so maybe win is not as secure as a lot of us were thinking. Does anyone have the figures on AIBs UK profit breakdown? Maybe be in region. Of 10% - 15% of overall profits?
18% of group operating profit from 2007 annual results presentation.
roughly 50:50 split between the mainland and northern ireland.
I think AIB is a good-quality company and there are obviously some very smart people in charge. They’ve done extremely well out of the sale of their property portfolio which will temporarily bloat their performance. Also, I think they’re not as exposed to Irish mortgage defaults as some of the other Irish banks/building societies are because AIB have much higher quality customers. The problem I have with AIB however is:
- how big is their sub-prime exposure? (particularly with regard to their US operation)
- how risky is their Poland strategy?
- how will they cope with an Irish depression?
I would stay well away from AIB for now (especially with the global banking volatility), wait and see, and buy back in just as take-over talks are commencing.
As for Anglo, well… I think they’re screwed.
I think only 6% of AIBs profit come from the US. They have also announced that they have 700million euro of Irish construction debt that is being managed by a specialized team. I guess this means they think their expose is 700mill in Ireland which is more than manageable given their current profit level. The question is will that number grow?
Take-over talks? A pessimist would say nationalisation talks.
Everyone is knocking Anglo, are they the most likely to be nationalised? are they in THAT bad shape. I mean, I know their share price has sank but so have alot of other companies?
I think that the banking sector as a whole is to be avoided for the medium term. Profits have been boosted by leverage. Leverage is now a bad word and banks (at least in most western countries) are looking at a prolonged period of much more modest profit growth.
According to Goldman Sachs the rate of profit growth by banks since 2000 is over three times the rate of growth during the period 1973-2000. This was achieved by leverage. It will be quite some time before the banks are allowed to repeat this borrowing binge; indeed some of the mooted regulatory changes (and updated Basel II) could prevent this re-occuring - that is until we find a brand new way to shift loans off balance sheet.
The party is well and truly over.
from the Irish Times
I wonder why it was withdrawn. Perhaps a few of the comments were a bit close to the bone.
also in the Guardian
In related news, Anglo’s 5 year credit default swap spread is 315 bps. That means it costs 315,000 euros per year to insure 10 million of Anglo bonds against default.
As recently as the 27th of Feb the CDS traded at 200 bps. In June 2007 it traded about 35 bps.
For comparison AIB, BOI and IL&P currently trade about 180-190 bps.
Can someone here please explain where is the evidence is that Anglo could/should/may be Nationalised?
As for the share price falling…if you plot it’s performance over the last year, it mirror the Banking sector as a whole.
I don’t understand the rationale.
Now that’s innovative dogma for ya!
Yea, e.g. the AIB shafted developer Gilmartin for developer O’Callaghan over the Quarryvale Centre. Now, could it have been the relationship that the latter built up be the “driven” element? I would not be too smug about the “secure” element in this. Somebody is going to tumble and going on past behaviour, it sure won’t be members of government. Popularist politicians never side with losers