Banks?? how solid?

[Orwellgeorge]

The only ingredient missing from the property bust is a financial institution going under. Anglo Irish Bank have lost money to bothe Lynn and Byrne, were big investors in International Securities Trading Corporation, and of all the banks are the ,developers bank’. There share price has dropped to such a degree that rumours of a run on the bank surfaced last week

[daveirl]

Up 4% today.

[SeanD]

I beleieve Anglo have stated today they weren’t investors in ISTC, which I suppose isn’t to say some of their big names didn’t have a few bob in it. Ouch!

[daltonr]

There share price has dropped to such a degree that rumours of a run on the bank surfaced last week

After last weeks drops, Anglo was selling for about 10 times earnings, AIB and BOI for about 6 or 7 times earnings. The market seems to have it’s own ideas about the relative strength of the various banks.

A short term drop in the share price should have very little impact on the financial stability of a bank. A drop in the share price might raise rumours of a takeover, but I don’t see why it would prompt a run.

I’m curious what Irish banks should be worth. It seems to me they’ve got to be getting close to reasonable value. Still even at current values the Dividend Yield is down below 4%, which doesn’t seem very high, considering that nobody (including the banks) really knows who owns the dodgy debt.

-Rd

[Orwellgeorge]

Anglo is off about 1/3 it’s value in the last few months, that’s very fast movement for a bank. Todays rise is due to the statement on istc.

All I’m saying is that a run on the bank could come to pass…depositors did withdraw cash last week in large amounts. The Northern Rock run has had a significant effect on the house price situation in the UK.

[daltonr]

Anglo is off about 1/3 it’s value in the last few months, that’s very fast movement for a bank. Todays rise is due to the statement on istc.

Aren’t AIB and BOI down the same or more? BOI has gone from about almost €19 to about €10 since March. AIB from €24 to €14 in the same period.

-Rd

[Orwellgeorge]

Yes indeed, Just that Anglo is smaller and very tied into the developer class. Also they failed to sell thier Swiss operation last month. They have financed projects in Portugal and that market has stagnated recently as well.

[daltonr]

Yes indeed, Just that Anglo is smaller and very tied into the developer class. Also they failed to sell thier Swiss operation last month. They have financed projects in Portugal and that market has stagnated recently as well.

Wouldn’t PTSB be a more risky proposition, since are greater percentage of their mortages are of the Northern Rock calibre?

It depends on where you think the biggest risk comes from. Failing property owners, failing developers, or a global credit crunch cutting off the tap to a bank that relies on it.

Depending on which flavour you choose some or all of the Irish banks could face problems or not as the case may be.

I could be made to eat these words but I don’t think AIB, BOI or Anglo will face any genuine financial problems in the near future. Whether some idiot with a camera and a microphone can get enough passers by to stand in front of a branch in order to do a story about a Run is another issue. If such a story ever gets made it WILL become self fulfilling.

-Rd

[Green_Bear]

The bailout of the Insurance Corporation of Ireland (ICI) will last until at least 2050, because of outstanding international claims against the former AIB insurance subsidiary.
The company collapsed with liabilities of €400million. The state, which nationalised ICI and put the company into administration in 1985, subsequently agreed in 1992 to a second plan with AIB to help fund the bailout.
New estimates by the administrator of ICI, now known as Icarom, calculate that the €77 million in asbestos claims against the company will drag on way beyond 2012, when AIB will pay its last annual installment.
Under a 1992 deal announced by AIB and the then minister for finance, Bertie Ahern, AIB agreed to pay €11.5 million every year until 2012. The payments were not linked to inflation.
Administrators to the company said it would not cost the state extra money. Recent accounts show that Icarom had net claims of €77 million at the end of last year and a deficit of €220 million.
In a press release in 1992, Ahern said the agreement with AIB involved a “significant annual sum’‘ but that, after consultations with the Central Bank, it would “not have adverse prudential implications for AIB’‘.
Peter Sutherland, then chairman of AIB, said at the time that the bank’s participation in the 1992 agreement was in “the best interests of its shareholders, customers and staff, as well as meeting the concerns of the community at large’‘.
AIB pays €7.4 million of the annual €11.5 million payment in monthly installments. The balance is paid from the interest earned on a loan administered through the Central Bank.

**ICI bailout will last to 2050 **
archives.tcm.ie/businesspost/200 … ry6520.asp

Details of the last major bailout

[daveirl]

@Orwellgeorge

Yes indeed, Just that Anglo is smaller and very tied into the developer class.

