We predicted this as well.

Must be over a year back the Pin predicted Anglo Irish wold end in trouble.

Now of course Anglos Mr Fitz is going to defend Anglos performance to the shareholders. After all it is his job.
It is much more prudent to listen to unbiased UBS opinion and of course many of the Pins members’ opinions’.

Above in bold is probably the most ridiculous thing Mr Fitz was ever forced to say to appease his audience. It does beg the question, who are Anglos shareholders? What I mean is, the statement is a completely untruth and of course Mr Fitz (with his education and experience) knows it is. It shows that the people he was addressing are uneducated and inexperienced to the man. Otherwise at least one would have stood up and questioned such a statement.
Irish investors have got to be the least knowledgeable in the world. What an easy gig it must be for CEOs to run rings around them.

Alternatively, some of the shareholders clearly understood what they were told and decided to keep quiet until they sold their Anglo shares. I suppose we’ll find out Monday.

Now who is to say that “UBS” are unbiased!Thats quite a leap there Bertie.Like the UK hedge funds that spread all the BS re Anglo pre results in Dec and then beneffitted from driving the stock price down as they had “Shorted” the stock!It is very likely that UBS are doing the same.

Anglo has doubled its market share in the last 10 years to 20%,it’s loan book is all “secured” lending,it has a low cost/income ratio of 22% and is on track to deliver 20% EPS growth in the year to Sept 2008.

It delivered a 44% increase in operating profit in the year to September 07 and is on track to deliver a further 24% increase this year.These are not the hallmarks of a bank in trouble!

It is very likely that UBS are doing the same. I happen to know a little something about UBS and you are making some big assumptions of your own there.

Anglo has doubled its market share in the last 10 years to 20%,it’s loan book is all “secured” lending Doubled it’s market share in a market in trouble. Secured lending? Secured in a depreciating asset. :unamused:

It delivered a 44% increase in operating profit in the year to September 07 and is on track to deliver a further 24% increase this year. The increase you’re talking about was the last of the boom it’s all downhill from here. As for the 24% increase, lets wait and see shall we?

These are not the hallmarks of a bank in trouble! Creative accounting does wonders for the image of a company. In any investment bank I’ve worked for they take internally produced company accounts with a pinch of salt.

Basher, I dont understand why you believe that was ‘the most ridiculous thing Mr Fitz was ever forced to say to appease his audience’.
It accurately sums up every single mortgage, every single bank issues.
Its NEVER about the building, its ALWAYS about the ability of the borrower to repay. I can assure you, if Sean Fitzpatrick was giving the talk to experienced investors, they would all be nodding their heads in agreement.

Which begs the question, who or what did you think the banks were exposed to ?

Mr Andersen beat me to it.

When considering a loan you underwrite the cashflows the asset produces rather than value of the asset itself. Tight interest cover is the indicator that a borrower will have difficulty servicing the interest and potentially default. The value of the asset is only relevant if the borrower defaults on his repayments and you have to foreclose. Then it depends on what LTV that you have lent at. If you have lent to 70% LTV you are fine, if you have lent at 85%+ you should be worrying that the country does not fall into too significant a recession.

Maybe Anglo have lent at higher leverage than other domestic banks to help them gain market share in the UK. In the recent low interest rate environment and with the proliferation of securitisation based lenders it has been difficult to compete on price and banks have competed on how high an LTV they were willing to lend at.

The thing that worries me about commercial property is refinance risk. Even if your borrower can service his interest will someone have the appetite to offer him increased leverage against a reduced asset vale when the loan matures and needs to be repaid. This has been a continuing problem for German banks post their real estate boom.

I don’t understand why not? Surely if the borrower has met the repayments then it makes sense to rollover/renew the facility?

Forgot that :open_mouth: , well put NCD. The Banks most at risk are those who competed the most for the same business in recent times.

Mr A has said before ( around here) that Anglo started walking away from projects a few years back .

It also strikes me that other banks did not , INBS and IIB seem ( to me anyway) to crop up a lot when megaprojects go tits up in your Portlaoises and Monaghans .

And Anglo have not offloaded all of these from their balance sheets,. they have some covered bonds out there for example.

As for refinancing, they are stuck. I am waiting for another poster to detail Anglo involvement in Hotel lending in the CB forum as well .

Commercial and Hotel lending are areas I know little of. So i keep an eye on the empties !

Not when foreclosures are on the horizon. The assets are decreasing in value. There is an over supply in commercial property as there is with residential. We are looking at increased unemployment coming from both construction fall off and Ireland loosing it’s competitiveness. This will lead to higher vacancies in commercial property.
So, to cut to the chase. Anglo will be looking at foreclosures sooner rather than later. Since they have high LTV ratios then they are heavily exposed to a drop in value of any asset which backs up their loan.
Now there is a case whereby the commercial property loans are strengthened by a lease agreement being in place. However, this is absolutely not the case for all of them. And of late most commercial property has been built without a tenant but on the supposition that a tenant will materialise after the completion. With the US heading into recession and our competitiveness gone I see little foreign investment on the horizon. Further many small export driven companies will go under in the next while so there you have further difficulties with Anglo’s stance. The only thing it can rely on is big blue chip companies as tenants, the rest is counting your chickens…

Right, I think the country is heading into a recession. I don’t think Bernanke will manage to avoid one and Ireland will follow.

And why not share your inside information on UBS with the rest of us Plebs!Don’t be so naive to believe that UBS did not benefit from their decision to advise shareholders to get out of anglo!

As for secured lending it has allready been pointed out by several posters that anglo arrive after the development and fund the purchase of completed buildings.Now you may be correct when saying that the asset is depreciating but the rent roll is not,25+ yrs leases with upwards only rent reviews put paid to that particular argument!

