AIB/BOI 100% Nationalisation?

[conor_mc]

@Indo

Mortgages may go into NAMA

independent.ie/national-news … 31055.html
Among the ideas being explored are:

Moving distressed mortgages in arrears for 90 days-plus into NAMA.

If I were in trouble with my mortgage, I’d be straight on the phone to my bank manager today to start negotiating. The banks know that NAMA dishes out heavy enough discounts - so if they can get away with short-sales within, say, 20% of the mortgaged amount before NAMA arrives to take the mortgage at 50-70% of face value, they might just go for it.

[fungus]

@FB2

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.

When AIB, BOI and IL&P are 100% nationalised, the Irish government will appoint a valuer, the valuer will decide if the equity shareholders are entitled to anything. They will most likely decide that they are entitled to nothing as their shareholding is worthless.

[fungus]

Equity Investors in BOI Wake Up to the Fact that BOI will be nationalised

bloomberg.com/news/2010-11-2 … cerns.html

ank of Ireland Plc, Ireland’s largest bank, fell to a 20-month low, leading the country’s lenders down, on concern that shareholders will be diluted in any government bailout.

Bank of Ireland slid 25 percent to 29.2 cents at 11:53 a.m. in Dublin trading after tumbling 19 percent yesterday. Allied Irish Banks Plc, the country’s second-largest lender, fell 14 percent to 35 cents, and Irish Life & Permanent Plc, which has so far avoided a bailout, fell 4.8 percent to 80 cents.

Irish banks may get immediate capital injections as part of the European Union and International Monetary Fund’s rescue package, Matthew Elderfield, the country’s head of financial regulation, said in a speech yesterday. Finance Minister Brian Lenihan said on Nov. 18 that the government was considering a “contingency fund” that banks could tap for additional funds.

“That the banks will be obliged to raise further capital now looks assured,” Emer Lang, an analyst with Dublin-based securities firm Davy, wrote in a note today. “The timing of any increase will hinge on the balance struck between ‘immediate’ additional capital injections and ‘top-ups’.”

Irish banks forced the government to seek the bailout after loan impairments surged following the collapse of the country’s decade-long real estate boom in 2008. That year, the government pledged to back most liabilities, including all deposits in Irish banks, a promise that led the government to inject 33 billion euros ($45 billion) to support the lenders. As loan losses climbed, the government put the cost of the rescue at 50 billion euros in September this year, fueling investor doubts that Ireland could afford the rescue.

[fungus]

Wall Street Journal: Irish Bank Nationalisations Loom

online.wsj.com/article/BT-CO-201 … 04999.html

Irish banking stocks sold off sharply Monday, along with Irish subordinated bank debt that is expected to take a big hit in any further nationalization

[El_Stuntman]

sub-euro BARF looming

[CaveCanem]

@fungus

Mortgages may go into NAMA

Among the ideas being explored are:

Moving loss-making tracker mortgages off bank balance sheets into NAMA.
Moving distressed mortgages in arrears for 90 days-plus into NAMA.
Moving impaired SME loans and smaller corporate loans into NAMA.
Reversing the recent decision not to move loans below €20m into NAMA and admitting thousands of smaller property loans.

The NAMA structure doesn’t work anymore. Or a least the nama bonds at 6 month euribor to be used as repo collateral.

For example - tracker mortgages. Banks are getting about ecb+1%. It wouldn’t make sense to replace these with a write-off and replacement with something earning 6m euribor.

Though my warning light is flashing. If the gov is forced to shrink the bank balance sheets immediately, they may be told to remove the Irish sovereign from any of this risk. This may take the form of selling the mortgages to a non-irish investor/bank. At a guess, we’d be doing well to get 60c in the euro for trackers. This would force the irish banks to call on the contingent capital pretty quickly.

[PilsnerUrquell]

Question on the Tracker book : if my Tracker was indeed sold to a Foreign Bank, I assume the product itself remains intact? Ie :Im still paying Tracker rates? Is it possible they can break the contract?

