Honohan predicts interest in Irish banks - IT 071209

[jacobmarley]

Honohan predicts interest in Irish banks

The governor of the Central Bank Patrick Honohan said investors will be “scrambling” to support the country’s banks after they exit the current financial crisis.

Speaking at an event in Dublin today, Mr Honohan said he anticipates capital being injected into the banking system in 2010, but did not elaborate on where he expects it to come from.

“The whole process of National Asset Management Agency purchases, careful evaluation of the capital needs of banks, capital injections, I expect that to roll out over the next number of months,” he said.

The setting up of Nama, the Government’s bad bank to take toxic property loans from the country’s lenders at a discount, will leave Bank of Ireland and AIB needing capital, and the Government has said it’s “committed” to supporting them.

“Irish banks are going to leave this situation well capitaliaed,” said Mr Honohan, who is also a member of the European Central Bank Governing Council.

He said private capital would be “scrambling” to get into Irish banks in due course, because they will be so strong.

irishtimes.com/newspaper/bre … king37.htm

[johnboy]

I think that Mr Honohan has been working too hard.

[El_Stuntman]

@johnboy

I think that Mr Honohan has been working too hard.

no, it’s the same disease that afflicted Alan Aherne

[spqr64]

The governor of the Central Bank Patrick Honohan said investors will be “scrambling” to support the country’s banks after they exit the current financial crisis.

They could be waiting a while for that then couldnt they Thats the first statement I heard from him and if thats the calibre of his remarks theres been no change in the system just a re-shuffle.

[whizzbang]

They’ll be scrambling alright, just not sure which direction. September 29th 2010 anyone?

[The_Unwelcome_Guest]

Governor of Central Bank says Irish Banks are fucked.

Not likely.

By the way, the lights were on top floor of the Central Bank all Saturday night…

[What_Goes_Up]

@jacobmarley

Honohan predicts interest in Irish banks

The governor of the Central Bank Patrick Honohan said investors will be “scrambling” to support the country’s banks after they exit the current financial crisis.
…

irishtimes.com/newspaper/bre … king37.htm

Jaysus!

The banks must be preparing to unleash a torrent of shit sometime soon.

Create a false impression, let the bad news ooze out and hope people spend more time trying to square the circle rather than joining the dots.

Seriously Paddy…

Extra reserves of about €30 billion would have shielded Irish banks from the global credit freeze, the drying up of credit on international money markets and surging bad debts, Mr Honohan said.

Have you seen Anglo’s books lately?

[Negative_Covenant]

Honohan appears to have said that prvate capital will not flow into the banks until after the Govt has carried out its capital injections. This is surely bad news for existing shareholders as it suggests the market has no confidence in the banks at this stage.

[The_Unwelcome_Guest]

@Negative Covenant

This is surely bad news for existing **speculators / carpetbaggers / gamblers **as it suggests the market has no confidence in the banks at this stage.

Fixed that for ya.

EDIT: Oh and of course, pension funds.

[yoganmahew]

@Negative Covenant

Honohan appears to have said that prvate capital will not flow into the banks until after the Govt has carried out its capital injections. This is surely bad news for existing shareholders as it suggests the market has no confidence in the banks at this stage.

Yep.

Reading between the lines - the government is going to get a good price for its equity at some stage in the future. With the banks cleaned up, even if they are not doing much new lending, they are going to be able to turn profits. In a time when many other companies are going bust, this is going to be an attractive proposition. Because other banks haven’t done this cleanup and are ‘pretending and extending’, anyone who is cleaned up is going to look sweet.

It suggests there’s no way out of the preference shares dilemma and no way of not taking further equity stakes in the banks with more recapitalisation (probably through the NPRF?). So the state will own about 80% of the banks post recapitalisation. It also suggests that the state will start selling those shares actively quite quickly after recapitalisation.

Mrs. YM has another cash call from Lloyds in the post today. Another huge risk-take from the YM hedge fund (okay, 120 quid…). I’ll be hedging it with a cash of Lidl gin (back on it’s 2 euro off offer). If the UK bad bank scheme works, I expect the shares will be worth something someday! (You may all call me ‘canny’ then… or ‘canny and savvy’ if it doesn’t work!).

Note, I mean work from the bank point of view. As I’ve said, I suspect the ECB will come up with some cheap money scheme for national bad banks to allow the bad debt problem to be worked out cheaply, but only for the public sector.

Another interesting bit:

Extra reserves of about €30 billion would have shielded Irish banks from the global credit freeze, the drying up of credit on international money markets and surging bad debts, Mr Honohan said.

This suggests the level of capital the banks will be required to hold in proper assets (not risk weighted) into the future.