Anglo Irish Bank - time to buy?

hatrickpatrick

Just wondering if anyone had opinions about this - it seems from last week's state guarantee that the government is determined to prevent Anglo from collapsing, yet the share price remains at €3, a shockingly low price given what it was even 6 months ago. Does anyone think it'd be safe to buy these or is the company best given a wide berth? I've been considering this for a while, just wondering how others feel about it...

All in all

Every second post in this forum seems to be people looking for advice on buying bank shares. There is going to be a lot of turbulence in the market for at least the next 12 months and ups and downs with these shares. It depends on your attitude to risk - I wouldn't invest in a company that I knew nothing about, so asking strangers on an internet forum should you invest or not is probably an indication that you don't have a knowledge of the company.
The governments guarantee means that none of the banks will go out of business in the (very) short term I believe, the banks still have their problems that haven't changed post the guarantee.
IMO you are taking a total punt if buying bank shares with a lack of knowledge, which is fine if that is what you want.
What are your objectives or expectations do you have for the anglo shares? Do you think the share price will double/treble in the next 1/3/5 years? What do you want from your investment, etc.

damnyanks

Nothing is safe at the moment.

buy it if you are willing to lose all the money you put into it. This way whatever the outcome you wont be disappointed.

pocketdooz

All in all wrote: »

The governments guarantee means that none of the banks will go out of business in the (very) short term I believe, the banks still have their problems that haven't changed post the guarantee.

no it doesn't

The Govt guarantee means that customers' deposits are safe.

The banks can (read: one will) still go bust despite the guarantee.

As far as the OP's initial question . . . read pretty much half the posts over the past few weeks for an answer. The equity holders are getting murdered on bank stocks even after bailouts etc. all over the world, so why would you want to buy into the equity of a bank ? Maybe you came by your money easy but there's no reason to throw it away.

This goes back to boomboombazza's post where he thought the bank's share prices would go up again to a certain level - just because they had once been there and they have now come down. This is flawed thinking and does not make sense. Alot of people have gone broke thinking this way . . .





.

failsafe

Do you know what's even more shockingly low than €3?

.... €0

DJDC

Just wondering if anyone had opinions about this - it seems from last week's state guarantee that the government is determined to prevent Anglo from collapsing, yet the share price remains at €3, a shockingly low price given what it was even 6 months ago. Does anyone think it'd be safe to buy these or is the company best given a wide berth? I've been considering this for a while, just wondering how others feel about it...

Do it now. Take out the biggest loan possible from the bank to buy the shares. Also Id recommend buying some Icelandic soverign debt and a 1 bed roomed apartment in longford.

Time Magazine

It's a far better idea to look into the future rather than the past when buying shares. You're not going to be selling them six months ago.

BTW everyone is thinking what you're thinking. Just as you might be thinking "Wow! What a bargain!", I'd be there are plenty of people going to think "Wow! They're so expensive compared to six months ago!" in six months.

All in all

pocketdooz wrote: »

All in all wrote: »

The governments guarantee means that none of the banks will go out of business in the (very) short term I believe, the banks still have their problems that haven't changed post the guarantee.

no it doesn't

The Govt guarantee means that customers' deposits are safe.

The banks can (read: one will) still go bust despite the guarantee.




.

Pocketdooz if you had highlighted the rest of the sentence rather than picking out half of it you would have better grasped my point. I think that the guarantee does mean that one of the irish banks won't go broke in the very short term (3-6 months), and it has stopped probably 2 banks going bust last week, hence the speedy legislation.
Obviously it doesn't change the inherent risks of the banks loan book.

daveirl

This post has been deleted.

kaiser sauze

No, for too many reasons that I don't have time to type up.

Jam-Fly

I'd probably wait a few months, they'll probably drop even further

gurramok

42cent this morning, bank guarantee means squat.

DJDC

This will probably get deleted but its looks like the end is finally approaching. My commiserations to all the ordinary joes working there.

stevethesatguy

33 cent today

Diarmuid

gurramok wrote: »

bank guarantee means squat.

Not true. The bank guarantee means what it meant from the start. The money on deposit is safe. Nothing more.

