What is truth?

Posts tagged ‘www.irishtimes.com’

The cost to the Irish taxpayer

SIMON CARSWELL

 

Photo Machholz

 What the bailout is costing Irish taxpayers

Anglo  – €29.3 billion (including €22.9 already committed by Government) – could go to €34.3bn in severe worst-case

AIB  – up to €6.5 billion (including €3.5 billion already invested by Government) A Basket case

BoI  – €3.5 billion (doesn’t need any more capital from Government)(So it says but can you belive them  I don’t!)

INBS  – €5.4 billion (including €2.7 billion already committed by Government) why is there no prosecutions for this fraud?

EBS  – €350 million (further requirement for €440 million and possibly more which is expected to come from its new buyer)

can anyone belive any buyer will stump up this kind of cash now?

Irish Life & Permanent  – doesn’t need any capital; didn’t engage in property development lending

No ,just helped Anglo Irish Bank to defraud its own investors and customers and Irish Life& permanent is now screwing its own customers now  

Total:  €45 billion – could go to €50 billion in Anglo severe stress case

Of this, some €35 billion of this is debt and is unlikely to be recovered – the €6.5 billion to be invested into AIB and €3.5 billion already invested into Bank of Ireland is regarded as an investment by the National Pension Reserve Fund, the €24 billion sovereign wealth fund held by the Government. The State is likely to make this €10 billion back and could make a profit by selling down the shares over time.

The figures relate to the State’s investments in the banks. AIB’s capital requirement is €10.4 billion of which it has raised €2.5 billion from the sale of its stake in Poland’s Bank Zachodni WBK, leaving €7.9 billion to raise – some of that will come from the sale of the 22.5 per cent stake in US bank M&T, the sale of its UK business and further (possible) investment from existing shareholders and institutional investors. The Government will underwrite the sale of new shares.

source http://www.irishtimes.com/newspaper/breaking/2010/0930/breaking37.html?via=rel

What about the dierivitave  losses that the Banks are hiding Bank of Ireland and Allied Irish Bank ?

 Machholz

Irish banks are still in denial

While all the focus has been on losses at Anglo Irish, the other Irish banks are in denial about the scale of State support needed. It is time to face the facts: the three viable banks need over €17 billion, writes PETER MATHEWS 

LAST WEEK, the scary reports of liabilities at Irish banks centred on the colossal Anglo Irish Bank loan losses, the scale of which I (and other analysts) had been only too aware of more than a year ago. The focus on Anglo Irish was understandable, as far as it went. But the banking sector crisis is not just about Anglo. The Government is missing the bigger picture entirely.

The Irish banking system is analogous to a household’s heating/plumbing system with inter-related boilers. The two big boilers are AIB and Bank of Ireland. There are other smaller boilers, including Anglo and Irish Nationwide, which got really badly damaged by using the wrong fuel and, as a result, they’re now broken beyond repair. The correct decision now is to “stop-cock” Anglo and Irish Nationwide out of the overall system, decommission them and wind them down, in an orderly way, over a period of five to seven years.

AIB and Bank of Ireland (BoI) are the economy’s two heavy duty “main boilers”. Both are now in highly unreliable condition, hissing and spluttering and stopping and starting unpredictably. Both need major refits and servicing. They are severely undercapitalised and poorly directed and managed. Yet both persist in pretending they’re in reasonable shape. They are not. And that’s absolutely the case for BoI, notwithstanding the insistent protests that it is okay because it has more or less raised the capital amount indicated as adequate last March.

But that was last March. And last March’s estimates for both AIB and BoI were not enough. BoI needs €6.5 billion, not €3.65 billion. And AIB needs €10 billion, not €7.4 billion.

The proof goes along the following lines. Gross loans in AIB listed for transfer to the National Asset Management Agency (Nama) totalled €24 billion. A (light) 40 per cent writedown on this figure amounts to €9.6 billion, which should be rounded at €10 billion. We note also that AIB will have to absorb large further losses on its mortgage loan book, its corporate loan book and its SME book and also on its personal lending portfolio. In addition, it may well have uncovered exposures on derivatives. For these reasons, and extensive relevant professional experience, I feel conscience bound to point out that AIB definitely needs recapitalisation now of not less than €10 billion. Furthermore, AIB should not be selling its stakes in Polish and US banks. They are the most profitable, cash-flowing parts of AIB. AIB is only doing this as a panic measure to try and plug its deepening capital shortfall.

Similarly, BoI needs a €6.5 billion recapitalisation. Why €6.5 billion? Because in BoI, the listed loans for transfer to Nama were €16 billion. Apply a 40 per cent write down. This amounts to €6.4 billion, which should be rounded to €6.5 billion. All comments applicable to AIB in the preceding paragraph apply also to BoI.

