Our FX reserves

[baby_tooth]

2pack et al, was it you looking for these figures…

As at the 27 april 2007 we have 96 milion gold and 590 million euros worth of fx. (40 held in euro area, and 540 million outside it (uk and us)

as an aside.
We have lent out 7billion to euro area credit institutions, c.bank holds collateral against this of about 12bill

Gold has been constant for the last few years, we don’t buy or sell it anymore…

the fx reserve amount has flaoted around the 600m mark, going from 660 to 530 over the last two years…

we have taken alot of foreign reserves and held them in euro, which is somewhat prudent as euro is pretty much the main foreign reserve currency anywhere.

I would think that the decrease in our actual fx is due to the dollar dropping…we don’t need to hold as much fx as non euro countries. we don’t need to protect this currency, cos lets be honest, who’s going to try to run it.

bear in mind that the bank also holds about 12 billion as fractioanl reserves, this money is there if needed be.

gotten from centralbank.ie/frame_main.as … mo_nav.asp …the latest file, pages 14 15 etc. the balance sheet.

[Eirmail]

@baby_tooth

2pack et al, was it you looking for these figures…

As at the 27 april 2007 we have 96 milion gold and 590 million euros worth of fx. (550 held in euro area, and 40 million outside it (uk and us)

as an aside.
We have lent out 7billion to euro area credit institutions, c.bank holds collateral against this of about 12m

Gold has been constant for the last few years, we don’t buy or sell it anymore…

the fx reserve amount has flaoted around the 600m mark, going from 660 to 530 over the last two years…

we have taken alot of foreign reserves and held them in euro, which is somewhat prudent as euro is pretty much the main foreign reserve currency anywhere.

I would think that the decrease in our actual fx is due to the dollar dropping…we don’t need to hold as much fx as non euro countries. we don’t need to protect this currency, cos lets be honest, who’s going to try to run it.

bear in mind that the bank also holds about 12 billion as fractioanl reserves, this money is there if needed be.

gotten from centralbank.ie/frame_main.as … .asp…the latest file, pages 14 15 etc. the balance sheet.

Does this mean we are in a good position if things go pear shaped?

After finding these facts do you think a collapse such as in Argentina a while back is more or less likely? than before you got this infomation

[The_Unwelcome_Guest]

@Eirmail

After finding these facts do you think a collapse such as in Argentina a while back is more or less likely?

How on earth is an Argentina scenario likely???

They were one economy, albeit with a fairly large population, that pegged their currency to the dollar on a like for like basis. Given their position overall, in the world marketplace, it was financial suicide.

We’re a very small part of a massive market. The euro will stay strong so at least our salaries (those who can hold on to them) will always have purchasing power attached, I can’t foresee the euro devaluing to 25% of it’s value any time soon.

God bless those Argentinian kids…

[baby_tooth]

no, argentina won’t happen

could there be a idiosyncratic failure, most definitely, can c.banks carry this, oh quite easily…

the c.banks of europe have more money (fiat) than you could shake a stick at, quite easily the largest collection of world currency in the world, they can play all the games they want, they wouldn’t lose, no matter how much leverage someone could employ.

they could find themselves temp short of liquid positions, but enter the NTMA or sister branches, anyhow, we’d never know…

[Pill]

Are you therefore saying that the CB has sufficient funds to bail out any banks that might find themselves in trouble (assuming of course that there was the political will to do same)?

[2Pack]

I found the 0.6bn fx all right.

As we had €8bn including fx in 2002 I WAS wondering where the other €7.4 bn had gone to .

The central bank has feck all money available to bail our banks out of a property crisis …even if the ECB let them use it. Last year our banks lent €40bn on property alone.

[Pill]

baby_tooth> You mention 7 billion that we have in debtors from EU institutions. You also mention 12 billion in fractional reserves. What about liabilities?

[baby_tooth]

we have aprox 7 bill in short term money and another 13 in long term money…this is just money.
total about 20 million.

we have another 14 billion in other securites, total assets is 34 billion.

