Announcement

Collapse
No announcement yet.

Anglo’s future

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Anglo’s future



    Anglo boss hits out at Green Party call for bank wind-down
    By Aine Kerr and Laura Noonan



    Tuesday August 31 2010


    THE boss of Anglo Irish Bank last night hit out at the Green Party's call for a faster wind-down of the nationalised lender.


    The Greens will raise the contentious issue of winding-down the bank over four to five years, at tomorrow's first Cabinet meeting since the summer break.


    Any rift between Fianna Fail and the Greens has been played down, with both the Department of Finance and Justice Minister Dermot Ahern insisting everyone simply wanted to minimise the cost of the bank to the State.


    The debate over Anglo's future comes as the bank prepares to today unveil another set of massive losses for the first half of the year.


    Anglo chief executive Mike Aynsley has already warned this year will see more "horrendous" results, and experts are expecting losses in the €4bn range for the first six months.


    But Mr Aynsley was scathing in his response to the Greens' comments, saying it was "difficult to understand" views that don't take account of the "detailed analysis" that had been prepared to assess Anglo's options and find the best way to limit the cost to the taxpayer.


    "While some of the information is commercially sensitive, we are more than willing to sit down with interested parties and take them through it," he said.


    "If the Green Party's Finance spokesman is interested in getting an informed perspective he is more than welcome to meet us," he added.


    Sources close to the bank also stressed that it would be "no surprise" if the European Commission imposed some limitations on Anglo's so-called 'good bank'. "The EU always applies growth constraints on restructured banks," one said. "Anglo has always expected that."


    Split


    Sources also pointed out that Anglo "continues to engage" with the commission and has been given no indication that plans to split the institution into a good bank and a bad bank were about to be vetoed.


    The Government is understood to be hoping for an EC verdict on the split plan by the end of September, at the latest.


    Economist Dermot O'Leary of Goodbody Stockbrokers claimed there is now an urgent need for the Government to announce a set plan and detailed final cost for the bank.


    Certainty and closure on the issue are now crucial, he said.


    Fine Gael also rowed in, claiming the way the Greens had announced their changed position could add political instability to the financial instability. And the Labour Party claimed the divisions between Fianna Fail and the Greens would fuel further uncertainty.


    Two plans for the bank are still being considered by the European Commission but the Greens have now clearly opted for one option, while the Department of Finance is still awaiting a verdict.


    One of the plans being considered by the European Commission proposes dividing Anglo into a 'good' and 'bad' bank with the good unit taking assets worth between €10bn and €15bn and reinventing itself as a small business lender.


    The other plan is to close it down over an, as yet, unspecified period of time.


    It is understood Brussels is becoming increasingly sceptical of the 'good bank' proposal.


    However, Anglo chairman Alan Dukes claimed this was at variance with what he is hearing from the ongoing talks with the EU Commission.


    The rising cost of rescuing Anglo was partly responsible for a surge in Irish bond yields last week with interest rates reaching highs of 5.9pc.


    Mr O'Leary claimed any perception of two government parties being at odds on the direction of the bank would not be helpful to the markets.


    "That certainly doesn't help either. One of the benefits, I suppose, over the past two years since October 2008 has been that there has been some level of political stability. ," he said.


    "Some sort of spat in government would not help from an international perspective."


    Adding t
    Excellence is hard to keep quite - Sherrie Coale

    #2


    Shut or salvation - the choices facing Anglon
    Tuesday August 31 2010



    Winding-down:


    This could be done over a five-year period, or even over a 20-year period, depending on what the EU and the Government opt for.


    It involves the bank gradually shrinking as loans are repaid and assets sold off. One benefit is that Anglo could wait for the property market to recover and get a better price as a result.


    The challenge is how would Anglo keep hold of its deposits? Would depositors remain with the bank if they knew it was going to close?


    Consequently the bank could have major problems funding itself when the markets know it won't be around in the long term.


    An immediate closure:


    This is regarded as the most dangerous option, causing Anglo to sell its assets into a depressed property market at fire sale prices.


    There is also the question of how the bank pays off its bond holders and depositors from its risky loan book.


    Closure would also mean no return to the taxpayer, as the proceeds of asset sales are unlikely to be enough to pay for its liabilities.