The Educational Building Society (EBS) also needs recapitalisation of €1 billion to cover its loan losses. Four months ago, the Oireachtas Joint Committee on Finance and the Public Service was advised that the three viable banks, AIB, BoI and EBS, needed immediate capital of €10 billion, €6.5 billion and €1 billion. That’s €17.5 billion in total. The question arises: should the State provide all of this on top of the €7 billion already invested in AIB and BoI in 2009? Clearly not. How much of this €17.5 billion should the State invest? Perhaps €11 billion, in appropriate proportions, into AIB, BoI and EBS.

All of this will result in temporary State nationalisation of these three banks. This leads to another question: where will the €6.5 billion balance come from? The State will be in majority control, at levels in excess of 85 per cent, and able to force existing bondholders in AIB, BoI and EBS to take writedowns on their holdings of bonds, while maybe offering them, say, a small debt-for-equity swap as a sweetener to soften the blow. After, say, five years, the banks will have regained reasonable annual-maintainable normal profit levels in the range €3.5 billion to €4 billion, putting the State in a good position to realise, by way of stock exchange or private sales, its investment of €18 billion in these three banks, plus a profit.

Temporary nationalisation of AIB and BoI will merely formalise the reality that, without 100 per cent State support, both are insolvent. Removal of the State guarantee on deposits at this point would lead to a run on the banks’ deposits. However, we see the banks continuing their delusory charade that they are financially sound and independent!

Realism and optimism are essential for recovery. But optimism must be based on reality. As a country we’re facing a stark reality. Protracted denial in the banking industry, the Government, official Ireland and the professions must stop. Unfortunately, the Fianna Fáil-led Government is responsible for the financial destruction of our economy. Regrettably, the Green Party has collaborated in this destruction. These are the facts. The true situation has been denied by the Government for far too long.

Finally, after two years, only in the last few days have the Minister for Finance, the Government and (some of) the banks been forced to admit the true scale of the destruction. What a waste. What a shame.

So let’s stop the stupid denial. Let’s acknowledge the scale of destruction in the Irish-owned banking sector, not just the Anglo Irish story. AIB and BoI have not been honest with us. Their loan losses are also a shock-and-awe story and they’re only being revealed, on the drip, in drawn-out chapters.

Let’s measure truthfully all the appalling financial damage. Let’s insist AIB and BoI are recapitalised at the truthful, honest, correct and much more robust levels (thereby resulting in temporary nationalisation and bondholder participation through bond writedowns) to enable them to make necessary, much larger, loan-loss provisions than they’ve done to date. Let’s reverse the nonsensical, unwieldy Nama project. This can be done speedily and simply. We’ve got to stop what has become a slow-motion Nama/banks bailout nightmare. Let’s roll up our sleeves and face the challenge. And let’s get on with the work of recovery

source http://www.irishtimes.com/newspaper/opinion/2010/0909/1224278513715.html?via=mr

Comment

This is an excelent articel by PETER MATHEWS 

Early August I posted  my disbelief at the figures the EU stress test results for Allied Irish and Bank of Ireland at the time I stated I thought the figures from the EU were false and were conveniently forgetting some serious hidden derivative losses these corrupt institutions’ were keeping off the book through some fancy  account gimmickry  

My figures were for allied Irish were 10 billion and bank of Ireland, I thought 7 billion or there about .So it is nice to see an independent analyst confirm these figures

Comming over the wires I see headlines say

“Ireland has fallen four places to 29th on the list of global competitiveness and its banking system is the least sound of the 139 countries surveyed, according to the World Economic Forum’s annual rankings.”

now what does that tell you ?

Dublin city Sheriff’s Office and Paddy Kelly

EOIN BURKE-KENNEDY and SUZANNE LYNCH


ACC BANK has seized a BMW saloon car from the Donnybrook home of developer Paddy Kelly.
Bailiffs acting on foot of a warrant to the Dublin city Sheriff’s Office took the seven-year-old 7 Series yesterday.
The car was featured in an article in The Irish Times last month when Mr Kelly spent a day with Irish Times assistant editor Fintan O’Toole travelling to developments around Dublin and its environs.
Mr Kelly, who owes various banks €350 million, was unapologetic in the article about the extent of his debts.
Two weeks ago he appeared at the MacGill summer school in Co Donegal, where he once again seemed apparently untroubled by his borrowings and drank champagne conspicuously while joking about the car and his lifestyle.

Comment
It is appalling to see this developer apparently unaffected by his 350 million debts
I once owned the bank 10.000 pounds and I could not sleep at night worrying how I was going to pay it back to them and I can assure you I wasn’t driving around in a car worth 138,000
(This car would pay the yearly costs of one person on the Dole for 14 years when you think about it)
Nor was I drinking champagne
The old saying is true if you owe the bank that kind of money then it apparently is their (I.E. The Taxpayers of this country) Problem
How does it feel Mr. Kelly? To know that the taxpayers of this country are keeping him in such a comfortable lifestyle and at the same time hundreds of thousands are scraping by on the Dole?
Thousands in danger of loosing their homes .His prancing around like this is not exactly endearing him to the Irish public
One law for the rich and another for the ordinary people seems to be the order of the day
Dublin city Sheriff’s Office should go back and do a propper job !

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