Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi all,
Vanilla are planning an update to the site on April 24th (next Wednesday). It is a major PHP8 update which is expected to boost performance across the site. The site will be down from 7pm and it is expected to take about an hour to complete. We appreciate your patience during the update.
Thanks all.

Irish banks and the greater financial "crisis"

  • 21-09-2008 7:25pm
    #1
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭


    daveirl wrote: »
    This post has been deleted.

    Agreed that a bad debt is a bad debt. But how can you say the Irish banks have been irresponsible? Ok, I admit I can only really talk from a BOI perspective but all in all I still have confidence in Irish banks being banked with other banks and knowing people in the industry. Like any company when times are bad they will look to stabilise operations and work through the difficulties. Reckless companies will go bust and getting back to banks I don't believe they've been reckless.


Comments

  • #2
    daveirl
    Closed Accounts Posts: 14,483 ✭✭✭✭daveirl


    This post has been deleted.


  • #3
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    daveirl wrote: »
    This post has been deleted.

    Dave, lets get back to my point about companies looking to stabilise operations etc. The BOI is mearly doing that. Nothing wrong with that TBH. No one could predict (let say if we were back in 2005) that things would be the way they are now. Unless bankers can predict the future stating anything else is crazy. Now AFAIK you work for a bank. What is your opinion of the bank you work for?


  • #4
    daveirl
    Closed Accounts Posts: 14,483 ✭✭✭✭daveirl


    This post has been deleted.


  • #5
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    daveirl wrote: »
    This post has been deleted.

    Now you know as well as I know what was correct today may well not be correct in a days time (from a banking perspective or any perspective for that matter). If one could predict the future it would be handy. Now, I'm not trying to talk down the suitation we are facing at the moment but one has to be realistic.


  • #6
    daveirl
    Closed Accounts Posts: 14,483 ✭✭✭✭daveirl


    This post has been deleted.


  • Advertisement
  • #7
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    daveirl wrote: »
    This post has been deleted.

    You know the saying "a week is a long time in politics". What was true today may not hold out true tomorrow. Can't really disagree with what you are saying above but in fairness the BOI have set their stall out and told their shareholders what the story is.


  • #8
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    I'd like to hear the comments of the bankers on this article in business section of yesterdays tribune on the loan-to-deposit ratio's of the banks here.

    http://www.tribune.ie/business/article/2008/sep/21/irish-banks-lending-level-near-highest-in-western-/
    tribune wrote:
    The level of lending by Irish banks is among the highest in the industrialised world and significantly higher than at most US banks, new research shows
    According to a UBS survey of bank balance sheets, Ireland's average loan-to-deposit ratio has risen to almost similar levels (163.1%), with the country's largest mortgage lender, Irish Life & Permanent (IL&P), recording a ratio of 277.4%, one of the highest of any western financial institution.

    Loan-to-deposit ratios measure the value of loans compared to deposits. Banks plug the gap by relying on wholesale funding provided by other banks.
    Anglo Irish Bank, a keen taker of deposits, has the lowest loan-to-deposit ratio (124.2%), followed by Allied Irish Banks at 156.7%, according to the UBS research.

    The second-highest ratio, behind IL&P, is Bank of Ireland (160.3%).

    While the slowdown in lending will help to address the problem slightly, next year's estimates put Ireland at similarly worrying levels.

    Last week, UK analysts Exane BNP described any bank with rates of over 177% as having an "unhealthy" profile.

    People have a right to know if the banks are prudent. If the likes of that article is rubbish, why don't the banks sue or something?


  • #9
    OfflerCrocGod
    Registered Users Posts: 6,294 ✭✭✭OfflerCrocGod


    It's so much more complicated then simply the loan/deposit ratio you must also analyze the loans and their risk profile. I wouldn't be too worried about Irish banks tbh.


  • #10
    daveirl
    Closed Accounts Posts: 14,483 ✭✭✭✭daveirl


    This post has been deleted.


