Can anyone explain WHY the government has to save Anglo?

longhalloween

I cannot wrap my head around this one. There are plenty of other financial institutions in Ireland and all bad debt are now being transferred to NAMA, so why does Anglo have to be saved? Why cant it just be allowed fail and all good and bad debt transferred to other banks.

It just seems like a hole at which the government is heedlessly throwing money with no chance of ever getting a return!

I understand why banks in general need to be saved, but why this particular bank?

SkepticOne

It is all about appearing to keep our financial house in order whilst at the same time eroding the real economy the banks are supposedly there to help. We wanted to be able to say "no bank has failed in Ireland".

Not that anyone is fooled at this stage, of course.

Welease

Plus once we put the bank guarantee in place, we effectively picked up the tab... the tab for complete failure would be a lot higher than partial failure.

rugbyman

I am hopelessly lost in the whole Banking scenario.

But I believe that the govt had to nationalise Anglo to avert a collapse.
Its collapse had to be averted because the other big two were actually shaky and would have fallen like a house of cards, due to panic.

the original billions pumped into Anglo were to stabilise it,and these billions are secured(I think)

the forthcoming billions to be injected represent the least worst scenario ,and perhaps may minimise the final loss.

I ASSUME that all injections will have first call on any
assets.

?? Rugbyman

oppenheimer1

Anglo is the third largest bank in Ireland. As the irish institutions are all intertwined in each other, thaking out anglo could have brought the whole system cascading down.

Sir Oxman

oppenheimer1 wrote: »

Anglo is the third largest bank in Ireland. As the irish institutions are all intertwined in each other, thaking out anglo could have brought the whole system cascading down.

oppenheimer1, would you have a few online sources for this?
Not having a go, as I pointed out in another thread I don't have much knowledge of how the financial sector works etc

But this was the line touted by Messrs. Cowen & Lenihan and what I do know is that I do not trust them or their party.

AlekSmart

I know it`s quoted on another thread but I feel this lad`s take is probably as good an explaination as we`ll ever see...:)

The Irish Times - Thursday, March 25, 2010
Cantillon


Inside The World Of Business

Warning for the powers that be

AS IF there wasn’t enough painful comment on Government policies floating around, there came a few days ago some tough-talking from none other than a former chief economist for the International Monetary Fund.

Simon Johnson, writing with an eminent pal on a New York Times blog, sternly warns that Ireland should “definitely not” be held up as a model for other economic trouble spots in Europe or further afield. The problem with our way of doing things (ie the National Asset Management Agency), he argues, is that it reflects “an unwillingness to make creditors pay for their past mistakes”.

Instead, it is the good taxpayers of the State who have been left shouldering problems that were not of their creation. Just in case the powers that be might still be feeling a touch self-satisfied at having succeeded in their economic repair job where others have failed, Johnson says this is “hardly a good lesson for Greece, the euro zone or anywhere else”.

He doesn’t stop there. These days an academic at MIT’s Sloan School of Management, Johnson makes some uncomfortable accusations about the motivations behind the Nama bailout scheme.

“Ireland had more prudent choices,” he says, suggesting the taxpayer could have been spared taking on private bank debts by forcing bank creditors to share the burden. Instead, and here comes the most bruising bit, he says, “a strong lobby of real-estate developers, the investors who bought the bank bonds, and politicians with links to the failed developments (and their bankers) have managed to ensure that taxpayers rather than creditors will pay”.

Ouch. Sparing nobody’s feelings, he claims the banks and associated parties are simply too well-connected in the corridors of power to end up as the losers.

In fact I think that paragraph in bold type should be written into our constitution ! :eek:

oppenheimer1

gambiaman wrote: »

oppenheimer1, would you have a few online sources for this?
Not having a go, as I pointed out in another thread I don't have much knowledge of how the financial sector works etc

But this was the line touted by Messrs. Cowen & Lenihan and what I do know is that I do not trust them or their party.

http://ftalphaville.ft.com/blog/2009/01/16/51239/dublin-nationalises-anglo-irish-bank/

IrishTonyO

Alan Dukes and Joan Burton to debate whether to keep Anglo afloat or shut it down on Prime Time RTE1 after the news

Sir Oxman

oppenheimer1 wrote: »

http://ftalphaville.ft.com/blog/2009/01/16/51239/dublin-nationalises-anglo-irish-bank/

...because FF guaranteed Anglo in Sept 08

that doesn't tell me why Anglo could not have been let slide in 08

Thanks anyway.

