Why are the banks allowed make any profit while getting state subventions?

Rebelheart

Could somebody tell me why Irish banks are allowed gain, and distribute, their profits while they owe the Irish state, the Irish people, billions of euro?

All of their profits should be given to repaying this enormous corporate socialism from the Irish state to them.

Thank you.

b.skytower

I know its disgraceful. It seems that the banks don't 'owe' the Irish state, they 'own' the Irish state.

Toots

Basically the state has invested 'x' amount into the banks that were recapitalised. They have to pay it back after a certain period. They also have to pay "interest" on this, so the state is actually going to make money out of it in the end. This is a hugely condensed version of the actual situation.

Anyhoo, I'm slightly unsure about leaving this thread open, cos I can only imagine the mess it will descend into. Also not really sure it falls under the umbrella of what this forum is actually for. I'm going to lock it for now until I can find it a new home.

Toots

I think the Irish Economy forum is probably a better place for this thread.

ei.sdraob

thats socialism for ya

you reap what you sow

stepbar

Rebelheart wrote: »

Could somebody tell me why Irish banks are allowed gain, and distribute, their profits while they owe the Irish state, the Irish people, billions of euro?

All of their profits should be given to repaying this enormous corporate socialism from the Irish state to them.

Thank you.

What profit would you be talking about?

Victor

If they don't make a profit, how are they going to repay the state investments?

Dob74

Rebelheart wrote: »

Could somebody tell me why Irish banks are allowed gain, and distribute, their profits while they owe the Irish state, the Irish people, billions of euro?

All of their profits should be given to repaying this enormous corporate socialism from the Irish state to them.

Thank you.

It was the free market when developers and bankers where screwing the general public.
Now that they would be forced into a fire sale and lose billions, its time for the government to step in.
The government in this country are a complete joke. It will be interesting to see what values they are going to give the banks for there bad assets.
Surely if they dont pay market value and pay some future notional price it will be against EU competition rules.

The banks have been posting massive profits over the last few years. These profits have not been adjusted downwards yet. Surely the gov should change accounting rules to reflect a realistic finanical picture of banks and all public quoted companies. I know there are rules but these need to be updated to reflect modern accounting practices.

johnathan woss

Toots* wrote: »

Basically the state has invested 'x' amount into the banks that were recapitalised. They have to pay it back after a certain period. They also have to pay "interest" on this, so the state is actually going to make money out of it in the end. This is a hugely condensed version of the actual situation.

Anyhoo, I'm slightly unsure about leaving this thread open, cos I can only imagine the mess it will descend into. Also not really sure it falls under the umbrella of what this forum is actually for. I'm going to lock it for now until I can find it a new home.

No one in their right mind believes that the state is going to make money on this in the end.

ardmacha

The banks have been posting massive profits over the last few years. These profits have not been adjusted downwards yet

This thread say that banks are making and distributing profits.
Which bank is currently taking and distributing profit? Which bank is making the same profit as a few years ago? Please give a concrete example.

7mountpleasant

johnathan woss wrote: »

No one in their right mind believes that the state is going to make money on this in the end.

Who says? two of the most recent international examples of state interventions in the banking sector the u.s savings and loans crisis and the swedish recapitalisation of there banking system in the 90's both turned out accure positive returns to the taxpayer.

jhegarty

None of the bail-out banks are making massive profits.

I hope they start to soon because me , you and everyone posts here are now shareholders !

stepbar

ardmacha wrote: »

This thread say that banks are making and distributing profits.
Which bank is currently taking and distributing profit? Which bank is making the same profit as a few years ago? Please give a concrete example.

I've love if someone would explain this to me as well.

Sponge Bob

The OP asked a totally ridiculous question , once he tells me why he asked it I will answer the question ....but I bet he never does

P. Breathnach

Toots* wrote: »

I think the Irish Economy forum is probably a better place for this thread.

Hey! This forum isn't (quite) a dustbin.

K4t

P. Breathnach wrote: »

Hey! This forum isn't (quite) a dustbin.