All the advice here was that the share price could go to €0 even with a guarantee, no one should be surprised that the share price is heading in that direction.

the shares more than likely will hit zero.

I pity anyone who bought a lot of these shares

ranger4

rarnes1 wrote: »

the shares more than likely will hit zero.

I pity anyone who bought a lot of these shares

i bet some day traders have made small fortunes by daytrading banks including anglo.

Diarmuid

ranger4 wrote: »

i bet some day traders have made small fortunes by daytrading banks including anglo.

and I bet many lost small fortunes doing the same

ranger4

Diarmuid wrote: »

and I bet many lost small fortunes doing the same

True, there will always be winners and loosers when trading.:rolleyes:

Danimalito

ranger4 wrote: »

i bet some day traders have made small fortunes by daytrading banks including anglo.

short selling anglo irish is still prohibited

Diarmuid

Danimalito wrote: »

short selling anglo irish is still prohibited

phew! Good to see that banning short selling stopped Anglo being drive to €0 by the "speculators". :rolleyes:

Idu

Diarmuid wrote: »

phew! Good to see that banning short selling stopped Anglo being drive to €0 by the "speculators". :rolleyes:

They're evil to the core that lot

pocketdooz

janets_on_clubs wrote: »

They're evil to the core that lot

Yeah - they are ! It's them and George Lee that drove us into this recssion !

Why did they talk us into the recession like this ?

rugbyman

I though you two were night owls!

ranger4

Danimalito wrote: »

short selling anglo irish is still prohibited

Yep, but day trading with own funds isnt..:D

pocketdooz

rugbyman wrote: »

I though you two were night owls!

Sleep is for the weak !

rugbyman

I bought 1,000 shares at 51 cent last monday. Since that the conspiracy theorists have hi jaked the media and web and planted false figures to show that the share price had fallen to 33 cent. they will say there was no man on the Moon yet.

pocketdooz

rugbyman wrote: »

I bought 1,000 shares at 51 cent last monday. Since that the conspiracy theorists have hi jaked the media and web and planted false figures to show that the share price had fallen to 33 cent. they will say there was no man on the Moon yet.

Lol - you should do stand up !

blackiebest

Well, according to the ISE website http://www.ise.ie/app/equityList.asp the share price is now at 31c...

I wish for you it was not so but it is, maybe long term Anglo can survive but you would be better off studying the form at the bookies IMO.

ranger4

blackiebest wrote: »

Well, according to the ISE website http://www.ise.ie/app/equityList.asp the share price is now at 31c...

I wish for you it was not so but it is, maybe long term Anglo can survive but you would be better off studying the form at the bookies IMO.

bought at 0.3150 and sold at 0.37 made some profit.

pocketdooz

ranger4 wrote: »

bought at 0.3150 and sold at 0.37 made some profit.

Proof or it didn't happen IMO

daveirl

This post has been deleted.

rugbyman

No, dave, noy a urine extractor. a follow on to some morning humour from two theorists a few posts up.. By the way i was wrong , the note from the bank arrived fri and the buying price was 55 cent , so i have to find a deeper spot in the river to jump into.

If there is anyone on boards who actually knows what is going on I would love to hear from Him/her. I suspect not ,or if there are, they read ,but dont post. Ditto for Irish newspaper journalists. this weeks Phoenix is worth reading on Anglo Irish.

What will happen to Anglo irish i have no idea, I have taken a 550euro (plus costs) GAMBLE on winning some money. I have a stop loss of zero built in.

Regards,Rugbyman

Danimalito

I'll try to explain why Anglo's share price has taken a nose dive:

- ALL irish banks need to raise more capital, they currently hover between 4% - 6%, where in the currrent market you need at least 10%. Anglo is less well capitalised than AIB and BoI

- The property sector is in trouble no doubt. Despite this, Anglo has this year substantially /increased/ its exposure to property developers (now at roughly 17%).

