The Bad Bank


#95

15% haircut.
85c on the euro.
That is utterly insane and if they try to peddle the “we’ll make it up with a levy in the end” I’ll explode: you levy the banks and who the hell do you think will ultimately be paying it? And if you’re the goddamn majority owner of said banks, which the taxpayer likely will be, you’re actually levying your own company to pay yourself back… motherofgod.


#96

Lenihan was on news @ 1 stating that all property lending was being taken off the banks , the whole lot .

He did not mention mortgages though , they may be left with that much.


#97

I heard that too. I don’t know if that’s better or worse though than them just taking the shite.


#98

Sorry, I’m lost on the 15%…do they mean that 15% of the entire portfolio the state is taking on (i.e. all the banks’ construction/developer loans) are bad?


#99

Currently - the banks have €90Bn of “Assets” on their balance sheets that could possibly go bad i.e. not be repaid in full. Balance sheets, by the way, kept by psychopathic, schizophrenic optimists hopped out on powder of unicorn horn.

The banks would feel “aggrieved” at having to take a hit and swap these “pristine” assets for some grubby taxpayer money - but goddamit they’ll do it for the good of the nation. So they will give the state these €90Bn in loans and they get €76.5Bn in cash.

Heroes - each and everyone of them!


#100

I simply can’t make my head climb over the fact that the arsonists still think they can make amends by burning us all alive and thrice over to make amends for the original inferno.


#101

To think we where all up in arms at the prospect of local councils buying up a few hundred peaked priced ghost estates :open_mouth: To the death of innocence :nin


#102

Interesting as an aside that the NTMA now don’t seem to give the breakdown of domestic/foreign institutional takeup for debt issuance…

As a second aside:

So if the banks go and issue loads of new equity to the market, the government’s share is diluted? :imp:

And now to the money shot:

[code]Debt Ratios 2009 2010 2011 2012 2013
Scenario 1: Based on Supplementary Budget 2009 Deficit
General Government Debt/GDP 59% 73% 78% 79% 77%
General Government Debt/GDP, adjusted for cash balances 47% 61% 69% 72% 73%

Scenario 2: Based on Supplementary Budget 2009 Deficit, consolidating
a €50* billion bond issue by/on behalf of NAMA
General Government Debt/GDP 88% 103% 107% 106% 103%
General Government Debt/GDP, adjusted for cash balances 77% 91% 97% 99% 99%

*€50 billion for illustrative purposes only, does not assume any repayment of NAMA bonds before 2013[/code]

The 50 bn is laughably too low. It assumes that 40 bn of magic pixie money is going to appear from somewhere. I can, at best, see 30 bn (10 bn writedown from the banks and 20 bn cash on hand) of leprechaun money (you know the type, you lock it in the safe and the next morning it has turned to turds).

Adjusting the GGD/GDP based on cash balances is also risible. Which is why eurostat doesn’t allow it. It is like saying, well I borrowed a million and I still have a 100k in my back pocket, so I’ve really only borrowed 900k. Never mind that I have plans for the 100k…

I think shareholders of AIB and BoI can worry less aswell. I have a suspicion that this whole scheme is aimed at Anglo. As I wrote at the time of the nationalisation, Anglo’s debts become the state’s debts if the accounting scheme from Northern Rock in the UK (worked out between the PAO and Eurostat) is followed and I expect it to be to. So this will shuffle a load of paper from Anglo to NAMA letting Anglo be set up as a good bank. Add in INBS and EBS and you’re nearly to 90 bn. But I my be stretching the tinfoil a little!


#103

Oh, BTW, don’t get hung up on the 15% figure. Read between the lines. What they are saying is that AIB and BoI can afford a 15% haircut before they are nationalised. Anything lower than that and we’re heading into RBS territory…


#104

Dam it I was fucking right! Body of evidence can back me up on this whence I made the comment, RTE 9 o;clock news David So & So just said this is a pilot project, Ireland is being used as the test case for the EU!!!

