The Anglo Irish Bank Discussion Thread

Time Magazine

This thread is for the discussion of Anglo Irish Bank. Discussions of the nationalisation, compensation (if any), Sean Fitzpatrick, etc. should be restricted to here.

Thanks.

fan_by

hello,
please, anybody, explain what is going to happen with my Anglo Irish shares.
i'm absolutely new to share trading and just about a week ago i have bought my first 10000shares, next thing - Friday on the radio "Anglo Irish Bank - Nationalized". what does it mean? Government becoming the only owner of this bank? will i get any compensation? if not then it looks like government robbed me? is it legal at all?

Time Magazine

fan_by wrote: »

what does it mean? Government becoming the only owner of this bank?

Yes, the government have taken over the company.

will i get any compensation?

Possibly, but probably not.

if not then it looks like government robbed me?

No, the government did not rob you. The government took over to stop the company from going bankrupt. If Anglo had gone bankrupt, you would have got nothing. The taxpayer has stepped in and risks making a loss. The taxpayer (not the shareholder) should, and probably will, get all the rewards.

is it legal at all?

It is perfectly legal. In fact the Oireachtas passed the legislation. It's not only legal - it's a law.

Sorry you lost out.

homer911

Sorry to hear about your misfortune. The government will assess what compensation, if any will be paid to shareholders. It may possibly reflect the amount paid for the shares, one price per share, or even nothing at all. You will have to wait and see.

LasseBrown

Legal in a sense of NOW backed by law. Yes.
What does the market think about it? BoI and AIB shareholders know it since Monday. Lenihan moodles around - depending on the question Anglo is still well financed with 7billions in their pocket, but on the other side they had to be nationalised.
The worst thing of the Anglo story are the insider stories (this is the perception in international investor boards): How many people knew since when about the director loans? It appears many more, a good bit earlier than thought so far.
What the assessor comes up with is questionable. As a nationalisation is unprecedented in recent history, proceedings in a squeece out might give some ideas what could happen. Sometimes a multistage approach is taken: The first x shares will be taken at A Euro, the next y shares will be taken at B Euro, the remaining ones at C Euro. With A>B>C. X could be e.g. 1000. The idea is to protect smaller shareholders.
Well, the Irish approach might be A<B<C. So in the end only Mr Quinn will see some money.

woodseb

LasseBrown wrote: »

What the assessor comes up with is questionable. As a nationalisation is unprecedented in recent history, proceedings in a squeece out might give some ideas what could happen. Sometimes a multistage approach is taken: The first x shares will be taken at A Euro, the next y shares will be taken at B Euro, the remaining ones at C Euro. With A>B>C. X could be e.g. 1000. The idea is to protect smaller shareholders.
Well, the Irish approach might be A<B<C. So in the end only Mr Quinn will see some money.

completely wrong, a squeeze out has no relevance here and all equity shareholders will be treated the same

pocketdooz

As stated - a squeeze out has no relevance in this situation.

Likely event is Anglo shareholder will get some nominal sum per share in the end, as the Economist pointed out - incorrectly and politically-based. I expect to see some sort of Northern Rock type solution. But really God knows what these donkeys in Govt. will come up with . . .



.

LasseBrown

I did not claim that a squeeze out is of broader relevance here. However, it is the only common way of forcefully removing shareholders. I think we have to go back several decades to Russia or Germany to see nationalisations of public held companies.
There are some social implications here. Besides the fat cats it appears that some thousands of pensioners held AngloIrish. Not seldom to top up their pensions by dividends.
Is it 100% clear that Anglo would have hit the wall without nationalisation? If so, why was it not clear on the 21st of December? Or earlier when Anglo was put under the 400bil umbrella?

pocketdooz

LasseBrown wrote: »

I think we have to go back several decades to Russia or Germany to see nationalisations of public held companies.

Eh No

Northern Rock / Bear Stearns / Three Iceland Banks / Fortis . . . .

Diarmuid

fan_by wrote: »

i'm absolutely new to share trading and just about a week ago i have bought my first 10000shares,

Are you serious? You never invested before and with clearly no clue as to what you were doing you put your hard earned money on Anglo Irish Bank. jesus wept.

Hanley

So... these law suits people are cooking up, what are they planning to sue on????