KerranJast

IrishTonyO wrote: »

Alan Dukes and Joan Burton to debate whether to keep Anglo afloat or shut it down on Prime Time RTE1 after the news

Unless Dukes is lying through his teeth it would appear that restructuring the bank is the lesser of two evils.

hinault

Two cents worth.

I reckon that by Anglo is so enmeshed with transactions in our other two main banks that by allowing Anglo to fail, it might pull down either AIB and/or BOI.

This may be a guess.

hinault

goat2 wrote: »

it is only a guess or a question
but is the reason for saving angle
that some of these folk in government are shareholders, or the golden circle who bought shares from money borrowed from anglo

Anglo was the developers bank.
The developers were in the FF tent in Galway.

FF insisted on rescueing Anglo.

There's bound to be a connection somewhere.

nesf

KerranJast wrote: »

Unless Dukes is lying through his teeth it would appear that restructuring the bank is the lesser of two evils.

At this point, yes it probably is.

The problem is it's rather complicated. First you need an understanding of what happens when a company fails and it doesn't have enough assets to cover its liabilities.

First the creditors are ordered into a priority scheme. Generally speaking bank loans and senior bond debt are at the front of the queue with subordinated debt behind this and shareholders at the very end. Money is paid out in order of the line with those at the top getting most of their money (if not all) back with those at the back potentially getting nothing. Depositors rank equivalently or slightly above senior debt/bank loans in terms of getting paid.

In terms of what proportion of what kind of debt Anglo has it's (very approximately since I don't have the figures to hand)

35 odd billion owed to depositors
35 odd billion owed to senior debt holders
2 billion owed to subordinated debt holders

Against this we've a bunch of property related loans as assets which aren't going to be worth their facevalue right now (or anytime soon).


The last group, the subordinated debt holders, are the ones we can tell to feck off. They don't have much of a claim on getting paid back due to the nature of the bonds they hold. Unfortunately they hold very little of Anglo's debt.

The senior debt guys have as much claim as depositors do to the banks assets so they need to be paid their money out of the assets. We can't just repay depositors and tell these guys to feck off due to the nature of the bonds they hold.

Depositors are the tricky part. They're entitled to all their money back, be it from Anglo or from Anglo + the Government. More worringly these guys can pull out of Anglo and put their money elsewhere (the bondholders can't, they're stuck in it until their bonds mature, or they can convince someone else to buy their bond off them). So if there's even a hint of a wind-up going to happen then depositors are going to start withdrawing cash and starting a bank run. The only thing stopping a bank run is the Government's guarantee on deposits right now.


So with the guarantee as it currently is, the bondholders are guaranteed their money. So if we wind up Anglo quickly, we get to have a firesale of property loans (not exactly going to earn much money) and then need to find 20-50 billion (pure guesstimates!) to pay everyone off. Not a good option. If we wait until the Government Guarantee for bondholders expires then screw over the bondholders then we'll end up paying a big chunk of that 35 billion owed to depositors since the senior debt will hoover up assets that could be paying off depositors. Worse still, the kind of people who hold senior debt are pension funds and similar. So by winding up Anglo quickly we could do serious damage to the Irish pension system. The bond holders aren't all faceless investors, in fact most of them will be institutions like pension and funds companies who manage people's investments. These bondholders are also the people who buy Irish Government Debt, so pissing them off isn't going to help us nationally (there's a good reason for the quote "If I die, I want to come back as the bond market because then I could scare anybody").

