Impending Nationalisation of AIB & BOI

ixus

I know I shouldn't be starting another thread on these but I think events are going to unfold pretty quickly over the next 48 hours. Brace yourselves!

Shane Ross: IMF and State battle it out over nationalisation of BoI

Frantic efforts by Bank of Ireland to stay out of state ownership were dominating the talks between the IMF and Ireland's negotiating team this weekend.

Insiders said that while AIB was now unable to escape full state control, BoI was fighting a rearguard action to duck the same fate.

All the banks are now required to provide 12 per cent capital ratios, necessitating either a further massive injection of state funds( triggering nationalisation) or burning bondholders in a debt/equity swap.

A reliable source at the talks reported yesterday that both the National Treasury Management Agency and Nama were resisting attempts by the IMF to force the Government to take all the banks into full state ownership.....

Irish fury as EU 'nationalises' Bank of Ireland

The European Union is to announce the effective nationalisation of Bank of Ireland within the next 48 hours after a weekend of crisis meetings between finance ministers and angry public demonstrations across Europe.

Despite strong representations from the Irish government that Bank of Ireland was secure, the EU-brokered €85bn (£72bn) bail-out is likely to demand that billions more euros of capital are injected into the bank to take its key Tier 1 ratio up to 12pc, higher than the demands of the Basel process.

Sources said that the move will take the Irish government's stake in the bank from 36pc to an effective majority stake and dilute all other shareholdings. "It is nationalisation by any other name," the source said.

Ireland will also have to provide part of the bail-out funding itself from its National Pension Reserve Fund and will have to pay interest on the loan of above 6pc, higher than Greece's 5.2pc average interest rate.....

Raskolnikov

Someone has done the maths on this already.
http://ftalphaville.ft.com/blog/2010/11/24/415436/a-de-facto-nationalisation-of-the-irish-banking-sector/

Assuming no dilution to the current market price (preference share conversion treated in the same way), this would result in 98% government ownership of AIB, 91% of BKIR and 92% of IL&P. In short, a de facto nationalisation of the entire Irish banking sector. The government currently has an 18% stake in AIB (expected to rise to 94% if current government back stopped capital raising plans were executed) and a 36% stake in BKIR. ILP is 100% private sector owned.

LuckyG

In lay mans terms what does this mean for someone with shares?

Bullish

http://www.youtube.com/watch?v=2gm9q8uabTs
Interesting video

josey_whale

Bullish wrote: »

http://www.youtube.com/watch?v=2gm9q8uabTs
Interesting video

Interesting indeed Bulish. Thanks for sharing

pocketdooz

LuckyG wrote: »

In lay mans terms what does this mean for someone with shares?

They will most likely be worthless very soon. i.e. The same thing that happened to Anglo. BOI shares will most likely be worth Zero.

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woodseb

pocketdooz wrote: »

They will most likely be worthless very soon. i.e. The same thing that happened to Anglo. BOI shares will most likely be worth Zero.

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that's not strictly true, if its anything less than 100% govt owned the shares will still have some value, albeit very very little - they won't be 'worthless' and drawing a comparison with Anglo is confusing the matter

pocketdooz

woodseb wrote: »

that's not strictly true, if its anything less than 100% govt owned the shares will still have some value, albeit very very little - they won't be 'worthless' and drawing a comparison with Anglo is confusing the matter

I understood the questions to mean - in layman's terms what does nationlisation mean for someone with shares .....

LuckyG, if not full nationalisation, then what Woodseb said ^^^

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MrMatisse

seems were going to borrow at 5.8%

http://www.irishtimes.com/newspaper/breaking/2010/1128/breaking1.html

17bn going in from the NPRF

AP_MAN

AIB ?

pocketdooz wrote: »

They will most likely be worthless very soon. i.e. The same thing that happened to Anglo. BOI shares will most likely be worth Zero.

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pocketdooz

AP_MAN wrote: »

AIB ?

AIB will be nationalised too from what I understand.

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ixus

Looks like Lenny balls has guaranteed unhedged interest rate derivatives contracts. Some great explanations of this on thepropertypin. It seems like funds are being used to post collateral for these contracts. That's one big black hole.

neris

was hopping boi would drop to 10-15cent a share and no nationalisation. :mad: see their going to the markets now and whats not bought the government will take.

Shauny2010

Bullish wrote: »

https://www.youtube.com/watch?v=2gm9q8uabTs

Interesting video

this one