  • #11
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    gurramok wrote: »
    I'd like to hear the comments of the bankers on this article in business section of yesterdays tribune on the loan-to-deposit ratio's of the banks here.

    http://www.tribune.ie/business/article/2008/sep/21/irish-banks-lending-level-near-highest-in-western-/


    People have a right to know if the banks are prudent. If the likes of that article is rubbish, why don't the banks sue or something?

    You can't just look at one article in isolation and take it to be gospal. I'm sure the banks have better things to be at then sueing a journalist about an article which is just simply quoting research and it not incorrect per se.

    BTW 80% of lending by the BOI is supported by deposits. As per this article from the same paper, I'd rate the BOI / AIB as one of the old school banks.

    http://www.tribune.ie/business/article/2008/sep/21/old-school-banks-know-how-to-stay-out-of-hot-water/
    OfflerCrocGod wrote: »
    It's so much more complicated then simply the loan/deposit ratio you must also analyze the loans and their risk profile. I wouldn't be too worried about Irish banks tbh.

    + 1


  • Advertisement
  • #12
    jmayo
    Registered Users Posts: 13,078 ✭✭✭✭jmayo


    Not a banker so I guess I will get my opinion ridiculed by stepbar et al.

    What the Joe Duffy show highlighted was the fact that the level of deposit guarantee in this country was cr**. Yes it was the same as some other EU countries but look at our average incomes and the bloody value of a house (althought that is changing) in this country and we had only 20,000 of a guarantee.
    Maybe it was unbalanced but what was the balanced view ?
    "Nothing to worry about, why would you want your saving guaranteed ?
    Sure there is a very low chance of anything happening to it."

    If there was not a mini run of depositors removing money late last week, followed on Friday night by Late Late debate, would Lenehan have upped the depositor guarantee on saturday ?
    Probably not, or at least not at present.

    So who wins out of this change?
    IMHO the consumer is the one who wins, the little guy and it's about time.

    As regarding the argument about how major Irish banks are not investment banks or were not exposed to the subprime business ala the US banks in trouble, then what about the issue of construction related debt being carried by Irish banks.
    Also what about Northern Rock or HBOS in UK?
    Are we immune from the some similar happening here because of course we are different, we are Ireland :rolleyes:

    I remember what happened to ICI and how AIB ran screaming to government for bail out back in 1985.
    There is widespread unspoken rumours that there is one Irish finanical institution facing difficulties, nobody dare speak it's name.
    Are there any more surprises coming down the tracks?
    No one knows or at least if they do they are keeping very stum about it.

    So we should pretend everything is all hunky dory and God forbid if anyone should discuss the fact that ones savings were affectively totally unprotected upto saturday.

    Do I trust our banks ? No becuase I have always found they act in their own interests and not mine.
    Do I trust our politicans ? No, see above.

    PS: I do find the opinions of some of the posters on this thread rather condescending towards others (alluding to conspiracy theorists etc etc), there is an attitude that we know best becuase we are in the business. I bet that was also the opinion of the guys in Fanny Mae, Freddy Mac, Lehman Brothers, Bear Stearns, AIG, etc, etc. And look where they are all now.


  • #13
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    jmayo wrote: »
    Not a banker so I guess I will get my opinion ridiculed by stepbar et al.

    What the Joe Duffy show highlighted was the fact that the level of deposit guarantee in this country was cr**. Yes it was the same as some other EU countries but look at our average incomes and the bloody value of a house (althought that is changing) in this country and we had only 20,000 of a guarantee.

    What has the price of house has got to do with this? As for the level of guarentee, I've given my opinion on this already.
    jmayo wrote: »
    Maybe it was unbalanced but what was the balanced view ?
    "Nothing to worry about, why would you want your saving guaranteed ?
    Sure there is a very low chance of anything happening to it."

    The "balanced" view would have been to give the IBF (Irish Bankers Federation) / Financial Regulator the forum to speak.
    If there was not a mini run of depositors removing money late last week, followed on Friday night by Late Late debate, would Lenehan have upped the depositor guarantee on saturday ?
    Probably not, or at least not at present.