Indeed they are, I know a guy who had a property bought in Cork city in a deal financed by Anglo, when he heard how much he was being offered and the other properties were being bought for he sold all his shares in Anglo. Reckon he got that call right in the end, it was almost two years ago at this stage.

Of course our pal 2Gaffs would have called him stupid for having sold in 01/06 when the share price continued to grow until 06/07, but in the end he was right. This simple concept is something that some perma-bulls never get.

[Orwellgeorge]

By several accounts this years annual Anglo Irish christmas parties will be interesting. In the past it has been a real get together of the Developer class. They hold one in Galway and from what I’m hearing it will be different this year as quite a few of the favoured one’s are under a bit of pressure. Discussions should centre around who has been put on interest only for the purpose of riding out the downturn.

[Orwellgeorge]

Irish Banks have been hammered (again) this morning. BOI results were good but guidence has declined. CEO pointed to ongoing credit crunch. Central Bank made happy noises, but the big investors know how to red betweent he lines.

Anglo Irish down 4.7%.
uk.finance.yahoo.com/q/bc?s=ANGL … z=m&q=l&c=

The market says it all.

[conor_mc]

@Orwellgeorge

Central Bank made happy noises, but the big investors know how to red betweent he lines.

Irish banking system robust - Hurley

Hurley says a soft landing is in sight, but just be wary of…

Household mortgage repayment burdens have stabilized since the last stability report, a year ago, but the outlook remains uncertain, it adds. The bulk of household mortgages are variable interest rate mortgages and so are subject to change.

…and …

The report also reveals that Ireland’s private sector is one of the most heavily indebted in the world. It says private sector indebtedness could reach 248% of GNP by the end of this year.

…oh, and what about…

It also says that the stock of lending by financial institutions to domestic households is now equal to 78% of GDP. This puts Ireland in a group of four countries who are the most heavily indebted in the euro area. The others are the Netherlands, Spain and Portugal.

… did I forget t mention…

The Central Bank report also reveals that only the top 40% of households, ranked by household income, would be eligible for a mortgage on an average new house. Last year the bank found that 50% of households would have been eligible.

… but hark! is that an investor-led recovery we see…

It also said that 26.1% of outstanding mortgages can be attributed to investors, up from 16.7% in 2006. By the middle of this year, investors faced a 36% shortfall between their annual rental income and their annual mortgage repayments on new houses. This is a significant deterioration since 2005 when it was just a 16% shortfall.

…nope, didn’t think so…

It added that the rental shortfall for those investing in second hand houses is more pronounced at 43%.

But not to worry, the bank are only “concerned”…

The bank also says that it continued to be concerned over the high share of the construction sector in economic activity and the longer-term losses in economic competitiveness.

Oh well that’s alright then.

[Green_Bear]

“Concern” is John Hurley’s get out of jail free card, he simply threw his hands up in the air and said feck it, if people want to make mistakes so be it. Any inquiries in the future after the Irish banking system collapses will show he issued lots or warnings (expressed his concern), but actually did nothing to stop the train wreck. He could have, but that would require making ‘courageous’ decisions.

[2Pack]

The central bank is the original bottle of watered down piss pretending to be a regulator Completely useless and asleep at the wheel.

Its the Empties Hurley ya Stoopid !

[Green_Bear]

Just how effective is the Central Bank at regulating the banks??
Well as late as November 2006 there was talk about setting money aside…

It has emerged that the Financial Regulator is consulting the banks about further tightening the rules covering how much money they can lend for mortgages.
A report from the Central Bank published today said the regulator had already asked financial institutions to set aside more money to cover the risks arising from the strong growth in mortgage lending.

Talks on tightening banks’ lending rules
Wednesday, November 8, 2006
rte.ie/business/2006/1108/central.html

The judge did not have a good work to say about them either

‘‘The Central Bank’s concern was that Guinness & Mahon was facilitating a tax avoidance scheme, and indeed, in the view of one of the inspectors, that this scheme was tantamount to tax evasion,” said Moriarty in his report.
But instead of forcing Guinness &Mahon to shut down its offshore activities, Traynor assured the Central Bank that the levels of loans would be reduced.
‘‘On the strength of that commitment, the Central Bank took no further action: nor did it impose any conditions on Guinness & Mahon’s banking licence,” said Moriarty.
Moriarty concluded that Guinness & Mahon ‘‘failed abjectly’’ to disclose to the Central Bank the loans to Irish residents backed by offshore deposits, and ‘‘supplied materially false and deficient information’’ on these loans.
‘‘In light of what was known, it is difficult indeed to see how what was involved was anything other than tax evasion.
“Even if what was apparent fell short in strict terms of coming within the category of tax evasion, its nature, persistence and potential repercussions necessitated firmer and more concerted action,” he said.
The judge said that the Central Bank was entitled to attach conditions to a banking licence, if it had discovered wrongdoing at Guinness & Mahon.
‘‘Had this course been taken, it would in all probability have accelerated the rate and level of response on the part of the regulatory authorities generally to abuses of this nature within Irish banking, that were probably not unique to Guinness & Mahon,” said Moriarty.

