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Anglo Irish Bank : EU rejects Anglo's business plan

  • 06-07-2010 03:38PM
    #1
    Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭


    Even when this bank is dead, it's still causing problems.











    The EU Commission approved the Government’s €8.3 billion recapitalisation of Anglo Irish Bank, despite having grave reservations about the survival plan put forward for the nationalised lender.
    .
    It felt the survival plan was still excessively exposed to the property market and was based on assumptions that could not be supported.
    In March, competition commissioner Joaquin Almunia raised fundamental questions about the viability of the original plan to separate Anglo into “good” and “bad” banks to manage its performing and non-performing businesses respectively. He called for revised restructuring proposals.
    In private correspondence with Minister for Foreign Affairs Micheál Martin, Mr Almunia noted the Government believed the “good” bank – known as New Bank – could generate equivalent profits to those Anglo had at the height of the property boom.
    The commissioner doubted that assumption, going on to say that New Bank could potentially accumulate excessive risk and would remain very exposed to the property market.

    Anglo, a prime participant in the National Asset Management Agency (Nama) scheme, has so far received more than €14 billion from the State and may require at least another €8 billion. Most of the money will never be recouped.
    The partial publication yesterday of Mr Almunia’s letter on his website comes as he examines a revised plan, submitted in May. The new plan also relies on the same separation between New Bank and Old Anglo, as the bad bank would be known.

    The letter was sent to Mr Martin as the commission approved an €8.3 billion recapitalisation of the bank at the end of March, which followed a €4 billion cash injection last year.
    Anglo received a further €2 billion from the Government in June, under the same authorisation. However, Minister for Finance Brian Lenihan has warned the bank may need a further €8 billion.

    In his letter, Mr Almunia noted that no detailed business plan was submitted for New Bank or Old Anglo. He questioned the broad assumptions of the plan in respect of income, loan impairments, legal and accounting issues, risk profile, and funding and liquidity issues.

    The letter says the total profits of Old Anglo/New Bank together would be the same as the profit generated by Anglo at the top of the commercial real-estate cycle.
    “Considering the level of impairments in Anglo, the projected reduced size of New Bank, and taking into account that it intends to develop activities in areas in which it has no previous experience, the Commission doubts that such an objective is achievable under prudent assumptions and with reasonable risks.” Assumptions on economic growth and house prices were “incomplete” and the letter called for “sensitivity analyses with regard to the relevant macroeconomic parameters” and regulatory change.

    “The Commission also observes that the plan depends on the rating of Irish State bonds being maintained at a current level. Moreover, the potential impact of a broader restructuring of the Irish banking sector or individual Irish banks has not been considered in the plan, thus casting doubts on the scope covered by the adverse scenario.”
    “The Commission has doubts regarding the New Bank’s capacity to penetrate different market segments without undercutting price and without accumulating excessive risks. Further information will thus be needed to provide evidence that the new businesses targeted by New Bank will positively contribute to its viability,” he wrote.

    Mr Almunia said it was unclear whether the New Bank’s high exposure to the property market was acceptable in terms of risk. “At the moment, the Commission doubts whether further large exposure to a sector which is experiencing severe difficulties and which is volatile by nature will contribute to the viability of New Bank,’’ he said.
    Furthermore, the funding strategy of New Bank did not seem sufficiently developed, he added.

    The Government last night declined to comment. “We are in discussions with the commission on the second restructuring plan,” said a spokesman for Mr Lenihan.



    Anglo are trying to tell the govt and the commission that under it's new business plan that it would make the same level of profits as it did during the height of the property bubble?:D:D:D
    Throughout guys like Dukes were making excuses for hiring all these hotshots and they come up with business plan figures which have been ridiculed by the Commission.
    And the dear old tax payer still has to carry the burden of this edifice.


«1

Comments

  • Registered Users, Registered Users 2 Posts: 685 ✭✭✭jock101


    Ah sure what the hell, we'll pump another 50 billion into Anglo, better idea let the EU pump it in instead! yeepee:D:D:D:D:D:D


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    jock101 wrote: »
    Ah sure what the hell, we'll pump another 50 billion into Anglo, better idea let the EU pump it in instead! yeepee:D:D:D:D:D:D

    They can't even get their business plans correct.

