Todays G20 meeting.

ranger4

Has the agreement this evening with the g20 except ireland to directly invest in banks by buying shares to help interbank lending etc been enough to stablise markets and hopefully reduce the chances tommorow and this week not to repeat the huge falls of stock values that happened last week.

Baird

When people actually realise that interbank lending is the problem and not bank capital then
this crisis will sort itself out.
Until then we will stutter along in the same way we have for the past 9 months.
Capital is not the main problem and even if it was the Irish banks are adequately capitalised.

daveirl

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Baird

daveirl wrote: »

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The Irish banks all have a core tier 1 around 6.
Up until a few months a min of 4 was required, now according to some analysts its 8.
Why all of a sudden is it 8 for no good reason, now some people are saying 10!!!!!!

Banco santander the most cash rich bank in the world came out yesterday
in response to the french finance minister who is looking for a tier 1 above 9
(tier 1 and core tier 1 are slightly different)
In response santander said they were more than happy at having their core
at 6 and see no reason to change this view.

Every broker on the street thinks they need capital? Who are these brokers
may i ask? Davys who now say a tier 1 of 11.5-12.5 is required?
Merrion who have addition errors in their latest reports ?
Goodbodys who have been long the banks until the last few weeks and all of
a sudden when the share prices collapse they decided to issue sell notes?
Shocking analysis by some of these houses in my opinion.
In comparison 3 international brokers have all upgraded the irish banks in the
last 4 weeks. Makes you wonder dont you think?

The Irish banks assuming the bad debts are double what they are forecasting are still profitable. They have no capital markets exposure of any kind unlike
every UK bank bar HSBC. None of these banks have wrote down their exposures yet and when they do their core tier 1s will collapse.
Thats why they had to raise capital in advance of doing this.
RBS now have the highest core tier 1 in europe at over 9.
They start writing down their cdo exposure in the next 3 weeks which will
see their tier 1 fall to the mid 6's.
This is without any write downs in property etc.
Irish banks have none of this toxic crap and thats why they do not need capital.

daveirl

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Baird

daveirl wrote: »

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I believe Irish banks will definitely have non performing loans, unquestionable.
Irish banks are all factoring 100bps this year, if bad debts are twice that,
which is a huge figure no matter what way you look at it, then all the banks
except BOI are still making profits and extending their core tier 1's.
That 200bps is across the entire loan book, credit cards, car loans, business
loans etc and not just property related loans.
Do i see 200bps across the entire loan book, no i really do not.
Even if bad debts in housing fell off a cliff i still think the banks can get
through without capital injections.
When geniuses like morgan kelly on prime time 2 weeks ago claim that
Irish banks will lose 20bn from a loan book of 120bn because of property writedowns
you realise these people cannot have a clue what they are talking about.
That is 1666bps when the banks are quoting 300bps over 3 years.
I mean for crying out loud.

What do you mean why is is required? Have you not seen the complete lock up of the whole system in the past 6 weeks. The game has changed, what we were doing previously clearly isn't working.

Like I said yesterday, if you feel differently go mad buying these stocks. You can get BOI 20% cheaper than you could this time last night.

Dave as you have previously said you dont fully understand banks so why
are you continuing to perpetuate the argument of capital injections?
Core tier 1 ratios are required to be a certain level or else banks are deemed
risky and their cds spreads will expand and expand and as a result it becomes
more and more expensive for them to raise short/long term money.
So to get cheaper money they keep their core tier 1 ratio around what is
believed to be the consensus min.
(The absolute min is 4 which is set by Basel 11 accounting practices)
That was 4 until a few months ago, then it became 6 and now people are talking about 8.
If banks dont reach this then their cds will balloon as they are deemed
a greater risk of defaulting and institutions will not give them funds.
The Irish banks (excluding anglo) have the lowest cds spreads of any banks in Europe and they are still falling.
Why when they dont have the required tier 1 ratio of 8 you may ask?
The reason is it doesnt matter if they have no core tier 1 because they have
a gov guarantee to fully back them if they were to ever default.
Therefore the necessity to inject capital disappears as the banks can replenish
it naturally over time using the profits they will definitely continue to earn
even through the recession.

What then is the reason that every idiot broker keeps releasing notes saying
our banks need capital injections?

daveirl

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Baird

daveirl wrote: »

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Agree to differ?
You havent actually put forward one argument in defence of capital injections
other than "the market has priced them in so they are required"
I have gave numerous reasons why it wont be needed