I’m sorry now as this post is pretty vague and conjectural but I remember chatting to a reasonably senior manager in a bank that wasn’t BOI and he had told me that it was whispered that BOI had managed to creatively account for tracker losses and vulnerability better than the others and that they were in fact no better off than AIB in reality. I don’t really remember the specifics of the chat and didn’t pay much heed to it at the time.
They’ve certainly pulled some nifty balance sheet tricks but they’re no way as bad as AIB. The real comparison that is (slowly) dawning is that AIB is little better than Anglo!
I can understand why Anglo needed such a massive bailout, given the profile of its loan book, but how did AIB f-ck up so spectacularly, when BOI didn’t? Surely they had similar lending to SMEs, developers and ordinary home buyers?
Will there be any European banks wound down as part of the stress tests?
Karl Whelan’s assessment here:
More to be taken by what AIB don’t say than what they do say, esp. based on BoI’s statement
forbes.com/sites/karlwhelan/ … m-ireland/
The general consenus is that AIB had a bigger development loan book and they went head to head with Anglo to get court some of the big developers. BOI were more careful managing concentration risk, smaller loans on average.
Anectodally, AIB were also a bit more risky in lending to business owners to fund large property purchases too.
BOI have lot of crap on their books too and of there residential loan book I believe they had more 100% mortgages and a bigger proportion of the mortgage market in the real heady years so it not like its a hidden jem or something
summary is that Bank just did not fook up quite as spectacularly as Allied
Don’t know how to embed tweets, but this one from @tconnellyRTE doesn’t look good:
So the ECB, so are carrying out the stress tests next year, are saying that the CBI tests were a farce. Wonderful.
All the more reason to think that the stress tests, if done properly by the ECB, next year, are going to reveal a big black capital hole in the Irish banks balance sheets. The question then is where the banks will get the capital from and whether Permo remains a viable entity.
Neither AIB or Permo are…but when they go wallop so would BOI.
The real question would be, is the country a viable entity.
Don’t know if this has been discussed in this thread but I have been told by sources within Government, that all of AIB’s capital ratios are made up of tax assets and some other unusual ‘book’ items. There is little real ‘cash’ behind it? Has anybody else heard this ?
Does anyone know what happens when a bank goes ‘wallop’?
AIB are the only ones interested in giving me a mortgage. If I draw it down and then the bank fails the stress tests, what happens to deposits and loans?
If a bank goes wallop, the loans still have to be paid back as per the loan document you signed. Someone else just collects the monthly check.
Re deposits, think cypress
There has been no “cash” behind any of the banks since Q3 2008. Apart from the 1B the BOI got from bottom feeders for one third of the bank.
With AIB I’d be more worried in the 30B in dead loans, the 16B in NAMA bonds, the 26B in cross deposits from CB / other banks and the 10B in government bonds parked on their books. The fact that their Tier capital is purely imaginary is the least of their problems. It could be worse. They could have the problems Dexia and Unicredit have. A negative 10 digit cash flow most quarters. AIB are only 9 digit.
I didn’t think the loan would evaporate, but would the terms with the new bank be worse?
Hmmm. So the ECB with its fiasco stress tests in the past that gave the Irish banks a flying pass is resolving to do better? I’ll hold my breath…
Well, the interest rate is unlikely to be lower.
Isn’t this the first ECB fully run stress test? The saga so far AFAIK … The 2 EBA farce tests that damaged the reputation of the EBA. Then the Blackrock CBI credible tests. More recently, there seems to be serious questions from both a transparency and accuracy perspective of the very recent CBI test or be it not a full stress test.
The ECB are putting a lot of effort into trying to give the impression that the next set of stress tests are credible. Judging by multiple statements from Draghi I think he is buttering us up for a likely fail of the test by 1 or more of the Irish banks.
Draghi calls for better funded and less bureaucratic banking union - Michael Hennigan -> finfacts.ie/irishfinancenews … 7000.shtml