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Thread: Final Anglo bailout cost set at minimum of 29.3bn up to 34.3 bn

  1. #1
    Politics.ie Member danger here's Avatar
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    Default Final Anglo bailout cost set at minimum of 29.3bn up to 34.3 bn

    AIB requires an additional €3 billion.
    http://www.irishtimes.com/newspaper/...breaking4.html

    How will the markets react to this?
    Last edited by danger here; 30th September 2010 at 08:18 AM.

  2. #2

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    Why is the spread exactly €5billion?

    seems like a back of an envelope job.
    The IDA would be marketing Ireland as the innovation island -- "like Einstein explaining his theory of evolution." - Our number two in command, Mary Coughlan

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    Politics.ie Member Dreaded_Estate's Avatar
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    Statement on implementation of Prudential Capital Assessment Review requirements for Irish Banks

    Statement 30 September 2010

    The Central Bank is announcing today (30 September 2010) that it has advised the Irish banks that have been subject to PCAR[1] assessments that the year-end deadline for meeting the PCAR standards remains in place despite recent developments in international capital standards. The Central Bank has also advised the banks as to the capital treatment of any adverse development in NAMA haircuts since the PCAR calculations were conducted on 30 March.

    PCAR Timing

    On March 30, the Central Bank published the results of the first round of its Prudential Capital Assessment Review of AIB, Bank of Ireland and EBS. The results of a PCAR for IL&P were published on 11 September. The PCAR standard required the banks to meet a requirement of 8% core tier 1 and 7% equity by the end of 2010, taking account of both NAMA losses and of projected expected losses on non-NAMA portfolios through 2012. A stress capital requirement of 4% of core tier 1 was also established.

    The Central Bank is today confirming that this deadline remains in place. Since the publication of the PCAR standards the Basle Committee has announced its intention to increase international regulatory standards. This includes a target level of 7% equity plus capital conservation buffer and an 8.5% core tier 1 plus capital conservation buffer, both by 2019. These are very close to the PCAR standard established by the Central Bank. Despite the long transitional period agreed by Basel, the Central Bank has decided to retain the PCAR deadline to ensure the Irish banks move to a stronger capital position on an accelerated timeline. This will also allow the Irish banks the full transitional time to meet any additional changes necessitated by other elements of the Basel proposals.

    Impact of Higher NAMA Haircuts

    The 30 March announcement by the Central Bank included specific required capital increases for each of the banks. This was based on the Central Bank’s own assessment of non-NAMA expected losses, including a buffer. The calculation also applied the haircuts on the first tranche of loans transferring to NAMA, based on information available from NAMA at the time. In the period following 30 March, a subsequent NAMA tranche has transferred and NAMA at the request of the Minister for Finance has now provided an estimate of the NAMA haircuts on all remaining tranches for the two principal Irish banks, AIB and BOI.

    In light of the publication of the estimated remaining NAMA haircuts, the Central Bank has advised the banks as follows:

    AIB

    In the case of AIB, the NAMA haircut for Tranche 2 and the estimated haircuts for all remaining Tranches are higher than the first tranche used for the PCAR exercise. The Central Bank has therefore advised AIB that it will be required to raise an additional €3 billion by 31 December, 2010. The Government is today announcing its plans to recapitalise AIB to the PCAR requirements, including this adjustment for higher NAMA haircuts, after taking account of disposals of AIB’s Polish and US assets.

    Bank of Ireland

    In the case of Bank of Ireland, the bank already has sufficient capital to meet the PCAR standard (including the buffer set by the Central Bank for the non-NAMA portfolio) recognising the change in threshold and estimated NAMA haircuts announced today.

    EBS

    NAMA has not indicated haircut estimates today for EBS. Given the small size of the portfolio of loans transferring into NAMA, the impact of higher haircuts is unlikely to be significant for EBS’s PCAR requirement. However, following advice from NAMA the Central Bank has informed EBS that it will need to take account of higher haircut levels of up to 60% in its capital planning and that it should advised potential acquirers accordingly.

    IL&P

    IL&P does not have loans in NAMA and its PCAR is unaffected.

    INBS

    A PCAR exercise has not yet been conducted for INBS in light of the continuing discussion on its restructuring plans.

    Non-NAMA Loss Estimates

    The Central Bank’s loan loss estimates for the non-NAMA portfolios of AIB, BOI, EBS and ILP remain unchanged from the 30 March PCAR process. These estimates included a buffer for uncertainty in base expected loss estimates, as well as a stress assessment.

    Below €20 Million Land and Development Loans

    The Minister for Finance will shortly outline that the Government has decided that eligible loans below a €20 million threshold in AIB and Bank of Ireland will not now be transferred to NAMA. This is an increase on the threshold of € 5million which had previously applied to NAMA loans in these institutions. This means that land and development loans of between €5 and €20 million will now remain on the banks’ balance sheets. The Central Bank has advised AIB and Bank of Ireland that the impairment provisions requirement for this portfolio of loans should be the higher of the PCAR base loss rates used for below €5 million loans and the average haircut used for loans exceeding €20 million transferring to NAMA.

    Future PCAR Exercises

    The Central Bank will conduct its next PCAR exercise in 2011. Any differences between the estimates provided by NAMA, which are used for the end 2010 capital requirement, and the final haircuts on transfer will be included in that exercise. The Central Bank will at that time also give an indication of the timeline towards full compliance with Basel 3.

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    Look to me to be managed just to keep it under 30 billion, very accurate, hard to believe this when we were told at the start 4 billion,

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    irish government will not go back to the market until 2011 also, so we will have a major funding issue in the spring
    "Man has a single basic choice: to think or not, and that is the gauge of his virtue." - John Galt (Atlas Shrugged)

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    Politics.ie Member Dreaded_Estate's Avatar
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    I am advised by the NTMA as the Exchequer is fully funded until late June 2011 the Agency has decided not to proceed with the bond auctions scheduled for October and November. The NTMA will return to the bond markets in the normal way in early 2011. In the meantime investors will have had the benefit of the affirmation in the budget that Ireland continues on its planned path of multiannual fiscal consolidation up until 2014

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    what is hilarious is that we are missing the AIB story - an additional €3bn, thats on top of the 7.4 already, so they need €10.4bn all in, great stuff
    "Man has a single basic choice: to think or not, and that is the gauge of his virtue." - John Galt (Atlas Shrugged)

  8. #8

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    Looks like a massive dilution for AIB shares. 8 to 1 or so ?
    Redacted.

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    Politics.ie Member Fides's Avatar
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    Does not look like S&P were all that wrong after all. With AIB and Irish Nationwide also needing more money and the NTMA pulling out of bond auctions and a very difficult budget ahead it looks like we are now very close to the end game which I believe to be EU/IMF.

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    The Friends of FF are laughing, their pockets are well lined.

    FF thanks the taxpayer for their compliant servile nature.

    Bend over, pay up suckers.

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