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Another 81bn for the banks and more to come, angry yet?
On Tuesday of this week quite possibly the most important series of announcements in the economic history of this country were made. 81bn more of your money was pledged to the banks, AIB and BOI were given 30 days to get the house in order or face Nationalisation and the regulator started taking out the trash beginning with placing Quinn Insurance in administration. Meanwhile, the first loan transfers were made to the National Asset Management Agency.
And guess which bank is far and away the worst offender? Anglo Irish Bank - This will bring the total bailout there to 22bn - with at least an additional 10bn needed shortly aswell. Notwithstanding the people who were running the bank were clearly insane but the cost of shutting it down immediately were said to be somewhere between 30 and 40bn . So far as said it will cost 22bn to keep it running and that's not the end. It could cost us more to keep it open then to have it shut.
NAMA to take on first loans at 47% discount
Tuesday, 30 March 2010
The National Asset Management Agency is to apply an average discount of 47% on the first loans it will acquire from the five financial institutions involved in the scheme.
This means the Agency will give the banks just over half of what the loans were worth on the banks' books.
It is well ahead of the figure of 30% estimated by the Government last year.
The first batch of loans, made up of 1,200 individual loans and originally worth 16bn, will be bought for 8.5bn.
Out of the 8.5bn in loans, the majority of the securities are in Ireland. Investment properties make up the bulk of the loans at 5.5bn. 1.3bn is in land, 0.8bn in hotels. Residential property makes up 0.4%.
NAMA completed the first transfer of loans from EBS and Irish Nationwide yesterday.
The first Bank of Ireland loans will transfer on Friday, with Anglo Irish and AIB loans going to NAMA by early April.
NAMA said it expected to complete the transfer of all loans by February 2011.
Figures for the individual banks show NAMA will pay AIB 1.8bn for loans worth 3.3bn, a discount of 43%.
It will pay 5bn for 10bn of Anglo Irish Bank loans, a discount of 50%.
The discount for Irish Nationwide is even bigger, at 58%. The figures are 35% for Bank of Ireland and 37% for EBS.
NAMA also announced three institutions will invest 17m each, a total of 51m, in an entity called the Special Purpose Vehicle being set up to buy, manage and sell-off the loans identified by NAMA.
The three institutions investing the money are Irish Life Assurance, New Ireland and major pension and institutional clients of AIB Investment Managers.
NAMA set up the SPV, which will be 51% owned by private investors and 49% by NAMA, in order to receive approval from the EU to keep the debts associated with the agency outside of the State's national accounts.
The SPV will have capital of 100m and private investors will be represented on its board, but NAMA will have a veto.
The Dαil tonight approved the Government plan to stabilise the banking system by 83 votes to 69.
'Anglo may need 18bn'
Speaking in the Dαil, Minster for Finance Brian Lenihan said the scale of the damage is now known.
Minister Lenihan said that senior figures in banking had made appalling decisions and that the losses were horrifying.
He said that what has emerged from the NAMA process is 'shocking' and that the worst fears about the banking system had been surpassed.
Mr Lenihan said the banks had played 'fast and loose' with the economic interests of this country.
However, Mr Lenihan said NAMA had carried out its valuations in a 'hard-headed' manner.
He said the first tranche was 20% of the anticipated total assets.
He outlined how much new capital the banks will need to meet targets set by the Financial Regulator.
Anglo Irish Bank: The Minister told the Dαil that the State may need to pump more than 18bn into Anglo Irish Bank.
Mr Lenihan said he was providing 8.3bn to Anglo Irish Bank this week, but additional capital will be needed to help it cope with its losses.
The current estimate is that this could involve another 10bn over time, though there was still uncertainty over this figure.
The 8.3bn will be paid over a number of years, reducing the cost to the Exchequer.
He said he understood why people wanted to close the bank, but this would involve huge costs to the State, and potential damage to the State.
He predicted an exit of the bank from State hands in five-seven years.
