Irish consumers are still wary of placing their money in banks.
Banks in Ireland have lost billions as fewer deposits are made by the public who still don’t trust them to safeguard their money.
Irish banks made losses of €40 billion in deposits at the end of last year as consumer confidence in their country’s financial institutions plummeted.
Figures from the Irish central bank show that just a month earlier in November losses of €27 billion were made illustrating how steep the decline is amongst account holders.
Credit rating provider Standard & Poor’s reduced Ireland’s sovereign rating to A- earlier this week due to a “weaker economic outlook, reduced prospects for bank earnings and funding difficulties of domestic banks”. Bank of Ireland, Allied Irish, Anglo Irish and Irish Life were also downgraded as it questioned the “ability and willingness of the Irish government” to keep the lenders propped up during the tough economic climate.
The provider added that all four banks have failed to raise the market funds required and are still “highly reliant on central bank funding”.
The figures have been brought to light just in time for the Irish election on February 25, which investors will be keeping a close eye on.
Michael Noonan, the finance chief of leading opposition party Fine Gael, said: “Those who lent recklessly as well as those who borrowed recklessly should share the burden” as he urged the EU to cut the interest rate on rescue loans from 5.8% to a level closer to the EU’s borrowing cost of 2.6%.