The have just changed the way they report to come inline with IFRS. It’s a little harder to see where the numbers are coming from, if you look at the annual report it will give you a more detailed breakdown of what each segment states.

But, as a euro c.bank, they need feck all fx or gold/silver. I mean, if there IOU isn’t accepted then you can prety much write off the banking system worldwide…they are as close to riskless as can be achieved, far far superior to the fed.

[2Pack]

But the ECB as I understand is a sort of P2P central bank.

They disperse the kitty to their component central banks…including those of Greece Spain and Portugal who have dumped a lot of reserves in recent times.

This is, IIRC, done pro rata issued currency in the territory.

Ireland has 8% of notes on issue so it may have 8% of the ECB reserves. I am not sure about this though.

What I cannot figure out is what is being held for the ECB and managed for the ECB and belonging to the ECB what is there to prop up our stupid banks when their pyramid scheme collapses.

Anyway , I am still sure that its pretty inadequate when set against lending on homes. The fact that Hungary and Poland and Bulgaria and Cape Verde will also tank once the Paddys pull out means we have not exactly diversified our property risk either .

Irish remortgages and topups account for 3% of the entire Bulgarian property market including industrial and commercial . (12% of the 30% that is foreign investment while the Brits account for 20% of the entire Bulgarian property market …period).

sofiaecho.com/article/eu-mem … 3/search_1

[crashandburn]

When will the dollar be worth more then the euro?
At the moment $1=€0.74

[baby_tooth]

the ecb is the governeing council as such, it is made up of the member state banks, and as such would have access to their reserves. It kinda goes both ways, as in the irish c.banks borrows and lend to the ecb by borrowing and lending to other euro c.banks.

At the inception, the irish c.bank would have had x amount of money, This x amount has now grown in by an amount xreturn rate years. It has also swelled by the money multiplier (due to the fractional banking system we use). The Central banks lend money out to retail/investment banks and governments in return for interest. They also hold certain collateral obligations and reserve requirements. This money is also lent in the overnight markets, with the orignal banks earning money, albeit at EOINA (small interest rates). All guaranteed by the c.banks.

Yes, alot of these reserves are spread throughout the euro area, but this money is not kept in the c.banks but re-dsipersed back out to the market. It’s this dispersion that provides the diversification.

An analogy.

I get 100 euo from you and and pay you small interest. I take this money and lend it to you ten of your friends. Your friends are then all required to give me back 2 euro each for me to hold on the back that they can use the remaining money to make loans. So I have 20 in my pocket, and the lads have 8 each and 80 total…They repeat this process and loan all the money to another bank, this bank has to deposit a certain fraction with me, “rinse and repeat” this cycle…

You look for your money and i call the lads, they pay up, even if only 8 pay then i still have your money. (actually less than 8 with interest spread being earned)…of the two who don’t pay, they would have some of thier money in the calling banks accounts so the orignal bank could net it off, and adjust their Collateral trades…

Its basically a whole case of dillution. Yes, there is risk, but this risk is spread out far and wide. The cbanks act somewhat as a market maker and lender of last resort. They can always honour a debt, all they have to do is print money. Of course this printing process is tighly controlled to supposedly track the interest earned in these collateral accounts…

that is no doubt badly typed and spelt, but excuse the rush.

[2Pack]

Ok

The money multiplier (the fraction in fractional ) is not the CB s own cash either as it belongs to the banks they …ummmmm …ehmmmm …‘regulate’ if thats not too strong a term ???

I am merely trying to figure out how much liquidity the CB could provide from its own funds before they started to tap the taxpayer…although if it gets that far the country is fecked IMO.