    Good bank/bad bank:


    The plan favoured by the bank itself, this tries to carve out a new bank from all the bad loans, which would go into a `bad bank'.


    This new so-called `good bank' would eventually be sold and the proceeds returned to the taxpayer.


    The problem is how much money would be needed to start the `good bank' and whether Anglo has the expertise to operate in sectors far beyond its property-lending roots.


    Irish Independent


    Excellence is hard to keep quite - Sherrie Coale

    Comment


      #3


      irishtimes.com - Last Updated: Tuesday, August 31, 2010, 06:25


      Anglo expected to report massive loan losses today
      SIMON CARSWELL


      State-owned Anglo Irish Bank is expected today to report a loss for the first half of this year well in excess of the previous six-month deficit of €4.1 billion posted last year.


      This would lead to Anglo setting a new Irish corporate record for a loss in a six-month period.


      The bank will report the losses incurred on the transfer of the first €9.25 billion in loans sold to the National Asset Management Agency, and further losses on non-Nama loans and investments.


      The loans were sold at a discount of 55 per cent, forcing the bank to take a loss of €5.1 billion.


      The bank, which is led by chief executive Mike Aynsley, may also take into the six-month accounts some of the €4.2 billion in losses incurred on the second tranche of €6.75 billion in loans sold to Nama earlier this month at a discount of 62 per cent. Anglo has a further €19 billion in loans to sell to Nama.


      Anglo is also expected to post losses on financial derivatives and investments today, and may need to refer to the loans due by businessman Seán Quinn and his family, totalling about €2.8 billion.


      Mr Quinn has questioned whether the family would be able to repay the loans if Quinn Insurance, which is in administration and currently up for sale, was sold out of his business, Quinn Group.


      Anglo has expressed an interest in taking control of Quinn Insurance with an industry buyer in an attempt to secure the repayment of the loans. The bank is one of several parties interested in buying the beleaguered insurance firm.


      The bank last reported results in March when it announced a loss of €12.7 billion – the highest in Irish corporate history – for the 15-month period to the end of last year after writing off €15.1 billion on bad loans and investments, primarily due to the property crash.


      Anglo previously announced a loss of €4.1 billion for the six months to the end of March 2009.


      Some €10.1 billion of the impairments taken during the 15 months to December 2009 related to a 28 per cent write-down on the €36 billion in loans – half the bank’s original loan book – moving to Nama.


      Anglo has so far received €14.3 billion in capital from the Government in cash and by way of promissory notes. The European Commission has approved a further €10 billion, and Central Bank governor Patrick Honohan has said the Anglo bailout will not exceed €25 billion.


      Ratings agency Standard & Poor’s estimated last week that the cost of Anglo to the State could rise to €35 billion over time.


      The total cost of recapitalising the banks may total €39.9 billion, including the €7 billion injected into Allied Irish Banks and Bank of Ireland, fixed income firm Glas Securities said in a research note.


      Anglo wants to split the post-Nama €36 billion loan book into a good bank and bad bank, with a view to selling the good bank and running down the bad bank over time. The plan is awaiting European Commission approval.


      Green Party finance spokesman Dan Boyle said Anglo could be wound down more quickly, after four to five years, and that the preferred option of a split was proving more costly than first thought.


      A Department of Finance spokesman said the Government’s preference was for the option that posed the lowest cost to the State.
      Excellence is hard to keep quite - Sherrie Coale

      Comment


        #4


        The Irish Times - Tuesday, August 31, 2010


        Department sets out merits of longer Anglo wind-down
        HARRY McGEE and SIMON CARSWELL


        THE DEPARTMENT of Finance has indicated that a long-term wind-down of Anglo Irish Bank may be a more attractive option than a quicker process as it would spread the cost to the taxpayer of the bank’s €25 billion debts over a longer period of time.


        The view is at variance with the new policy of one of the two Coalition parties, the Greens, that Anglo should be wound down as quickly as possible.


        Sources in the department signalled yesterday the attraction of lower annual costs to the taxpayer over a longer period of years as part of a wind-down, over that period, would be greater than the indicative period of 10 years for an “orderly wind-down”. It is believed that this view is also shared by some officials in the State’s financial agencies.


        The bank is today expected to report a loss for the first half of this year well in excess of the previous six-month deficit of €4.1 billion posted last year. This would lead to Anglo setting a new Irish corporate record for a loss in a six-month period.


