EBS under State control after €100m investment

ei.sdraob

http://www.irishtimes.com/newspaper/breaking/2010/0528/breaking27.html

The funding, which comes in the form of Special Investment Shares, is the first instalment in a €875 million capital injection.

"investment"

anyone please explain the rationale behind giving money to this lot?

zootroid

Seems to me that government policy is to save all the banks at any cost. At a time when the country is broke, yet more money is being thrown away. A case may be made for AIB and BOI, but nobody else in my opinion.

And what a brilliant example thats sets for future bankers. It doesn't matter how much of a mess you make, the taxpayer will always step in.

Scarab80

Not really news, this was all announced at the time of the budget.

Hopefully EBS will be able to raise the 875m by private means.

Dob74

zootroid wrote: »

Seems to me that government policy is to save all the banks at any cost. At a time when the country is broke, yet more money is being thrown away. A case may be made for AIB and BOI, but nobody else in my opinion.

And what a brilliant example thats sets for future bankers. It doesn't matter how much of a mess you make, the taxpayer will always step in.

AIB and BOI should be broken up into smaller banks. That way they cant pull another scam like this on us.
If AIB & BOI didnt have such a big slice of the market it would be alot easier to tell them where to go, the next time they come looking for a our money.
Chop them up into banks with 10 branches and get rid of the corporate overhead.
If one of those banks fail, it fails no bailout.

In 1985 the gov had to bail out AIB. So it lasted til 2008 without another bailout. It will be 2031 til the next one so lets start saving

Oracle

ei.sdraob wrote: »

.... "investment" anyone please explain the rationale behind giving money to this lot?

I agree, it's a waste of money, EBS should be nationalised, cost to the State €0.

ei.sdraob

Scarab80 wrote: »

Not really news, this was all announced at the time of the budget.

Hopefully EBS will be able to raise the 875m by private means.

erm not to burst you bubble

but what private means?

but it will be the State (us) paying the full 875 million

Scarab80

ei.sdraob wrote: »

erm not to burst you bubble

but what private means?

but it will be the State (us) paying the full 875 million

http://www.independent.ie/business/irish/ebs-plans-to-buy-back-bonds-at-discount-2199896.html

The Government has committed to providing all the capital EBS needs to reach new regulatory capital targets. But the group is in talks with a private equity consortium, led by Dublin's Cardinal Asset Management and backed by US buyout firm JC Flowers, about taking a majority stake in the lender -- which would allow the State to claw back up to 100pc of its investment.


Speaking to journalists, EBS chief executive Fergus Murphy said he expected talks with Cardinal "to come to a conclusion towards the end of July". He described the negotiations as being at an early stage and that it was "far too early to be definite about a potential investment".

As I said, hopefully they will be able to fund from the private equity markets.

thebaldsoprano

ei.sdraob wrote: »

anyone please explain the rationale behind giving money to this lot?

Looking after the boys?

Meanwhile, the director who chaired their risk committee gets a handy number at the HSE.

It's funny, I remember writing to my local TDs about how wasteful PPARS and evoting were of taxpayers' money - that seems like small change now.

Oracle

"EBS in private equity talks with Cardinal Asset Managemant, backed by JC Flowers", LOL, thats so funny. ... more spinning than Blarney Woolen Mills.

Yeah, there's always huge demand among private investors for loss making, basket case, government-bailed out, building societies. :rolleyes: Old rope anyone??

gurramok

Scarab80 wrote: »

http://www.independent.ie/business/irish/ebs-plans-to-buy-back-bonds-at-discount-2199896.html



As I said, hopefully they will be able to fund from the private equity markets.

They failed. http://www.independent.ie/national-news/nama-the-truth-its-a-bailout-for-developers-2200525.html

This and INBS should be wound up, they are 'not too big to fail the banking system'.

Scarab80

gurramok wrote: »

They failed. http://www.independent.ie/national-news/nama-the-truth-its-a-bailout-for-developers-2200525.html

This and INBS should be wound up, they are 'not too big to fail the banking system'.

I read that article this morning, populist rubbish and full of errors. They are referring to the initial capital raising efforts which failed, that was more to do with the escalation of the European debt crisis in recent weeks as it was to do with the fundamentals of EBS. The talks with JC Flowers are ongoing, but i reckon will be dependent on on a stabalisation in Europe.

