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Thread: What is max% government can hold without banks being "nationalised"?

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    Politics.ie Member cyberianpan's Avatar
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    Default What is max% government can hold without banks being "nationalised"?

    As part of the Nama transfer deal the government will have to inject capital into the banks in the form of equity.

    Lenihan has indicated that he may not have to "nationalise" AIB & BOI See

    So my question is:
    What percentage of equity can the government hold and still say the banks "aren't nationalised" ?

    ISE rules usually require 25% + of shares to be publicly available for trading, though they'll make exceptions.

    I've fuzzy recollections of company law for publicly listed companies but I think it said that once a single shareholder goes above 80% they take on additional obligations and they can force the buyout of the remaining 20% or the remaining 20% can demand to be bought out. So I think the threshold looks like 75-80%.

    Can anyone aid in answering this question, as I'll freely admit my knowledge of equity listing is rusty !

    cYp
    "Yawn , am I alive yet ?"

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    100% is the answer. Full ownership does not itself mean full nationalisation. Nationalisation also involves the State taking on the burden of the assets and liabilities and the day to day running of the bank. The State can through an investment vehicle own 100% of a bank without taking on the full responsibilities of outright nationalisation.

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    Politics.ie Member cyberianpan's Avatar
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    Quote Originally Posted by kerrynorth View Post
    100% is the answer. Full ownership does not itself mean full nationalisation. Nationalisation also involves the State taking on the burden of the assets and liabilities and the day to day running of the bank. The State can through an investment vehicle own 100% of a bank without taking on the full responsibilities of outright nationalisation.
    Indeed - but politically 100% would seem ... like well 100%, especially if the ISE delisted the banks (though on a side point the banks should delist from the NYSE as SOX is far too onerous)

    Also doesn't EU law apply here ? As in I don't think the State can suddenly acquire a controlling interest in a particular sector (banking) as that violates competition law ? Even if they tried an arm's length trust I think that would fail (legally)

    I think a lot of people could prove to be surprised by what "not nationalised" means

    cYp
    "Yawn , am I alive yet ?"

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    Quote Originally Posted by kerrynorth View Post
    100% is the answer. Full ownership does not itself mean full nationalisation. Nationalisation also involves the State taking on the burden of the assets and liabilities and the day to day running of the bank. The State can through an investment vehicle own 100% of a bank without taking on the full responsibilities of outright nationalisation.
    Is that how the UK Govt, did the RBS deal?

    Because they still trade

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    Politics.ie Member cyberianpan's Avatar
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    So can we say that for political purposes nationalisation would be a 100% stake ... and that to avoid charges of nationalisation it would be preferable to maintain a stockmarket listing ?

    Thus up 75% government owned is certainly fine and higher if the ISE approves ?

    cYp
    "Yawn , am I alive yet ?"

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    Politics.ie Member cyberianpan's Avatar
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    Also does % holding potentially affect:

    1) Limited liability status of the bank
    2) EU competition law being forcibly triggered
    3) EU national debt measurement rules

    I ask this as I think AIB is heading for over 80% state ownership (though of course the Sep 16 "haircut", being only ~1/3 of the haircuts/acquisitions, won't push it that far)

    cYp
    "Yawn , am I alive yet ?"

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    Politics.ie Member cyberianpan's Avatar
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    Quote Originally Posted by Middleaged View Post
    Is that how the UK Govt, did the RBS deal?

    Because they still trade
    It is

    There are legal niceties around just how much the government can own ... if it should go for an "arms length SPV" ...

    On the common sense side if it does nationalize ... they need to only have oversight of the banks... not try to run them

    The phrase "Nationalize the banks" is getting bandied around a lot and I don't think there's clarity on what it means

    For example Nama & Nationalization go well together:

    Karl Whelan
    First, Sarah frames the debate as nationalisation versus NAMA. However, both than 20 guys piece and my earlier four-point plan proposed that a NAMA-like vehicle be used in conjunction with nationalisation, so it is not accurate to say that “The academics want to nationalise the banks and the bureaucrats want Nama.” (Does anybody actually like the IT’s house style on acronyms?)
    Though depending how it would be done there would be problems regards funding the deal... and EC competition issues

    cYp
    "Yawn , am I alive yet ?"

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    Quote Originally Posted by cyberianpan View Post
    It is

    There are legal niceties around just how much the government can own ... if it should go for an "arms length SPV" ...

    On the common sense side if it does nationalize ... they need to only have oversight of the banks... not try to run them

    The phrase "Nationalize the banks" is getting bandied around a lot and I don't think there's clarity on what it means

    For example Nama & Nationalization go well together:



    Though depending how it would be done there would be problems regards funding the deal... and EC competition issues

    cYp
    Having met you once, my opinion is your a nice guy.
    However, your Posts are utter nonsense in the Current Climate.
    If there are steps on your Egotistigal Pedestal, then I suggest you ring some moron that does not read your waffle to see if you can get down.
    When you want to apply for a Job Please do not show any of this to Future Employer.
    As a gesture I will do reference if you come back to Planet Earth.

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    Politics.ie Member cyberianpan's Avatar
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    Quote Originally Posted by lifeisagame View Post
    Having met you once, my opinion is your a nice guy.
    However, your Posts are utter nonsense in the Current Climate.
    If there are steps on your Egotistigal Pedestal, then I suggest you ring some moron that does not read your waffle to see if you can get down.
    When you want to apply for a Job Please do not show any of this to Future Employer.
    As a gesture I will do reference if you come back to Planet Earth.
    Your comment is very general - and I don't see how it relates to any of the points I made

    If you could try to address the points I could perhaps answer it

    I'm raising this question now, as it is highly topical, given the likely conversion of the Government's preference shares into ordinary shares will take AIB close to the brink of 50% state ownership (and perhaps go over depending on deal) ... and also given the Nama haircuts are growing in size... the capital injection to restore capital adequacy is less likely to be found on the markets.

    cYp
    "Yawn , am I alive yet ?"

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    Politics.ie Member Malbekh's Avatar
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    The UK will end up having a share in RBS of around 84% - at least that's what I've read. Assuming that the UK has to adhere to the usual EU guidelines then I see no reason why the same can't/won't happen here. I think the key here cYp is the perspective of the government, Lenny has made it abundantly clear that nationalisation is no resort let alone a last one.

    I'm not so sure, unlike the general trend in P.ie that Anglo will be liquidated or even absorbed into another bank. I think it's more likely that it will go ahead with its business plan to the EU and remain in operation for the foreseeable future. I could be wrong, but I think Lenny's main concern is to ensure that at least one bank will be in a position of lending to ISME's, and the only one that can is Anglo, because the government can make it.

    I agree with the general synopsis that for a variety of reasons, mostly corporate and personal debt, the government will take on a majority shareholding in AIB in 2010. I also think that Lenny is fully aware of this, and because of these circumstances, he hasn't been too outraged by the appointment of Doherty because he'll be forced to fall on his sword next year.

    @lifeisagame

    I approach cYp with all the enthusiasm of engaging with a provoked Rattlesnake, but with experience you can read the subtle and non-too subtle signs and negotiate the encounter favourably. This thread is perfectly legitimate and no different from any of the financial threads that have been around so far this year.

    Your own recent posts Exhibit 'A' are rather pot, kettle, black when accusing people of being on an ego statistical pedestal.
    Blessed be the threadmakers.

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