Interestingly the CB and AIB are still working through the Insurance Corporation of Ireland fiasco and that was ultra minor league compared to mortgage lending , its in the last annual report here

centralbank.ie/data/annrepfi … ations.pdf

page 26 re Icarom

and a bit of history

actuaries.org.uk/files/pdf/l … reland.pdf

and in the Dáil in 1999

. Mr. Cosgrave asked the Minister for Finance the action, if any, taken to secure the repayment of the costs for the bail out of Allied Irish Bank plc over the ICI insurance collapse; if he will give details in this regard including arrears of interest charges, if any, recovered in each year to date; and if he will make a statement on the matter. [10634/99]

Mr. McCreevy Mr. McCreevy

1171

Minister for Finance (Mr. McCreevy): The former Insurance Corporation of Ireland – now called Icarom plc – was taken over from Allied [1171] Irish Banks by the State and placed under High Court administration in 1985. The High Court administration of Icarom plc still continues and is not expected to be completed for some years. The final costs of the administration will not be known until it is completed.

The Exchequer contribution to the funding arrangements for the High Court administration of Icarom plc consists of two repayable loans totalling £132 million. A loan of £100 million was advanced to the administrator of ICI in 1985 and is repayable in 2000. This repayable advance was provided by way of a loan to the Minister for Finance from the Central Bank which was funded in turn by a deposit of £70 million placed by AIB with the Central Bank and £30 million of the Central Bank’s own resources. Under the 1985 funding arrangements AIB and the other banks make an annual contribution of £7 million towards the interest costs of this loan for each year of its 15-year term of which AIB contributes £5.5 million. The Exchequer does not bear any of the interest costs of this loan.

The Exchequer advanced an interest-free loan of £32 million to the administrator of Icarom plc in 1993 following the conclusion of an agreement with AIB in 1992 for additional funding of the Icarom administration. The £32 million loan is repayable not later than 2012. The cost to the Exchequer of this loan is represented by the interest forgone which is estimated to amount to £2.1 million annually. Under the 1992 agreement AIB makes an annual contribution of £8.8 million to Icarom in each year from 1993 to 2012 inclusive. This contribution is in addition to the annual contribution which AIB makes under the 1985 funding arrangements.

The administrator of Icarom also benefited to the extent of £38.9 million from the settlement in 1993 of an action against the former ICI auditors, Ernst and Whinney.

The funding available to the administrator is expected to allow him to meet his foreseen liabilities, including the repayment of the Exchequer loans of £100 million and £32 million.

The Deputy may be aware that in a reply to a question from Deputy Deasy on 5 November 1998, I indicated that the estimated net present value (NPV) of the costs of the funding arrangements now in place for the Icarom administration, that is, the sum of all past and known future payments to the administrator, is £357 million of which 56 per cent is met by AIB, 8 per cent by the other banks, 27 per cent by Ernst and Whinney (former auditors of ICI) and 9 per cent by the Exchequer. The Exchequer share of this cost would be less than the figure indicated if the Exchequer loan of £32 million were repaid at a date earlier than the scheduled repayment date of 2012. Therefore, the final cost to the Exchequer cannot be determined until the administration is completed.

It was the last sizeable collapse here with a deficit about €500m in its day over 20 years ago .

Again that pales in comparison to Mortgage Lending of €40bn a year nowadays of which €500m is indeed …a fraction.

[Pill]

@2Pack

Ok

The money multiplier (the fraction in fractional ) is not the CB s own cash either as it belongs to the banks they …ummmmm …ehmmmm …‘regulate’ if thats not too strong a term ???

I am merely trying to figure out how much liquidity the CB could provide from its own funds before they started to tap the taxpayer…although if it gets that far the country is fecked IMO.

Interestingly the CB and AIB are still working through the Insurance Corporation of Ireland fiasco and that was ultra minor league compared to mortgage lending , its in the last annual report here

centralbank.ie/data/annrepfi … ations.pdf

page 26 re Icarom

and a bit of history

actuaries.org.uk/files/pdf/l … reland.pdf

and in the Dáil in 1999

. Mr. Cosgrave asked the Minister for Finance the action, if any, taken to secure the repayment of the costs for the bail out of Allied Irish Bank plc over the ICI insurance collapse; if he will give details in this regard including arrears of interest charges, if any, recovered in each year to date; and if he will make a statement on the matter. [10634/99]

Mr. McCreevy Mr. McCreevy

1171

Minister for Finance (Mr. McCreevy): The former Insurance Corporation of Ireland – now called Icarom plc – was taken over from Allied [1171] Irish Banks by the State and placed under High Court administration in 1985. The High Court administration of Icarom plc still continues and is not expected to be completed for some years. The final costs of the administration will not be known until it is completed.