    We've had Dukes and Lenihan saying that probity and sober management and analysis is taking place at Anglo.
    yet they tried to tell the EU that Anglo, under it's new business plan, would make as much profit as it did under the Seanie property boom staewardship!

    It's beyond a joke.
    Gob****tery more like.


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    Can I just point out something here.

    Isn't this article based on the old business plan from March?

    And has nothing to do with the one submitted in May?

    I think the Irish Times had their print headline as "EXPRESSES" but this was swiftly changed to "EXPRESSED" in the online version.


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    noodler wrote: »
    Can I just point out something here.

    Isn't this article based on the old business plan from March?

    And has nothing to do with the one submitted in May?

    I think the Irish Times had their print headline as "EXPRESSES" but this was swiftly changed to "EXPRESSED" in the online version.

    You make a point, I suppose.

    Whether the plan was the March 2010 version and/or May 2010 version, which fcukwith at Anglo presumed their business plan would realise profits
    of the levels enjoyed during the largest property bubble in living memory?


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    hinault wrote: »
    You make a point, I suppose.

    Whether the plan was the March 2010 version and/or May 2010 version, which fcukwith at Anglo presumed their business plan would realise profits
    of the levels enjoyed during the largest property bubble in living memory?

    I think the Times have just made an awful article and put it on the front page because they were the only ones to have the story this morning.

    You could argue, as the article goes on, that they start talking about the 2nd plan but that was only submitted last month and the first opinions we hear from the Commission on it are hardly going to be on some letter he 'leaks' on his own website in correspondence with a member of our Government.

    Can anyone find this letter online? I had a try this morning but to absolutely no avail.

    It is such a badly written / deceptive / whatever article.


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  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    The salient point which you appear to keep (deliberately) missing is who in Anglo Irish Bank is responsible for divining a plan suggesting that Anglo - if rescued - would be able to make profits equal to the profits made during Seanie's tenure in 2006 at the height of the property boom?

    Whether the plan was divined in March 2010 and/or May 2010 is immaterial.

    Who divined this pie in the sky business plan?


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    I think my point was you have misrepresented the article in your OP.

    Don't get tetchy with me for pointing that out please - also, next time you post something like this it would be advisable to focus less on smilies and more on posting a link or source.


  • Closed Accounts Posts: 595 ✭✭✭George Orwell 1982


    Hilarious!


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    noodler wrote: »
    I think my point was you have misrepresented the article in your OP.

    Don't get tetchy with me for pointing that out please - also, next time you post something like this it would be advisable to focus less on smilies and more on posting a link or source.

    The article is crystal clear pal.

    http://www.irishtimes.com/newspaper/breaking/2010/0706/breaking1.html

    Anglo's plan proposed that good bank would deliver profits equivalent to those profits delivered at the height of the property boom.
    :D:D:D:D:D


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    hinault wrote: »
    The article is crystal clear pal.

    http://www.irishtimes.com/newspaper/breaking/2010/0706/breaking1.html

    Anglo's plan proposed that good bank would deliver profits equivalent to those profits delivered at the height of the property boom.
    :D:D:D:D:D

    Jesus Christ.

    Look at your Topic title.

    The comission hasn't given a ruling on the Anglo's revised plan yet. So, unless you are announcing to boards the news that the commission asked Anglo to redo its plan (which was announced around 4 months ago) then please just admit the article title decieved you.

    Again, like I said. It was poorly written by the paper but it is incorrect to say Anglo's plan, currently being looked at by the commission, has been rejected.


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  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    noodler wrote: »

    The comission hasn't given a ruling on the Anglo's revised plan yet. So, unless you are announcing to boards the news that the commission asked Anglo to redo its plan (which was announced around 4 months ago) then please just admit the article title decieved you.


    There's nothing to admit.

    The EU commission did not accept Anglo Irish's business plan which said that a good bank would deliver profits equivalent to those delivered during the property/asset bubble.

    By not accepting Anglo's business plan - they de facto rejected the business plan.
    Which makes sense.

    Think about a business plan presented by a bank which is a basketcase, that says it will realise "profits" delivered in previous years.