The other option is to wind the bank down slowly. Using NAMA etc to shift bad debt off the books until we're left with a bank that can operate profitably. It'll cost money and not make a profit but it could be less painful than winding up the company quickly.

deadhead13

According to Mike Aynsley CEO of Anglo - liquidating the bank over a year would cost between 27 and 35 billion euros. Running it down over a period of 10 years would cost 18 to 22 billion euros. "Least worst option" is to split it into a good bank and a bad bank (asset run-down firm), which would cost the state up to 9 billion more in capitol.

http://www.irishtimes.com/newspaper/finance/2010/0326/1224267096199.html

baalthor

Here is my answer from the other Anglo thread - it's a more condensed version of what nesf said.

After I submitted that post the advert below appeared as a board's Google ad::eek:

hinault

nesf wrote: »

At this point, yes it probably is.

The problem is it's rather complicated. First you need an understanding of what happens when a company fails and it doesn't have enough assets to cover its liabilities.

First the creditors are ordered into a priority scheme. Generally speaking bank loans and senior bond debt are at the front of the queue with subordinated debt behind this and shareholders at the very end. Money is paid out in order of the line with those at the top getting most of their money (if not all) back with those at the back potentially getting nothing. Depositors rank equivalently or slightly above senior debt/bank loans in terms of getting paid.

In terms of what proportion of what kind of debt Anglo has it's (very approximately since I don't have the figures to hand)

35 odd billion owed to depositors
35 odd billion owed to senior debt holders
2 billion owed to subordinated debt holders

Against this we've a bunch of property related loans as assets which aren't going to be worth their facevalue right now (or anytime soon).


The last group, the subordinated debt holders, are the ones we can tell to feck off. They don't have much of a claim on getting paid back due to the nature of the bonds they hold. Unfortunately they hold very little of Anglo's debt.

The senior debt guys have as much claim as depositors do to the banks assets so they need to be paid their money out of the assets. We can't just repay depositors and tell these guys to feck off due to the nature of the bonds they hold.

Depositors are the tricky part. They're entitled to all their money back, be it from Anglo or from Anglo + the Government. More worringly these guys can pull out of Anglo and put their money elsewhere (the bondholders can't, they're stuck in it until their bonds mature, or they can convince someone else to buy their bond off them). So if there's even a hint of a wind-up going to happen then depositors are going to start withdrawing cash and starting a bank run. The only thing stopping a bank run is the Government's guarantee on deposits right now.


So with the guarantee as it currently is, the bondholders are guaranteed their money. So if we wind up Anglo quickly, we get to have a firesale of property loans (not exactly going to earn much money) and then need to find 20-50 billion (pure guesstimates!) to pay everyone off. Not a good option. If we wait until the Government Guarantee for bondholders expires then screw over the bondholders then we'll end up paying a big chunk of that 35 billion owed to depositors since the senior debt will hoover up assets that could be paying off depositors. Worse still, the kind of people who hold senior debt are pension funds and similar. So by winding up Anglo quickly we could do serious damage to the Irish pension system. The bond holders aren't all faceless investors, in fact most of them will be institutions like pension and funds companies who manage people's investments. These bondholders are also the people who buy Irish Government Debt, so pissing them off isn't going to help us nationally (there's a good reason for the quote "If I die, I want to come back as the bond market because then I could scare anybody").

The other option is to wind the bank down slowly. Using NAMA etc to shift bad debt off the books until we're left with a bank that can operate profitably. It'll cost money and not make a profit but it could be less painful than winding up the company quickly.

Well done - a very concise and straightforward summary.

Regarding Anglo we are stuck between a rock and a very hard place.
The Anglo albatross has a grip around the Irish economy's neck.

And to think that the money we are putting in to this albatross, could be used to to help this economy in a more tangible way.

zootroid

nesf wrote: »

At this point, yes it probably is.

The problem is it's rather complicated. First you need an understanding of what happens when a company fails and it doesn't have enough assets to cover its liabilities.

First the creditors are ordered into a priority scheme. Generally speaking bank loans and senior bond debt are at the front of the queue with subordinated debt behind this and shareholders at the very end. Money is paid out in order of the line with those at the top getting most of their money (if not all) back with those at the back potentially getting nothing. Depositors rank equivalently or slightly above senior debt/bank loans in terms of getting paid.

