A mind-boggler or an eye-goggler in the SBP today about the share movements of Anglo and the implications of the guarantee.

Meanwhile, market sources have said that Anglo Irish Bank has six borrowers with loans of about €800 million each. The bank made the disclosure after analysts inquired about levels of concentration in its loan book in early December.

The Irish Banking Crisis is beginning to impact on other economies...

Quote :

Spire mired in Irish bank crisis

A financial scandal in Ireland is posing new trouble for the developer of the Chicago Spire, the proposed 150-story tower on the lakefront.

Anglo Irish Bank Corp., the developer's main lender, faces nationalization by the Irish government to avoid collapse. The bank's stock has lost 98 percent of its value since reaching a high in 2007, and its chairman quit after investigators discovered he would hidden about $121 million of personal loans he got from the bank.

The Chicago Spire construction site at 400 N. Lake Shore Drive, shown in September, is quiet now as work has stopped. Financing for the proposed 2,000-foot Chicago Spire (inset) could be in jeopardy.
(Richard A. Chapman/Sun-Times, Courtesy)

The bank has specialized in commercial lending and become a symbol of Ireland's boom-and-bust economy. It also had a taste for speculative development overseas. It opened an office in Chicago to handle business here.

For more than a decade, its stock -- now worth just 21 cents a share -- soared on foreign investment and homegrown enthusiasm for construction and property.

Spire developer Garrett Kelleher, executive chairman of Shelbourne Development Ltd., used private funding assurances from Anglo Irish to persuade Mayor Daley's administration to grant zoning approval for the project in 2007. Kelleher had said Anglo Irish's commitment was almost open-ended and required no threshold of condominium sales before it would underwrite construction.
Property records show Shelbourne has drawn $69.5 million from Anglo Irish for the early stages of construction at 400 N. Lake Shore Drive. But work has been stopped, and Shelbourne has been hit with several liens from contractors -- including one from his own celebrity architect, Santiago Calatrava. Though the building has been marketed almost as a Calatrava artwork, the architect alleges Kelleher owes him $11.34 million.

Sources said Kelleher has been seeking other investors, either in debt or equity positions, to help get construction restarted. But the world's financial crisis has dried up the supply of money looking for speculative investments.

If Kelleher can't raise money from Anglo Irish, it becomes more likely that he will default or lose control of the project. Shelbourne has said that about a third of the spire's 1,200 condos are under contract, but experts wonder if those buyers will be able to close.

Kelleher and a spokeswoman for Shelbourne could not be reached for comment. An Anglo Irish executive in Chicago declined to comment.

The bank's predicament boils down to bad debts and lost reputation, especially after the disclosure of hidden loans to former chairman Sean FitzPatrick, who resigned Dec. 18.

Irish Finance Minister Brian Lenihan said the government would buy about $2.1 billion in new-issue Anglo stock, effectively nationalizing the bank because the government would gain a 75 percent stake. The government-owned shares could not be traded.

The bank's new chairman, Donal O'Connor, announced an extraordinary general meeting Jan. 16 to approve the government intervention -- and urged shareholders in a letter Wednesday to accept the government's terms even though their own stock would be heavily diluted.

"The board recognizes and understands the sense of hurt and disappointment that people feel regarding the bank following recent events," O'Connor wrote. "We apologize unreservedly to our customers, employees, shareholders and all other stakeholders for these events and are determined to restore people's trust and confidence in the bank."

But Anglo's shares have continued to fall this week, as Irish, British and American analysts voiced doubts that the bank has revealed the true extent of its exposure to bad debts, currently estimated at $700 million.

Credit rating agency Standard & Poor's said its officials planned to visit Dublin next month to get a briefing from Anglo directors. The New York agency -- whose ratings influence the interest rates that banks must pay on their borrowings -- said the FitzPatrick scandal "may have a significant impact on Anglo's standing in the marketplace." It expressed "continuing reservations about the long-term viability of Anglo's business model."

The character of this deal appears to be the same as I have been talking about in other posts here. A vast loan proffered without a sound business plan at (or after) the top of a building boom and with, I presume, the site and development value ( zero, if the development isn't completed) taken as collateral for the loan.

The value isn't zero if the development isn't completed. The value of an incomplete development is the value of the land and buildings minus the cost of completing the development. Obviously this is considerably less than the loan extended to the developer but nonetheless it is not zero.

johnfás wrote:

The value isn't zero if the development isn't completed. The value of an incomplete development is the value of the land and buildings minus the cost of completing the development. Obviously this is considerably less than the loan extended to the developer but nonetheless it is not zero.

Yes, johnfás, you're right, has a value, if a buyer/ buyers can be found, but the value of land and buildings has much declined since AIB granted the loan. If the loan is called in, and a buyer can't be found (or a very low fire sale price is realised), any notional value is of small comfort to creditors.

Sinn Fein want the CAB in there.

http://www.sinnfein.ie/news/detail/36806

I know someone who phoned Anglo Irish to remove their money and over three phone calls in the day, they spoke to two people. On the third call they spoke to the man they had originally spoken to, who denied that he had spoken to the caller at all or indeed that the caller had spoken to anyone else. He claimed that the second named Anglo employee was out sick on that day. He lied. It says alot for the Bank.

