government looks set to buy bank shares.

ranger4

With the massive falls with in&p and irish bank shares how much longer before the government buys shares with irish banks.

Économiste Monétaire

Is that a question you're asking, or a statement of fact?

ranger4

UCD_Econ wrote: »

Is that a question you're asking, or a statement of fact?

Looks very likely that at some stage in the not too distant future that the government will buy stock with Certain irish banks,building societys, they seem to be crying out for capital.

miju

question how exactly will the gubberment afford to re-capitalise the banks when it's currently trying to scrimp & cut costs everywhere?

Économiste Monétaire

ranger4 wrote: »

Looks very likely that at some stage in the not too distant future that the government will buy stock with Certain irish banks,building societys, they seem to be crying out for capital.

I read the title, government looks set to buy bank shares, as a projection that this will happen soon, and expected a source, or even a link to some figures, to support the statement of fact that the event will occur in the near future. I'm not saying it will, or will not, happen as I don't know, but, you're claiming to know that it will occur (this week?). If so, that's great and worth reading, but, it helps to support a claim with a source, or even to expand the statement beyond a one liner.

miju wrote: »

question how exactly will the gubberment afford to re-capitalise the banks when it's currently trying to scrimp & cut costs everywhere?

Bonds, most likely.

ranger4

I guess i was seeking views with other traders, savers,etc with their views with the posibilty of gubberment intervention with buying stocks, This seems to be one of the main reasons which has investors running for their lives.

BenjAii

ranger4 wrote: »

This seems to be one of the main reasons which has investors running for their lives.

The share prices have been in freefall since sometime before the question of part-nationalisation arose; the banks vast loans to Ireland's creditworthiness-challenged property developers are the reason for that.

Idu

ranger4 wrote: »

I guess i was seeking views with other traders, savers,etc with their views with the posibilty of gubberment intervention with buying stocks, This seems to be one of the main reasons which has investors running for their lives.

In fairness you've asked the same question repeatedly over a few threads at this stage and nobody has answered. This is probably because nobody is sure of what is going on at the moment. This uncertainty, coupled with the amount of risky debt on their books, is the reason for the massive sell off in their share price

You clearly have shares in these companies and thats unlucky so you can either buckle down and try and ride this out or cut your loser but you're just getting yourself worked up posting two threads a day that deal with the exact same issues.

Best of luck with whatever you decide to do as always though

ParkRunner

I heard that the whole Sean Quinn affair and the re-capitalising of banks are linked. The Govt weren't able to go ahead with the project before it came out that Quinn had a large stake in Anglo Irish, acquired in a way that breached financial regulations, therefore, I wouldnt be surprised in Lenihan delves into the national pension fund and directs the money into the banks very soon.

justfortherecor

MacNamara wrote a letter to his respective banks recently giving them an update of the state of their loans to him. Obviously this is a confidential letter between himself and the financial institutions but when the other builders follow suit it should give the banks a much greater idea of whether they require capital rapidly.

Also saw that Mitsubishi UFJ are looking to raise $10bn fresh capital. Haven't arrived at the bottom of the trough in the banking sector by any means yet.

Edit: MacNamara letter article from Sunday Business Post:
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=NEWS-qqqs=news-qqqid=37061-qqqx=1.asp

ranger4

Thanks for replys, some food for thought there, I sure hope leinahan holds off from stock buyout with banks.

Harpy

what will happen if the government does buy bank shares??what will that mean for people who already own bank shares?? what will happen their shares like?

ranger4

Harpy wrote: »

what will happen if the government does buy bank shares??what will that mean for people who already own bank shares?? what will happen their shares like?

when the uk gov bought shares with some of the uk banks the exsisting shareholders stock value plummeted.:mad:

ParkRunner

It's bound to happen very soon because Irish banks will be at a competitive disadvantage now to the English banks who have been recapitalised

pandamoanium

I'm interested in this also - what would happen to shareholders and their shares if the government stepped in?

What about share prices in general, would they be likely to go up or down?

gurramok

UCD_Econ wrote: »

Bonds, most likely.

Did someone say bonds?

http://www.irishtimes.com/newspaper/frontpage/2008/1113/1226408582953.html?via=mr

The success of the planned fund- raising - and the price paid by the banks for the loans - will indicate whether the Government's blanket support announced on September 30th is sufficient to restore international confidence in the banks.