The fundamentals of the society are still sound, they made an operating profit of 96m last year before impairment charges. After NAMA and other impairments of 195m reported a loss of 79m. They also have a Tier 1 capital ratio of 6.7% so they are far from insolvent ala INBS and Anglo and only need to achieve 8% Tier 1 Capital.

Whatever arguments can be made for a wind up of Anglo and INBS - and it would seem that Europe is moving closer to the Anglo option of good bank/bad bank as the cheapest option - i don't think apply to EBS.

thebman

Scarab80 wrote: »

I read that article this morning, populist rubbish and full of errors. They are referring to the initial capital raising efforts which failed, that was more to do with the escalation of the European debt crisis in recent weeks as it was to do with the fundamentals of EBS. The talks with JC Flowers are ongoing, but i reckon will be dependent on on a stabalisation in Europe.

The fundamentals of the society are still sound, they made an operating profit of 96m last year before impairment charges. After NAMA and other impairments of 195m reported a loss of 79m. They also have a Tier 1 capital ratio of 6.7% so they are far from insolvent ala INBS and Anglo and only need to achieve 8% Tier 1 Capital.

Whatever arguments can be made for a wind up of Anglo and INBS - and it would seem that Europe is moving closer to the Anglo option of good bank/bad bank as the cheapest option - i don't think apply to EBS.

EBS are the best of a bad lot. Should they be rescued no, if they were a strong bank they wouldn't need a bail out.

The fact is they aren't a good bank. Being less in a hole than Anglo and the others does not a good bank make.

Scarab80

thebman wrote: »

EBS are the best of a bad lot. Should they be rescued no, if they were a strong bank they wouldn't need a bail out.

The fact is they aren't a good bank. Being less in a hole than Anglo and the others does not a good bank make.

And if the financial regulator hadn't raised the capital requirements they might not have needed a bailout. They operated with strong capital buffers to absorb significant impairments and have come out of the worst banking crisis in history in a realatively stable position.

Unfortunately it is not a good time to be a bank trying to raise capital in Europe , private investors just don't want to take the risk. Remember if we want to let EBS fail, someone needs to buy up their loan book, given current market conditions this will be at firesale prices and would most likely wipe out any equity in EBS or result in depositers / bond holders losing money.

775m if invested would be on the basis of a 10yr promissory note, hopefully (that word again) this would not need to be drawn down on (it's just a capital buffer and not part of working capital) and could be repaid by EBS.

Bob the Builder

Dob74 wrote: »

AIB and BOI should be broken up into smaller banks. That way they cant pull another scam like this on us.
If AIB & BOI didnt have such a big slice of the market it would be alot easier to tell them where to go, the next time they come looking for a our money.
Chop them up into banks with 10 branches and get rid of the corporate overhead.
If one of those banks fail, it fails no bailout.

In 1985 the gov had to bail out AIB. So it lasted til 2008 without another bailout. It will be 2031 til the next one so lets start saving

Your rationale seemed odd when I first read it. But the fact is there and it is correct. You are correct, it's only a matter of time before they come back looking for more in 2031 when we may even have less.

The one disadvantage is that by removing economies of scale, in the short-term banking becomes more expensive (even though argubaly we're just paying more for our banking because of higher taxes). But this will be counteracted by better competition, more streamlined banking system and ultimately lower wages.

I also think that no banker/politician or otherwise should be allowed earn anything in excess of €200,000 a year.

Stabshauptmann

Oracle wrote: »

I agree, it's a waste of money, EBS should be nationalised, cost to the State €0.

Em. no. Cost to the state would be fecking huge. Lets look at Anglo; Nationalisation is not the cost free adventure people seem to think it is.

Cost of bank collapsing:
Compensate customers
Compensate investors (under government guarentee scheme)
Knock on effect on Irish debt rating
Knock on effect on rating of other irish banks, que another liquidity crisis that required the guarentee scheme in the first place.
Loss of jobs
Withdrawal of funds from the market (fractional banking)
Call on loans and mortgages when the bank is liquidated.
The list goes on.

Its a quick sum, and it turns out its cheaper to invest in EBS