Banks in general. I wanted to close an account with BoI a couple of years back, and went into the branch. They refused to let me close it. I had to shout before I got my way.

Is CAB investigating this cowboy outfit yet? And if not, why not?

Slim Buddha wrote:

Is CAB investigating this cowboy outfit yet? And if not, why not?

They should.

ceacg wrote:

Slim Buddha wrote:

Is CAB investigating this cowboy outfit yet? And if not, why not?

They should.

Isn't it true that we just don't have the laws ready to hand in this place to put their balls in a vice ? What mechanisms would we need for the Dáil to cook up laws and procedures to hang basturds who engage in this kind of skullduggery ?

What we need is enforcement. We need some people to pay the price for what they have done. They should not be allowed to get away with things just because they wear a suit.

ceacg wrote:

What we need is enforcement. We need some people to pay the price for what they have done. They should not be allowed to get away with things just because they wear a suit.

Do we send Louis Copeland in to measure them up?

He couldn't do worse than the Regulator.

There seemed to be a lot of trading in Anglo shares the last 2 days. I don't know why. I still think this is a dead bank for the reason I posted on the youngdan prediction thread.

14 Million shares traded today, finished down 8% at 0.24

Silly business. Is Sean Quinn trying to buy the whole shebang ?

Anyone want to offer an opinion as to why Anglo shares are up 8% today ? I don't get it. It must be just short term speculation...

from the Irish Times today

Quote :

FitzPatrick Anglo loans were more than €87m

THE SECRET loans to former Anglo Irish Bank chairman Seán FitzPatrick exceeded €87 million at times over the eight years he concealed them, the Oireachtas Committee on Economic Regulatory Affairs was told yesterday.

Former Revenue Commissioners chairman Dermot Quigley, who investigated the Financial Regulator’s handling of the inquiry into the loans, told the committee that there were “variations up and down from that figure” over the eight-year period.

He said he could not disclose the size of the loans to Mr FitzPatrick each year, saying that legal advice constrained him.

...


Chairman of the regulatory authority, Jim Farrell, who fielded questions from TDs and Senators, promised to tighten the supervision of banks in future, following the “unacceptable” loans at Anglo.

“Some of the behaviour we have witnessed of late is totally unacceptable,” said Mr Farrell. “We fully accept that substantial change to regulation is required.”

Mr Quigley said the regulator had failed to investigate the loans as it had been, in part, busy coping with the worsening financial crisis.

“This went off the radar screen. . . We had a serious breakdown in our process and internal communications,” he said.

Fianna Fáil Senator Geraldine Feeney said it was “pathetic” for the regulator to say it had been too busy to investigate the loans. “You were blindfolded, you were sitting on your hands, you had your mouth gagged and you had your ears covered,” she said.

Mr Quigley said he “could not reconcile” the evidence presented to him during his three-week investigation into the affair. Fine Gael TD Leo Varadkar said: “Somebody there is not telling the truth.”

Mr Quigley, Mr Farrell and another member of the authority, John Dunne, who assisted Mr Quigley and attended yesterday’s committee hearing, said they would not resign over the controversy.

“Our report shows there were shortcomings and failings but does not show that the whole authority had failed,” said Mr Dunne. Independent TD Joe Behan replied: “You are divorced from reality.”

Mr Neary answered only two questions yesterday ...
http://www.irishtimes.com/newspaper/frontpage/2009/0114/1231738222989.html

Are CAB investigating Anglo yet? And if not, why not?

Slim Buddha wrote:

Are CAB investigating Anglo yet? And if not, why not?

Nothing in public domain about that yet Slim.

EvotingMachine0197 wrote:

14 Million shares traded today, finished down 8% at 0.24

Silly business. Is Sean Quinn trying to buy the whole shebang ?

It would make sense if somebody did!

Buy the bank, accept a lesser amount in settlement of the loans on the basis that it is a bad debt and the underlying asset won't sustain it. The bank is then carrying the can with a debt to its financiers. This debt will be covered by the state. On this basis, the developers and Dunne could club together and buy the bank for much less than they owe the bank and negotiate the settlement of their loans for a lesser amount. They have 18 months to complete their task!

There is a good thread on the Pin about this report that led to Neary's retirement.

One of the points that stood out for me is that the regulator essentially doesn't bother reading the quarterly reports sent in from financial institutions.

Years ago a bank/credit union/building society would return an annual report to the Central Bank (the "Registrar of Friendly Societies" for a Building Society or Credit Union). Then IFSRA came into being and it introduced quarterly reporting.
Fitzpatrick's loans *were* on the quarterly reports! So clearly the quarterly reports were being filed in the bin, unread, and Fitzpatrick knew this.

Anglo share price bombing today. Down 22% to 26 cents, which sort of illustrates that the gains of last 2 weeks were without basis.

BOI, otoh, seems quite stable even if sluggish.

I would imagine the mentions of the IMF have had a large bearing on the rapid decline of the ISEQ today.

Yesterday evening the govt announced that Anlgo Irish bank would be nationalised, probably on Tuesday.
http://www.rte.ie/news/2009/0116/banks.html

Anglo Nationalisation discussed here