    So who wins out of this change?
    IMHO the consumer is the one who wins, the little guy and it's about time.

    People need to wake up and realise the functions of a bank.
    As regarding the argument about how major Irish banks are not investment banks or were not exposed to the subprime business ala the US banks in trouble, then what about the issue of construction related debt being carried by Irish banks.
    Also what about Northern Rock or HBOS in UK?
    Are we immune from the some similar happening here because of course we are different, we are Ireland :rolleyes:

    The Northern Rock suitation was exerbated by the sub prime problem over in the US where the process of getting a mortgage was like going into a shop and buying a litre of milk. There was never any issues about the quality of their mortgage book or with liquidity. The problem with Northern Rock was that they relied too heavily on funding from the wholesale money markets - up to 75% of their mortgage book was funded by this method. When the money markets seized up it became difficult for them to raise funds to fund new mortgages and roll over existing ones. The run on Northern Rock only went to exerbate the suitation. As for HBOS proactive measures were taken to ensure that another Northern Rock would not happen. Funnily enough HBOS was also well capitalised.
    I remember what happened to ICI and how AIB ran screaming to government for bail out back in 1985.
    There is widespread unspoken rumours that there is one Irish finanical institution facing difficulties, nobody dare speak it's name.
    Are there any more surprises coming down the tracks?
    No one knows or at least if they do they are keeping very stum about it.

    Please tell us. My god at this stage most banks names have been mentioned so it probably won't be a suprise.
    So we should pretend everything is all hunky dory and God forbid if anyone should discuss the fact that ones savings were affectively totally unprotected up to saturday.

    Again, people need to wake up and realise the function of a bank and their role in the economy. Take our two largest banks. Are you seriously telling me that they would be allowed to fail. Do you have any idea the amount of Government bank a/c's in both banks?
    Do I trust our banks ? No becuase I have always found they act in their own interests and not mine.
    Do I trust our politicans ? No, see above.

    And just like every human being on this planet they will at some point look to act in their own interests because humans by nature are selfish beings. So.....
    PS: I do find the opinions of some of the posters on this thread rather condescending towards others (alluding to conspiracy theorists etc etc), there is an attitude that we know best becuase we are in the business. I bet that was also the opinion of the guys in Fanny Mae, Freddy Mac, Lehman Brothers, Bear Stearns, AIG, etc, etc. And look where they are all now.

    I have no problem debating facts. But I won't debate half truths, conspiracies and people trying to scare mounger others. There's the problem.


  • #14
    parsi
    Site Banned Posts: 5,904 ✭✭✭parsi


    stepbar wrote: »
    Again, people need to wake up and realise the function of a bank and their role in the economy. Take our two largest banks. Are you seriously telling me that they would be allowed to fail. Do you have any idea the amount of Government bank a/c's in both banks?

    Hmm. That implies that the only thing preventing some banks from failing is the fact that they will be propped up and not allowed to fail.

    However this discussion can only degenerate into a "I'm a banker and I know what's right" V "I'm Joe Public and I don't trust you" slagging match.

    What the Bankers need to realise is that sometimes your fundamentals and your ratios mean diddly squat if the sentiment deems otherwise. This used be seen in IPOs when shares in loss-making companies went ballistic.

    Bankers also need to realise that Joe Public has been listening to bankers employees telling them that the world was fine, the economy was fine and sure that iceberg was just a fleck on dandruff on the telescope lens.

    Joe Public needs to realise that just like everything the bankers said wasn't true so too some of their utterances are correct.

    Joe Public needs also to realise that many media outlets are about sensationalism and don't really care what the ultimate effect is as logn as it brings readers/listeners.

    Bankers can't just say trust us, we know what we're talking about - that day is gone. They'll have to persuade their listeners.


  • #15
    daveirl
    Closed Accounts Posts: 14,483 ✭✭✭✭daveirl


    This post has been deleted.


