State ripped off by AIB recapitalisation...

From my new favourite blog…

In English please?

Edit - I think I know what it means - it’s some fkn scam of some kind where the taxpayer has been shafted - again.

Well, it’ll only amount to a couple of percent of AIB (following the recap), but the state did hold an option to takeover 25% of the bank at a fixed price of something very small. Smaller than the price paid as part of the recapitalisation.

The problem, as I see it, is the insistence (which appears to be ideological) to both maintain the banks as institutions and to maintain a private component to their ownership. This is causing the government to tie itself in knots to maintain the fiction that these are arms-length companies. It is far too late for those kind of antics.

It’s just a paper exercise so (of course with some cost). Irrelevant at this stage.

Well, yes and no. As with the guarantee of existing bonds, the retention of some private ownership will ‘complicate’ the eventual resolution of the banks, IMO. Subordinate bondholders in AIB will have a case that equity should be wiped out before they are.

Hang on - does that translate to “taxpayers” should take a hit before them?

Well, we are already in for so much; we will take a hit one way or another, but the danger is that we will be left open to being sued and depressingly for ideological reasons.

Do we happen to know the strike price of the warrants and the expiration if any?

I assumed keeping some shares in private hands was because of some limitation of fully-nationalised banks at the ECB begging bowl?

I don’t believe there is any limitation. The assets stand or fall on their own merits.

If the state used these as the collateral for much of the 3.5Bn loan, and are only getting back 52Mn then that was a bad deal.
It there is any thinking of nationalizing the bank, then the stacks become worthless, and a warrant would hence become worthless. If that is the case, then recovering the 52Mn is a good deal for the taxpayer.

Emmigrant is quite possibly right in his statement about the other parties abilities to fund them.

Maybe there is some EU law that limits the operations of government owned banks somehow. Maybe some extra regulatory hoops to jump through. This is the only explanation I can think of that would explain why our idiot rulers haven’t fully nationalised the banks yet. … 92762.html

This sort of action, places the cuts and tax rises in perspective.

If it had a clear commercial purpose, the bank has gained and somebody has lost. The loser as usual is the taxpayer. Now you know exactly where the money is going and will go in the future.