        The bank will report the losses incurred on the transfer of the first €9.25 billion in loans sold to the National Treasury Management Agency (NTMA).


        The department said that relevant authorities (Central Bank, Financial Regulator, NTMA) were actively engaged in discussions with the EU Commission concerning the future of Anglo and all of the various available options. A spokesman said that the options for resolving Anglo Irish Bank included the management’s good bank-bad bank proposal and the potential for an orderly winddown of Anglo.


        “If the orderly wind-down of Anglo is selected as the most cost-effective option, then obviously the time period for this wind-down would be whatever time period minimised this cost,” said the spokesman.


        However, according to sources, the view expressed by some officials is that the time period that might best minimise the cost would be a longer time period, and not the quicker time period now advocated by the Green Party through its finance spokesman Dan Boyle.


        The bank’s future is expected to dominate tomorrow’s Cabinet meeting, the first one after the summer recess. Green Party Ministers are expected to inform ministerial colleagues that they now favour a quicker wind-down of the bank. The Government’s discussion with the European Commission on Anglo is also expected to conclude this month.


        The two Government parties played down suggestions of divisions over strategy over dealing with the Anglo Irish Bank crisis.


        Opposition parties claimed that the Greens had effected a U-turn on policy after the party signalled it now favours a quicker wind-down of the nationalised bank.


        Minister for Justice Dermot Ahern said that Fianna Fáil and the Greens were not at odds about the future of the bank. He said all parties were agreed that the solution for the bank must be achieved at the least cost to the taxpayer.


        Fine Gael and Labour said that the Green Party’s new policy had created further instability for Ireland.
        Excellence is hard to keep quite - Sherrie Coale

        Comment


          #5


          Was listening to the non elected sound bite machine Dan Boyle last night on George Hook. Loads of sound bites, no substance. Again, completely unable to grasp the concept of structure of bond holders (Subordinated, senior), no idea of the liabilities side of the balance sheet. An 'orderly wind-down', a phrase making about as much sense as house hold NAMA, is again fantasy land. If you announce in the morning the bank is winding down, do you think the 30bn worth of deposits are going to stay in the bank? When the bank cannot meet the demand for all deposits called in, what happens?


          Then we had some midland FFer, an accountant would you believe, suggesting that Anglo should be transfered hook line and sink into NAMA. Again, no mention of what happens to liabilities. Interviewer asked him who pays for this? The ECB apparently! Under any definition, that is essentially a default.

          Comment


            #6

            Originally posted by bosh12

            Was listening to the non elected sound bite machine Dan Boyle last night on George Hook. Loads of sound bites, no substance. Again, completely unable to grasp the concept of structure of bond holders (Subordinated, senior), no idea of the liabilities side of the balance sheet. An 'orderly wind-down', a phrase making about as much sense as house hold NAMA, is again fantasy land. If you announce in the morning the bank is winding down, do you think the 30bn worth of deposits are going to stay in the bank? When the bank cannot meet the demand for all deposits called in, what happens?


            Then we had some midland FFer, an accountant would you believe, suggesting that Anglo should be transfered hook line and sink into NAMA. Again, no mention of what happens to liabilities. Interviewer asked him who pays for this? The ECB apparently! Under any definition, that is essentially a default.
            It never ceases to amaze not just how uneducated our 'leaders' are, but also how little they read up on what their talking about. They don't even bother to try to understand the situation, just throw out buzz words to keep their voters happy while they tow the party line.








            Comment


              #7


              The Irish Times - Tuesday, August 31, 2010


              Waking up to reality of an economic nightmare
              As the country grinds to a halt, we should maintain some sense of decency and call a halt to the Anglo rescue, writes FINTAN O'TOOLE


              THE MOVIE of the summer is Christopher Nolan’s Inception , which is about a man who can enter other people’s dreams. The labyrinthine plot leaves many people confused: are we back in reality, or is he still dreaming, or is he dreaming that he’s woken up, or is reality all a dream? And that’s where we are in Ireland now.


              We know that, roughly from 2002 to 2008, we were in a long dream. We were in this weirdly hyper-real place, saturated with day-glo colours and animated by feverish distortions. In the way of dreams, contradictions simply coexisted. Everything was speeded up to a frantic and frenetic blur. But at the same time, things seemed to float around in a dazed weightlessness.


