Friday, March 1, 2024

Irish banking sector ‘in good stead into the future’

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The level of capitalisation and liquidity in the Irish banking sector is very strong, the chief executive of the Irish Banking and Payments Federation Ireland (BPFI) has said.

Brian Hayes also said the supervisory and regulatory requirements in place put the entire banking sector here in good stead into the future.

He was speaking as European bank shares fell further today, dragged down by wider concerns about the health of the global banking system.

“The reality is that the Irish banking story in terms of international investors is a very good story,” Mr Hayes said.

“Also when one considers the amount of deposits to loans in the Irish banking sector it is a completely different story than what happened a decade and a bit ago.”

He said the problems in the markets today centre around Credit Suisse and that has unnerved investors already worried about the fallout from the collapse of Silicon Valley Bank.

“And I think that is really around the question of hedging in a very difficult market, where interest rate volatility is so stark for banks to deal with,” he said.

Mr Hayes added that Irish banks had been very good at hedging in an environment where bonds have to be paid out and it is very difficult with volatility to get that right.

“We have moved from a 12-year period, a lower for longer interest rate environment, to a very volatile interest rate environment today and that is clearly taking some time to work its way through the financial markets and financial system,” he said.

He added that as monetary policy works its way out through the ECB, Fed and Bank of England, there will be some challenges ahead.

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