In terms of what proportion of what kind of debt Anglo has it's (very approximately since I don't have the figures to hand)

35 odd billion owed to depositors
35 odd billion owed to senior debt holders
2 billion owed to subordinated debt holders

Against this we've a bunch of property related loans as assets which aren't going to be worth their facevalue right now (or anytime soon).


The last group, the subordinated debt holders, are the ones we can tell to feck off. They don't have much of a claim on getting paid back due to the nature of the bonds they hold. Unfortunately they hold very little of Anglo's debt.

The senior debt guys have as much claim as depositors do to the banks assets so they need to be paid their money out of the assets. We can't just repay depositors and tell these guys to feck off due to the nature of the bonds they hold.

Depositors are the tricky part. They're entitled to all their money back, be it from Anglo or from Anglo + the Government. More worringly these guys can pull out of Anglo and put their money elsewhere (the bondholders can't, they're stuck in it until their bonds mature, or they can convince someone else to buy their bond off them). So if there's even a hint of a wind-up going to happen then depositors are going to start withdrawing cash and starting a bank run. The only thing stopping a bank run is the Government's guarantee on deposits right now.


So with the guarantee as it currently is, the bondholders are guaranteed their money. So if we wind up Anglo quickly, we get to have a firesale of property loans (not exactly going to earn much money) and then need to find 20-50 billion (pure guesstimates!) to pay everyone off. Not a good option. If we wait until the Government Guarantee for bondholders expires then screw over the bondholders then we'll end up paying a big chunk of that 35 billion owed to depositors since the senior debt will hoover up assets that could be paying off depositors. Worse still, the kind of people who hold senior debt are pension funds and similar. So by winding up Anglo quickly we could do serious damage to the Irish pension system. The bond holders aren't all faceless investors, in fact most of them will be institutions like pension and funds companies who manage people's investments. These bondholders are also the people who buy Irish Government Debt, so pissing them off isn't going to help us nationally (there's a good reason for the quote "If I die, I want to come back as the bond market because then I could scare anybody").

The other option is to wind the bank down slowly. Using NAMA etc to shift bad debt off the books until we're left with a bank that can operate profitably. It'll cost money and not make a profit but it could be less painful than winding up the company quickly.

This is the first time I've read a logical argument about why we need to save Anglo, nice and clear too. Thanks.

It's just a pity that I have to read it on a discussion board on the net rather than hear it from the government or through the media.

ei.sdraob

so to summarize

Anglo is only a problem for as long AS all deposits and bondholders are guaranteed by the state

well then the solution is rather obvious when the guarantee runs out in few months

KerranJast

ei.sdraob wrote: »

so to summarize

Anglo is only a problem for as long AS all deposits and bondholders are guaranteed by the state

well then the solution is rather obvious when the guarantee runs out in few months

No wrong. The bank is nationalised therefore Anglos debts are Irelands debts.

UltimateMale

nesf wrote: »

At this point, yes it probably is.

The problem is it's rather complicated. First you need an understanding of what happens when a company fails and it doesn't have enough assets to cover its liabilities.

First the creditors are ordered into a priority scheme. Generally speaking bank loans and senior bond debt are at the front of the queue with subordinated debt behind this and shareholders at the very end. Money is paid out in order of the line with those at the top getting most of their money (if not all) back with those at the back potentially getting nothing. Depositors rank equivalently or slightly above senior debt/bank loans in terms of getting paid.

In terms of what proportion of what kind of debt Anglo has it's (very approximately since I don't have the figures to hand)

35 odd billion owed to depositors
35 odd billion owed to senior debt holders
2 billion owed to subordinated debt holders

Against this we've a bunch of property related loans as assets which aren't going to be worth their facevalue right now (or anytime soon).


The last group, the subordinated debt holders, are the ones we can tell to feck off. They don't have much of a claim on getting paid back due to the nature of the bonds they hold. Unfortunately they hold very little of Anglo's debt.

The senior debt guys have as much claim as depositors do to the banks assets so they need to be paid their money out of the assets. We can't just repay depositors and tell these guys to feck off due to the nature of the bonds they hold.

