Statistical Release 24 August 2017

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1 Statistical Release Consolidated Banking Statistics: Foreign Claims Q1 217 Statistical Release 24 August 217 Consolidated Banking Statistics: Foreign Claims Q1 217 Domestic banks 1 claims on foreign residents increased by 277 million (.3 per cent) in Q1 217, bringing the outstanding amount of claims to 79.6 billion. Claims on the official sector were the predominant driver, with an increase of 74 million recorded. Claims on the UK decreased by 176 million (.3 per cent) over the quarter, continuing a trend in quarterly declines which began in March 216. Claims on the United States grew by 296 million in the quarter, having increased by 511 million in Q Domestic banks largest foreign claims continued to be on the UK, and accounted for 66 per cent of claims at end-march 217. The availability of new sector breakdowns 2 allows us to split the non-bank private sector into non-financial corporations (NFCs), households, and non-bank financial institutions (Table 1). Table 1: Overview of Foreign Claims by Country & Sector, end-march 217 Q1 217 Change in Quarter million % of total million % change By country United Kingdom 52, % % United States 6, % % France 4, % % Spain 2,21 2.8% 8.4% Netherlands 1,617 2.% % Rest of World 12, % % Total 79,624 1.% 277.3% By sector Banks 9, % % Official Sector 13, % % Non-Bank Financial Institutions 6,66 7.6% % NFCs 21, % 22.9% Households 28, % % 1 In this case, the Central Bank of Ireland defines domestic banks as those banks whose ultimate parent entity is resident in Ireland. 2 A summary of these enhanced statistics can be found in Devine et al. (217), which focuses on foreign claims, international claims and sectoral breakdowns for Irish headquartered banks.

2 Statistical Release Consolidated Banking Statistics: Foreign Claims Q1 217 Developments in Foreign claims by Sector The largest increases were in claims on the foreign official and NFC sectors, recording rises of 74 million and 22 million, respectively. Claims on foreign official sector counterparties had also increased by 1.6 billion in the previous quarter. The majority of Irish resident banks foreign claims were on households (36 per cent) and NFCs (28 per cent), which accounted for almost two thirds of total claims at end-march 217. Claims on foreign official sectors (17 per cent), banks (12 per cent), and non-bank financial institutions (8 per cent) were smaller in comparison. Foreign claims recorded an annual decline of 1.2 billion, or 11.3 per cent. Annual declines were also recorded in all quarters of 216. Chart 1: Foreign Claims; net flows (4-qr sum) and annual rate of change 3 billion per cent Banks Official Sector Non-Bank Private Sector Total foreign claims, % (rhs) Non-Bank Financial Institutions Non-Financial Corporations Households incl. NPISHs Developments in Local & Cross-Border Claims Local claims 4 stood at 5.6 billion at end-march 217. This represented a 323 million increase during the quarter and follows a fall of 2.3 billion in Q Local claims fell by 9.1 billion (15.2 per cent) on an annual basis to end-q This annual fall in local claims represents over 89 per cent of the annual decline in total foreign claims. This follows a trend from 216 when each quarter recorded annual declines in local claims. 3 From Q4 213, the non-bank private sector has been broken down further into three sub-categories. However, as this chart uses a four quarter sum, the breakdown is only available from Q4 214 onwards. Before this, the non-bank private sector is shown as an aggregate figure. 4 Local claims are claims where the location of the bank office that books the position is the same as the location of the claim counterpart (e.g. UK subsidiary of an Irish headquartered bank lending to UK resident).

3 Statistical Release Consolidated Banking Statistics: Foreign Claims Q1 217 Cross-border 5 claims were lower at 29 billion at end-march 217, following a fall of 47 million (.2 per cent) over the quarter. In annual terms, cross-border claims recorded a decline of 3.6 per cent, or 1.1 billion, in Q At end-q1 217, cross-border claims had recorded five consecutive quarters of annual decline. Chart 2: Local and Cross-Border claims; net flows (4-qr sum) and annual rate of change billion per cent Local Cross-border Cross-border claims, % (rhs) Local claims, % (rhs) Developments in Claims by Location of Counterparty Domestic banks largest foreign claims were on the United Kingdom (including Northern Ireland), with exposures of 52.3 billion at end-march 217. Foreign claims on the UK fell by 176 million (.3 per cent) over the quarter. This represents the fifth consecutive quarterly decline in this figure. This was primarily driven by a decrease in claims on credit institutions and households, with claims on UK credit institutions recording the largest decline of 362 million. Chart 3 shows that the vast majority of the domestic banks claims on the UK are on the NFC and household sectors, while exposures to banks and the official sector are relatively small in comparison. 5 Cross-border claims refer to claims where the location of the bank office that books the position is different to the location of the claim counterpart (e.g. an Irish bank office lending to UK resident).

4 Statistical Release Consolidated Banking Statistics: Foreign Claims Q1 217 Chart 3: Geographical Breakdown of Foreign Claims, end-march 217 All Foreign Claims UK Claims ROW 16% Spain 3% France 5% US 8% Netherlands 2% UK 66% Households 34% Bank & Official Sector Non-bank 7% Financial Institutions 6% NFCs 19% There was a 4.6 per cent, or 296 million, increase in claims on the US over Q This rise was primarily driven by growth in claims on the official and credit institutions sectors. France, Spain and the Netherlands were also important locations for the foreign claims of domestic banks at end-q Foreign claims on these three countries increased cumulatively by 176 million during the quarter. This was driven by an increase in claims on France of 254 million, partly offset by a decrease in claims on the Netherlands of 86 million. Claims on Spain were largely unchanged, increasing by 8 million in the quarter. Chart 4: Locations of Irish Foreign Claims billion ROW 35 United Kingdom Netherlands 3 Spain France 25 United States 2 Grand Total

5 Statistical Release Consolidated Banking Statistics: Foreign Claims Q1 217 Note: The consolidated banking statistics detail the claims of the domestic banks on non-residents, by counterpart country and sector on an ultimate risk basis i.e. according to the country and sector where the ultimate guarantor of the risk resides. The dataset used is similar in methodology to the Consolidated Banking Statistics published by the Bank for International Settlements (BIS), but differs in coverage, as it refers only to the domestic Irish banks. The tables can be accessed on the Central Bank of Ireland website. The dataset begins in Q4 24 and the latest data published relate to end-q1 217.