              Patently absurd things – that suburban three-bedroom houses were worth a million euro, that you could have low taxes and excellent public services, that Fianna Fáil might be dodgy but at least knew how to keep the economy going – seemed like common sense.


              Strange characters popped out of nowhere and spoke in nonsensical non sequiturs: taxi drivers talking about buying villas in Bulgaria; economists babbling about the end of boom and bust.


              And then we woke up. Like Pamela Ewing in Dallas , we opened our eyes and realised that the whole of the previous season of Irish history had been a dream and that actually we were still in the early 1990s. Like Pamela’s awakening, this twist in the plot was rather annoying for the viewers. It made us feel that the people behind the scenes were messing with our heads in order to disguise the fact that they had literally lost the plot.


              But we were awake now and we had to rub the sleep from our eyes and look at our own sorry faces in the morning mirror. We had to shake from our minds those lingering vestiges of the dreamtime – the stray images of opulence that clung on until the sharp, bitter taste of black coffee brought us fully into the waking world. We let out a low, rueful laugh at the fragments of vanished fantasy that floated to the surface of memory. And we steeled ourselves to face into the daylight of a bloody awful reality – same as it ever was, the country going down the tubes.


              But maybe we only dreamed that we woke up. Maybe the surreal self-delusion is continuing. Maybe, at least in official Ireland, all the buzz and bustle of hands-to-the-pumps activity is just rapid eye movement. Maybe, instead of facing reality, the great and the good have simply slipped from a blissful reverie into a febrile dream.


              Maybe they’re not leading us out of the wilderness, but sleepwalking towards a cliff.


              The old dream was that we were rich. The new, uneasy dream is . . . that we’re still rich. Rich enough, at least, to be able to afford to take on, not just a massive public debt, but a vast private banking debt as well. Rich enough to be able to service a real government debt that could, by the end of next year, be close to €200 billion – if we add the cost of the bank bailout to all the money the Government has to borrow to keep the show on the road.


              What makes it seem probable that we’re still in dreamland is that nothing changes. In the real world, when things get worse and worse, people react. But in bad dreams, you have the sensation of being stuck. You run and run and get nowhere. The stairs just get longer and longer as you try to climb them to safety. And most of the Irish elite seems to be in this mode. They can’t move at all.


              When the cost of the Government’s catastrophic decision to rescue Anglo Irish Bank was €4 billion, it was tough but manageable. When it was €10 billion, it was tough but manageable. When it was €22 billion, it was tough but manageable. And what will it be if the cost turns out to be €35 billion? Tough but manageable.


              There is now a realistic chance that the
              Excellence is hard to keep quite - Sherrie Coale

              Comment


                #8
                For dreamers....</span></font>


                THE MOVIE of the summer is Christopher Nolan’s Inception , which is about a man who can enter other people’s dreams. The labyrinthine plot leaves many people confused: are we back in reality, or is he still dreaming, or is he dreaming that he’s woken up, or is reality all a dream? And that’s where we are in Ireland now.

                We know that, roughly from 2002 to 2008, we were in a long dream. We were in this weirdly hyper-real place, saturated with day-glo colours and animated by feverish distortions. In the way of dreams, contradictions simply coexisted. Everything was speeded up to a frantic and frenetic blur. But at the same time, things seemed to float around in a dazed weightlessness.

                Patently absurd things – that suburban three-bedroom houses were worth a million euro, that you could have low taxes and excellent public services, that Fianna Fáil might be dodgy but at least knew how to keep the economy going – seemed like common sense.

                Strange characters popped out of nowhere and spoke in nonsensical non sequiturs: taxi drivers talking about buying villas in Bulgaria; economists babbling about the end of boom and bust.

                And then we woke up. Like Pamela Ewing in Dallas , we opened our eyes and realised that the whole of the previous season of Irish history had been a dream and that actually we were still in the early 1990s. Like Pamela’s awakening, this twist in the plot was rather annoying for the viewers. It made us feel that the people behind the scenes were messing with our heads in order to disguise the fact that they had literally lost the plot.