Depositors are the tricky part. They're entitled to all their money back, be it from Anglo or from Anglo + the Government. More worringly these guys can pull out of Anglo and put their money elsewhere (the bondholders can't, they're stuck in it until their bonds mature, or they can convince someone else to buy their bond off them). So if there's even a hint of a wind-up going to happen then depositors are going to start withdrawing cash and starting a bank run. The only thing stopping a bank run is the Government's guarantee on deposits right now.


So with the guarantee as it currently is, the bondholders are guaranteed their money. So if we wind up Anglo quickly, we get to have a firesale of property loans (not exactly going to earn much money) and then need to find 20-50 billion (pure guesstimates!) to pay everyone off. Not a good option. If we wait until the Government Guarantee for bondholders expires then screw over the bondholders then we'll end up paying a big chunk of that 35 billion owed to depositors since the senior debt will hoover up assets that could be paying off depositors. Worse still, the kind of people who hold senior debt are pension funds and similar. So by winding up Anglo quickly we could do serious damage to the Irish pension system. The bond holders aren't all faceless investors, in fact most of them will be institutions like pension and funds companies who manage people's investments. These bondholders are also the people who buy Irish Government Debt, so pissing them off isn't going to help us nationally (there's a good reason for the quote "If I die, I want to come back as the bond market because then I could scare anybody").

The other option is to wind the bank down slowly. Using NAMA etc to shift bad debt off the books until we're left with a bank that can operate profitably. It'll cost money and not make a profit but it could be less painful than winding up the company quickly.

Great post, even I understand a bit now ! But two questions

1) I listened to Allen Dukes last night and he said something like, this is not the first bad bank, bad banks can recover. What are the chances of Anglo or Anglo in a different guise recovering ?

2) Or is it just better to let it wind down in the long term ?

ei.sdraob

KerranJast wrote: »

No wrong. The bank is nationalised therefore Anglos debts are Irelands debts.

did you even read my post?

let me spell it out so

its only our problem for as long as the 100% deposit and bondholder guarantee is in place

---

* September 2010, the 2 year bank guarantee runs out and is not extended, it reverts to 20,000 per depositor as before

* Anglo is allowed to sink at this point, as per yesterdays primetime figures this is what it will cost us then:
** Subordinated debt/ Junior bondholders - 2 to 5 billion (10:15 on above video) > this crowd can kiss goodbye to the lot

** Senior bondholders - 32 billion (march 2009), unlike what Brian L told us most of it from Central Bank (at least 10 billion) not pension funds, insurance companies etc (most of these were already wiped out) > this crowd can kiss goodbye to the lot

** that leaves us with Depositors (anyone stupid enough to put money in this bank) - 34 billion (march 2009), assuming Anglo has half a million depositors (wildly optimistic) thats 500,000 * 20,000 = 10 billion needed to cover the deposit protection, once again thats a very large number of depositors, the real number is probably much smaller and we will find out what it is in a month when accounts are released i presume

basically the cost to the taxpayer then is whatever the amount the deposits are guaranteed for in September.


so there you have the solution to Anglo Problem

let it sink once the guarantee is up and pay anyone up to 20,000 in deposit protection

anyone stupid enough to be putting savings in this bank deserves then what they get

ei.sdraob

nesf wrote: »

So if there's even a hint of a wind-up going to happen then depositors are going to start withdrawing cash and starting a bank run. The only thing stopping a bank run is the Government's guarantee on deposits right now.

and there lies the huge risk with putting your savings (being a depositor) into Anglo
the government can decide (or be forced by circumstances) to cut Anglo loose once the guarantee is up, of course the big question would be can they keep this quiet to prevent a bank run
and all you can hope to get back is about 20K


as for the bondholders we know that a third (10 billion) of it is from Central Bank

either-way it would be interesting to see a detailed breakdown of their accounts in a months time
notice how their Chief avoided answering last night and giving any figures
what sort of a bank manager are you if you do not know the exact amount of assets and liabilities of your bank at this point of time?
crazy stuff


anyways the government will take the path of least resistance and extend the guarantee, therefore making the taxpayer liable for the lot again, they will avoid at all costs making the right and tough decisions

baalthor

@ei.sdraob: 10bn isn't most of 32bn. I thought they said on Primetime that the 10bn was held by central banks?