AIB: The Minister has said 3.29bn of assets from AIB will be transferred in the first tranche. That accounts for 14% of its assets. The average discount applied will be 43%.
Mr Lenihan said AIB would need to raise 7.4bn by the end of the year to meet targets.
It is to immediately start selling off assets in Poland, the US and Britain to help raise this, but Mr Lenihan said the State would provide additional funding by increasing its stake in the bank if necessary.
Bank of Ireland: Will need 2.7bn in new capital, but is hoping to meet much of this from private sources.
The State will convert some of its existing preference shares into ordinary shares, but this will not require any new investment of State funds.
Irish Nationwide: Will require 2.6bn of new funds from the Government, most of which will be payable over 10 to 15 years, reducing the cost to the State.
EBS: Will need 875m. The State will provide 100m by taking new shares in the society, which will give the Government full control.
But Mr Lenihan said there had been interest from private sources in making an investment in the society.
The Minister said he was ordering AIB and Bank of Ireland to lend 3bn each to businesses this year and next year.
The National Treasury Management Agency will manage the State's stakes in EBS and Irish Nationwide, as well as Anglo Irish Bank.
Stakes in AIB and Bank of Ireland will continue to be funded and held by the National Pension Reserve Fund.
The Minister said he was seeking EU approval for a modified extension of the bank guarantee scheme, which runs out in September. The extension will not cover subordinated debt.
This follows the largest loss in Irish Corporate history which was announced the follwing day.
Anglo Irish reports 12.7bn loss
Wednesday, 31 March 2010 22:53
Anglo Irish Bank has reported a loss of 12.7bn for the 15 months to the end of December last year, as it set aside just over 15bn to cover loan losses.
10bn of the loan loss figure was linked to assets expected to be transferred to the National Asset Management Agency.
Excluding money set aside for bad loans, the bank made an operating profit of 2.4bn, though this included a gain of 1.8bn from a restructuring of its debt.
The bank confirmed the Minister for Finance, Brian Lenihan, had put a further 8.3bn into the bank, as he announced in the Dαil yesterday.
Anglo Irish also said restructuring of its activities and the NAMA process cost it 42m in the 15-month period.
The bank's annual report also gives a breakdown of loans to former directors and how much of this money the bank expects to be re-paid.
The figures show a total of just over 155m in loans to former directors of the bank was outstanding at the end of last year, but the bank has set aside almost 109m to cover the failure or possible failure to re-pay these loans.
Former chairman Sean FitzPatrick personally owed the bank more than 85m at the end of last year. But the bank's accounts show that it anticipates that almost 68m of this may not be re-paid.
The figure for former chief executive David Drumm was just over 8.3m, with the bank setting aside 6.7m for possible non-repayment. Most of this is linked to a loan given to Mr Drumm to buy shares in the bank. It is currently the subject of legal action by the bank.
Former finance director William McAteer (left) owed the bank 8.5m, of which more than 7.6m is not expected to be re-paid. This 7.6m figure also relates to a loan given to buy shares in the bank.
The figures also show that almost 13.9m was jointly lent to Mr FitzPatrick and former director Lar Bradshaw to facilitate an investment in oil exploration. The bank has set aside 11m to account for possible non-repayment of this. 3.1m was also lent to Mr FitzPatrick to fund a hotel investment.
Anglo has made provision in its accounts for the possible non-repayment of almost 22m of the 27.3m in loans to Mr Bradshaw.
Anglo's chief executive Mike Aynsley described the results released today as 'soul destroying'.
Speaking on RTΙ's Six One News, chairman-designate of Anglo Irish Bank, Alan Dukes said keeping the bank open remains the best option for taxpayers, based on calculations available.
He said even with increased funding requirements, 'it still costs less to keep the bank open', even if it were to be wound up over a period of 10 years.
He said the bank would aim to get back as much money as it could from various outstanding loans, despite write downs, adding that legal action was pending in a number of cases.
Along with everything else it's a wonder as to why there has not been a coup de'tat yet!