The plans involve the banks selling bonds - essentially IOUs to other banks and big investors - guaranteed by the Government. The sales will be staggered so each bank can access funding. They will also be capped to ensure one bank doesn't absorb a greater share of the funding that could be drawn by all the banks from international investors.

"It will stop the banks rushing the markets all at once," said a senior bank executive. "It is a big test of the bank guarantee."

eamonnm79

Taken from the same Irish times article
"The bonds will carry the top AAA credit rating, as they are insured by the Government, which has the strongest rating."

"However, the interest rate charged to the Government by international lenders indicates that banks will have to pay significantly more than previously for money they are seeking to raise."

Obviously some AAA ratings are more AAA than others.

Do we not need a more sophisticated credit rating system than A, AA, AAA?

Given that the governent openly admits that it will have to borrow 1 euro in every ten to meet current spending next year they are hardly in a good financial position to guarantee 400 billion especially since we are now "putting it to the test"
Who would decide that the irish or icelandic or zimbabwian government should only have a AA rating?
Any info on this issue would be appreciated.

eamonnm79

I should have read todays editorial in the Irish Times before the last post.

http://www.irishtimes.com/newspaper/opinion/2008/1113/1226408581897.html

Flamed Diving

Read this:

http://www.rte.ie/news/2008/1120/economy.html

This is what I was hoping they would do in reaction to this crisis.

silverharp

Flamed Diving wrote: »

Read this:

http://www.rte.ie/news/2008/1120/economy.html

This is what I was hoping they would do in reaction to this crisis.

I wouldnt expect it to solve any problems , adding 2 failing banks together just creates a larger failing bank. The gov. have no idea how long this contraction will last and I think it is insane to use public money to prop up the shareholders or the T's & C's of a bloated sector.

As the old saying goes capitalism without failure is like religion without hell!

BenjAii

this all gives me a very bad feeling.

On the one hand, a private equity firm now sees a great opportunity for short term investment gain in newly to be duopolised BOI, that really makes me think i'll be getting better value as a BOI customer ...............

and Brian Lenihan insisting on "reform" inspires even less confidence .....

Flamed Diving

silverharp wrote: »

I wouldnt expect it to solve any problems , adding 2 failing banks together just creates a larger failing bank. The gov. have no idea how long this contraction will last and I think it is insane to use public money to prop up the shareholders or the T's & C's of a bloated sector.

As the old saying goes capitalism without failure is like religion without hell!

How many major financial crises were there between WWII and the mid-70's, when such consolidating practices began to be wound down?

silverharp

Flamed Diving wrote: »

How many major financial crises were there between WWII and the mid-70's, when such consolidating practices began to be wound down?

I dont quite understand the question but if 2 commerial organisations wish to consolidate that's fine, but not a shotgun wedding organised by the gov.

Take GM and Ford in the US, the market clearing solution is to let them go bankrupt, let the assets be taken over by entrepeneurs if they so wish and put the assets back into production, at a stroke you would end the situation where shop floor workers earning 70$ per hour are trying to flog cars to other shop floor workers who only earn $15

mumhaabu

The Consolodation of Irish banks is now inevitable I believe. The Government should nationalise 100% Bank of Ireland and take a majority holding in AIB and begin control over the Irish financial market.

The monopoly then will be more stable, do an asset release by selling all the other branches of the old banks while keeping a few big branches open but rebranding them BOI. AIB should be incorporated into the BOI as a wing based around lending and mortgages.

We have to take complete control of the banks and by asset stripping the old bansk the funds raised can be used to refinance the new National BOI/AIB monopoly. I also suggest selling bonds to the public at a fixed rate to help finance the move. All premium bonus managers should be sacked and fixed rates of pay introduced in the new National bank.

Sometimes a little socialism is needed to keep capitalism on track.

mike65

I just throw this out for discussion - which would peeps prefer, a government capitalisation or private equity?

Mike

Dob74

Flamed Diving wrote: »

How many major financial crises were there between WWII and the mid-70's, when such consolidating practices began to be wound down?

None as big as this!!!!! Its difficult to see an easy way out if this one. Two of the six banks should go according to what I am hearing. The problem is what will happen to all there assets and debts. The saving and loan crisis in the 80's in the states the US gov bought up alot of the bad debt and actually made money on it in the long run. They were about to try the same thing but the hole they are in now looks to deep to try the same thing. The irish gov has commited to saving all the banks so that means this whole country has been gambled on the banks future and none of them going out of business. A scary thought.