- Banks are very good a hiding dodgy loans. There's an uncertainty in the market of how much Anglo is hiding

On a positive note, the irish bank guarantee means that if an irish bank goes under, the irish state will end up with a multi-billion euro shortfall after liquidating the bank's assets (as all of the bank's debt is guaranteed). So they'll probably do their utmost to ensure that doesnt happen. Nationalisation is a distinct possibility though, which would mean that the shares will be worth nil

rugbyman

Thank you Danimalito.
I was aware of most of that, but you have helped.

I forget the exact amount but Phoenix suggests even more than 17 % of Anglos loans are to property developers.

Has more bad news emerged in the last three weeks that caused further falls. from over 1 euro to .35?

I think Northern R ock fell to a quarter of their value after being nationalised. Is there a reason why Nationalised Anglo Irish would fall to nil.

What could cause the bank to fail. i assume that their people are busy every day trying secure debts and entice clients to sell something at a loss. This should marginally help their liquidity. but e.g. are there foreign banks who have large loans due for repayment by Anglo irish, and who may be unwilling to extend them even though all interest payments had been met. If this were so , could they ,the lending bank push them into liquidation.

I assume from what you said ,that if they failed and the Govt had to pay out to depositors, that somehow the Govt would own their assets. is that so/ Was that part of the Govt deal.?

Regards

Danimalito

rugbyman wrote: »

Thank you Danimalito.
I was aware of most of that, but you have helped.

I forget the exact amount but Phoenix suggests even more than 17 % of Anglos loans are to property developers.

Has more bad news emerged in the last three weeks that caused further falls. from over 1 euro to .35?

I think Northern R ock fell to a quarter of their value after being nationalised. Is there a reason why Nationalised Anglo Irish would fall to nil.

What could cause the bank to fail. i assume that their people are busy every day trying secure debts and entice clients to sell something at a loss. This should marginally help their liquidity. but e.g. are there foreign banks who have large loans due for repayment by Anglo irish, and who may be unwilling to extend them even though all interest payments had been met. If this were so , could they ,the lending bank push them into liquidation.

I assume from what you said ,that if they failed and the Govt had to pay out to depositors, that somehow the Govt would own their assets. is that so/ Was that part of the Govt deal.?

Regards

Anglo presented their earnings report last week, i think. NCB went out shortly afterwards and stated that Anglo's bad debt is probably at least twice of the estimate presented in the report. This was one of the reasons why the share price plummeted.

When a bank gets nationalised, its shares becomes worthless. It's not reasonable to expect taxpayers to bail out investors who deliberately took a gamble when deciding to purchase a bank's shares.

The liquidy requirements for irish banks were upped once banks started toppling over, also irish banks effectively borrow money now as sovereign entities (due to the recent financial institutions bill), so liquidity in itself shouldnt be a problem. An irish bank would go bankrupt if its bad debt exceeds its capital.

If an irish bank goes bust, the state will sell its assets (for a discount), and service its debts in full, leaving the irish state in a lot of red ink. That's the essence of the bill.

Anglo's aggressive business strategy has led to it making a ton of profit, but yea you would /think/ that reducing their loan portfolio now would be the way to go. Sometimes managers become more obsessed with profit targets as opposed to creating a sustainable, viable business (read up on Enron for an example)

ranger4

pocketdooz wrote: »

Proof or it didn't happen IMO

daveirl

This post has been deleted.

Concept2D

daveirl wrote: »

This post has been deleted.

I've a Davy's online account, and haven't made many trades yet .

By luck I was looking closely as the price nose dived to 0.28 (using http://www.davy.ie/PricesAndCharts?equityIdx=$0$$$ANGL.I ), then stopped it's decline .

Decided it was a good time to speculate, failed to get a buy now price (this has happened last time I tried to buy Anglo) . So went for a .28 limit order . Kept checking my account to see the order processed but no joy, then I see the price rise to .29/30 so cancel my .28 order and try .31, same thing happens after a while and cancel the .31 order and try now at .35 .

Finally get the shares at .34 . Set a sell order at .39 which was hit at 8:04 the next morning . Just 1 nervous evening and kicking myself I hadn't got it at .28-.33 .