astrofool

If the deposit scheme is to be let run out, there will be a run on the bank in the days leading up to this. There's no way for the tax payer not to be liable.

ei.sdraob

baalthor wrote: »

@ei.sdraob: 10bn isn't most of 32bn. I thought they said on Primetime that the 10bn was held by central banks?

no 10billion just to our central bank

http://www.boards.ie/vbulletin/showthread.php?p=64924465


it would be interesting to see a complete breakdown so we cant talk business then

astrofool wrote: »

If the deposit scheme is to be let run out, there will be a run on the bank in the days leading up to this. There's no way for the tax payer not to be liable.

the government can lie about their intentions or just stay quiet, they are good at that sort of carry on

nesf

UltimateMale wrote: »

Great post, even I understand a bit now ! But two questions

1) I listened to Allen Dukes last night and he said something like, this is not the first bad bank, bad banks can recover. What are the chances of Anglo or Anglo in a different guise recovering ?

2) Or is it just better to let it wind down in the long term ?

1) feeds into 2). Essentially a proportion of Anglo's current business is good business. If you strip out the bad bits during a wind down you'd be left with a decent bank that'd be able to stand on its own two feet and could be cut loose. This would require a large transfer of bad debt off the books though and require NAMA to go ahead.

nesf

ei.sdraob wrote: »

so to summarize

Anglo is only a problem for as long AS all deposits and bondholders are guaranteed by the state

well then the solution is rather obvious when the guarantee runs out in few months

You're assuming there's no negative impact to screwing over depositors and senior debt holders. This is a rather large (and probably false) assumption.

Laminations

35 odd billion owed to depositors

Who are these retards? who would keep money on deposit there?
Brian Lucey seems to think this figure is closer to zero than it is to 35 billion.

His argument is that it is likely to cost about the same to close Anglo as it is to keep it open and he opts for closing it as its a stain on our reputation.

Of course he hasn't seen their figures, something we should all be angry about seeing as we own this bank.

KerranJast

Laminations wrote: »

Who are these retards? who would keep money on deposit there?

The bank is guaranteed by the Government so technically is a solid place to deposit money (as is Northern Rock in the UK). They were also offering a good deposit rate. Every bank needs as much deposits as it can get.

Laminations

KerranJast wrote: »

The bank is guaranteed by the Government so technically is a solid place to deposit money (as is Northern Rock in the UK). They were also offering a good deposit rate. Every bank needs as much deposits as it can get.

If Anglo aren't lending with their 35 billion worth of deposits (I reckon cos that money is thin air), why are they requesting extra deposits and who would be crazy to deposit there, the government guarantee is essentially YOU guaranteeing your own money!

IrishTonyO

Laminations wrote: »

If Anglo aren't lending with their 35 billion worth of deposits (I reckon cos that money is thin air), why are they requesting extra deposits and who would be crazy to deposit there, the government guarantee is essentially YOU guaranteeing your own money!

It means you get your money no matter what happens, and the interest rates are good so why not get a higher rate with Anglo, when there is no risk

Laminations

IrishTonyO wrote: »

It means you get your money no matter what happens, and the interest rates are good so why not get a higher rate with Anglo, when there is no risk

So now Anglo is a risk-free bank?? If things went sour the government could never cover the guaranteed deposits of our banks and even if they could it is you that is guaranteeing your own money

nesf

Laminations wrote: »

So now Anglo is a risk-free bank?? If things went sour the government could never cover the guaranteed deposits of our banks and even if they could it is you that is guaranteeing your own money

Yeah but the Guarantee prevents a bank run, preventing the whole thing going sour, similar to Northern Rock in the UK. Anglo at the moment offer the best deposit rates in the country I think.

i.e. Anglo offer 3.1% interest on their Premium Demand Deposit account. AIB offer 0.01% on the same Demand Deposit account.

danbohan

longhalloween wrote: »

I cannot wrap my head around this one. There are plenty of other financial institutions in Ireland and all bad debt are now being transferred to NAMA, so why does Anglo have to be saved? Why cant it just be allowed fail and all good and bad debt transferred to other banks.