Idu

Probably mis management or something along those lines. Maybe they'll drag some of those Americans who defaulted on their mortages into it too. Worrying how litigious we are becoming as a nation. Everybodies fault but mine seems to be our creedo to go along with our can't someone else do it work ethic

Hanley

janets_on_clubs wrote: »

Probably mis management or something along those lines. Maybe they'll drag some of those Americans who defaulted on their mortages into it too. Worrying how litigious we are becoming as a nation. Everybodies fault but mine seems to be our creedo to go along with our can't someone else do it work ethic

Amen.

Apparently they're looking into possible breaches of company law now???

Tbh, I still don't get it... This whole true and fair buzz.... the loans to Fitzpatrick were what, .1% of the banks loan book?? Hardly the cause of the downfall.

I love all of the people giving out about having to suffer cos the banks fcuked up... I wonder how many multiples of the salary they paid for their house... The bank facilitated the peoples excess... and now the people are crying.

Boo bloody hoo!

ranger4

someone sugested that anglo could be used as a toxic bank to absorb the bad debt and loans from aib-boi is this likely to happen?

Économiste Monétaire

ranger4 wrote: »

someone sugested that anglo could be used as a toxic bank to absorb the bad debt and loans from aib-boi is this likely to happen?

The existing commercial structure of Anglo, with 300,000 deposit accounts (I think), isn't really appropriate to act as a depository for distressed assets—from my understanding of previous "bad banks." A designated bad bank(s) will form asset management companies—for example, Sweden's two bad banks, Securum and Retriva, formed two AMCs, Borgkronan and Addum—which will attempt to restructure debt to maximise the amount recoverable from non-performing loans of debtors; i.e. assets of Anglo, BoI, and AIB mirroring what happened to Nordbanken and Gota. Some companies that, effectively, defaulted on loans were taken over, and managed by the AMCs as majority shareholders, so that could occur here. The process took approx. 4 years in Sweden, but they're far more efficient than we are I doubt Anglo, as you know it now, will be kept in the same shell if the government were to follow the bad bank path. I'm not sure how the government could offload the deposit wing of Anglo, though.

Tiesto

pocketdooz wrote: »

As stated - a squeeze out has no relevance in this situation.

Likely event is Anglo shareholder will get some nominal sum per share in the end, as the Economist pointed out - incorrectly and politically-based. I expect to see some sort of Northern Rock type solution. But really God knows what these donkeys in Govt. will come up with . . .



.

When you say like a Northern Rock type solution, does that mean it will just drag on and on and not for a long time, will we find out whether or not we get anything for our holdings?

wallstreetguy

Anglo is no northern rock...completely different like chalk and cheese.
Northern Rock was nationalised after the british goverment had pumped
25 Billion pounds into her to keep her a float. The Bank was effectively
insolvent.

With regard Anglo, the minister for finance , the financial regulater ,and
the central bank have stated for record that the bank is solvent when
nationalised, and the tax payer has not given anglo a single cent.
The Bank has 4.1 Billion in shareholder equity, 2 Billion in core capital, and
1 billion set aside for future loan impairments. Also on its 70 Billion loan
Book it earns 2 billion core profit.
Dec 2008 reported 1.3 Billion profit and set aside 500million for future losses. All loans are cross collateralised for further security.
People dont realise that anglo only reported loan losses of 270million for
2008....30/40 basis points.
It has factored in 80-120 basis points for next three years 2-3 billion in loan impairments, and expects still to be profitable.
PWC has been all over its loan book on goverment instructions prior to
state nationalistion, and confer the above.
Its commercial /development book is only 17 billion, with half of its 5000
residential portfolio already sold.
Factoring all the facts above The bank is easily worth 10 Billion, but
Due to funding /credit rating issues ,market sentiment, and recent
director loan scandal bank was nationalised and expect the state to pay only 2-3 Billion.
(Remember state was putting in 1.5 billion for 75% stake)
The minister for finance lenihan and anglo chairman have stated they
will seek fair and reasonable compensation.This Process could take 6 to 12
months, but interest on payments will be made.
Income from anglo will help pay off the states hefty debt over the coming
years, hence a good buy.

DJDC

The Bank has 4.1 Billion in shareholder equity, 2 Billion in core capital, and
1 billion set aside for future loan impairments. Also on its 70 Billion loan
Book it earns 2 billion core profit.
Dec 2008 reported 1.3 Billion profit and set aside 500million for future losses. All loans are cross collateralised for further security.
People dont realise that anglo only reported loan losses of 270million for
2008....30/40 basis points.