As for the the creative accounting argument,lets deal with facts please!Since enron accounts have been much more difficult to manipulate,and are you seriously trying to tell us(without proof) that anglo are cooking the books!

Lets look at a recent Anglo funded development,the funding of the South King St retail development off Grafton St.The development is completely let to secure covenants on upwards only leases.Now perhaps you did,nt see last Wensdays property section in the IT but rents on Grafton St on review are increasing by over 90%(from 02/03 levels).

Anglo are not in trouble…I happen to know a little something about Anglo and you are making some big assumptions and major leaps of your own there.!

:roll:

After or before still amounts to the same exposure.
Your second point only applies to an already secured blue chip tenant.

Not suggesting that, I am saying there is more to a company than a Trading/Profit&Loss a/c and Balance Sheet.

So? Grafton St the best place in Ireland to sell retail. Talk about cherry picking.:unamused: Can you assure me Anglo has all properties on Grafton Street with blue chip tenants? No. Didn’t think so. This makes your point irrelevant.

I have full access to facts and figures on Anglo, market trends, and fundamental data and I have read them. Do you?

I can guarantee you that I have access to everything I need to know about Anglo!If you need any further info send me a pm.Anglo fund primarily “Prime” investments,they pulled the plug on a retail development in portlaoise last year at the first hint of trouble i.e the failure by the developer to secure an anchor tenant

Good memory :wink:
Think I mentioned it first on DAFT around this time last year.

Hmmmm. Ok. We both have the data.
I do not have a list of all their current projects and if you do then I’d say you are walking a very thin line by offering to discuss this on a public forum. Probably best if we don’t walk down that road.
I will say though, I’d be absolutely shocked if the majority of their projects are secured blue chip tenants.

I personally see this for the chop.

I don’t see how such long leases are achievable in a downtunred and rather dispondant economy and that is where we are headed no doubt, you can have all the high rents in teh world but if you can’t find any takers. I think we have reached comercial saturation point now, with enough spars & centras plus well known anchor teanants that the DAFT comercial lisitng have doubled in tandem with the rental & sale inventories. there is massive oversupply in the commercial market and thats that.

Upwardly only rent review are a thing that is currently kiling business and preventing new ones staring as I write. In the last two years every business that I know that has moved or jsut gien up is because the rent was doubled thus destorying the business offering overnight. These businesses been establish 10+ years.

Plus its having a massively culutral & social regressive influence on Ireland as a whole. You cannot discount this.

As for Zone A rents in general, Finfacts printed the tried and trusted Big Mac Index , beloved of the Economist , some time back

https://www.finfacts.com/irelandbusinessnews/uploads/ubsaug102006.jpg

A summary of Anglo’s last results and position/exposure below…

The business bank’s pre-tax profit jumped 46pc to €1.24bn in the year to the end of September, with underlying earnings per share (EPS) rising 41pc to 131.7c to beat market expectations and its own guidance by 2.7c. It forecast EPS growth of over 15pc for the current year.

Anglo wrote down €112m of its €413m investments in structured investment vehicles (SIVs) and asset-backed securities with some exposure to the US subprime market. The group has €96.7bn of assets.

“This was an extremely prudent measure. We will not have to be discussing these again in 2008,” said group chief executive David Drumm.

On the funding side, Anglo said its customer deposit book jumped 46pc to €52.7m. This accounts for 63pc of the capital Anglo uses to fund lending, with the remainder made up of wholesale funding.

The group said it has been taking in €700m a month in new deposits since the onset of the credit crunch in August, compared to about €500m a month about six months ago, said finance director Willie McAteer.

This served to stem speculation in some quarters of the market that it has been losing deposits in recent months.

Anglo’s work in progress (WIP), a closely watched measure of loans which have been agreed but not yet drawn down, stood at €9.8bn at the end of September.

Goodbody Stockbrokers analyst Eamonn Hughes said he had been expecting WIP to be at the €10.5bn level.

“Gross new lending was also behind expectations,” said Mr Hughes.

Analysts were relieved, however, that the bank is managing to pass on its own rising funding costs to borrowers – keeping its net interest margin close to 2pc – rather than lend aggressively and cheaply into a weakening property market. Anglo said margins should remain stable or rise in its current year.

The group took a €51m charge on bad loans, equivalent to 0.9pc of its average loan book. It had total provisions of €295m covering €335m of impaired loans, where repayments are at least two months behind.

“Taking the collateral held on these loans into account leaves us covered to the tune of about 300pc,” said Mr Drumm.

Anglo sees the underlying Irish economy growing 3pc next year despite a continuation of the slowing housing construction market.

It expects house completions falling from 90,000 units in 2006 to 75,000 this year and 50,000 in 2008.

“Supply has just been ripped out of the market (by developers). The lower it goes the quicker the market will recover,” said Mr Drumm, adding that rising rental yields in Ireland show ongoing demand for housing.

Wishful thinking, 300,000 empties and you’ve got many years supply on the books.

The Developers have no control over this now.

Latest IPD/SCS Quarterly Irish Commercial Property Index. Q4 2007

ipd.com/LinkClick.aspx?fileticket=2l3zNUZM8hM%3d&tabid=435&mid=4342

That great myth AGAIN !!! :frowning:

Other than zone a shops ( our city centres are a bit low rise)

WE HAVE

  1. A great surplus of housing …maybe 350,000 empties and certainly 330,000 at least ( yes that includes holiday home and in February )
  2. Scads of empty offices nationwide , many good quality ones.
  3. Scads of empty retail parks ( warehouse / shop / office combos)
  4. Scads of empty factories all over.

None of which is consistent with a throttling of supply .

Its WAY too late to throttle supply, that should have been done in 2004 from what I can see.

People are not blind . You can get a 1 year break clause on pretty much anything nowadays .