Banks to pay gov 1 billion.

ranger4

Banks are to pay government 1 billion over the next 2 years allong with allowing non voting observers into board meetings etc, Is it looking likely that the government woint adopt the uk plan of buying shares with banks.

Baird

They were never going to in fairness.
It was largely rumourmongering that the notion of undercapitalisation became an issue.
Post bank in germany have a core tier 1 of 3.4% for crying out loud.
All the Irish banks are over 6, which is the euro bank average.

bosra

It would be naive to think the Govt won't end up bailing out the banks here. They will eventually need capital injections.

daveirl

This post has been deleted.

woodseb

Baird wrote: »

All the Irish banks are over 6, which is the euro bank average.

ah, but many banks are heading in excess of 10% following recapitalisations, although i don't think the irish banks need that high if they stick largely to retail banking

Thomas_S_Hunterson

bosra wrote: »

It would be naive to think the Govt won't end up bailing out the banks here. They will eventually need capital injections.

I wouldn't be so sure.

The government were quick to act. We can't really afford to bail out banks (it would cripple our economy for years) so they issued a guarantee which restored confidence.

From what I hear, deposit's have been flowing in from overseas because of the guarantee which means the banks have more liquid capital to work with.

Baird

woodseb wrote: »

ah, but many banks are heading in excess of 10% following recapitalisations, although i don't think the irish banks need that high if they stick largely to retail banking

Those banks are the likes of RBS and Fortis who have to get to 10 or 12 due
to the huge writedowns they are about to implement.
After these writedowns their tier 1s will be back around 6.
Without the capital injections and if they were forced to do the writedowns now
they banks would have tier 1s under 3.
These banks are getting capital injections due to what their capital markets
exposure is about to do to their balance sheets.
Or they could just do like they did in Germany and completely change the
accounting laws so you dont have to write anything down anymore :rolleyes:

Baird

Sean_K wrote: »

I wouldn't be so sure.

The government were quick to act. We can't really afford to bail out banks (it would cripple our economy for years) so they issued a guarantee which restored confidence.

From what I hear, deposit's have been flowing in from overseas because of the guarantee which means the banks have more liquid capital to work with.

Finally
+1

woodseb

Baird wrote: »

Those banks are the likes of RBS and Fortis who have to get to 10 or 12 due
to the huge writedowns they are about to implement.
After these writedowns their tier 1s will be back around 6.
Without the capital injections and if they were forced to do the writedowns now
they banks would have tier 1s under 3.
These banks are getting capital injections due to what their capital markets
exposure is about to do to their balance sheets.
Or they could just do like they did in Germany and completely change the
accounting laws so you dont have to write anything down anymore :rolleyes:

i don't think forits will need a 10% ratio now;) besides i think you will see a ratio in the region of 10% post writedowns to become the norm across europe in the years to come as dividends are reigned in and leverage reduced, 5-6% was considered sufficient last year but regulators won't allow it anymore

gaz wac

1 Billion is the most they could get..10% etc. Ombudsman was quoted saying the there is a total of €39 billion owed to banks from builders, 15 billion of which is "risky"...in other words, he dosent see them able to pay back !!

Baird

gaz wac wrote: »

1 Billion is the most they could get..10% etc. Ombudsman was quoted saying the there is a total of €39 billion owed to banks from builders, 15 billion of which is "risky"...in other words, he dosent see them able to pay back !!

Do you honestly believe that 4 out of every 10 property loan in Ireland will default?
Thats what will need to happen to see €15bn written off
It would take more than half of every loan related to property to be written off
to get to the €20bn that Morgan Kelly is saying will happen.
That figure also implies the of value the propery defaulted on at is zero.
Property doesnt get valued at 0, ever. :eek:

woodseb

true, the figure of 15bln is what the banks have said is 'risky' which is different from the amount being 'at risk' - the banks have announced these amounts to investors weeks ago and are well known by the market so what Neary said the other day wasn't new - although it wouldn't surprise me that it was new to him given his record