Ok so lets assume for one minute you're BS figures are true. So it has a loanbook to equity ratio of 5.85%, assuming it has 4.1 billion in shareholder equity (its way lower in reality). In conjunction with PWC, Anglo are just fiddling with their books to keep the losses off balance sheet. With property prices plummeting over 30%, the truth is Anglo are likely to lose billions in the next few years.

The bank is easily worth 10 Billion, but
Due to funding /credit rating issues ,market sentiment, and recent
director loan scandal bank was nationalised and expect the state to pay only 2-3 Billion.

So the whole market was wrong? It was just a conspiracy against Anglo

The minister for finance lenihan and anglo chairman have stated they
will seek fair and reasonable compensation.This Process could take 6 to 12
months, but interest on payments will be made.
Income from anglo will help pay off the states hefty debt over the coming
years, hence a good buy.

Stay around and let us know when you get the cheque in the post. Don't be too optomistic!

Pepe LeFrits

You left out Ernst & Young and the government too. Conspiracy indeed.

Diarmuid

What a trustworthy bank! :rolleyes:

skywalker

Are peoples savings safe in anglo. & if so, would you have any qualms saving more with them? Just had a look at rates for instant access accounts & theirs is the best going.

pocketdooz

Your deposits are safe.

I would have no problem putting my savings in Anglo

xOxSinéadxOx

deposits are definitely safe

Idu

http://www.rte.ie/business/2009/0216/anglo.html

Is this legal and if not what does it fall under? Market manipulation, insider trading?

Corkbhoy8

Does anyone know where I could get information on the different strategies these two banks have followed from 1999 onwards..? I know the annual reports are there but I dont really know how to start analysing them so im looking for reading material really...or any knowledge you might have on the subject? Cheers!

pocketdooz

PM me a reminder and I'll sort you out tomorrow. Even if you are from Cork !

pocketdooz

IRISH NATIONWIDE gave tens of millions worth of sterling and dollar loans to former Anglo Irish Bank chairman Seán FitzPatrick as part of his loan transfers between the two institutions to conceal up to €122 million in borrowings from Anglo Irish.

The Irish Times understands the building society provided Mr FitzPatrick with loans of $56 million and £14 million on September 26th, 2007.
Irish Nationwide also lent the then Anglo Irish chairman $26 million on September 27th, 2006. This loan was secured with an undertaking from Anglo Irish, meaning that the bank would repay the loan if he could not. The £14 million personal loan was secured on properties and 4.5 million Anglo Irish shares, worth €55 million at the time.
It is understood that Mr FitzPatrick drew loans in different currencies as he held investments in sterling and dollars.
These borrowings form only part of Mr FitzPatrick’s loans from Irish Nationwide in 2007 as Anglo Irish said last month that Mr FitzPatrick had repaid €122 million on the bank’s books in September.
Mr FitzPatrick borrowed from Irish Nationwide over eight years, drawing loans before Anglo Irish’s accounting year-end on September 30th and repaying them within days with fresh loans from Anglo. By transferring the loans, Mr FitzPatrick hid them from the bank’s auditors and shareholders. The Financial Regulator and the Office of the Director of Corporate Enforcement are investigating Mr FitzPatrick’s loans.
Irish Nationwide chief executive Michael Fingleton directed queries to his spokesman who declined to comment. Mr FitzPatrick had no comment, saying he had been advised legally not to make any comment in relation to his loans.
An Anglo Irish spokeswoman said the bank could not comment on the undertaking provided as security against a loan in 2006.
Alongside its investigation into multibillion-euro lodgements in Anglo Irish by Irish Life Permanent (ILP), disclosed last week, the regulator is investigating whether there was a reciprocal relationship between the two institutions.
At issue is whether there were flows of money into ILP from Anglo at the end of the first half of ILP’s financial year in June and the second half in December.
ILP said last Friday that Anglo accounted for €3.33 billion in short-term cash deposits from other banks held last June. These deposits ranked among €7.73 billion in short-term inter-bank deposits, which were pledged against mortgage assets.
ILP said the transactions were “correctly accounted” for in its half-year accounts, adding that there were no material collateralised transactions with Anglo Irish at the end of its financial year.
The company’s spokesman said it will co-operate fully with the regulator. “We are absolutely confident that we can deal with any questions they might have,” he said.
The new details about Mr FitzPatrick’s loans emerged as Irish Nationwide had its debt rating – an indication of its ability to repay its borrowings – downgraded by two notches to one level above speculative or “junk” status yesterday. A drop to “junk” status would stop many large companies investing in the building society’s bonds.
International credit rating agency Moody’s also reduced Irish Nationwide’s rating to a level representing “modest” financial strength, “potentially requiring some outside support at times”. The agency said the outlook for the building society was “negative”, meaning it may downgrade the lender’s ratings again soon.
The lower ratings will force the lender to pay higher interest rates at a time when it is preparing to raise €1.5 billion in the markets this year to cover debt payments.
Mr FitzPatrick has declined to appear before the Oireachtas committee on economic regulatory affairs meeting today to explain why Anglo Irish needed to be nationalised, citing legal reasons.
Committee chairman Michael Moynihan said: “We need and deserve a full explanation as to what went on at the bank which led to the necessity of it being nationalised.” The committee has written to the Government asking that a motion be put before the Dáil that would compel witnesses to attend hearings.

