SBP: New 'Bad Bank' plan for AIB and PTSB Tracker Mortgages

[fungus]

This is big news …

The Sunday Business Post are reporting that:

• AIB and PTSB are planning to move their tracker mortgages off balance sheet.
• This may involve a new bad bank ‘vehicle’.
• OR this may involve the transfer of tracker mortgages to IBRC.
• The plan has been discussed with the troika.
• The talks are at an advanced stage.

Anglo/IBRC is about to get bigger. Much bigger.

[discostu]

I heard a mention of this on some radio show last week I cant remember which one, only a small piece but the suggestion was the “junk” was going to IBRC

[Thing_Fish]

is this where the monies set aside for mortgage defaults is going to go?

[onlyone]

Not a bad idea, what about putting Nama in there as well. Might save a few bob.

[txirimiri]

Is this all tracker-mortgages or ones which are not performing? Why are performing trackers classified as ‘junk’?

What are the implications for the holders of the mortgages in question? Presume the terms stay the same. I wonder whether, if this were to come to pass, it would make it more or less likely that IBRC or the new bad bank vehicle would do a discount deal on an early payoff?

[AWAAF]

I presume an across the board sweet deal for clearing (or part-clearing) trackers won’t arise but if it did what would be the macro consequences. Funds sucked from where to where? Any ideas on the consequences?

[yoganmahew]

@AWAAF

I presume an across the board sweet deal for clearing (or part-clearing) trackers won’t arise but if it did what would be the macro consequences. Funds sucked from where to where? Any ideas on the consequences?

Some random thoughts -

• AIB and PTSB achieve balance sheet reduction, increase loan to deposits.
• No actual delevering taking place as assets are moved to ICB or ECB funding at levels that might make them relatively low cost (or profitable?) excluding writeoffs.
• Trackers are likely to be more amenable to workouts rather than writeoffs given their lifetime low and fixed cost of funding?
• Given lower default rates, securitisation is a likely possible outcome?

[Duisigh]

i thought they’d securitised that lot to the hilt already ?. And I was wondering, then if they wanted to warehouse them, who the hell would take them off their hands ? With ECB rates pegged at the bottom for the moment who’d want a piece of that action ?

[namascama]

@yoganmahew

• No actual delevering taking place as assets are moved to ICB or ECB funding at levels that might make them relatively low cost (or profitable?) excluding writeoffs.

You mean another form of Eurozone money printing by stealth. Yes that’s a highly probable outcome.

[mr_anderson]

@txirimiri

Is this all tracker-mortgages or ones which are not performing? Why are performing trackers classified as ‘junk’?

Even performing trackers are loss-makers for the bank, as the interest received (from the customer to the bank) is lower than the interest paid (from the bank to the lender/ECB).

So from the banks perspective, they can all be classified as ‘junk’.

[slasher]

ft.com/cms/s/0/0c01abe8-efc6 … z2ZEFcCfSy

Dublin seeks credit line to help exit bailout programme

this is almost a BTW in article

Talks are under way between troika and Irish officials on possible solutions to reduce the cost of funding these mortgages. An EU official, who spoke on condition of anonymity, said the ESM, Europe’s new bailout fund, is one potential avenue to remove tracker mortgages from the balance sheets of Irish banks. Troika officials are also investigating the option of private sector investors becoming involved with options including securitisation, guarantees and other types of innovative financial engineering.

[BoyRacer]

Irish banks’ woes continue as they’re warned of legal difficulty in trying to warehouse trackers - Thomas Molloy → independent.ie/business/iris … 34627.html

Mr McQuaid said it may be possible to structure a purchase of the portfolios at “long-term economic values” similar to the NAMA acquisitions.
However, such a off-balance sheet transfer is likely to create material capital losses.
Operationally it may also be difficult for the institutions to disaggregate these loans (unlike NAMA, which acquired large developer exposures).

there is more

[consie]

@slasher

Subscribe to read | Financial Times

Dublin seeks credit line to help exit bailout programme

this is almost a BTW in article

…and other types of innovative financial engineering.

Isn’t that what got us in all the trouble in the first place!!
Goddamn innovation.

[HNWI]

@FT

Talks are under way between troika and Irish officials on possible solutions to reduce the cost of funding these mortgages. An EU official, who spoke on condition of anonymity, said the ESM, Europe’s new bailout fund, is one potential avenue to remove tracker mortgages from the balance sheets of Irish banks. Troika officials are also investigating the option of private sector investors becoming involved with options including securitisation, guarantees and other types of innovative financial engineering.

A loss making product is a loss making product. No amount of “financial innovation” can magically turn shit into gold.

“Financial innovation” is actually all about using accounting tricks to conceal losses and transfer them to the unwitting. I expect these loss making assets to turn up in peoples pension funds pretty soon. This is what they did with IBRC losses and Bankia losses in Spain.

[slasher]

@HNWI

I expect these loss making assets to turn up in peoples pension funds pretty soon. This is what they did with IBRC losses and Bankia losses in Spain.

How can I stop these loss making assets showing up in my pension fund?

[HNWI]

@slasher

@HNWI

I expect these loss making assets to turn up in peoples pension funds pretty soon. This is what they did with IBRC

losses and Bankia losses in Spain.

How can I stop these loss making assets showing up in my pension fund?

Stop contributing to a pension. Once you contribute, the money is no longer yours. It belongs to the fund manager. He can invest you in any loss making trackers he wants. You have no control.

Ive stopped contributing. Pension funds are scams.

[Bjorn_again]

What rates are both banks currently paying for credit?

As an extension of the state did they not receive recapitalisation funds at the ECB rate of 1% or less now?

So the banks are still making money on trackers despite the hoohah?

I guess only another bank would have access to the basic ECB rate, even an optimistic forecast on increasing rates to improve profitability on these loans to a buyer would be offset by a spike in defaults. How could you securitise this pile of sh1t? I’m guessing securitise is like insure??

[HNWI]

@Bjorn again

How could you securitise this pile of sh1t? I’m guessing securitise is like insure??

It looks like theyre going to do the US style mezzanine financial innovation. Pool the tracker mortgage book into a single fund, then slice and dice that fund into bonds with different risk profiles. Flog the high risk ones to pension funds. Flog the low risk ones to the ESM and favoured cronies.

[slasher]

@HNWI

@slasher

@HNWI

I expect these loss making assets to turn up in peoples pension funds pretty soon. This is what they did with IBRC

losses and Bankia losses in Spain.

How can I stop these loss making assets showing up in my pension fund?Stop contributing to a pension. Once you contribute, the money is no longer yours. It belongs to the fund manager. He can invest you in any loss making trackers he wants. You have no control.

Ive stopped contributing. Pension funds are scams.

Talking nonsense again. You’ll be telling be to buy bitcoins next.

I’ve told you before with your other user name that its very easy to get a self directed fund and decide what yo want to do. You must be very gullible not to realise that there a multitude of options for this.

With the pension relief I’ve received from my pension contributions I’ve saved a fortune in tax. The pot is up marginally due to being invested in low risk assets.

[HNWI]

@slasher

I’ve told you before with your other user name

WTF are you on about?

@slasher

With the pension relief I’ve received from my pension contributions I’ve saved a fortune in tax.

Those savings are just on paper. The money is not in your possession. And it will never be in your possession. In order to actually enjoy and spend that money, you will have to buy an annuity. Then the annuity company will gradually drip feed a little of the money back to you with massive fees and charges deducted. Youll never get the full amount back.

By the time you figure out its a scam, you’ll be too old to do anything about it.