The Exchequer contribution to the funding arrangements for the High Court administration of Icarom plc consists of two repayable loans totalling £132 million. A loan of £100 million was advanced to the administrator of ICI in 1985 and is repayable in 2000. This repayable advance was provided by way of a loan to the Minister for Finance from the Central Bank which was funded in turn by a deposit of £70 million placed by AIB with the Central Bank and £30 million of the Central Bank’s own resources. Under the 1985 funding arrangements AIB and the other banks make an annual contribution of £7 million towards the interest costs of this loan for each year of its 15-year term of which AIB contributes £5.5 million. The Exchequer does not bear any of the interest costs of this loan.

The Exchequer advanced an interest-free loan of £32 million to the administrator of Icarom plc in 1993 following the conclusion of an agreement with AIB in 1992 for additional funding of the Icarom administration. The £32 million loan is repayable not later than 2012. The cost to the Exchequer of this loan is represented by the interest forgone which is estimated to amount to £2.1 million annually. Under the 1992 agreement AIB makes an annual contribution of £8.8 million to Icarom in each year from 1993 to 2012 inclusive. This contribution is in addition to the annual contribution which AIB makes under the 1985 funding arrangements.

The administrator of Icarom also benefited to the extent of £38.9 million from the settlement in 1993 of an action against the former ICI auditors, Ernst and Whinney.

The funding available to the administrator is expected to allow him to meet his foreseen liabilities, including the repayment of the Exchequer loans of £100 million and £32 million.

The Deputy may be aware that in a reply to a question from Deputy Deasy on 5 November 1998, I indicated that the estimated net present value (NPV) of the costs of the funding arrangements now in place for the Icarom administration, that is, the sum of all past and known future payments to the administrator, is £357 million of which 56 per cent is met by AIB, 8 per cent by the other banks, 27 per cent by Ernst and Whinney (former auditors of ICI) and 9 per cent by the Exchequer. The Exchequer share of this cost would be less than the figure indicated if the Exchequer loan of £32 million were repaid at a date earlier than the scheduled repayment date of 2012. Therefore, the final cost to the Exchequer cannot be determined until the administration is completed.

It was the last sizeable collapse here with a deficit about €500m in its day over 20 years ago .

Again that pales in comparison to Mortgage Lending of €40bn a year nowadays of which €500m is indeed …a fraction.

O.K. so put your neck on the block. Will banks collapse, which ones are more susceptible and approx time-frame?

[2Pack]

Based on the profile of their loans and in my opinion only .

Very High Risk

IIB and Anglo Irish

eg

iibbank.ie/Homeloans/BuyToLet/?paraID=26

High risk , overlent and under stress tested.

EBS

Considerable Damage and greedily looking for slice of cake available to the above.

BoI and Friends First and Permanent TSB

Will probably limp along complaining they got no money from the taxpayer .

Ulster NIB AIB Rabo BoSI

Some credit unions will also go to the wall …deposit money problems . They will not be bailed out. Look for ones with sudden increases in post 2002 €20k+ loans .

Starting from about this time next year .

[baby_tooth]

@2Pack

Ok

The money multiplier (the fraction in fractional ) is not the CB s own cash either as it belongs to the banks they …ummmmm …ehmmmm …‘regulate’ if thats not too strong a term ???

I am merely trying to figure out how much liquidity the CB could provide from its own funds before they started to tap the taxpayer…although if it gets that far the country is fecked IMO.
.

money multiplier, is the fractioanl size of the depoist the cbank holds. it pays eoina on this. it has a small spread, 1bp maybe upto 3bp. massive amounts of capital so generates some cash.

this is their last “regualtion” tool left. They should have upped this fraction in the last 10 years alot more than they have.

This is a “measure” of its ability to liquidate…combined with tier 1& tier 2 capital.

