Banks and building societies have been sourcing day-to-day liquidity abroad for the first time in over a year as the cross-border interbank market makes a tentative comeback a year after the in­stitutional lending system came to the brink of collapse following the Lehman Brothers bankruptcy.

Bank sources have reported a "fragile recovery" in the market for short-term loans of two to three months, with Irish institutions tapping banks and the commercial paper markets in France and Portugal for fresh funds.

The reopening of these markets is seen as a breakthrough in European money centres, according to one bank, where signs of comeback are reportedly being taken as "a straw in the wind". One Irish bank treasurer described the comeback as "very modest" but said the industry was "taking comfort" from improved access to liquidity.

The banks have largely relied on Central Bank funding in the last year, although interbank rates returned to pre-crisis levels in recent months. Still, the demand for term lending between banks has remained limited after institutions tried to reduce counterparty exposures amid widespread financial instability since last September.

The availability of new sources of short-term funding comes amid recent notable successes by Bank of Ireland and AIB in unguaranteed bond issues. Earlier in the month Bank of Ireland sold a €1.5bn mortgage-backed five-year covered bond – the first such issue outside the government guarantee – which one senior banker called a "signal success for the banking community". AIB followed last week with a €1bn three-year unsecured bond which was nearly three times oversubscribed.

EBS chief executive Fergus Murphy told the Sunday Tribune the building society was planning to issue its own covered bond early next year, after issuing and buying two bonds themselves this year for collateral purposes.

Kevin McConnell, Bloxham Stockbrokers' head of re­search, said the AIB bond issue revealed a "sea change" in attitudes to the banks.

"The liquidity problem is solving itself," he said. "Sentiment has improved significantly towards Ireland. If banks in the toughest position can get funding, it opens the door for other banks in Europe."

McConnell also said Ireland "needs to pass certain signposts" – meaning Nama and the Lisbon treaty – if the recovery in money market access is to continue, a sentiment reinforced by AIB head of capital markets Colm Doherty last week.