This place has become the Indo's new ideas forum.:pac:

Rebelheart

stepbar wrote: »

What profit would you be talking about?

ardmacha wrote: »

This thread say that banks are making and distributing profits.
Which bank is currently taking and distributing profit? Which bank is making the same profit as a few years ago? Please give a concrete example.

Sponge Bob wrote: »

The OP asked a totally ridiculous question , once he tells me why he asked it I will answer the question ....but I bet he never does

These profits, for starters:

http://www.bankingtimes.co.uk/20052009-bank-of-ireland-chairman-quits-as-profit-plummets-97/

http://www.irishexaminer.com/business/snmhsnkfkf/rss2/

PS: Just by your misplaced idiotic smiling face I bet you have not reached adulthood yet, SpongeBob. Time to work on those insecurity issues, son.

stepbar

Rebelheart wrote: »

These profits, for starters:

http://www.bankingtimes.co.uk/20052009-bank-of-ireland-chairman-quits-as-profit-plummets-97/

http://www.irishexaminer.com/business/snmhsnkfkf/rss2/

PS: Just by your misplaced idiotic smiling face I bet you have not reached adulthood yet, SpongeBob. Time to work on those insecurity issues, son.

Well the first link you provided is actually incorrect. The BOI made a 7 mil loss this year. And the second link refers to a bond that AIB bought back from bondholders. Very different to reporting a full year profit / loss.

The truth of the matter is that none of the banks are profit making at the moment.

jmayo

Toots* wrote: »

Basically the state has invested 'x' amount into the banks that were recapitalised. They have to pay it back after a certain period. They also have to pay "interest" on this, so the state is actually going to make money out of it in the end. This is a hugely condensed version of the actual situation.
...

It could also be said to be a very optimistic view of events.
Do you actaully believe that the state will ever recoup the money they have and will have to pour into the banks.
Will Anglo ever be anyhting but toxic debt holder ?

7mountpleasant wrote: »

Who says? two of the most recent international examples of state interventions in the banking sector the u.s savings and loans crisis and the swedish recapitalisation of there banking system in the 90's both turned out accure positive returns to the taxpayer.

Ehhh the USA/Sweden administrations and economies are slightly different to good ould Ireland.
We do things differently around here and we are always different you know.
Our bubble was different and thus our recovery will be different

Sponge Bob

Rebelheart wrote: »

These profits, for starters:

http://www.bankingtimes.co.uk/20052009-bank-of-ireland-chairman-quits-as-profit-plummets-97/

http://www.irishexaminer.com/business/snmhsnkfkf/rss2/

PS: Just by your misplaced idiotic smiling face I bet you have not reached adulthood yet, SpongeBob. Time to work on those insecurity issues, son.

They are not profits but now I know why you asked a totally ridiculous question

The latter of those links is a reduction in debt for AIB and where the holder of the bond takes a 35% - 55% bath just to be rid of it . The holder taking the hit might be your very own pension fund .....were you of an age .

The bondholders are additionally likely to be exposed to rather large , high spread , CDS swaps to hedge their exposure and these are no longer required if the bond is bought back .

Do you have any other examples of 'profit' for us so that we can continue to set your 'mind' at ease ?????

ardmacha

Banks will obviously make profits on individual transactions, if they are not doing this they should close down. But these will be more than offset by bad loans, so no profit will be made overall and there certainly with not be the payment of dividends etc. Their operating profits serve to reduce the need for government intervention and hasten the day when the government can get some money back. Better the bond holders lose money then the taxpayer, although some of these are pension funds, credit unions etc.

stepbar

Sponge Bob wrote: »

They are not profits but now I know why you asked a totally ridiculous question

The latter of those links is a reduction in debt for AIB and where the holder of the bond takes a 35% - 55% bath just to be rid of it . The holder taking the hit might be your very own pension fund .....were you of an age .

The bondholders are additionally likely to be exposed to rather large , high spread , CDS swaps to hedge their exposure and these are no longer required if the bond is bought back .

Do you have any other examples of 'profit' for us so that we can continue to set your 'mind' at ease ?????

I think you can safely set your mind at ease there..........

7mountpleasant

jmayo wrote: »

It could also be said to be a very optimistic view of events.
Do you actaully believe that the state will ever recoup the money they have and will have to pour into the banks.
Will Anglo ever be anyhting but toxic debt holder ?



