Anglo capital fears as loan transfers get 61pc discount - Emmet Oliver -> independent.ie/business/iris … 07929.html
The above is the get out jail card!
“we didn’t Know” “nobody told us” " we did not have the information" “that information was not required” and so on
It is estimated that the cost of rebuilding Pakistan may be between 10 and 15 billion , need I say anymore?
Spot on Richie
Its difficult to convey to people just how much money our 60-90bn best estimated committment is to these irish banking wankers.
Your reference to the cost of re-building pakistan is a useful benchmark.
Perhaps a personal favourite is the fact it would only take 300million to keep all of the children who will die from starvation around the planet next year alive…
The Irish people seem to have no comprehension of how badly they and their kids have been stitched up.
I for one cant understand why there is a high street bank in ireland with its front windows intact.
Why is the discount important ? Is it not one arm of the government transferring bad loans from one of the government to another arm of the government ? The money still comes from the taxpayer . Or am I missing something ?
Yes it’s all government cash - but some is immediate spend and some is possible future cash flow generating.
Think of the discount as the inverse of the probability of recovery.
A 60% discount on the loans being transferred means a 40% chance of recovery of monies against these loans in the future.
One is a guaranteed loss the other is a “Hail Mary” pass to the future.
So the bigger the haircut now the more the guaranteed immediate loss and the less the hope of getting any recovery against the loans in the future.
It’s been known about for a month, will be interesting to see what happens next, hopefully no more shocks in hte next budget
tribune.ie/article/2010/jul/ … 60/?q=Neil Callanan Anglo
I think a deteriorating capital position at the banks will lead to more government money. Note that Mr. Honohan talks about ‘net’ expected cost, the implication is that it is going to be bigger in the short-term. It’s all very well for the NTMA to trumpet that they have the fiscal deficit funding sorted; the banks are much the bigger problem this year.
Agreed. The covering up by the banks of their real losses - good work by David Clerkin in SBP on that - means the full year positions will shock some people…
Yeah, September is going to be a doozie (given that if we’ve spotted the shit on the fan, you can be bloody sure institutional money is whispering about it), with april next year not much better (as the full year’s come out). That’s without taking into account the year-end squeeze. Herr Weber is clearly expecting some trouble, though it is not clear whether it is on behalf of German banks or on Irish and Greek ones.
At best from september I expect much higher costs of funding for the banks (certainly than the debt they’re rolling over - most of it issued in the halcyon days just after the guarantee when Brian&Brian thought they could spin the world…
At worst? Well, worst is only really higher funding cost. I don’t expect an actual failure since the banks are backstopped by us, and the ECB is standing behind us, albeit with a syringe of “something that’ll do us good” rather than necessarily a helping hand.
As for the full years, I note that the banks are already using the trick of the US banks of increasing their assets by the amount their existing debt has dropped by (i.e. a reduction in the buy-back cost). I expect more balance sheet shenanigans to improve the bottom line - more on-off savings as, for example, IT is outsourced on a ten year deal to IBM and the life-time savings of the contract are recognised in the current year.
€25bn for Anglo is looking a optimistic given the information we have to date.
The quality of the loans should have been higher with the larger, more established developers.
Anglo - all that’s left is to divide by zero!