AIB selling the Crown Jewels?

K-9

AIB asset sale will leave €3.3bn hole

A good piece on how AIB selling its foreign assets could leave a €3.3 Billion hole that the taxpayer will have to finance.

Seeing as the taxpayer will probably end up owning the bank anyway, is there any point selling the Crown Jewels like the Polish bank, at a time when it is going to achieve a very low price?

Is the Regulator looking for its pound of flesh at the long term detriment of the tax payer?

K-9

A good piece explaining it in more detail:

A Corporate Undertaker?

View

Yes, there is. If they want their bail-out money, then they will have to sell their non-Irish operations. Still, I am sure, a "well-managed" company like them won't need a bailout...

K-9

View wrote: »

Yes, there is. If they want their bail-out money, then they will have to sell their non-Irish operations. Still, I am sure, a "well-managed" company like them won't need a bailout...

Yes, but the point is, sell now and the tax payer will have to capitalise more. Sell later and the taxpayer may have to stump up less.

We seem to be looking for our pound of flesh, now, as in your post and not thinking long term.

View

K-9 wrote: »

Yes, but the point is, sell now and the tax payer will have to capitalise more. Sell later and the taxpayer may have to stump up less.

We seem to be looking for our pound of flesh, now, as in your post and not thinking long term.

There isn't going to be a "sell later" option for AIB if they don't get bail-out money. They take the money on the terms available or they can see how far they get by doing without a bail-out.

ei.sdraob

View wrote: »

There isn't going to be a "sell later" option for AIB if they don't get bail-out money..

well said
AIB need to raise cash and fast
but i suppose K9 would rather they raise the money from us

anyways why where they not thinking of these "crown jewels" when engaging in reckless lending?

K-9

View wrote: »

There isn't going to be a "sell later" option for AIB if they don't get bail-out money. They take the money on the terms available or they can see how far they get by doing without a bail-out.

Even if it it costs the tax payer more in the long run?

ei.sdraob wrote: »

well said
AIB need to raise cash and fast
but i suppose K9 would rather they raise the money from us

anyways why where they not thinking of these "crown jewels" when engaging in reckless lending?

That's is exactly what I would rather! Insert smiley here.

View

K-9 wrote: »

Even if it it costs the tax payer more in the long run?

There is no obligation on AIB to take tax-payers' money on the terms on offer. They are free to look elsewhere for the money if they feel they'll get better terms elsewhere. Alternatively, they can take the money on the current terms available.

As for the tax-payer, it is simple. AIB is basically bankrupt. The equity in AIB that the Irish tax-payer now owns would have a negative value if AIB were liquidated in the morning. There is no "long run" in that scenario.

As such, the only reason that AIB is continuing to operate is as a result of massive subsidies from the tax-payer and direct legal intervention in the market by the government. That is a questionable policy to start off with, but whatever about the case of whether the bank continues to operate in Ireland, there is no way that the Irish tax-payer is going to get away with subsidising a bank in Poland thus distorting the operation of the financial market there. If the Commission were really bloody-minded, it would force the sale of the Irish branch network of AIB as well as its Polish operations.