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Ireland’s banking sector: Facts & Figures

Economic Trends

The Central Statistics Office (CSO) reported a 26.3% jump in GDP – GNP was up 18.3% – in 2015. The data is prepared in line with Eurostat requirements but, the CSO has acknowledged that the economic growth figures may be distorted by the “effects of depreciation and the net effect of profits of multi-national entities” in a small open economy such as Ireland. A separate measure prepared by the CSO where these effects are removed showed GDP growth of 6.4% in 2015.

The improvement in the Irish economy is most evident in employment where unemployed fell to 8.7% in Q4 2015, the lowest level since Q4 2008.

The Banking Sector in Ireland

Credit institutions in Ireland employed some 27,100 people at the end of 2015. Gross value added (GVA) by the banking sector was estimated at €5.6 billion in 2012, equivalent to 5.5% of total GVA by businesses (excluding agriculture) in Ireland, according to the Central Statistics Office.

There were 20 banks and building societies which had significant business with Irish resident household or non-financial corporate credit or deposit markets at the end of 2015, according to the Central Bank of Ireland (CBI). These included institutions authorised under Irish legislation and institutions authorised in another Member State of the European Economic Area and operating in Ireland on a branch basis. Two Irish banking groups (Allied Irish Banks – AIB and (Permanent TSB) are majority-owned by the Irish government, while the government also holds a minority stake in Bank of Ireland. There were a further 40 banks with mainly international business.

The Government established the National Asset Management Agency (Nama) in 2009 to acquire, manage and gradually reduce problem property-related loans from Irish financial institutions. Nama aims to redeem most of the bonds used to buy the debts by 2018 with the remainder redeemed by 2020. In 2015, the government launched the Strategic Banking Corporation of Ireland, which provides wholesale funding to banks and non-bank financial institutions for on-lending to small and medium-sized enterprises (SMEs).

Credit institutions in Ireland include more than 350 credit unions, which are not-for-profit, member-owned financial cooperatives funded primarily by member deposits that compete with banks in the personal lending and deposits markets. Each credit union operates a single branch and its membership is drawn from a specific community, industrial or geographic group. The Credit Union Restructuring Board is a statutory body established to facilitate and oversee the restructuring of credit unions. By the end of 2016, the CBI expects the number of active credit unions to drop to about 280.

Credit unions managed some €14 billion in assets at the end of 2015, compared with €364 billion for domestically-oriented institutions and €236 billion for internationally-oriented institutions.

On-balance sheet loans outstanding to Irish resident private-sector enterprises (excluding financial intermediation) totalled €49.7 billion at the end of 2015, of which €33.6 billion was outstanding to SMEs. Housing loans of €77 billion were on the balance sheets of credit institutions, with a further €33.6 billion in securitised loans. Non-mortgage consumer credit €11.2 billion was outstanding as well as €3.7 billion in other loans.

Outstanding credit institution loan balances have declined in recent years as both businesses and consumers deleverage, but gross new lending grew strongly in 2015: new residential mortgage lending rose by 26% year-on-year to €4.9 billion, while new lending to non-financial SMEs rose by 24% year-on-year to €3.4 billion.

Credit institution deposits also grew, with private household deposits up 3.6% to €89.1 billion at the end of 2014 and deposits of Irish resident private-sector enterprises (excluding financial intermediation) up by 7% to €48.2 billion.

An Post, the State-owned postal service operator, provides a range of financial services and offers some cash-based banking services in its offices to customers of partner banks. By the end of 2015, some €19.4 billion (€19.1 billion in 2014) was held in national savings schemes and post office savings accounts, administered by An Post on behalf of the National Treasury Management Agency.

Ireland has emerged as a major international financial services centre. It was the world’s seventh-largest exporter of fee-based financial services and insurance services in 2015 according to UNCTAD estimates. Ireland supports the full range of banking activities, including corporate and investment banking, funds’ industry services, asset management, corporate treasury, securitisation, leasing and asset finance, trade finance, and wealth management.