Allied Irish Banks, Ireland’s second-biggest bank, said deposits shrank 17 percent this year as companies and customers pulled money amid the debt crisis.
Deposits dropped by about 13 billion euros ($17.8 billion) since the start of the year, the lender said in a statement today. The Dublin-based bank said it will increase the amount it’s seeking to raise in a share sale by the end of the year to 6.6 billion euros from 5.4 billion euros.
Allied Irish said it increased its reliance on funding from “monetary authorities” amid “increasingly challenging” funding conditions. The bank’s loan-to-deposit ratio, excluding the Polish unit it agreed to sell in September, rose to 159 percent at Sept. 30 from 151 percent at the end of June.
Irish lenders have become more reliant on European Central Bank funding after being frozen out of wholesale markets. The amount of ECB loans to the country’s banks rose 7.3 percent to 130 billion euros in October from the previous month, Ireland’s Central Bank said on Nov. 1. The data include both international and domestic banks operating in Ireland.
Finance Minister Brian Lenihan said yesterday he would welcome the creation of “substantial contingency capital funding” for Irish banks, as European Union, International Monetary Fund and ECB officials started talks in Dublin about a possible bailout of the debt-laden country.
Bank of Ireland, the country’s largest lender, said on Nov. 12 it has 20 billion euros of net borrowings from “monetary authorities,” compared with 8 billion euros at the end of June. Irish Life & Permanent, the only domestic lender to avoid a bailout so far, said on Nov. 17 its banking division’s borrowings from the ECB rose to 11.7 billion euros at the end of September, up from 8.1 billion at the end of June.
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