Cost to liquidate the banks

Just had a quick look at the last BOI and AIB annual reports and as far as I can see even when taking into account the toxic loan book if the banks were put into administration and the various parts, deposits, loan books etc were sold off in the way that the US regulators wind down failed banks then the tax payer (the owners) would end up net positive after full liquidation.

All the others Anglo, INBS etc if wound up would end up paying cents on the euro to its debtors but hey, that’s the way business works.

So the current phase of the bankrupting of the country is all about the Irish political elite keeping domestic control over the banks. Because once the foreigner owners took over the domestic banking system then all the (bank financed) scams that have enriched the elite over the decades would end. Plus the books would be finally open to proper inspection and there is no knowing what will be found. I’d expect an awful lot of the great and the good to have their day in court, in the dock. Although it might be difficult finding judges without a conflict of interest to try all the cases.

Could the ‘political elite’ really say no to a foreign buyer at the moment?

And yet again Honohan seems to tread on the establishment’s toes

Why not? You have seen what they have done over the last two years and the absolutely dire performance of the government over the last few weeks. This is classic last stand behavior from an embattled power elite. By this stage what are defending but the banks. The banks are the key to their existence. No longer control the banks and they will wither up and rapidly die as a power center. And they know it.

Definitely one of the good guys. And just reinforces my belief that this stage of the game is all about defending the current domestic control of the banks rather than the greater good of the country.

A little bit on the pros and cons of the entry of foreign banks to a new market which has parallels with the pros and cons of foreign ownership of formerly domestic banks. Nearly all the points made below were seen in the past few years here with BOSI shaking up the mortgage market with trackers and low margins, Ulster bank introducing 100% mortgages etc and the subsequent pull-out of BOSI and the non-lending of NIB, KBC and others.

unescap.org/drpad/publication/fin_2206/part4.pdf

At the time of the bailout, how many deposits were being held in Irish banks ?
I found (on the net) a figure of c€50 billion, but can’t confirm it.

If true, the government could have guaranteed all deposits for the same price as keeping the bankrupt banks *temporarily *afloat.

They could have taken all the deposits, popped them into a new bank and allowed the old banks to go bust.

If they really wanted to be stingy, they could have guaranteed 90% of the first €20,000 and nothing for the rest - that, I believe, was the taxpayers original liability.

The old banks would have been liquidated and any money from the sale of their (profitable) debt could have gone towards the depositors, with anything else going to the senior bondholders.

With a new bank holding €50 billion on deposits, using the fractional reserve system, another €450 billion could have (theoreticially) been created.

So in terms of total cost of liquidation to the taxpayer - max €50 billion.
To the bondholders, other debt holders and shareholder … who cares !

Yep. But actually, it doesn’t matter, they will be forced to shut or subsumed into foreign owned concerns whatever happens. The people of Ireland are not stupid, just a bit slow on the uptake. The flight to Nationwide UK, Rabo, Ulster, etc, will continue.

From 2008 and 2009 financial statements - BOI had 90bn, AIB had 92bn, Anglo had 51bn and PTSB had 14bn, so about €250bn.

Thanks for that.
Makes more sense.

i dont understand how there can be a flight of deposits when u consider ireland is an island :smiley: