FT: Lex Column on Irish Banks - 16/01/09

good ole lex…this will really inspire confidence in the markets. Expect to see AIB and BOI gone month end :frowning:

Is this not a rumour. This is a dangerour thread to start and should not continue.

Are you Lenihan? “a dangerous line of questioning”…Its a reporting of what the major financial newspaper in the world says. Feel free to keep yur head in the sand if you wish.

So your hunch that the big two will go is the result of reading tealeaves then :unamused:

I love the solid analysis on this site sometimes.

SORRY BUT I thought bank run rumour threads used to be banned. The publication of this rumour wont enlighten us by telling what we already know. but the general public are not as well informed and may cause a run

What are you talking about? Bodyofevidence is posting an article from a global paper, Lex no less, which is widely read and respected.

Choking on tealeaves would be more appropriate here bud.

All the banks are worth 0 until we see transparent writedowns and a model for how they will earn in the future.
If you can tell me how they will earn, I will invest. I’m pretty sure that’s the line the big movers are taking with Irish banks and the Lex column is merely stating that.

You see, that’s the head in the sand part.

There were major deposits removed from Anglo, every broadsheet is reporting that. Lenihan admitted it. There was a run by the big deposits, probably not your retail. Knowledge is power and all that…

If you’ve a problem with it, take it up with the FT. The Pin isn’t exactly in the same league.

There is massive system risk. I’d rate it 50:50 that the other banks get nationalised, followed by the state being unable to issue debt by conventional means*. There is a growing fear about the collapse in government tax receipts. In turn its ability to honour the bank guarantee comes into question. Institutional deposits could flow from Ireland.

(*possible that ecb could play a financial guarantor role for euro sovereigns. However this in not in place and the German would, quite rightly, have a mickey-fit.)

I think it is absolutely fair enough to carry this on the Pin. It is an article in a leading reputable paper and Lex is a leading analyst of the financial world. This is not carrying “rumours” as some posters suggest - this is out there in the mainstream media. Whether you agree or not with the sentiments expressed in the article is a totally different issue upon which you can legitmately express a view, however, it is not an excuse to shoot the messanger (i.e. the OP poster) just because you do not like the message.

The big UK banks are in the same boat as those here, as are most in the US, it’s worth bearing in mind.

I know Irish property prices are ridiculous vis a vis the UK and US and Dublin banking is an contemptable incestous old Rugby/golf/sailing boys club, but we need a sense of perspective about what is happening around us.

Plus the UK doesn’t have the ECB back up.

The UK doesn’t need it, to large degree, as it has its own currency. Where they may end up in trouble is if they have big foreign exchange liabilities that need to be discharged. The ECB and the Fed might come into play here by providing swap lines. You’ll notice that the UK were in no hurry to defend their currency when it came under attack over the new year and do not seem overly concerned that it is trading at a discount.

I do not see that this is a rumour - it provides information that is known:

  • Anglo has been nationalised
  • it was nationalised in a panic with the Taoiseach out of the country and the night before the EGM on its recapitalisation
  • all Irish banks have lent recklessly for property speculation
  • some have lent more recklessly than others
  • the Irish consumer is amongst the most indebted in the world
  • the markets think the other Irish banks are likely to have large losses for the next number of years
  • Irish banking capital ratios are low by new international standards

So, the conclusion that is being drawn, which is an opinion, is that the Irish banks will be nationalised.

Whether nationalised, in need of nationalisation or about to be nationalised, the government’s deposit guarantee is as secure as it has ever been.

edit: if you do have concerns about a post, use the report post button (the red exclamation mark) and the moderators will discuss it further.

I thought the ban on discussing bank runs was still in force but I could not find it. Thats fine I knew there was a run going on in Anglo and did not post. Who in their right minds have their spare cash in AIB and BOI anyway. The ony dealings I personally have in Ireland is in TSB and I owe them more money than they have of mine.

Although the UK banks are in a terrible state they aren’t nearly as weak as the Irish banks. The Irish banks bet heavily on developers and they have lost big time.

Probably because past experience has taught them not to bother; the markets will just take them to the cleaners like they did the last time they tried to prop it up under attack.

As for the rest of this thread; it’s speculation, pure and simple. I don’t agree with it for a number of reasons; the point remains we were not the first to have to go rescuing bits of our banking sector, the UK were first out of the blocks in Europe on that, and France, NL, Belgium, and Germany all had a go before us. I do, however, hear voices suggesting that Anglo Irish should be let go to the wall.

I think there’s an element of sensationalist television about this, you know, when some disaster hits somewhere and you’re speculating just how many people get killed, and you’re waiting for the numnbers because at some level, it’s the scale that matters, not the victims. The point is, by international standards, neither of our two big banks are big banks. They are not important in the grand scheme of things.

There’s a tendency in this country, sometimes, to aim for extremes. Last year we were the wealthiest. Now we have the most rotten banking sector, the biggest economic problems.

We need to get over ourselves. We’re nothing very special and until we get to grips with that reality, we’ll continue to take pieces like the above too much to heart.

Yep they are fuc&ed. Bankers are in trouble. Unions will be broken. public servants will get a big pay cut. welcome to the new world and this time “it is different”

Good, nuanced post. Of course, you’ll duly be accused of being a ‘ZanuFF’ sympathiser by the extreme element on here.

You are right on that - the ban on run reports is in force. But the Lex piece is about nationalisation and not failure. To my mind, there is a difference.

Care to expand on the nature of the run that was taking place? We’ve heard from the minister that there was “absolutely no run taking place”, yet ‘sources’ within the finance department have said that institutional investors had lost confidence and withdrawn their deposits.

The point is not who started it and who did most of it, the point is how much more is to come. This is significant for those who might consider buying shares in the banks, which is what the Lex column is aimed at - it is an investment column - it is saying that it sees the likelihood of nationalisation of the remaining Irish banks which makes their shares, despite the low P/E, a risky investment.

In the week that Germany, Austria and the US part nationalised more of their banking system is it any surprise that there might be more trouble for Irish bank investors? No. Is it even news? Probably not.

Smart arse! I’ll use an equally dodgy source to rebut. This week Rating Agencies placed Ireland on negative outlook. Therefore the guarantee ain’t what it used to be :wink: