Nationalisation Watch / Govt. rethinking 3.5 billion bailout for the banks?

Should have kept those bloody AIB shares, would have made even more had I sold them today. Ah well, it'll probably be worth nothin in the morning .

Bird in the hand

I lodged €38 in coin at my local AIB this morning. I presume this is the reason for the rally.

I hear that developers are going to be suing the banks for reckless lending.

I am so not glad to be a part owner of these banks.

Quote :

Time for Quinn to come clean on Anglo Irish Bank saga

ANALYSIS: Senior figures in Irish business may have been involved in an exercise that shored up the share price of Anglo Irish Bank, writes COLM KEENA .

THE INFORMATION seeping into the public domain concerning Seán Quinn and Anglo Irish Bank has the potential to cause yet more damage to the reputation of Irish banking and business culture generally.

The owner of the State’s largest privately owned business was betting enormous sums on the share price of the State’s third biggest bank and using a method (contracts for difference) that meant the markets had no entitlement to know what he was up to.

Then, when the financial regulator somehow got wind of the size of Seán Quinn’s involvement in Anglo Irish Bank, the position was unwound in such a way that something in the region of 10 per cent of the bank’s shares changed hands without going on to the market.

Key questions arise from that fact. Who managed this process? To what extent, if any, did Anglo Irish Bank fund the purchasing of the shares by the persons who ended up owning them?

>>>> Irish Times

cactus flower wrote:

I hear that developers are going to be suing the banks for reckless lending.

Has the borrower no fault here?

Quinn's business empire appears to be in rude financial health. At least we know they have one very large loan which the borrower can service. It may ultimately transpire that this is one bit of business that we are thankful for.

Zhou_Enlai wrote:

Quinn's business empire appears to be in rude financial health. At least we know they have one very large loan which the borrower can service. It may ultimately transpire that this is one bit of business that we are thankful for.

What do you mean, we effectively own Quinn Direct now too?

We don't own Quinn Direct but they have very large debts at Anglo and all their debts will be secured... so if things go belly up for Quinn, Anglo (owned by us), will appoint a Receiver or Liquidator as a significant creditor. But then again that applies to any business which has any loan with Anglo and it applies to any business who has any loan with any other bank.

We don't own Quinn Direct. It looks like the Quinn Group will be able to pay their loan repayments so we/Anglo should never have to call in the security.

Yup the Quinn Group seems to be doing OK for the moment anyway. Although I would guess their cement business has seen better days... and their hotel business...

eoinmn wrote:

cactus flower wrote:

I hear that developers are going to be suing the banks for reckless lending.

Has the borrower no fault here?

I guess, and sincerely hope, the courts will find the borrower has all the fault. If not, a can of worms would be open that would allow for legal default left right and centre, leaving us responsible for Banks with even bigger liabilities than we imagine they do already.

cactus flower wrote:

I guess, and sincerely hope, the courts will find the borrower has all the fault.

From what I read over on the other place, the fella taking this action isn't some young brickie who bought a shoebox in Navan. He's a director at Quinn and used the loan to buy a house with a stud farm in Meath, formerly owned by Smurfit.
The same names just keeping cropping up again and again, don't they? Guess that happens in a small country.

eoinmn wrote:

cactus flower wrote:

I guess, and sincerely hope, the courts will find the borrower has all the fault.

From what I read over on the other place, the fella taking this action isn't some young brickie who bought a shoebox in Navan. He's a director at Quinn and used the loan to buy a house with a stud farm in Meath, formerly owned by Smurfit.
The same names just keeping cropping up again and again, don't they? Guess that happens in a small country.

Parting them from their money and their mansions will be like knocking barnacles off a rock. There's going to plenty of work for the legal profession.

cactus flower wrote:

Parting them from their money and their mansions will be like knocking barnacles off a rock. There's going to plenty of work for the legal profession.

Very difficult if it is for a loan other than a mortgage on the home and when there is a spouse involved.