Question : what is the optimal way to deal with the lowish liquidity of Anglo (no buy now option) and the bloody delay that the davy's link above has ? (was checking Goodbody's also and it was even slower to update the price) .
I'm guessing if I simply placed an order for .35 at the start I would have got the shares at .31/.32 (as I was chasing the market with my 3 buy orders) .

I've read about level 2 type screen's for the US exchanges, but I think there VERY expensive, what is the Irish equivalent (if there is one) and approx how much does it cost .

ranger4

Concept2D wrote: »

I've a Davy's online account, and haven't made many trades yet .

By luck I was looking closely as the price nose dived to 0.28 (using http://www.davy.ie/PricesAndCharts?equityIdx=$0$$$ANGL.I ), then stopped it's decline .

Decided it was a good time to speculate, failed to get a buy now price (this has happened last time I tried to buy Anglo) . So went for a .28 limit order . Kept checking my account to see the order processed but no joy, then I see the price rise to .29/30 so cancel my .28 order and try .31, same thing happens after a while and cancel the .31 order and try now at .35 .

Finally get the shares at .34 . Set a sell order at .39 which was hit at 8:04 the next morning . Just 1 nervous evening and kicking myself I hadn't got it at .28-.33 .

Question : what is the optimal way to deal with the lowish liquidity of Anglo (no buy now option) and the bloody delay that the davy's link above has ? (was checking Goodbody's also and it was even slower to update the price) .
I'm guessing if I simply placed an order for .35 at the start I would have got the shares at .31/.32 (as I was chasing the market with my 3 buy orders) .

I've read about level 2 type screen's for the US exchanges, but I think there VERY expensive, what is the Irish equivalent (if there is one) and approx how much does it cost .

Open an a/c with sharewatch, trade over the phone, cant beat their commision charges.

Mikel

rugbyman wrote: »

I have a stop loss of zero built in.

:pac:

The London listing on Yahoo reads:

52wk Range: 28.50 - 1,116.00

They got to them too!!

Baird

Danimalito wrote: »

I'll try to explain why Anglo's share price has taken a nose dive:

- ALL irish banks need to raise more capital, they currently hover between 4% - 6%, where in the currrent market you need at least 10%. Anglo is less well capitalised than AIB and BoI

Anglo is actually better capitalised than BOI.
It has a potentially higher bad debts exposure than any other irish bank.

All Irish banks dont actually need more capital and 10% is a joke of a figure, where on earth did you get that from?
Maybe a tier 1 level of 10% but no bank in Europe has a core level of 10%
so i have no idea where that is coming from.
A level around 7% will be considered an adequate level going forward.

- Banks are very good a hiding dodgy loans. There's an uncertainty in the market of how much Anglo is hiding

To be fair its not really hiding when no one has any idea what fair value is.
Has the property market fallen by 18% or 30% or somewhere in between.
No one actually knows and if u take a fall of 20% in total then the banks
should all pull through without assistance, the market however believes
it will be closer to double this figure which should scare the crap out of
anyone that bought property in the last 18 months.

Mikel

Baird wrote: »

Anglo is actually better capitalised than BOI.
It has a potentially higher bad debts exposure than any other irish bank

Don't those two sentences contradict each other?

Baird

No not in the slightest.
How would they?

Danimalito

Baird wrote: »

Anglo is actually better capitalised than BOI.
It has a potentially higher bad debts exposure than any other irish bank.

All Irish banks dont actually need more capital and 10% is a joke of a figure, where on earth did you get that from?
Maybe a tier 1 level of 10% but no bank in Europe has a core level of 10%
so i have no idea where that is coming from.
A level around 7% will be considered an adequate level going forward.




To be fair its not really hiding when no one has any idea what fair value is.
Has the property market fallen by 18% or 30% or somewhere in between.
No one actually knows and if u take a fall of 20% in total then the banks
should all pull through without assistance, the market however believes
it will be closer to double this figure which should scare the crap out of
anyone that bought property in the last 18 months.

There are european banks which have been much better capitalised than the irish banks, yet been runnign into trouble lately. e.g. Dexia had a >10% tier 1 core capital ratio when they were bailed out.