It just seems like a hole at which the government is heedlessly throwing money with no chance of ever getting a return!

I understand why banks in general need to be saved, but why this particular bank?
its because
long long ago in a little tent in galway , ........................................

Laminations

nesf wrote: »

Yeah but the Guarantee prevents a bank run, preventing the whole thing going sour, similar to Northern Rock in the UK. Anglo at the moment offer the best deposit rates in the country I think.

i.e. Anglo offer 3.1% interest on their Premium Demand Deposit account. AIB offer 0.01% on the same Demand Deposit account.

It wouldn't matter if Anglo were offering free hand jobs, if I had my money on deposit there it would have been withdrawn long ago when the share price collapsed and the bank was nationalised. I, like Brian Lucey, seriously question the figure of 35 billion.

Laminations

nesf wrote: »

Yeah but the Guarantee prevents a bank run, preventing the whole thing going sour, similar to Northern Rock in the UK.

Actually I get it now. Me guaranteeing my own money means if I attempt to take out that money, I'll collapse the bank which has my money and I'll have to pay to reimburse myself.

Lovely little chinese finger trap they have set up.

Flamed Diving

Laminations wrote: »

If Anglo aren't lending with their 35 billion worth of deposits (I reckon cos that money is thin air), why are they requesting extra deposits and who would be crazy to deposit there, the government guarantee is essentially YOU guaranteeing your own money!

No, it's actually a case of you, and a couple million other people guaranteeing your money, nicely spread out between everyone. Not a bad deal at all.

Laminations wrote: »

It wouldn't matter if Anglo were offering free hand jobs, if I had my money on deposit there it would have been withdrawn long ago when the share price collapsed and the bank was nationalised. I, like Brian Lucey, seriously question the figure of 35 billion.

I love how you put yourself on the same level of Brian Lucey here. I believe that Brian has his own reasons for doubting the claim. Maybe he is privy to some information from his friends, high up in the financial sector. Couple this with his years of expertise on finance and his obvious high intelligence.

On what grounds are you seriously questioning this?

ifconfig

but why is Anglo able to offer 3.5%, while the other banks covered by the same guarantee are offering much lower deposit rates ?

Flamed Diving

ifconfig wrote: »

but why is Anglo able to offer 3.5%, while the other banks covered by the same guarantee are offering much lower deposit rates ?

Because one bank is nationalised, and the others are not. In my view, the guarantee is meaningless, because if all banks collapsed, the country couldn't possibly afford it.

Laminations

Flamed Diving wrote: »

On what grounds are you seriously questioning this?

Based mostly on Brian Luceys arguments I have read or seen or listened to (like the one today on Newstalk). I dont need to be a professor of business to agree with the man. As well as that I just cant imagine anyone leaving money (35 billion) on deposit there, through all the stuff that has come out in the media. The large figure greatly strengthens the argument of the side which say we cannot let the bank fail, its odd that it is only these people who are making this argument that are privy to this figure. Brian Lucey himself has said he is not.

ifconfig

Flamed Diving wrote: »

Because one bank is nationalised, and the others are not. In my view, the guarantee is meaningless, because if all banks collapsed, the country couldn't possibly afford it.

Ok. I realise that Anglo is nationalised.

Does that setup some kind of perverse logic whereby a nationalised bank can effectively set up products which have no commercial sense to them (eg, setting up relatively high yield, relative to low interest rate environment deposit accounts while no new lending is being done and while the institution is about to announce the largest corporate loss in Irish history)?

mallet head

I'm struggling to understand all this caper but I have to say there's more good info for the layman on this thread than i've seen anywhere, Cheer folks.

We are in a 16 billion hole with the banks now according to latest.

With the state share in the banks when the go back to profitability does anyone know roughly what the taxpayers annual return on shares will be? In normal times banks are reasonably profitable right?

Laminations

ifconfig wrote: »

Ok. I realise that Anglo is nationalised.