Ehhh the USA/Sweden administrations and economies are slightly different to good ould Ireland.
We do things differently around here and we are always different you know.
Our bubble was different and thus our recovery will be different

Putting a smiley face at the end of an attempt to try to back up a generic statement doesn't really change anything, our bubble was not very differerent from the Swedish one , and besides the point the nature of the cause of the instability in the financial system does not matter , just the premise that state intervention in supporting a financial system in crisis does not always have to cost the taxpayer money as the state has the advantage of leveraging on its status.:cool::(:eek:, now if you could just go back to reading todays copy of the star that would be great.

Sponge Bob

7mountpleasant wrote: »

Putting a smiley face at the end of an attempt to try to back up a generic statement doesn't really change anything, our bubble was not very differerent from the Swedish one ,

It was much much bigger , apart from that you are correct .

the state has the advantage of leveraging on its status.:cool::(:eek:, now if you could just go back to reading todays copy of the star that would be great.

Its that a smiley I see ??? The state can impose a solution through tax , be that Sweden or Ireland .

That said I do see Jmayo attempting steely irony , nice one there Jmayo , got it mate

jmayo

7mountpleasant wrote: »

Putting a smiley face at the end of an attempt to try to back up a generic statement doesn't really change anything, our bubble was not very differerent from the Swedish one , and besides the point the nature of the cause of the instability in the financial system does not matter , just the premise that state intervention in supporting a financial system in crisis does not always have to cost the taxpayer money as the state has the advantage of leveraging on its status.:cool::(:eek:, now if you could just go back to reading todays copy of the star that would be great.

If according to your location, I coudl see how irony would go over your head :rolleyes:
At least spongebob has his irony detector on

And if you believe that this gurantee/recapitalisation is not costing us taxpayers money and together with NAMA could costs us lots of money for the next few decades you are the one that maybe shoudl broaden your reading material.
The reason I say our buble was much different to anyone else is we ended up basing our economy on the bloody thing.

Also the irony was how many VIs stated our bubble would be different and how we would be the first one in history to have a soft/soiftish/soft-hard landing :rolleyes:

Big difference would also be Sweden would have a broader industrial base and did not end up employing a huge proportion of the male population in the bubble industry.
Neither I bet did they drastically increase their public spending based on the taxes from the bubble.

BTW don't be a condescending sh** about what paper people read. :mad:
One should never make assumptions about anybody :rolleyes:
Maybe I read The Star, maybe I read the FT, then again maybe I read the Farmers Journal while watching Aljazeera ?
But the ultimate point is you don't know, do you

porte

Getting back to the banks profits and taxpayers money who exactly is making these decisions to start upping interest rates willy nilly talk about im alright jack have the ptsb forgot there are alot of familys out there scraping by on one wage.
they give you an umbrella when its sunny and take it back when it rains
and as for that clown managing the nations money and shunning the thought of even stopping it then what chance do we have of getting out of this deep black hole.

Small Change

porte wrote: »

Getting who exactly is making these decisions to start upping interest rates willy nilly

One bank making a business decision to increase the margin on their variable rate mortgage book by 0.05% (incidently a defining feature of that mortgage product) to offset against increased losses on bad debts hardly constitutes "decisions to start upping rates willy nilly"

Although, who needs rational analysis when you can have hyperbole instead? :rolleyes:

Carlow52

Small Change wrote: »

One bank making a business decision to increase the margin on their variable rate mortgage book by 0.05% (incidently a defining feature of that mortgage product) to offset against increased losses on bad debts hardly constitutes "decisions to start upping rates willy nilly"

Although, who needs rational analysis when you can have hyperbole instead? :rolleyes:

It was 0.5% not 0.05% which would have been Small Change indeed:D

Fighting Irish

Toots* wrote: »

Anyhoo, I'm slightly unsure about leaving this thread open, cos I can only imagine the mess it will descend into. Also not really sure it falls under the umbrella of what this forum is actually for. I'm going to lock it for now until I can find it a new home.

typical boards.ie :rolleyes: