What the tax payer gets back for risking the country.

eamonnm79

"THE GOVERNMENT and Central Bank will seek up to €2 billion in charges from the Irish banks and building societies covered under the State's bank guarantee."

"However, the banks will be pressing to cap the charges at about €1 billion, or €500 million over each of the two years of State protection cover."
"Department of Finance officials have indicated to the guaranteed banks that they would be seeking an annual charge equal to 0.2 per cent of the €400 billion in deposits and debts covered under the scheme.
The banks will press for the annual charges to be set at about 0.1 per cent of liabilities, for each of the two years"

Who came up with this 2 billion figure? It seems incredibly generous to the banks.
I pay about 5% of the value of my car in insurance payments each year and I am well less likely to crash than the Irish Economy See what i did there!
Between 0.1-0.2 % per annum is a joke.

BenjAii

Eamon, do you have a link to the material you are quoting ? I would be interested to see the rest of it.

As all the Irish banks have effectively been nationalised for 2 years, and the taxpayer is taking all the risk, should it be taking all the profit, or on what basis does it share some of it with the banks, thats the question I suppose.

What is 2 billion in relation to the banks annual profits ? I'm guessing in the region of 10-20% or thereabouts ?

stepbar

eamonnm79 wrote: »

"THE GOVERNMENT and Central Bank will seek up to €2 billion in charges from the Irish banks and building societies covered under the State's bank guarantee."

"However, the banks will be pressing to cap the charges at about €1 billion, or €500 million over each of the two years of State protection cover."
"Department of Finance officials have indicated to the guaranteed banks that they would be seeking an annual charge equal to 0.2 per cent of the €400 billion in deposits and debts covered under the scheme.
The banks will press for the annual charges to be set at about 0.1 per cent of liabilities, for each of the two years"

Who came up with this 2 billion figure? It seems incredibly generous to the banks.
I pay about 5% of the value of my car in insurance payments each year and I am well less likely to crash than the Irish Economy See what i did there!
Between 0.1-0.2 % per annum is a joke.

You've using the wrong fiqure. As a percentage of profit, it's quite signficant. Anyhow, the banks don't appear (yet) in any rush to use the facilities.

damnyanks

It most certainly will not be a direct hit on their profits.

e.g We made 2 billion profit; minus that to the government and we make 0

The government could of come up with a better alternative. Comes across as a real rush job with no thought behind it.

gurramok

The OP quote is from todays(Saturday) IT.

I don't mind the whole thing as a last resort as long as wreckless lending is not allowed to continue while banks can clear up their massive future bad debts and INBS London branch(that letter from Fingleton jnr) does not bode well for future behaviour of banks/BS's

eamonnm79

Here ye go
http://www.irishtimes.com/newspaper/ireland/2008/1004/1222959350513.html

Eamonn Gilmore was saying that the commercial value for this type of insurance would be about 3% on the week in politics last night.
The Irish government are looking for .1-.2 %

Personnally I dont think the banks could afford 3%.

TheBazman

I think most Bank's operate off an overall asset/liab margin of between 1 and 1.5%. Charging 3% would make all domestic banks loss making (ie) increasing the chances that after the 2yr guarantee the country is left with uninvestable loss making banks. While the banks have to pay for this guarantee, it needs to be reasonable to allow the banks to recapitalise and improve their health. The govt should just take a % of profits for the next two years therefore everyone will benefit proportionally because of the guarantee (assuming it works)

Burial

The guarantee was a confidence boost to the banks and consumers. Do you honestly think they'd let a bank go under if they didn't pay that €2billion? Best case scenario, banks don't go under and the government will get €2 billion extra in revenue each year.

BenjAii

Another sign of the utterly extraordinary times we are living through, the banks in the UK have apparently gone to the government en masse asking for the whole banking sector to be partially nationalised.

I don't know how many times I've posted in the Economics section recently, going "wow", "shocked", "jaw dropping", here's another one .......

Burial

Yes, same. Truely is shocking seeing this unfold. I wonder what people will think of these actions 25 years down the line??

I'm still of the opinion that it isn't fair these banks are being bailed out, when it was their own fualt... But it's to try and stop one of the worst recessions since the Great Depression...

Run_to_da_hills

Its quite ironic that post communist Russia has now privatised the banking system while now all of a sudden Ireland and the rest of the world is starting to nationalize them. :eek:

Flamed Diving

Run_to_da_hills wrote: »

Its quite ironic that post communist Russia has now privatised the banking system while now all of a sudden Ireland and the rest of the world is starting to nationalize them. :eek:

Its the big move to RFID all of our cash. Quick, to 'da' hills!

Run_to_da_hills

Flamed Diving wrote: »

Its the big move to RFID all of our cash. Quick, to 'da' hills!

Your next bank card will be the chipped National ID :eek::eek::eek: