of the Deposit Protection Account is governed under European Communities (Deposit Guarantee Scheme) Regulations 1995 (SI No. 168 of 1995). The following table shows the balance held at year-end in the Deposit Protection Account at the Central Bank of Ireland. Each deposit-holding institution is required to maintain a balance on their DPA account of 0.2% of their total deposits (with a minimum amount of €50,000 in the case of all institutions except credit unions). This percentage is calculated annually in December. Interest is paid by the Central Bank on the DPA balances (1).

In the following table, it is shown that at the end of 2012, the Central Bank held €379 million, which represented 0.2% of the €190 billion on deposit in Ireland at the end of 2012. It is true to say that this was down 12.9% from the €435 million held by the Central Bank at the end of 2011, which represented deposits of €218 billion. The decline in the DPA balance reflects the drop in deposits in Irish credit institutions.

DPA Balances

Year End

Banks

Credit Union

Total

2012

379,390,200.00

23,633,580.57

403,023,780.57

2011

434,740,900.00

0

434,740,900.00

2010

537,900,500.00

0

537,900,500.00

2009

608,262,200.00

0

608,262,200.00

2008

669,408,300.00

0

669,408,300.00

2007

526,093,100.00

0

526,093,100.00

A comparison between the figures for deposits covered by the Deposit Guarantee Scheme (DGS) and the statements from my Department on the level of deposits in general is not entirely comparable. The Department of Finance Deposit Note on Deposit Trends at Irish Covered Banks of 14 February 2013 to which I presume the Deputy refers in his question, concentrates solely on the covered institutions - that is AIB Group, Bank of Ireland Group and permanent tsb. Thus it covers both the DGS and the Eligible Liabilities Group (ELG) as covered in Ireland and the UK and to corporate and retail deposits at the three covered institutions.

I would also refer to the latest available figures from the Central Bank of Ireland, released on 28 February 2013 "January 2013 Money and Banking Statistics", which show that Deposits from households were 1.2% higher on an annual basis at end-January 2013, while deposits from insurance corporations and pension funds and Other financial intermediaries increased by 8.2%. Deposits from Non-financial corporations rose by 5.2% over the same period.

(1) Section 4 of the Financial Services (Deposit Guarantee Scheme) Act 2009 for credit unions provides that from 30 November 2012, each credit union will be required to maintain in the Deposit Protection Account at the Central Bank of Ireland, an amount equal to 0.2% of the deposits and shares held on behalf of members.