Roughly 11-14% fraction amount plus 20% assets under t1&t2 capiatal requirements…this is a very very rough approximation as the requirements are constantly changing depending o the deal types and counterpairties…
i reckon about 15% is covered.

so a movement out of 15% of a banks capital would pull up the banks liquidity and in turn force it to borrow from the cbank. If this happened sector wide then we would be out of liquidity,

so the banks would need to be short in thier own funds, their marketable securities and their reserve requirements…a 15% shock to the system

heres a report, graph and tables from page 2 ownwards, Ireland has one of the lowest requirements…

probanker.com/probanker-1.1. … iMilne.pdf

[Pill]

@2Pack

Based on the profile of their loans and in my opinion only .

Very High Risk

IIB and Anglo Irish

eg

iibbank.ie/Homeloans/BuyToLet/?paraID=26

High risk , overlent and under stress tested.

EBS

Considerable Damage and greedily looking for slice of cake available to the above.

BoI and Friends First and Permanent TSB

Will probably limp along complaining they got no money from the taxpayer .

Ulster NIB AIB Rabo BoSI

Some credit unions will also go to the wall …deposit money problems . They will not be bailed out. Look for ones with sudden increases in post 2002 €20k+ loans .

Starting from about this time next year .

That’s some prediction! Small point - why Anglo - they have no joe public mortgages - do you believe their financing of commercial will finish them? Finally, will govt bail out IIB and Anglo, etc if it comes to it - they bailed out AIB before?

[baby_tooth]

iib - wound down, alot of staff let go, its parent company can take its losses (kbc…massive)

boi - taken over, most likely candidate for a takeover, over exposed and under worked…a wasterl of a bank.

aib - hummm haaaa…prob in the safest cache, will lose value as market conditions worsen but should be fine.

BoIS - grand

Ptsb, taken over, Parent Irish Life has very very deep pockets…might sell it off if the costs get too high.

Anglo, risky, very exposed to the us at the moment, expcet earnings in 2009 onwards to dip alot. Hard to call…

Credit Unions, the small fry always get burnt the most, expect several to fold, no protection here for your depoist either, the wee man gets wiped out. Gov will jump in, all those votes…

All in all can’t see a credit risk or massive flight to capital, but i can see major restructuring to come, it a downturn will cause investor to dump share and a take over to come in from one of the large banks…ptsb and boi most likely candidates, and may carrya share premium to reflect this, a specualtive punt…

[2Pack]

Credit union deposits are , similar to bank deposits , guaranteed by an insurance scheme of sorts.

bank deposits up to 90% of 220000 (meaning 200000 max)
credit unions in full up to €12k or €15k

so spread that cash

anglo bankrolls property developers and thats pretty much all they do.

IIB are overweight in the BTL ( specuvestor) and FTB segments which are the worst hit at present . Its specuvestor heaven in there normally .

No wonder Austin of IIB is assidously peddling the myth that the interest rate rises will stop at 4.25% and start coming down …seeing as he said the rises were “Done and Dusted” when they hit 3.75% last year.

This is what he told the Indo in November

“The ECB (European Central Bank) simply doesn’t have to rise rates any further.â€

[Gatelodge]

Holy **** this is like a bad nightmare that keeps getting worse and worse.
How many more bombshells are you going to drop on us 2Pac?
Are there any more skeletons in the closet yet to be revealed?
This reminds me of the particle physicists and the standard model theory.Every time they strip away one layer there is revealed yet another layer underneath,I think they compared it to Russian dolls.

Plenty of food for thought here.

[Open_Window]

@Gatelodge

Holy **** this is like a bad nightmare that keeps getting worse and worse.
How many more bombshells are you going to drop on us 2Pac?
Are there any more skeletons in the closet yet to be revealed?
This reminds me of the particle physicists and the standard model theory.Every time they strip away one layer there is revealed yet another layer underneath,I think they compared it to Russian dolls.

Plenty of food for thought here.

Bertie “117% debt of GDP in the 80’s nearly bankrupted the country”