Idu

http://www.rte.ie/news/2009/0224/angloirish.html

just lol

dragonbet

Would any private equity firm coming in to invest in Anglo at this late stage, have any possible effect on compensation for shareholders or would this still be calculated by an accessor appointed by the government?

Merl

I'm doing some research for a thesis at the moment which is analysing the lending policies of Anglo Irish Bank for commerical property purposes from 2011 - 2008. Anyone have any advice on where to start? I'm looking for some bank lending or former bank lending employees to ask a few questions to and would really appreciate any help!

Thanks

ixus

That's a very difficult thesis to take on. I can't imagine you will get direct access to people.

What angle are you coming from? Accountancy? Ethics? Finance?

If you can read accounts, I would suggest starting at the rate of increase of their loan book and the provisions they had for it etc.

Very difficult thesis IMHO.

Merl

Thanks ixus.

I'm coming at from a property point of view - the theory is that the increased supply of money in the economy (by anglo in particular) was forcing up the demand and thus prices being paid for property. My argument that the increased lending by Anglo (and most other banks) was based on the belief that prices would simply keep going up, instead of actually analysing the underlying property and occupier demand. For example, units on Grafton St were being sold at 2.5% yield (which is ridiculous!) and now they're available at 6.5 - 7%. The irony is that now when the figures actually stack up to invest, investors can't get finance!

I know I'm maybe biting off more than I can chew, but its an incredibly interesting topic...

Merl

Also, I have been able to check their accounts and have the lending figures and percentage increases for each year. They also state the impairments for these loans which is fairly minimal, given the nature of their loanbook..

ixus

Merl wrote: »

T the theory is that the increased supply of money in the economy (by anglo in particular) was forcing up the demand and thus prices being paid for property. My argument that the increased lending by Anglo (and most other banks) was based on the belief that prices would simply keep going up, instead of actually analysing the underlying property and occupier demand.

Regarding supply of money, I would suggest you should have your figures correct here and supply them in your thesis. You'd need to show that Anglo's loan book was rising at a greater level to the others to say that they were the main instigators.

My understanding of Anglo is that they worked on a model whereby they took greater risks on property and thus, had greater mark ups on the loans they made. When they had great earnings, the other banks followed. If you can demonstrate this from all the banks accounts (AIB, BOI etc)you'd be on to something decent.

Would also advise seperating their commercial book from the residential book if you can.

Merl

Good advice - thanks. Will def look at the loan books of BOI and AIB also to compare. The theory that Anglo instigated lending is good, and worth following up.

Anglo didn't really get too involved in residential. Ideally I'd like to focus on retail property lending (as the Anglo retail loan book more than doubled from 10% of overall loan book in 2001 to 22% in 2008) but it really depends on the breakdown of information I can find.

Working title of the thesis is: An Examination of Retail Property Lending by Anglo Irish Bank from 2001 - 2008 and its subsequent impact on the Irish retail property sector.

stepbar

A lot of it was down to margins as well and the speed at which they could evaluate a deal. Particularily, for property lending, Anglo may have lent based on the value of a building, where as the incumbents may have looked for another property as security to bring down the LTV. BoS played the same game. Towards the end the incumbant banks leveraged the hell out of their balance sheets, particularily AIB, in order to stop, as one banker put it, "Anglo from stealing their lunch".