Does that setup some kind of perverse logic whereby a nationalised bank can effectively set up products which have no commercial sense to them (eg, setting up relatively high yield, relative to low interest rate environment deposit accounts while no new lending is being done and while the institution is about to announce the largest corporate loss in Irish history)?

If you are suspicious, and I'm suspicious, and most everyone I've talked to is suspicious of Anglo, this makes me doubt the €35 billion deposits figure. I also doubt the wind-up figure they have put on the bank as its fluctuated from €65bn to €35bn to €25bn to €27bn. They are all wishy washy figures aimed to scare us into not even thinking of cutting out the cancer that is Anglo

Flamed Diving

Laminations wrote: »

Based mostly on Brian Luceys arguments I have read or seen or listened to (like the one today on Newstalk). I dont need to be a professor of business to agree with the man. As well as that I just cant imagine anyone leaving money (35 billion) on deposit there, through all the stuff that has come out in the media. The large figure greatly strengthens the argument of the side which say we cannot let the bank fail, its odd that it is only these people who are making this argument that are privy to this figure. Brian Lucey himself has said he is not.

Fair enough, but as esteemed an academic Brian Lucey is, do you not see any danger in drawing all your opinion from one source?

That said, for all I know he is completely correct. Then again, if they are offering the highest savings rates out there, with the fact that they are a nationalised bank... it wouldn't surprise me if I found that some people have transferred their savings there.

Flamed Diving

ifconfig wrote: »

Ok. I realise that Anglo is nationalised.

Does that setup some kind of perverse logic whereby a nationalised bank can effectively set up products which have no commercial sense to them (eg, setting up relatively high yield, relative to low interest rate environment deposit accounts while no new lending is being done and while the institution is about to announce the largest corporate loss in Irish history)?

Yeah, pretty much. There is nothing to stop them, unless the Govt set a cap on rates.

Laminations

Flamed Diving wrote: »

Fair enough, but as esteemed an academic Brian Lucey is, do you not see any danger in drawing all your opinion from one source?

That said, for all I know he is completely correct. Then again, if they are offering the highest savings rates out there, with the fact that they are a nationalised bank... it wouldn't surprise me if I found that some people have transferred their savings there.

Have you? would you?
I draw my opinions from (discussions I have on here as well as from many economics commentators) but on this issue its mostly from the fact that in answer to those questions I've asked you, my response is:
I haven't and I wouldn't, even if they were giving out hand jobs

Flamed Diving

No and no. I don't save with Irish banks because I don't like to reward stupidity.


But just because you and I wouldn't, doesn't mean the other 2,000,000 would follow us.

Laminations

Flamed Diving wrote: »

No and no. I don't save with Irish banks because I don't like to reward stupidity.


But just because you and I wouldn't, doesn't mean the other 2,000,000 would follow us.

Maybe and obviously none of us know. But isn't this a reason why we, the owners of the bank, should be privy to this information?

My best guess is that not many people would put their money near that bank seeing as people are so infuriated they spit on people with Anglo umbrellas. Anything associated with Anglo is hated by the public hence I find the €35bn hard to believe

Flamed Diving

Laminations wrote: »

Maybe and obviously none of us know. But isn't this a reason why we, the owners of the bank, should be privy to this information?

My best guess is that not many people would put their money near that bank seeing as people are so infuriated they spit on people with Anglo umbrellas. Anything associated with Anglo is hated by the public hence I find the €35bn hard to believe

Sorry, but your reasoning is too spurious for me to believe you. My friend has a six-figure sum lodged with them, for example. I seriously doubt he knows much about any of the political stuff nor gives a damn. He said he asked around and people said that a nationalised bank is as safe as... well, anything else?

IrishTonyO

Laminations wrote: »

Maybe and obviously none of us know. But isn't this a reason why we, the owners of the bank, should be privy to this information?

My best guess is that not many people would put their money near that bank seeing as people are so infuriated they spit on people with Anglo umbrellas. Anything associated with Anglo is hated by the public hence I find the €35bn hard to believe

So if you had €10,000 to invest would you prefer to get €310 interest from Anglo or €1 from AIB? Especially when the government guarantees your money?