My comment about banks being good at hiding bad debt was mostly referring to inventions like CDOs, SPVs and the like.

Baird

Danimalito wrote: »

There are european banks which have been much better capitalised than the irish banks, yet been runnign into trouble lately. e.g. Dexia had a >10% tier 1 core capital ratio when they were bailed out.

My comment about banks being good at hiding bad debt was mostly referring to inventions like CDOs, SPVs and the like.

When did Dexia have a core tier 1 of 10%?

Agree with the comment about CDO's SPV's etc
A perfect example are the UK banks, who had tier 1s over 9 post bailout and now are lucky to be at 7 after writing down a lot of their exposures to such instruments.

okidoki987

Anglo's problems have arisen from the fact they have €70 billion lent to the Property market (in whatever form developers, builders, speculators etc).
They have only allowed in their bad debts for €500 million of this.
So they think that less then 1% of all their loans will default! :eek:
Now ask the question if they have lent €70 billion against land, apartments, houses etc etc how much is this now all worth?
I'll give you a clue, it ain't €70 billion and I'd say it not €69.5 billion which is what the Bank is saying it is.
Of course it's still worth something but just not what they've lent against it.
That's part of the reason why the share price has crashed.
Anglo will probably be merged with one of the 2 "big" Banks but the government will have to guarantee the buyer against the loans just in case it all goes pear shaped.
Anglo had problems, along with all the other Irish Banks, getting funding from the Interbank market and this only stopped when the Government stepped in with their guarantees.
Yes the share price is cheap but it may get cheaper before it recovers.
A lot depends on what happens in the new year.

Baird

okidoki987 wrote: »

Anglo's problems have arisen from the fact they have €70 billion lent to the Property market (in whatever form developers, builders, speculators etc).
They have only allowed in their bad debts for €500 million of this.
So they think that less then 1% of all their loans will default! :eek:
Now ask the question if they have lent €70 billion against land, apartments, houses etc etc how much is this now all worth?
I'll give you a clue, it ain't €70 billion and I'd say it not €69.5 billion which is what the Bank is saying it is.

For crying out loud mate thats not even close to how bad debt charges work.
1% bad debts charge historically, even in severe housing collapses is considered high.
Just because you got a loan on property thats worth 25% less now than when you bought it, doesnt mean you are a bad debt :rolleyes:
€500m provision is a large sum, probably not large enough but its not going
to be a figure of €10bn or something crazy like you seem to be implying.

Danimalito

Baird wrote: »

When did Dexia have a core tier 1 of 10%?

June 2008, 11.4% tier 1, of which 10.2% core. After the bailout they're significantly higher

3Q 2008 results: http://www.dexia.com/docs/2008/2008_3Q/PDF/20081114_slides_mariani_UK.pdf

That's just one example, other large european banks are also pushing their tier 1 core ratio above 10% for the short term. Presumably that's the proper thing to do to safeguard the business against the unknown quantity of bad debt out there.

Medium term I think that Basel will be updated to up the capital requirements a few percent, your figure of 7% sounds plausable.

Baird

Danimalito wrote: »

June 2008, 11.4% tier 1, of which 10.2% core. After the bailout they're significantly higher

3Q 2008 results: http://www.dexia.com/docs/2008/2008_3Q/PDF/20081114_slides_mariani_UK.pdf

That's just one example, other large european banks are also pushing their tier 1 core ratio above 10% for the short term. Presumably that's the proper thing to do to safeguard the business against the unknown quantity of bad debt out there.

Medium term I think that Basel will be updated to up the capital requirements a few percent, your figure of 7% sounds plausable.

In fairness that 10% before any write downs in relation to Lehmans or FSA
were accounted for. The bank was crippled when those losses were taken
into account and those losses wouldnt have been published because it was
bailed out soon after. There are still a lot of writedowns to come for the big European banks!!!

whatsupdoc?

€500m provision is a large sum

It's a large sum but as a % of the total amount, it's tiny.
I'd guess if only one of the people they have lent money to defaults and
then collapses, what would Anglo do then?
I assume that's why the s*** has been sold out of the shares since?