    We now know that the "profits" delivered were not in fact profits - given the fact that practically all of Anglo's loans were bull****.


    noodler wrote: »

    Again, like I said. It was poorly written by the paper but it is incorrect to say Anglo's plan, currently being looked at by the commission, has been rejected.

    Poorly conceived business plan, more like.


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    Haha, fair play.

    Doing your best to skirt around the issue of you making a thread about Anglo's plan being rejected when the article in question is talking about the old plan. Like I said, its cool, it was a confusing article.


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    noodler wrote: »
    Haha, fair play.

    Doing your best to skirt around the issue of you making a thread about Anglo's plan being rejected when the article in question is talking about the old plan. Like I said, its cool, it was a confusing article.


    If something is not accepted, de facto it is rejected.


  • Registered Users, Registered Users 2 Posts: 1,129 ✭✭✭pljudge321


    hinault wrote: »
    If something is not accepted, de facto it is rejected.

    That's pretty poor logic.


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    The "logic" behind Anglo's business plan is a lot more worrysome.


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    hinault wrote: »
    The "logic" behind Anglo's business plan is a lot more worrysome.

    Fine, agreed. The logic behind the initial plan was.

    We have no idea what the particulars of the revised plan are - we know they stuck with the Good / Bad bank plan but no idea what their assumptions regarding growth, profit etc are this time around.


  • Registered Users, Registered Users 2 Posts: 13,011 ✭✭✭✭Sand


    Noodler, what aspects of the "old" bussiness plan reassure you that the people behind it have any idea what theyre doing?

    I mean, was there just some typos in the old plan?


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    Sand wrote: »
    Noodler, what aspects of the "old" bussiness plan reassure you that the people behind it have any idea what theyre doing?

    I mean, was there just some typos in the old plan?


    Preposterous that any organisation which has been through what Anglo have been through would have the temerity to suggest that it could try to match the "profits" made under the regime of Seanie.

    We know for a fact that "profits" earned in those years were not profits.
    They were bull****.
    Anglo wasn't making a profit back then it was making losses.
    It's bull****.
    Bull**** which the hardpressed taxpayer is being made to clean up.


    It's the sort of fcukwittery which got this country in to difficulty in the first place.


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    Sand wrote: »
    Noodler, what aspects of the "old" bussiness plan reassure you that the people behind it have any idea what theyre doing?

    I mean, was there just some typos in the old plan?

    Again, where are you coming from? All I have said is the thread title was incorrect as the OP thought the poorly-written Times article was about the recent plan.

    I never said anything about being reassured about the new plan - I mean, if you just scroll up I just said we don't know the details of the new plan bar the fact it sticks with a good / bank bad bank scheme.


  • Registered Users, Registered Users 2 Posts: 13,011 ✭✭✭✭Sand


    Again, where are you coming from? All I have said is the thread title was incorrect as the OP thought the poorly-written Times article was about the recent plan.

    I never said anything about being reassured about the new plan - I mean, if you just scroll up I just said we don't know the details of the new plan bar the fact it sticks with a good / bank bad bank scheme.

    For a man whose good on the details, Id thought youd have read my post - I didnt ask you about the new plan - I asked you what aspects of the old plan reassured you that the minds behind knew what they were doing.

    So, were the errors a few typos or gaping errors in common sense?


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  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    Sand wrote: »
    For a man whose good on the details, Id thought youd have read my post - I didnt ask you about the new plan - I asked you what aspects of the old plan reassured you that the minds behind knew what they were doing.

    So, were the errors a few typos or gaping errors in common sense?

    Wow okay, I didn't say anything reassured me about the old plan.


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler




  • Registered Users, Registered Users 2 Posts: 738 ✭✭✭Chimichangas


    pljudge321 wrote: »
    That's pretty poor logic.
    It is, isnt it.
    If you take it in reverse (what hinault said), then what is rejected is not accepted?
    ..and I think we all know that kind of logic doesnt stand in todays world.


  • Registered Users, Registered Users 2 Posts: 5,932 ✭✭✭hinault


    noodler wrote: »

    Interesting link - and an interesting title Namawinelake!

    I'll read the content tomorrow,


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    I knew the Times' misleading headine the other day would cause trouble.