  • #16
    jmayo
    Registered Users Posts: 13,078 ✭✭✭✭jmayo


    stepbar wrote: »
    What has the price of house has got to do with this? As for the level of guarentee, I've given my opinion on this already.


    I would say the price of property would be an indication in most countries as to the personal wealth of the people, ala average salary.
    Of course thanks to the world's property bubble property is over inflated and not in line with salaries.
    stepbar wrote: »
    The "balanced" view would have been to give the IBF (Irish Bankers Federation) / Financial Regulator the forum to speak.

    Yes agree the regulator could have come on to give opinion, but getting the views of the IBF is a bit like getting view of Tobacco industry on the health affects of cigarettes ;)
    They are harldy likely to spill any truths that affect their members.
    stepbar wrote: »
    People need to wake up and realise the functions of a bank.

    And you and your banking buddies need to wakeup and remember without us plebs, the customers, you are shag all :rolleyes:
    Surely Northern Rock taught you something.
    stepbar wrote: »
    The Northern Rock suitation was exerbated by the sub prime problem over in the US where the process of getting a mortgage was like going into a shop and buying a litre of milk. There was never any issues about the quality of their mortgage book or with liquidity. The problem with Northern Rock was that they relied too heavily on funding from the wholesale money markets - up to 75% of their mortgage book was funded by this method. When the money markets seized up it became difficult for them to raise funds to fund new mortgages and roll over existing ones. The run on Northern Rock only went to exerbate the suitation. As for HBOS proactive measures were taken to ensure that another Northern Rock would not happen. Funnily enough HBOS was also well capitalised.

    So the saver views all of these collapses in the US, they see the US treasury having to bail out major financial institutions, allow banks merge and take ech other over and others go bust.
    Then we see the world's biggest insurer begging for money to save them.
    Yes we know their problems are due mostly to subprime but over in UK we have HBOS whose "fundamentals" are sound, they are well capitalised but suddenly the competition authorities are being told by government to put aside their rules so that HBOS can be saved.
    Now if you are a normal depositor you look to good old Ireland where our property bubble was even greater than UK, where huge volumes of unsold houses mean developers/builders are not able to pay back their loans.
    Then you have people, such as David McWilliams, who have been right on the money regarding what a crock of sh** we were creating for oursleves over last 7 years, basically saying some Irish institutions could be in trouble.

    Then we view our measly deposit guarantees and you think that people have not a right to safeguard their savings, because the totally infallible bankers tell us it is ok :rolleyes:
    We have had an attitude in Ireland for a few years now, that we shouldn't mention anything about the elephant in the corner. We are talking down the economy, we are in danger of starting a run on a bank.
    So say nothing, do nothing is the attitude and shoot anyone that raises the issue.
    stepbar wrote: »
    Again, people need to wake up and realise the function of a bank and their role in the economy. Take our two largest banks. Are you seriously telling me that they would be allowed to fail. Do you have any idea the amount of Government bank a/c's in both banks?

    And you need to wake up and remember that the depositors role and indeed tha taxpayers role is not to bail out a bank because they have made bad decisions.
    Do you only care that the two biggest banks, included your beloved BOI, are bailed out ?
    What about the savers in other institutions ?
    Can they go to hell becuase they are less important to the Irish state and they do not hold government accounts ?
    stepbar wrote: »
    I have no problem debating facts. But I won't debate half truths, conspiracies and people trying to scare mounger others. There's the problem.


    Maybe we don't know the banking system like you, but we do know that after all the cockups that have been perpretated by people within the banking system that you can't be totally trusted to act in our interest.


  • #17
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    And they have not even figured out how to fund a 100k scheme!
    http://www.independent.ie/business/personal-finance/investments/banks-report-deposit-surge-as-protection-limit-is-raised-1480397.html
    indo wrote:
    A spokesman for the Department of Finance said legislation would be passed soon to effect the €100,000 limit,but no details had been worked out on the funding of the scheme.