A nation of guinea pigs headed by pigs.


#105

Was any official reason given why the bad bank is to buy “good” loans?

Given the practice of interest roll-up, this stinks.


#106

You got it OW … !! Well done. :wink:


#107

Been busy Proximo???

:laughing:


#108

Dam it I am right :smiling_imp: It is well documented that products are market tested here first because the population size. The criminal M50 e tolling system is the first of its kind to be road tested in the EU before it rolled out EU wide. The British perfected population control in the north. Techniques now employed across the world in military campaigns to terrorize local populations. Dam it we are merely a firing range. There will be bodies strewn across the landscape with enough already there to make you vomit your guts.


#109

Funny fuckin guy … :wink:

The Game’s afoot !

I’ve been lurkin alright but time is an enemy at the mo … and sooo many posts … Jayzus ! Time poor that’s me.


#110

Jayzus you’re on fire tonight OW ! All true, no conspiracy among those save for the Brits as usual. It’s all ok now, Federal EU and all that … :wink:

That M50 toll is utter bollocks don’t get me started :imp:


#111

€90bn my hole :frowning:

It is well over €100bn , what is Lenihan playing at ?

AIB total loans over €130bn
Anglo Total loans over €70bn

Anglo and AIB alone probably make up €90bn of toxic property cack once commercial mortgages are included .

What about Nationwide whose loan book is over €10bn , Bank of Ireland too .

Then there is the EBS which got into development loans and mutality be damned , the Permo is mainly mortgages.

The Central Bank ( page 15) shows €150bn of Residential Mortgages outstanding end 2008 and total private sector credit including mortages of €400bn/

On page 34 it shows a balance sheet of €1.4TR for our banks .

In there are items like ( €Bns), eg €19 bn in ‘other mortgages’ , other loans and securites ???

                                       Resident   EU     Rest of W   Total
Loans to other residents               386,952    75,890  174,092    636,934
5.3 Loans up to and including 1 year    63,930     2,986    7,675     74,591
5.6 Residential mortgages              120,569       287    1,171    122,026
5.7 Other mortgages                     18,683       125      105     18,914
5.8 Other loans and securities issued 
    to other residents                  22,842    43,812  111,531    178,185

#112

2Pack, as I said earlier (or possibly elsewhere!) I believe the 90 bn is just Anglo and INBS/EBS.

Or it could just be the remaining dregs of development loans.

But the fact that 50% of it is outside the state makes me think that it is mostly Anglo.


#113

read this elsewhere

"The way that the bad bank is going to be run is sensible. They seem to be telling banks “We aren’t taking just the junk, we want everything or nothing.”

I don’t think people quite realise how bad this could be for Irish banks though. They are going to have to take extraordinary sized hits on development loans. The NTMA has the right ar5e with them and will bid low for assets (as it rightly should). However, this will give them a fighting chance.

The issue remains over national debt servicing and finances. I don’t think that it is draconian enough. At the start of the year, Ireland was looking to raise EUR20bio in bond markets. As tax receipts fall this rises and is currently undisclosed. From pretty high up discussions, the conclusion was :

10-20bio achievable
20-30bio difficult
30-40bio very difficult
40-50bio virtually impossible
50bio+ -----> phone the IMF

Each new issue is killing spreads and a higher percentage gets sold into Irish banks each time (under the radar QE imho).

Lenihan needs to get on the road and go to the big investors in the world and be as convincing as he was in London. The financing guys are frustrated at the govt’s inactivity when what they need is to sit people down and say “Look. We have this in place. Yes - we are in the sh1t, but we will get through it.” At the moment, there is nothing coming out. "


#114

If we buy the €100B of loans from the bank for say €50B. The banks will then have a hole of at least €50B in their equity which we will then have to plug.

Are we going to have to issue €100B of debt through the banks???