AIB/BOI 100% Nationalisation?

According to Newstalk/politics.ie at least - politics.ie/economy/143577-a … banks.html

Bank of Ireland share price plunging - goodbody.ie/servlets/MarketI … ?DATA=ISEQ

I’m guessing the bond holders debts are owed by the bad bank?

Dukes is saying the changes will happen “rapid”

irishtimes.com/newspaper/bre … ing18.html

Surely he means “knee jerk and without due process”?

I just don’t get this.

Surely they should merge the operations of AIB, Bank of Ireland and Anglo into ONE operation, and then do whatever with the junk bit. Otherwise we’ll end up with 3 crap banks and 3 bad (even crapper) banks.

Can’t see how the EU/IMF would agree to keeping 3 good bank operations on the go. It would stimmy the market from open market/foreign competition.

Any chance of a **rapid and sharp restructuring ** of the PS?

Dukes is talking again …

Maybe AIB, BOI and IL&P will be nationalised:

** AP: Dukes: Most, if not all, of Ireland’s six banks to end up in state hands**

msnbc.msn.com/id/40315568/ns … _business/

How will they own ILP? I thought they opted out of NAMA and the bailout money, so unless there is a plan to directly purchase them it makes no sense. Plus, if it is viable then it can be sold on the open market, if it is not viable it can be let fail.

While it has been able to fund itself so far, as I say liquidity = solvency if you are a bank. If the continued stressed conditions continue, it will not be able to fund itself.

What is also unclear is how much of the repo at the ECB is related to each of the banks.

The rumours concerning IL&P and EBS were that EBS would be sold for a half stake in IL&P and would involve overcapitalising EBS to permit a partial recap of IL&P.

Or, if they can’t raise any more finance, just let them go?

It would add a certain poignancy that the way we do it in Ireland is to bankroll without question the worst of all banks, but let the ones that are struggling but getting by go to the wall.

In fact, that’s probably what will happen, if only so that the new government can wax lyrical about how they don’t bailout failed banks.

You see this is waht I dont get. They have no profits, cant raise shareholder capital and have no reserves. How can they be even paying salaries.

IL&P are unsuistanable with their current liquidity issues. They have **8.1 billion in liquidity from the ECB **. They also have a 260% loan to deposit ratio, they also have a hugely unprofitable tracker mortgage base.

They are a mess and are dependent on the ECB to survive. The ECB are here to stop this dependency.

( 8.1 billion ECB IL&P rescue money was mentioned in this Bloomberg article: bloomberg.com/news/2010-11-1 … osits.html )

Of all the banks in the country, I think IL&P might be the only systemic one, in the same way as Quinn Insurance is systemic. Insurance companies are tricky as their assets generally relate to future claims. While it would be nice to think that there is a chinese wall at IL&P between the banking and the insurance operations, past history in Ireland makes this a very optimistic hope.

I retain the belief that IL&P is, in general, run in an honest manner. Based on little more than a relative who is in a relatively senior position who is straight as a die. Not much to base an opinion on I know!

edit: thanks fungus, so now we know…

How would any of this relate to PTSB ?

Huh? IL&P own PTSB. As mentioned above, they are in a total mess and are totally dependent on the ECB and ICB to survive. If Dukes is correct, IL&P is likely to be nationalised.

IL&P have a share in, and own some wonderful businesses.

The first is the 30% stake that they hold in Allianz PLC (the non-life Irish subsidiary of Allianz, who own 66%, incidentally, the Catholic church own the other 4% (?!)). During the boom years, this operation made serious dough, earning a spectacular return on equity of 30%+ and combined ratio in 70’s/80’s. While 2009 was not good, there has been a turnaround for the first half of 2010 and the operation is back in profit and profitably underwriting. For more information, see these links

standardandpoors.com/ratings … 5186613544
allianz.com/static-resource … eport1.pdf

The wholly owned Irish Life Insurance subsidiary is also another good asset. I don’t think you need to worry about systematic risk too much because most of their assets are either in AAA or AA-rated cash or fixed income securities, so there’s no dodgy hotels or land banks to write down. Irish Life don’t give a detailed breakdown on performance for this part, but it has been consistently in profit and weathered the recession reasonably well.

The big problem is that the banking part of IL&P is so shocking that it wipes out the decent performance of the rest of the group, and then some. What really needs to be done is to nationalize the group, put life and fund part of the business/Allianz stake up for sale and then use that cash to recapitalize the banking part. That would certainly raise enough to keep the wolves from the door, for the moment at least.

Well, yes and no. Who bought the RMBS that they securitised? (Fastnet and Auburn). Did the insurance arm buy any for their reserves? Is there any cross-fertilisation between the two arms?

IL&P have just hiked most of their deposit rates today.

IL&P increased their 1 year corporate deposit rate to 3.60%, this is higher than Anglo and INBS. IL&P have increased their 2 year term deposit rate to 3.40%, this is the highest out of all Irish banks.

There is one reason you increase deposit rates dramatically like this, you need more liquidity and are loosing deposits.

Mortgages may go into NAMA

independent.ie/national-news … 31055.html

I see the banks are taking a pounding again. As a matter of interest Mr.Agent, do you have a cut off point to cut and run or is it a speculative trade that if there is a 100% loss you will just take it as a gamble that didn’t pay off.
I’m assuming at this stage that all share holder value will be wiped out, maybe not all in a straight line down but not far from it.