No one really knows what's on those banks books, do they. From the SBP last Sunday:

Cliff Taylor wrote:

.... A study commissioned by the government and the Financial Regulator, and undertaken by PricewaterhouseCoopers, estimated that our three largest banks had a capital shortfall of around €10 billion - manageable in a scenario where our National Pension Reserve Fund has €15 billion in assets and the main banks had significant equity capital, which would be eroded before state capital was needed. The financial markets, however, believe losses will be much higher.

The crisis in Sweden in the early 1990s, for example, led to write offs of about 12 per cent of GDP, which would be upwards of €20 billion in the Irish case. Other estimates put the likely losses here as significantly higher. Write-downs of 10 per cent on the loan books of the three biggest banks alone, for example, would yield losses of upwards of €30 billion.

Many of these losses will be absorbed by shareholder equity, of course. It is the uncertainty about what will land on the government’s books which is unsettling investors.

In an analysis last week, Davy stockbroker economist Rossa White pointed out that the exchequer cost of recapitalising banks in Finland, Sweden and Norway in their crises during the 1990s ranged from about 2 per cent of GDP in Sweden (after an initial outlay of 4 per cent, it is reckoned that the government subsequently recouped about half of this through asset sales), and 2.6 per cent in Norway, to 8.6 per cent in Finland.

Applying these figures to the Irish GDP would give figures of between €3.5 billion and €16 billion - significant sums, but well short of the apocalyptic figures quoted in some debates.

>>>>>Sunday Business Post

How would you describe the running of a business, that has lost the ability to accurately write its own balance sheet?

Here is a bit of reality on Anglo. They have liabilities of 55 billion in deposits subject to immediate demand. They have about 29 billion in bonds outstanding due to future demand. They have liquid assets of whatever they have in cash immediately and whatever they are repaid on loans given out, in the future. This figure is a fraction of what is recognised.

In otherwords if there was a run tomorrow there would be a 50 billion euro gap which would force the country to default. The smart guys are withdrawing their cash

youngdan wrote:

Here is a bit of reality on Anglo. They have liabilities of 55 billion in deposits subject to immediate demand. They have about 29 billion in bonds outstanding due to future demand. They have liquid assets of whatever they have in cash immediately and whatever they are repaid on loans given out, in the future. This figure is a fraction of what is recognised.

In otherwords if there was a run tomorrow there would be a 50 billion euro gap which would force the country to default. The smart guys are withdrawing
their cash

Well, this is why I think the Brians are criminals, or criminally negligent, or both.

According to RTE we are now the second from highest State in the EU in terms of economic contraction, only Latvia (in the hands of the IMF) being worse, and the second from highest at risk of default, on Greece being at higher risk.

Both of the above are experiencing serious social unrest.

I would give Lenehan the benefit of the doubt so far.

I gather from a colleague who has a shareholder relative, that Anglo had insurance against the effects of dishonesty. Does that mean the domino effect of the collapse can be claimed, theoretically, from the insurer?? And I'd love to know who the insurer was/is........

youngdan wrote:

I would give Lenehan the benefit of the doubt so far.

Well, he has avoided starting the riots so far.

Otherwise, what would you give him marks for?

cactus flower wrote:

According to RTE we are now the second from highest State in the EU in terms of economic contraction, only Latvia (in the hands of the IMF) being worse, and the second from highest at risk of default, on Greece being at higher risk.

The risk of default is a measure of confidence from international investors, at best it is based on probability rather than on any known reality. To an extent you can understand why, we have been subject to some very negative publicity, mostly coming out of London, who largely never thought we were up to much to start with.
On the other hand so far we retain our AAA credit rating which is based on the actual reality of our low national debt to GDP ratio, which is one of the best in Europe, I don’t suppose RTE mentioned that …or did they?

RTE was actually being quite good tonight. The last 2 nights, they obediently reported agreements, vaguely, twixt unions, IBEC and framework document, while helpfully saying that a nice friendly little agreement would do wonders for our future ability to borrow.....which is probably exackerly what the Dept of Finance would want them to say; but in fairness, is probably also the right thing to say under the current circs.....

They also reported the 50% price difference between here and the UK; our glorious Tanaiste is threatening the retailers with legislation. For some reason, I'm vaguely hoping she chooses a few of the worst to demonstrate that she actually has teeth......yeah, I know, don't hold yer breath....