    The current deposit scheme has a total fund of just €527m in it, from a levy of 0.2pc imposed on each eligible deposit.
    This would cover just 5,300 deposits of €100,000 if it was called on, but the department spokesman insisted that it did not envisage a situation where the fund would be drawn down.

    Should the banks up their contribution to increase the funding of the scheme?


  • #18
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    daveirl wrote: »
    This post has been deleted.

    I had an answer typed but bleeden lost it :mad:

    Anyhow the gist of it was as follows

    - The Irish Bank Tier 1 ratios range from 5.7% (BOI) to 10.1 (PTSB). Only the BOI have stated that they need to cut dividends to preserve capital. Basel II defines a bank as being well capalised if their Tier 1 ratio is 6%.
    - The regulator asked Irish Banks to increase their liquidity after the Northern Rock debacle. They also recieve daily reports in addition and have extensive powers to ensure banks adhere to same.
    - CDS - Banks are not required to have them as insurance in the event of loan default. Can be used as a speculative tool much like the way short selling was used to speculate on shares. Take them with a pince of salt. Most have already stated expected impairment charges, effects to profit and the provisions they are making to same.. Whether you believe them or not is another thing.

    Had links done out but lost them as well.

    I'm tired now...:(


  • #19
    OfflerCrocGod
    Registered Users Posts: 6,294 ✭✭✭OfflerCrocGod


    daveirl wrote: »
    This post has been deleted.
    Basically you agree with what I feel; they wont go bust but may need to raise capital. Oh no the sky is falling, quick panic.... My gut feeling is based on the fact the Irish goverment won't let them go down and also that I have yet to see the Irish market show the same level of idiotcy as the US one where everyone was given loans and NINJA loans were the order of the day. Bad debt is there but not on a US scale.


  • #20
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    jmayo wrote: »
    I would say the price of property would be an indication in most countries as to the personal wealth of the people, ala average salary.
    Of course thanks to the world's property bubble property is over inflated and not in line with salaries.

    Still has very little got to do with how much people have in savings.
    Yes agree the regulator could have come on to give opinion, but getting the views of the IBF is a bit like getting view of Tobacco industry on the health affects of cigarettes ;)
    They are harldy likely to spill any truths that affect their members.

    And your saying An Post represents the world of banking?
    And you and your banking buddies need to wakeup and remember without us plebs, the customers, you are shag all :rolleyes:

    Works both ways mate.
    Surely Northern Rock taught you something.

    Yes, that people are nothing but scared frightened sheep. And that paper never refused ink.
    So the saver views all of these collapses in the US, they see the US treasury having to bail out major financial institutions, allow banks merge and take ech other over and others go bust.
    Then we see the world's biggest insurer begging for money to save them.
    Yes we know their problems are due mostly to subprime but over in UK we have HBOS whose "fundamentals" are sound, they are well capitalised but suddenly the competition authorities are being told by government to put aside their rules so that HBOS can be saved.
    Now if you are a normal depositor you look to good old Ireland where our property bubble was even greater than UK, where huge volumes of unsold houses mean developers/builders are not able to pay back their loans.
    Then you have people, such as David McWilliams, who have been right on the money regarding what a crock of sh** we were creating for oursleves over last 7 years, basically saying some Irish institutions could be in trouble.

    Then we view our measly deposit guarantees and you think that people have not a right to safeguard their savings, because the totally infallible bankers tell us it is ok :rolleyes:
    We have had an attitude in Ireland for a few years now, that we shouldn't mention anything about the elephant in the corner. We are talking down the economy, we are in danger of starting a run on a bank.
    So say nothing, do nothing is the attitude and shoot anyone that raises the issue.

    Again, take a look at how an bank operates. Get this. Your money is always at risk. Where do you think the money for mortgages, loan etc come from?
    How this risk is controlled / regulated is the key. And in Ireland we do this quite well.

