Anglo €22 Billion not paid in yet

Citizen_Cutback

I know that there are two other threads here on these forums relating to Anglo Irish Bank and mention of the amounts being paid into to it by the Government varying between €22 billion and €30 billion.

As far as I can ascertain the government has to date paid €8 billion in cash into Anglo Irish Bank.

What of the €22 Billion? I am led to believe that the Government has issued Promissory Notes to the value of €22 Billion to the bank.

What is a Promissory Note? A Promissory Note is basically an IOU with a "promise to pay" at sometime in the future.

In effect, the Government has promised to pay €22 billion to Anglo in future.

If we borrow this €22 billion interest payments alone will be €1 billion at current rates.

Can anybody see that the actual cost or rescuing Anglo is not properly reflected in Exchequer returns or in Government Press Releases?

Considering our off Balance Sheet commitments, our strong growth rate is not a true reflection of the actual condition of our Economy, especially in GNP terms.

lmimmfn

forget about that, what about the interest rates on Nama? 50+billion at current rate from bonds of 5% :eek:

Citizen_Cutback

lmimmfn wrote: »

forget about that, what about the interest rates on Nama? 50+billion at current rate from bonds of 5% :eek:

Forget about it? Not likely!

However, we know from the exchequer returns that we are paying €2.5 billion a year to service NAMA interest payments.

The point I am making is that we have promised to fund Anglo Irish Bank with an additional €22 billion in due course.

We have already paid €8 billion in cash into Anglo; this should cover interest repayments for a few years on the €22 billion that they have borrowed on our behalf (@ approximately 5% interest i.e. 1 € billion per year) on the basis that we will pay up when asked by Anglo.

Scarab80

Citizen_Cutback wrote: »

Forget about it? Not likely!

However, we know from the exchequer returns that we are paying €2.5 billion a year to service NAMA interest payments.

The point I am making is that we have promised to fund Anglo Irish Bank with an additional €22 billion in due course.

We have already paid €8 billion in cash into Anglo; this should cover interest repayments for a few years on the €22 billion that they have borrowed on our behalf (@ approximately 5% interest i.e. 1 € billion per year) on the basis that we will pay up when asked by Anglo.

Please show me the excheqeur returns where we are paying 2.5bn for NAMA interest, considering that less than 20% of NAMA bonds have been issued to date and that NAMA is completely "off balance sheet" this would be some feat.

We have paid 4bn cash into Anglo.

lmimmfn

Citizen_Cutback wrote: »

Forget about it? Not likely!

However, we know from the exchequer returns that we are paying €2.5 billion a year to service NAMA interest payments.

The point I am making is that we have promised to fund Anglo Irish Bank with an additional €22 billion in due course.

We have already paid €8 billion in cash into Anglo; this should cover interest repayments for a few years on the €22 billion that they have borrowed on our behalf (@ approximately 5% interest i.e. 1 € billion per year) on the basis that we will pay up when asked by Anglo.

my point that Anglo is peanuts compared to Nama, of course its a disgrace, but its overshadowed by a bigger disgrace

Scarab80 wrote: »

Please show me the excheqeur returns where we are paying 2.5bn for NAMA interest, considering that less than 20% of NAMA bonds have been issued to date and that NAMA is completely "off balance sheet" this would be some feat.

We have paid 4bn cash into Anglo.

Irish bonds are 5% interest rate and thats whats going to pay for Nama, on top of that theres the running costs and the fact that they 99% wont get back what they originally intended within the 10 year timeframe.

Yes Nama is off the books when it comes to our defecit, thats only an accounting con job though, it still has to be paid for and it gets paid from governmet bonds and thus incurs out current bond rate of 5% and no doubt that will increase based on the eurozone situation

Citizen_Cutback

Scarab80 wrote: »

Please show me the excheqeur returns where we are paying 2.5bn for NAMA interest, considering that less than 20% of NAMA bonds have been issued to date and that NAMA is completely "off balance sheet" this would be some feat.

We have paid 4bn cash into Anglo.

NAMA is off Balance Sheet. Isn't that just Grand and Dandy.

Why don't you explain more about this to us plebs.

What I'd like to figure out is what is the Bank bailout and NAMA actually costing us.

Between Capital injections into our Banks and the setting up of NAMA we are on the hook for between €70-€80 billion. Considering that for all intents and purposes we have nationalised one bank and have substantial stakes in two more it is all OK because these debts are dealt with on the Balance Sheets of the banks that we own or are propping up. At a bond rate of 5% this is theoretically costing €4 billion a year in interest. Show me that it isn't. Please!

The capital that we have paid into the Banks is for all intents and purposes allowing those banks to pay the interest on their loans.

Point us to a location where all the information you cite is succinctly available and give us all a break.

Don't think that you have steered this thread away from the €22 billion that we have yet to borrow to pay over to Anglo. We have allowed Anglo to borrow this money on our behalf and we have given them €4 billion to date to help them meet their commitments.

