Irish stress tests assume banks stem deposit loss

DUBLIN (Reuters) - The Irish bank stress tests that revealed a 24 billion euro (21.1 billion pound) capital shortfall among the country's four main banks on Thursday assume the banks do not continue to lose deposits, a finance ministry official said.

The official said he hoped the restructuring would boost confidence in the banks and stem the flow of deposits.

"The PCAR and PLAR tests assume no growth and no loss of deposits," the official told reporters at a briefing in Dublin. The Irish Prudential Capital Assessment Plan (PCAR) measured the capital needs of banks, while the Prudential Liquidity Assessment Plan (PLAR) measured liquidity needs.

Bank of Ireland, AIB, Irish Life and EBS have lost over 20 billion euros in deposits since the last stress tests were conducted in early 2010, forcing them to rely increasingly on short term liquidity funding from the European Central Bank.