What Moriarty said of the Central Bank

Sunday, December 24, 2006 - By Simon Carswell
archives.tcm.ie/businesspost/200 … y19805.asp

Now roll on to January 2007

The Financial Regulator has bowed to pressure from banks to water down tough new rules governing high-risk lending for speculative property development.
The regulator agreed to ease the rules after banks expressed concern that they could lose market share for property loans to foreign banks operating in Ireland that would be subject to less stringent regulations.
The rules, which will dictate how much capital banks must set aside for each category of lending, had been drawn up to make high-risk lending in the commercial real estate sector less attractive to lenders and force them to charge higher interest rates for individual loans.
Loans for the acquisition and development of greenfield sites, as well as certain construction loans, would have attracted higher risk weightings under the original proposals.
Banks were previously required to set aside €8 in capital for every €100 lent in this category, but the new rules would have increased this to €12, which would have made it significantly more expensive to provide such loans. >>>>

Regulator waters down rules on high-risk lending

Sunday, January 14, 2007 - By David Clerkin
archives.tcm.ie/businesspost/200 … y20258.asp

I’m telling you now, put your plan in place to reduce your exposure to the coming Irish banking crisis. The regulars won’t protect you, they act on behalf of their paymasters.

[Gatelodge]

**Green Bear wrote:
**

I’m telling you now, put your plan in place to reduce your exposure to the coming Irish banking crisis. The regulars won’t protect you, they act on behalf of their paymasters.

Been busy doing just that all week
Even have some of it under the pillow at this stage

[Poacher]

@Green Bear

I’m telling you now, put your plan in place to reduce your exposure to the coming Irish banking crisis.

What are you suggesting people do to insulate themselves?

[fishfoodie]

@Poacher turned gamekeeper

What are you suggesting people do to insulate themselves?

Me personally, I’m using layers of IIB stock certificates & the box my 50" LCD TV came in…

Sorry couldn’t resist

[Green_Bear]

@Poacher turned gamekeeper

@Green Bear

I’m telling you now, put your plan in place to reduce your exposure to the coming Irish banking crisis.

What are you suggesting people do to insulate themselves?

I’m not going to tell people how they should invest their money, and the course I have personally taken may not be the correct one for everyone and involves other risks, also as I have said previously my expertise is not in investments.
What I do say is do your own research and inform yourselves about what exactly are the risks of keeping your entire life savings in one bank, be that from loss of value due to inflation or the possibility that a bank can collapse and leave you with only €20,000 and a higher tax burden to show for it.

Learn from the Argentine experience. The poor people and middle classes got robbed and it happened suddenly, just like the crisis will here when it happens.

The ‘smart money’ is speaking loud and clear and dumping Irish bank stocks, they know there are better opportunities elsewhere. Sure everything looks OK now, they said the same thing about the ‘soft landing’ for the Irish housing market even as recently as a month ago, and we’re seeing in the last two months that pretense has mostly been dropped.

Research has been central to Halifax’s product launches and marketing. Strong inertia among bank customers was one of the key findings of the research, with few people interested in switching bank unless their bank did something bad to them. At the same time, consumers view all banks as much the same and there is little inherent brand loyalty.

Halifax banks on award-winning campaign to win new customers
ireland.com/newspaper/financ … 00169.html

There is a lot of inertia among Irish bank customers and misplaced loyalty to banks and a common myth pervades that the ‘banks will never let it happen’ and ‘sure won’t the government bail them out anyway’.
I don’t buy it, how can it be that ‘Ireland’s private sector is one of the most heavily indebted in the world’ and how will Irish banks not be affected when the arse is falling out of the property market that this credit bubble depends on?

I don’t have access to Irish banks balance sheets on which to make a qualitative judgement and I’ve worked hard to build up my savings and investments, and, I’ll be damned if I’m going to let some chancers and robber barons steal it from me. If you learn one thing from the many tribunals, don’t trust the banks, don’t trust the regulatory authorities and whatever you do don’t trust the government to get us out of this mess.