    Chairman of Anglo, Alan Dukes wrote into the paper today to complain about the fact the headline (which was changed in the online version from expresses to expressed) gave the impression the new restructuring plan was at the subject rather than the old one.

    http://www.irishtimes.com/newspaper/letters/2010/0709/1224274347981.html
    Madam, – The heading on Arthur Beesley’s article (Front page, July 6th) was seriously misleading. “EU expresses grave doubts over State’s survival plan for Anglo” loses its punch when it is made clear that the headline relates to comments made last March about a restructuring plan which has been replaced by one submitted at the end of May and which comprehensively addresses the Commission’s March comments.
    Most of the body of the article concerned the March comments and not the current position. The presentation as current news of comments made in March and subsequently overtaken by events is hardly leading-edge journalism. The fact that Mr Beesley returned to the issue (“EU casts a cold eye on Government’s plans to save Anglo”, Business, July 7th) is a tacit admission of the failings of the previous article. Once again, however, the “cold eye” referred to in this heading relates to comments made last March and not to the discussions currently under way on the existing restructuring plan.
    “Cantillon” (Business, July 6th) blithely ignored the facts in commenting on the bank’s dealings with the Office of the Director of Corporate Enforcement (ODCE) and on its submission on the Financial Regulator’s recent consultation paper on corporate governance.
    The bank’s claim to privilege in relation to certain documents was described as “prudent” by the court when it was first raised and again on Friday of last week. The bank’s proposal on that day of a limited disclosure of privileged documentation to the ODCE was seen by the court as a considered and responsible approach, a fact which “Cantillon” ignores.
    His interpretation of the bank’s submission to the Financial Regulator is almost childishly mischievous, particularly in view of the fact that the bank’s board held 59 meetings in the 15-month period to the end of December 2009. – Yours, etc,
    ALAN DUKES,
    Chairman,
    Anglo Irish Bank,
    Stephen Court,
    St Stephen’s Green, Dublin 2.


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    noodler wrote: »
    Chairman of Anglo, Alan Dukes wrote into the paper today to complain

    The same Dukes who - despite the fact that we own the cesspit company in which he's supposed to act in the public interest - told a representative of ours that it was "none of our business" ?

    Forgive me if I ignore anything that comes out of his mouth, because it's not worth listening to.


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    Liam Byrne wrote: »
    The same Dukes who - despite the fact that we own the cesspit company in which he's supposed to act in the public interest - told a representative of ours that it was "none of our business" ?

    Forgive me if I ignore anything that comes out of his mouth, because it's not worth listening to.

    ?????


  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    noodler wrote: »
    ?????

    Dukes - who was installed in Anglo to supposedly represent the public interest - refused to answer valid questions from Shane Ross and told him it was "none of his business".

    Surely you didn't miss that fiasco ?

    And as a result, Alan Dukes can go take a running jump if he expects us to listen to what he says.....if he can't be arsed telling us stuff that we want and deserve to know, then he can sod off issuing complaints and propaganda.


  • Registered Users, Registered Users 2 Posts: 27,585 ✭✭✭✭noodler


    Liam Byrne wrote: »
    Dukes - who was installed in Anglo to supposedly represent the public interest - refused to answer valid questions from Shane Ross and told him it was "none of his business".

    Surely you didn't miss that fiasco ?

    And as a result, Alan Dukes can go take a running jump if he expects us to listen to what he says.....if he can't be arsed telling us stuff that we want and deserve to know, then he can sod off issuing complaints and propaganda.

    ?
    Okay then, if it makes you feel better replace the name at the end of that letter with an imaginary one.

    Honestly, what one thing has to do with the other her is beyond me. The issue highlighted, which I brought up the day this thread was posted, is just a misleading headline article by the Times.


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  • Closed Accounts Posts: 18,163 ✭✭✭✭Liam Byrne


    noodler wrote: »
    ?
    Okay then, if it makes you feel better replace the name at the end of that letter with an imaginary one.

    Honestly, what one thing has to do with the other her is beyond me. The issue highlighted, which I brought up the day this thread was posted, is just a misleading headline article by the Times.

    You posted a link to a letter by someone who refused to say what he's asked about and prefers to whinge about stuff no-one asked him about.

    His opinion is irrelevant as he's refusing to do his job.


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