Scarab80

Citizen_Cutback wrote: »

NAMA is off Balance Sheet. Isn't that just Grand and Dandy.

Why don't you explain more about this to us plebs.

A pretty concise description of how NAMA works here, i'll try to summarise...

NAMA is run through an investment vehicle, it is owned 51% by private investors and 49% by the state. This qualifies it as a private company which does not need to be integrated into echequer returns, it's an accounting trick. The government has put 49m into this investment vehicle and it has given NAMA 250m of working capital (which is expected to be returned by the end of the year), see current exchequer statements here, pg 4.

However this doesn't mean that the exchequer is paying out the interest on NAMA bonds. NAMA is using the 40bn bonds to purchase loans with a nominal value of 81bn. 25% of these loans purchased - 20bn are paying their full interest liability, which is expected to be about Euribor + 2% (Pg 10 here). Just going on the accounts released for the first 2 days of NAMA's operation it would appear that some of the other 75% of loans are paying some interest. NAMA is paying the 6 month Euribor rate on 95% of it's bond's in issue, that's currently 1.081%. On the other 5% which are subordinated bonds which can be defaulted on if NAMA does not make a profit they are paying the Irish 10 year bond rate plus 75 basis points (3/4 of 1%). The idea is that the performing loans pay for the interest on the bonds.

Citizen_Cutback wrote: »

What I'd like to figure out is what is the Bank bailout and NAMA actually costing us.

Between Capital injections into our Banks and the setting up of NAMA we are on the hook for between €70-€80 billion. Considering that for all intents and purposes we have nationalised one bank and have substantial stakes in two more it is all OK because these debts are dealt with on the Balance Sheets of the banks that we own or are propping up. At a bond rate of 5% this is theoretically costing €4 billion a year in interest. Show me that it isn't. Please!

The capital that we have paid into the Banks is for all intents and purposes allowing those banks to pay the interest on their loans.

Ok - Anglo - There was 4bn cash injected last year from the exchequer, p5 here, and so far none this year - pg4 here. 8.3bn was promised to them by Lenihan at the end of March, with a further expectation of another 10bn (see same speech), of this 10bn - 2bn has actually been officially promised. These promissory notes are going to be funded over a 10 - 15 year period (see March speech). In the future you will see cash coming out of the exchequer and going into Anglo to pay off these promissory notes, at that time we will (assuming we are still running a deficit) have to go to the bond markets to borrow the money, then interest will start running. At the moment these promissory notes are used as collateral that Anglo can use to maintain their wholesale funding. Now it is possible that Anglo with these non-income producing assets on it's balance sheet is running a net interest income loss - that is the interest on it's borrowings is greater than the interest on it's loan book before default, in which case the interest on these notes are being rolled up until the actual cash comes in. Assuming the 22bn is a final figure this wouldn't have an affect on the total amount to be put in - ie. if it was put in in cash, a smaller amount then 22bn wouldbe needed but that would be offset by the interest on borrowings.

INBS - 100m put in in this year cash, (see current year exchequer statments linked before), 2.6bn promised in the March speech on the same basis as Anglo.

EBS - 100m put in in this year cash, (see current year exchequer statments linked before), 775m promised in the March speech on the same basis as Anglo. EBS is still in talks with US investors and Irish Life and Permanent to try and avoid this injection.

BOI - 3.5bn from the Pension Reserve, 3bn was frontloaded into the pension reserve last year (see exchequer statements) to bailout AIB and BOI. We would have had to borrow to fund the pension reserve in any event, so whether you want to count this as interest related to the bank bailout is up to you. Incidentially if you want to be really worried we have an approaching 100bn liability for state pensions.

Anyways 3.5bn in - currently it stands as follows

1.837bn in preference shares paying 10.25% - value 1.909bn
1.9bn ordinary shares at 70c (todays price) - value 1.332bn
Redemption of Warrants and Fees - 542m cash received.
Total - 3.783bn - Profit of 283m

AIB - 3.5bn in - currently it stands as follows

3.5bn in preference shares paying 8% - value 3.556bn
198m ordinary shares at 92c (todays price) - value 183m
Warrants- include at zero for prudence
Total - 3.739bn - Profit of 239m

Citizen_Cutback wrote: »

Point us to a location where all the information you cite is succinctly available and give us all a break.

Don't think that you have steered this thread away from the €22 billion that we have yet to borrow to pay over to Anglo. We have allowed Anglo to borrow this money on our behalf and we have given them €4 billion to date to help them meet their commitments.

Despite what you might think I don't have an agenda here, I am - like you - trying to figure out what the cost of various bailouts and government overspending are, for the sake of my own sanity and so that I can make an informed decision come election time.