                But we were awake now and we had to rub the sleep from our eyes and look at our own sorry faces in the morning mirror. We had to shake from our minds those lingering vestiges of the dreamtime – the stray images of opulence that clung on until the sharp, bitter taste of black coffee brought us fully into the waking world. We let out a low, rueful laugh at the fragments of vanished fantasy that floated to the surface of memory. And we steeled ourselves to face into the daylight of a bloody awful reality – same as it ever was, the country going down the tubes.

                But maybe we only dreamed that we woke up. Maybe the surreal self-delusion is continuing. Maybe, at least in official Ireland, all the buzz and bustle of hands-to-the-pumps activity is just rapid eye movement. Maybe, instead of facing reality, the great and the good have simply slipped from a blissful reverie into a febrile dream.

                Maybe they’re not leading us out of the wilderness, but sleepwalking towards a cliff.

                The old dream was that we were rich. The new, uneasy dream is . . . that we’re still rich. Rich enough, at least, to be able to afford to take on, not just a massive public debt, but a vast private banking debt as well. Rich enough to be able to service a real government debt that could, by the end of next year, be close to €200 billion – if we add the cost of the bank bailout to all the money the Government has to borrow to keep the show on the road.

                What makes it seem probable that we’re still in dreamland is that nothing changes. In the real world, when things get worse and worse, people react. But in bad dreams, you have the sensation of being stuck. You run and run and get nowhere. The stairs just get longer and longer as you try to climb them to safety. And most of the Irish elite seems to be in this mode. They can’t move at all.

                When the cost of the Government’s catastrophic decision to rescue Anglo Irish Bank was €4 billion, it was tough but manageable. When it was €10 billion, it was tough but manageable. When it was €22 billion, it was tough but manageable. And what will it be if the cost turns out to be €35 billion? Tough but manageable.

                There is now a realistic chance that the cost of the bank bailout will be €50 billion – more than twice what it was when the great and the good decided we could just about afford it. At €25 billion, the ESR
                Munster – Champions of Europe 2006, 2008, 2021.

                Comment


                  #9
                  Snap[img]smileys/lol.gif[/img]
                  Excellence is hard to keep quite - Sherrie Coale

                  Comment


                    #10
                    I though this poster from the Irish Times discussion on Fintan O'Toole's latest missive puts it quite well
                    "Pablo
                    I heard the economists last night say that the cost of Anglo is now going to be at least 35-38 billion, that Irish Nationwide will cost 6.5 billion, that AIB will cost 10 billion, BoI will cost 7.5 billion, that NAMA will lose 12-15 billion. These are now the mid-range estimates, so they could end up higher.

                    If you add up those figures that's a current estimated cost of 77 billion Euro, which is 248% of our current annual tax take of 31 billlion. To pay that off over 20 years would cost us 3.85 billion a year (and that's without adding interest) if you add in the interest at 5% that would be another 3.9 billion per year. So to pay it all off with interest would cost in the region of 7.7 billion a year which is 24.8% of our current tax take, for 20 years.

                    Of course we are also borrowing 20 billion a year on top of this to run the country on which we also have to pay interest. But lets keep this simple, so (putting aside the deficit) we are faced with having to take about 7 billion out of the economy every year just to pay the principal on the losses incurred for us by the banks. That's obviously a simplistic analysis, but essentially the point is we are looking at having to take on, as a state, losses of 70-80 billion at least over several decades, for the failure of private banks.

                    When you realize that there are further property based losses coming down the line as residential mortgages start to default en-mass and the economic consequences of the withdrawl of working capital from Irish SMEs continues to unravel the real economy; it becomes clear to you that something very seriously has to give.

                    Simply put, the situation is completely unsustainable, the state (i.e. us) cannot afford the costs of the banking and property collapse, and we can't afford to run 20 billion euro budget deficits to keep the lights on; the sooner the government accepts this and explains the reality to the people (and then hopefully resigns on principal) the better; we have been led into a financial catastrophe of the first order. The consequences of this mess are going to be very serious whatever policy is adopted, but its incumbent on the government to be honest with the people about the situation we are in" http://www.irishtimes.com/newspaper/...10/0831/122427 7908965.html

                    We simply can't afford this bailout, it's like letting the kids go hungry so that we can keep a BMW in the driveway so the neighbours will think we're still alright.
                    In the words of that great economic commentator and philosopher, Homer J Simpson:
                    "De-Fault: The two sweetest words in the English language"

                    Dublin Northeast FF free since Feb 27th 2011

                    Comment


                      #11
                      Originally posted by bosh12


                      Was listening to the non elected sound bite machine Dan Boyle last night on George Hook. Loads of sound bites, no substance. Again, completely unable to grasp the concept of structure of bond holders (Subordinated, senior), no idea of the liabilities side of the balance sheet. An 'orderly wind-down', a phrase making about as much sense as house hold NAMA, is again fantasy land. If you announce in the morning the bank is winding down, do you think the 30bn worth of deposits are going to stay in the bank? When the bank cannot meet the demand for all deposits called in, what happens?


