Anglo Irish: continues to pay among the highest rates in the world to attract sterling deposits through its Isle of Man subsidiary

Individuals and companies pulled out over €12bn in deposits from Irish-based banks in recent months amid international fears about the fragility of the banking system here, the Central Bank has confirmed.

Monthly statistics published last week showed that the whole deposit base for all banks, including those in the International Financial Services Centre (IFSC), stood at €275bn at the end of March, down by about €9bn in the month and €12bn since the start of the year. Central Bank figures suggest that overall deposits fell by as much as €28bn from March 2008 but appear to have started to flow back in again.

"There had been a fall of deposits in Irish and IFSC banks," a spokeswoman for the Central Bank said on Friday. The Central Bank, led by John Hurley, has so far been confident that deposit flows in Ireland will remain solid.

The flight of deposits appears to have quickened since the nationalisation of Anglo Irish in January, analysts say.

Stability returned in recent weeks as sovereign interest rates that Ireland must pay on its increasing debt pile also fell back, said Dan McLaughlin, chief economist at Bank of Ireland.

Market rumours swirled in late January and early February that huge amounts of cash had been taken out of Irish banks amid fears that the country would need to tap emergency funding from the European Union or the International Monetary Fund. Such fears subsided and sovereign-bond interest rates have fallen.

Separately, the Sunday Tribune has learned that some unnamed Irish banks on the Isle of Man have suffered net declines in their key deposits in recent months.

According to senior banking sources in Ireland, the credit standing of Ireland and Irish banks generally have led international banks to withdraw deposits they traditionally placed with some Irish banks on the Isle of Man.

Anglo Irish and Irish Nationwide have long competed aggressively, paying the highest savings rates in the world, to attract sterling deposits through their offshore subsidiaries on the island.

Accounts for Anglo Irish filed in the Isle of Man in December show that Anglo Irish International Plc, the bank's main Isle of Man subsidiary, raised £4.17bn (€4.6bn) in deposits offshore last year, accounting for 10% of all its deposits.

Price comparison websites last week showed that Anglo Irish and Irish Nationwide continued to pay among the highest rates in the world to attract sterling deposits through their Isle of Man subsidiaries.

Latest accounts filed show that Irish Nationwide (IOM) Limited also had a substantial operation on the island, with £1.34bn in deposits.