[coc]

@El Stuntman

sub-euro BARF looming

What?

[FB2]

Nonsense, it’s in the healthy 1.40s. Such negativity.

[CaveCanem]

@PilsnerUrquell

Question on the Tracker book : if my Tracker was indeed sold to a Foreign Bank, I assume the product itself remains intact? Ie :Im still paying Tracker rates? Is it possible they can break the contract?

I would expect the terms to be honoured. Generally the financial regulator would ensure that the borrowers would not be negatively effected. Though nothing is 100% certain these days.

[fungus]

FT: Full Nationalisation of Irish Banks is the Simple Solution

ft.com/cms/s/0/26acbaec-f734 … z168driciW

“Full nationalisation would give the government far more room for manoeuvre,” says one banking analyst. “I would be staggered if it didn’t fully nationalise at least Allied Irish Banks.”

AIB is already teetering on the brink of full state ownership – a larger than expected capital raising this year will leave the government with about 96 per cent – any move to fully nationalise Bank of Ireland would probably be met with strong resistance.

Full nationalisation would, in effect, allow the government to clean up the banks’ balance sheets in one fell swoop by siphoning off tens of billions of euros of toxic loans into a state-owned “bad” bank – much like the action taken to resolve the problems at Northern Rock, the nationalised UK lender.

and the IMF support it …

In June, an **IMF report on Ireland argued that such an approach **would be the most straightforward way to deal with the toxic loan problem within the banks.

How many days/hours do AIB, BOI and IL&P have left as listed companies?

[yoganmahew]

The Boomtown Rats - Like Clockwork

[fungus]

RTE Nine News:

RTE: AIB May be 99.99% Nationalised

This is bats. Why on earth would they not fully nationalise AIB?

the plan is not finalised. Hopefully the IMF will tell the government it should be 100%.

[Dreaded_Estate]

@fungus

RTE Nine News:

RTE: AIB May be 99.99% Nationalised

This is bats. Why on earth would they not fully nationalise AIB?

the plan is not finalised. Hopefully the IMF will tell the government it should be 100%.

Probably because the NPRF couldn’t be used to provide the cash if we go 100%

[fungus]

Isn’t the IMF providing the cash rather than the NPF?

[yoganmahew]

@fungus

Isn’t the IMF providing the cash rather than the NPF?

At 7%? You must be kidding. They’re providing the shits and giggles. The shits for the front bench, the giggles for themselves…

[jabaar]

So what’s do the terms and conditions on the tracker mortgages allow? If nationalized, can trackers be thrown away? Borrowing at 5%+ to loan at tracker rates is not viable so when does the straw land on the camel?

[FB2]

data.cnbc.com/quotes/ire

After hours in the states seem to like that its not definite nationalisation for Bank yet.

[yoganmahew]

And IL&P makes three… all in the 'nineties anyway…
ftalphaville.ft.com/blog/2010/11 … ng-sector/

A de facto nationalisation of the Irish banking sector
Posted by Neil Hume on Nov 24 19:18.

The banking team at RBS have produced an excellent note on what Ireland’s quoted banks will look like post-recapitalisation.

And it makes for uncomfortable reading.

In order to bring common Tier 1 equity ratios up to 12 per cent on a Basel III basis as proposed by the EU rescue package, analysts Asheefa Sarangi and Ian Smillie estimate a further €21bn of capital will need to be injected into Allied Irish Banks, Bank of Ireland and Irish Life & Permanent.

Now, €5.5bn of this could be funded through the conversion of existing government preference shares and in the case of ILP, surplus capital at its insurance operations. Which leaves a cool €15.5bn to find:

[discostu]

ON Tuesday there was a very strong (unfounded) rumour that sweep banking cirles in Cork at a branch level that AIB and possible Bof I would go into receivership/examinership. It caused a huge amount of unrest amongst the staff. Their is currently an IBOA meeting taking place in Cork it will be interesting to see what is said