                      Then we had some midland FFer, an accountant would you believe, suggesting that Anglo should be transfered hook line and sink into NAMA. Again, no mention of what happens to liabilities. Interviewer asked him who pays for this? The ECB apparently! Under any definition, that is essentially a default.


                      Yup and chucking22.5 billion into a dead bank and possibly another 10 billion more makes perfectsense[img]smileys/c&#111;nfused.gif[/img]


                      Must be accountants coming up with this idea to save the banks.
                      Excellence is hard to keep quite - Sherrie Coale

                      Comment


                        #12
                        Jeez, Morgan Kelly was well out when he said we may as well burn €1.5 billion, rather than give it to Anglo.
                        Please support Milford Hospice. Click here to donate.

                        Comment


                          #13
                          6 month loss to 30/6/10 is a staggering €8.2billion![img]smileys/shock.gif[/img]

                          Most commentators were suggesting c. €4billion.

                          Yorn desh born, der ritt de gitt der gue,
                          Orn desh, dee born desh, de umn bork! bork! bork!

                          Comment


                            #14


                            irishtimes.com - Last Updated: Tuesday, August 31, 2010, 10:45


                            Anglo reports massive loan losses


                            SIMON CARSWELL and CHARLIE TAYLOR


                            State-owned Anglo Irish Bank has announced an €8.2 billion loss for the first six months of 2010.


                            This is well in excess of the previous six-month deficit of €4.1 billion posted last year and means Anglo has set a new Irish corporate record for a loss in a six-month period.


                            The latest loss includes impairment charges of €4.8 billion and a loss of €3.5billionn upon transfer of €10.1billion of loans to the National Asset Management Agency (Nama).


                            The loans were sold at a discount of 55 per cent, forcing the bank to take a loss of €5.1 billion.


                            Anglo said impairment provisions include €2.3 billion relating to assets classified as held for sale to Nama, bringing cumulative specific provisions on such loans to 38 per cent.


                            Operating profit before impairment and loss on disposals to Nama total €151 million.


                            The bank last reported results in March when it announced a loss of €12.7 billion – the highest in Irish corporate history – for the 15-month period to the end of last year after writing off €15.1 billion on bad loans and investments, primarily due to the property crash.


                            Anglo previously announced a loss of €4.1 billion for the six months to the end of March 2009.


                            Some €10.1 billion of the impairments taken during the 15 months to December 2009 related to a 28 per cent write-down on the €36 billion in loans – half the bank’s original loan book – moving to Nama.


                            Anglo has so far received €14.3 billion in capital from the Government in cash and by way of promissory notes. The European Commission has approved a further €10 billion, and Central Bank governor Patrick Honohan has said the Anglo bailout will not exceed €25 billion.


                            Ratings agency Standard &amp; Poor’s estimated last week that the cost of Anglo to the State could rise to €35 billion over time.


                            The total cost of recapitalising the banks may total €39.9 billion, including the €7 billion injected into Allied Irish Banks and Bank of Ireland, fixed income firm Glas Securities said in a research note.


                            Anglo wants to split the post-Nama €36 billion loan book into a good bank and bad bank, with a view to selling the good bank and running down the bad bank over time. The plan is awaiting European Commission approval.


                            Green Party finance spokesman Dan Boyle said Anglo could be wound down more quickly, after four to five years, and that the preferred option of a split was proving more costly than first thought.


                            A Department of Finance spokesman said the Government’s preference was for the option that posed the lowest cost to the State.
                            Excellence is hard to keep quite - Sherrie Coale

                            Comment


                              #15
                              "Now, we are proper</span> f**ked."



                              Munster – Champions of Europe 2006, 2008, 2021.

                              Comment

                              Working...
                              X