ACROSS THE entire banking system, including institutions at the International Financial Services Centre (IFSC), cash on deposit fell by €14.6 billion month on month in February, according to new figures from the Central Bank. This was the largest decline since May of last year.

The total deposit base of Ireland-resident banks stood at €558 billion at the end of February. This is down by almost half from the peak in January 2009, when total deposits stood at €980 billion.

In the second half of 2010 the system suffered a huge outflow of funds, mainly caused by foreign depositors withdrawing cash. The rate of outflow slowed early last year, but the erosion of the deposit base has continued. Foreign withdrawals continue to account for most of the shrinking deposit base.

Irish private-sector depositors accounted for just over a quarter of the total deposit base in Ireland-resident banks.

At the end of February, Irish private deposits stood at €162 billion, unchanged on a month earlier. The stability of these deposits in February reflects a longer term pattern. Irish private sector depositors have reduced their deposits by just 13 per cent since their all-time high in August 2009.

Households are the largest source of deposits from the Irish private sector. Their total cash in banks stood at €91.2 billion at the end of February, a marginal decline on the previous month.

Companies of all kinds had just under €71 billion lodged in Irish-based banks at the end of last month, again broadly unchanged on a month earlier.

Borrowings by banks in Ireland on longer-term loans from the ECB fell by €7.9 billion in February, to €87 billion, due to a decline in IFSC banks’ recourse to refinancing operations.

The other side of the banks’ aggregate balance sheet shows that the credit crunch is continuing to affect households and businesses. Lending to households fell by €355 million during February following a decline of €691 million in January.

Developments in February were largely driven by a decline in loans for house purchase of €224 million, while loans for consumption and other purposes also decreased by €107 million and €23 million respectively. Loans to households were 4 per cent lower than in February of last year.

Lending for house purchases was 2.5 per cent lower on an annual basis in February, while lending for consumption and other purposes declined by 8.4 per cent over the same period.