BenjAii

mumhaabu wrote: »

The Consolodation of Irish banks is now inevitable I believe. The Government should nationalise 100% Bank of Ireland and take a majority holding in AIB and begin control over the Irish financial market.

The monopoly then will be more stable, do an asset release by selling all the other branches of the old banks while keeping a few big branches open but rebranding them BOI. AIB should be incorporated into the BOI as a wing based around lending and mortgages.

Exactly what problem does that solve ?

Maybe I'm wrong, but I thought the Irish banks problem was lack of access to international credit markets; a problem primarily related to the international financial crisis, but exacerbated by their perceived uncrediworthiness due to their exposure to property.

While I can see a banking duopoly making BOI/AIB bigger percieved as bigger players internationally.

I don't think nationalising them is the way forward, but then again I don't see why various shot gun weddings are either.

mumhaabu

Ireland Inc. and the Irish Government have plenty access to the credit markets and will get as much credit as they want. The Irish Government must now borrow and invest into a new national banking monopoly. It is the only way forward and it is only through tight control and regualtion that we will emerge from this crisis.

This way the banks are now is excarebating the situation 10 times worse than it is and with the idiotic government we have dug ourself down from a recession into a economic depression and 2009 will long be remembered as a long black year mostly caused by Government bungling.

I favour Government Capitalisation and we need to extend credit to our businesses and I know men who have worked for the last three months without a penny's pay because the banks refuse to give a loan to cover wages until the project is completed and the money comes in to pay them.

Businesses often go long periods without collecting money and extending this grace period to their customers is what keeps them in business becuase if they don't somebody else will.

If the Irish banking crisis is not sorted out soon we will have 20% of the population out of work by this time next year. We need three things now,

Leadership - Biffo has a much charisma as genital herpes
Ireland needs fun, We need to win something and get our National Pride back.
We need a change of government soon also.

If things don't improve soon Ireland will be down the swanny for the next 15years.

ranger4

mumhaabu wrote: »

Ireland Inc. and the Irish Government have plenty access to the credit markets and will get as much credit as they want. The Irish Government must now borrow and invest into a new national banking monopoly. It is the only way forward and it is only through tight control and regualtion that we will emerge from this crisis.

This way the banks are now is excarebating the situation 10 times worse than it is and with the idiotic government we have dug ourself down from a recession into a economic depression and 2009 will long be remembered as a long black year mostly caused by Government bungling.

I favour Government Capitalisation and we need to extend credit to our businesses and I know men who have worked for the last three months without a penny's pay because the banks refuse to give a loan to cover wages until the project is completed and the money comes in to pay them.

Businesses often go long periods without collecting money and extending this grace period to their customers is what keeps them in business becuase if they don't somebody else will.

If the Irish banking crisis is not sorted out soon we will have 20% of the population out of work by this time next year. We need three things now,

Leadership - Biffo has a much charisma as genital herpes
Ireland needs fun, We need to win something and get our National Pride back.
We need a change of government soon also.

If things don't improve soon Ireland will be down the swanny for the next 15years.

What would happen to the thousands of investors who have shares with aib boi etc, many who have allready seen their pension funds investments with the banks tank, also what about the present shareholders who have massively contributed to the rise of the banks are they to be shafted by seeing their investments made worthless by nationalisation.

Idu

ranger4 wrote: »

What would happen to the thousands of investors who have shares with aib boi etc, many who have allready seen their pension funds investments with the banks tank, also what about the present shareholders who have massively contributed to the rise of the banks are they to be shafted by seeing their investments made worthless by nationalisation.

dont think the government care too much about the shareholders. they are the smallest percentage of people that would be affected by a banking bailout/nationalisation or merger

Flamed Diving

silverharp wrote: »

I dont quite understand the question but if 2 commerial organisations wish to consolidate that's fine, but not a shotgun wedding organised by the gov.

Take GM and Ford in the US, the market clearing solution is to let them go bankrupt, let the assets be taken over by entrepeneurs if they so wish and put the assets back into production, at a stroke you would end the situation where shop floor workers earning 70$ per hour are trying to flog cars to other shop floor workers who only earn $15

I'm sorry, but the neat and tidy microeconomic theory you use to assess this simply doesn't hold up in reality. What you suggest would only aggravate the situation further.