Unfortunately I learned a long time ago that the media in this country are completely incompetent. They regourgitate press releases and don't properly explain to their readers what they really want to know, therefore there is no succient resource for all of your questions. If you really want answers to your questions go to source documents and learn for yourself instead of accepting someone elses interpretation of them.

Laminations

Scarab80 wrote: »

Despite what you might think I don't have an agenda here, I am - like you - trying to figure out what the cost of various bailouts and government overspending are, for the sake of my own sanity and so that I can make an informed decision come election time.

Lol. Informed decision? What more information do you need? You are trying to piece together the costs of the bank bailout and NAMA to 'judge' FFs plan yes? And you are saying if FF come up with a good plan (relatively cheap and effective) then you will vote for them? If I shat on your face and came up with the best plan to clean it off would you vote for me??

Trust me I want FF to succeed in this rescue attempt, but whether they fail or succeed, they played a very large part in creating the mess. I hope that will factor in your 'informed' decision come election time

noodler

Scarab80 wrote: »

Please show me the excheqeur returns where we are paying 2.5bn for NAMA interest, considering that less than 20% of NAMA bonds have been issued to date and that NAMA is completely "off balance sheet" this would be some feat.

We have paid 4bn cash into Anglo.

Citizen_Cutback wrote: »

NAMA is off Balance Sheet. Isn't that just Grand and Dandy.

Why don't you explain more about this to us plebs.

What I'd like to figure out is what is the Bank bailout and NAMA actually costing us.

Between Capital injections into our Banks and the setting up of NAMA we are on the hook for between €70-€80 billion. Considering that for all intents and purposes we have nationalised one bank and have substantial stakes in two more it is all OK because these debts are dealt with on the Balance Sheets of the banks that we own or are propping up. At a bond rate of 5% this is theoretically costing €4 billion a year in interest. Show me that it isn't. Please!

The capital that we have paid into the Banks is for all intents and purposes allowing those banks to pay the interest on their loans.

Point us to a location where all the information you cite is succinctly available and give us all a break.

Don't think that you have steered this thread away from the €22 billion that we have yet to borrow to pay over to Anglo. We have allowed Anglo to borrow this money on our behalf and we have given them €4 billion to date to help them meet their commitments.

Scarab, does it not drive you mad when you correct one post but then in the next one the poster moves onto a completely different point without acknowledging the mistakes of the initial post?

Scarab80

noodler wrote: »

Scarab, does it not drive you mad when you correct one post but then in the next one the poster moves onto a completely different point without acknowledging the mistakes of the initial post?

Not really, there is a lot of misinformation out there -most of it from so called 'celebrity economists' - and the actual information which is what people want is never summarised and explained properly. It's understandable that people think we are paying 4bn in interest a year given the billions of figures invested into this and that announced, but as always the truth is in the details.

It's unfortunate because it distracts from the much bigger problem of our spending to income deficit and the economic policys which led us to a property bubble.

Scarab80

Laminations wrote: »

Lol. Informed decision? What more information do you need? You are trying to piece together the costs of the bank bailout and NAMA to 'judge' FFs plan yes? And you are saying if FF come up with a good plan (relatively cheap and effective) then you will vote for them? If I shat on your face and came up with the best plan to clean it off would you vote for me??

Trust me I want FF to succeed in this rescue attempt, but whether they fail or succeed, they played a very large part in creating the mess. I hope that will factor in your 'informed' decision come election time

I'm not a FF supporter, i'm not a supporter of any political party. Yes FF led us into this position, one of the biggest contributors to the current mess being the extension of section23 relief to every part of the country and the giveaway spending budgets, but then who was promising any different. Like i said in a previous thread, taxes should have been raised and debt bought back or extra funds put into the pension reserve. We don't control our own currency anymore so we have to use fiscal policy to control the money supply. But then no party was advocating this course of action through the boom.

Laminations

Scarab80 wrote: »

I'm not a FF supporter, i'm not a supporter of any political party. Yes FF led us into this position, one of the biggest contributors to the current mess being the extension of section23 relief to every part of the country and the giveaway spending budgets, but then who was promising any different. Like i said in a previous thread, taxes should have been raised and debt bought back or extra funds put into the pension reserve. We don't control our own currency anymore so we have to use fiscal policy to control the money supply. But then no party was advocating this course of action through the boom.

I agree with all that, and you are probably right about what should have been done. But can you not make a distinction between a party that shat in your face and others who may have or may not have. I also support no particular party.

Scarab80

Laminations wrote: »

I agree with all that, and you are probably right about what should have been done. But can you not make a distinction between a party that shat in your face and others who may have or may not have. I also support no particular party.

Sure FF definitely screwed us, the others just might have. I'll put my cards on the table - I'm in Dublin West constituency. I'll be voting for Lenihan first because I consider him to be a competent and hard working politician. That's all the votes FF will be getting, they are too long in power and that breeds arrogance, imcompetence and also acts as a magnet to any dishonest individual who wants to gain political power.