    As for Dave McWilliams, I could libeled if I said what I think / know of him. Let's put it this way he's some man to talk.
    And you need to wake up and remember that the depositors role and indeed tha taxpayers role is not to bail out a bank because they have made bad decisions.
    Do you only care that the two biggest banks, included your beloved BOI, are bailed out ?
    What about the savers in other institutions ?
    Can they go to hell becuase they are less important to the Irish state and they do not hold government accounts ?

    Mearly stating the point that if our two big banks went to the wall we may as well just forget about Ireland Inc. I'm very sure the Government would step in and rescue any bank that needed to be. However my previous post states why I'm not concerned (in not as much detail as I would have liked but how in ever).
    But we do know that after all the cockups that have been perpretated by people within the banking system that you can't be totally trusted to act in our interest.

    Again works both ways. Anyhow what are these cockups you talk of?


  • #21
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    gurramok wrote: »
    And they have not even figured out how to fund a 100k scheme!
    http://www.independent.ie/business/personal-finance/investments/banks-report-deposit-surge-as-protection-limit-is-raised-1480397.html

    Should the banks up their contribution to increase the funding of the scheme?

    Who do you honestly think needs to figure it out? and who else do you think is going to pay for it?


  • Advertisement
  • #22
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    stepbar wrote: »
    Who do you honestly think needs to figure it out? and who else do you think is going to pay for it?

    Govt to figure it out and the banks to pay for it?

    Should they increase their contributions to account for a €100k per depositor payout if that happens as the present payout fund is paltry?


  • #23
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    gurramok wrote: »
    Govt to figure it out and the banks to pay for it?

    Should they increase their contributions to account for a €100k per depositor payout if that happens as the present payout fund is paltry?

    The law will require them to.


  • #24
    BuffyBot
    Moderators, Motoring & Transport Moderators Posts: 24,924 Mod ✭✭✭✭BuffyBot


    Thread split from http://www.boards.ie/vbulletin/showthread.php?t=2055382023 and moved to Economics.


  • #25
    eamonnm79
    Closed Accounts Posts: 459 ✭✭eamonnm79


    gurramok wrote: »
    And they have not even figured out how to fund a 100k scheme!
    http://www.independent.ie/business/personal-finance/investments/banks-report-deposit-surge-as-protection-limit-is-raised-1480397.html


    Should the banks up their contribution to increase the funding of the scheme?

    Oh My God.
    Thats Classic.
    Does that mean that until the law is passed the 100k guarantee is just a political promise?


  • #26
    eamonnm79
    Closed Accounts Posts: 459 ✭✭eamonnm79


    Just wondering if you guys would think it a good idea for the banks to Value their portfolios Mark to market. David McWilliams noted in the indo yesterday that unlike the American Banks Irish banks "are pretending to themselves and their auditors that the land they have on their books is still worth the price it was bought for. But this is nonsense."


  • #27
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    eamonnm79 wrote: »
    Oh My God.
    Thats Classic.
    Does that mean that until the law is passed the 100k guarantee is just a political promise?

    Yes. How long will it take we do not know. The lack of speed at which previous laws are passed by the Dail in this country, that's my worry.


  • #28
    Pythia
    Registered Users Posts: 7,469 ✭✭✭Pythia


    stepbar wrote: »
    I had an answer typed but bleeden lost it :mad:

    Anyhow the gist of it was as follows

    - The Irish Bank Tier 1 ratios range from 5.7% (BOI) to 10.1 (PTSB). Only the BOI have stated that they need to cut dividends to preserve capital. Basel II defines a bank as being well capalised if their Tier 1 ratio is 6%.


    Had links done out but lost them as well.

    I'm tired now...:(

    Hey, where did you get these figures from? I work with Basel II so am interested to see.


  • #29
    mountainyman
    Closed Accounts Posts: 2,268 ✭✭✭mountainyman


    Are Irish mortgage debts not all securitised?

    Do AIB, BofI EBS actually own the mortgage? I thought it had been sold on with thousands of other mortgages to hundereds of institutional investors.


Advertisement