Pimco’s El-Erian: Ireland Risks Major Run on Banks
Ireland risks a “major bank run” unless European officials act quickly to calm the financial turmoil in the nation, Pacific Investment Management Co. Co-Chief Investment Officer Mohamed A. El-Erian said.
“The numbers so far have shown that the Irish banking system has been bleeding deposits,” El-Erian said in Bloomberg Radio interview on “Bloomberg Surveillance” with Tom Keene. “It will seriously undermine the prosperity of this country for a generation. The first thing they must do is execute on what they announced this weekend — which is a big external aid package and steps by the Irish government.”
Ireland’s government was forced on Nov. 21 into applying for a bailout from the European Union and International Monetary Fund, mainly due to concerns about the country’s banking system. Lenders had become more reliant on emergency European Central Bank funding after being frozen out of wholesale markets. The amount of ECB loans to the country’s banks rose 7.3 percent to 130 billion euros in October from the previous month, Ireland’s Central Bank said on Nov. 1. The data include both international and domestic banks operating in Ireland.