Is Irish Life Permanent any different than the Rest?

Dude240502

I'm sorry if this has been asked before, is Irish Life Permanent any different than the other Banks in that is it completely Insolvent in the same way they are, do you think it has any prospects and is it likely to see any Share Dilution? Is this Bank a safer bet and do you think it has a real chance?

OfflerCrocGod

The most important point about is IPM is that it's not just a bank! The other sections of the group are performing quite well and, before the current madness broke out, was on track to post a smallish loss this year with profits next year.

People panicked and sold a good asset at cheap prices, this happens in the stock market.

Shauny2010

OfflerCrocGod wrote: »

The most important point about is IPM is that it's not just a bank! The other sections of the group are performing quite well and, before the current madness broke out, was on track to post a smallish loss this year with profits next year.

People panicked and sold a good asset at cheap prices, this happens in the stock market.

I bought shares on friday at 50 cent, there now trading at 1.06, seems crazy to me how much they were oversold!! Im expecting the shares to hit 1.20 before long

neil.p.b

Hit resistance twice at 1.081 today but thankfully it's still early in the day so it will test it again, if it doesn't break it today it will tomorrow and then 1.20 will be the next resistance. I expect 1.50+ before years end

Shauny2010

AHHH Im after getting stopped out at 1.02
Stupid Stupid Stupid:mad:

gaafan1

can irish life and permanent realisticly stay going until 1.5? seriously?

gaa fan1

thanks in advance guys

Dude240502

neil.p.b wrote: »

Hit resistance twice at 1.081 today but thankfully it's still early in the day so it will test it again, if it doesn't break it today it will tomorrow and then 1.20 will be the next resistance. I expect 1.50+ before years end

Do you mind if I ask why you think this, it was only 1.15 before it was sold, do you not think it has just recovered the value it lost, do you think it will rise after close today like yesterday?

Shauny2010

Dude240502 wrote: »

Do you mind if I ask why you think this, it was only 1.15 before it was sold, do you not think it has just recovered the value it lost, do you think it will rise after close today like yesterday?

The one thing It has going for it is its is a well run bank that didn't get carried away with itself during the boom years. As for 1.5 this is quite realistic but it wont get there as quick as it get to 1 euro.
On the negative side it will have to go to the market for capital to reach the new capitalization levels but theres no pressure to do so just yet and I feel they will succeed unlike Aib.

Dude240502

The share price this time last year was four times its present value, it has fallen steadily all this year, it may not see further share Dilution, is that a reason to invest, also do you think it will take time to see the effects of this Bailout before you think it's safe to invest, or possibly after the Election, do you think there will be a time when we will really start to believe again?

Raskolnikov

Irish Life and Permanent have a Texas Ratio of 300%, so no, they are no different to the rest.

OfflerCrocGod

Raskolnikov wrote: »

Irish Life and Permanent have a Texas Ratio of 300%, so no, they are no different to the rest.

Do you have any research that indicates that it's as valid in Europe as it is in the US?

RoadKillTs

Irish Life and Permanent have a Texas Ratio of 300%, so no, they are no different to the rest.

I learned a new ratio today.

displaced dub

watching this like a hawk, got in at 0.75 and put 3k into it

Raskolnikov

OfflerCrocGod wrote: »

Do you have any research that indicates that it's as valid in Europe as it is in the US?

A savings and loan institution in the US operates exactly the same as savings and loan institution in Europe. The business is really quite simple, but a lot of people (bankers above all) like to try and obfuscate it, and make the process look more complicated than what it is. I have discussed my systematic approach to evaluating banking on another thread in more detail here. What might surprise a lot of people here, is that picking safe, reliable banks with a good long-term track record produces substantial out-performance over those banks which are in trouble.

Words are one thing, but cold hard numbers are what vindicate, right? Well, I picked a bank at the start of the year that I thought would do well, and even wrote about it here. When I look at the performance year to date, I have battered the Irish banks by substantial margins.

NYB ytd +24%
AIB ytd -73%
BOI ytd -77%

As you can see, my out-performance is ~100%.

OfflerCrocGod

Raskolnikov wrote: »

A savings and loan institution in the US operates exactly the same as savings and loan institution in Europe. The business is really quite simple, but a lot of people (bankers above all) like to try and obfuscate it, and make the process look more complicated than what it is. I have discussed my systematic approach to evaluating banking on another thread in more detail here. What might surprise a lot of people here, is that picking safe, reliable banks with a good long-term track record produces substantial out-performance over those banks which are in trouble.

I won't disagree the business is pretty much the same but the regulatory environment is totally different in Europe. In Texas they don't have the advantage of full recourse, we don't have to worry about jingle mail for Irish banks. It's a powerful differentiator and I'm certain would weaken the applicability of the Texas ratio in Europe. That's why I was asking about it's use in Europe.

Raskolnikov wrote: »

Words are one thing, but cold hard numbers are what vindicate, right? Well, I picked a bank at the start of the year that I thought would do well, and even wrote about it here. When I look at the performance year to date, I have battered the Irish banks by substantial margins.

NYB ytd +24%
AIB ytd -73%
BOI ytd -77%

As you can see, my out-performance is ~100%.

Congratulations

Raskolnikov

OfflerCrocGod wrote: »

In Texas they don't have the advantage of full recourse, we don't have to worry about jingle mail for Irish banks.

The bank still loses though. When people stop making mortgage payments, the bank still has to fork over funding costs + overheads to manage those loans. When a few people do this, the bank should stay profitable. When 30% of your customers are doing it, the bank loses serious money. If you doubt me, read the Interim report. Since 2008, the position of the bank has actually continued to deteriorate, not get better.

Full recourse only works when the people you're chasing actually have cash to pay you back. Given the current climate - most mortgage holders in arrears in this country would not be in that position.

Investing in IL&P would only make sense if the government announced that it was nationalising the Permanent TSB banking part, and leaving investors with the Irish Life bit. As it stands though, the banking operation is so rotten and poorly performing, it will take the overall group down.

OfflerCrocGod

Raskolnikov wrote: »

The bank still loses though. When people stop making mortgage payments, the bank still has to fork over funding costs + overheads to manage those loans. When a few people do this, the bank should stay profitable. When 30% of your customers are doing it, the bank loses serious money. If you doubt me, read the Interim report. Since 2008, the position of the bank has actually continued to deteriorate, not get better.

Full recourse only works when the people you're chasing actually have cash to pay you back. Given the current climate - most mortgage holders in arrears in this country would not be in that position.

Yes the bank still losses but the size of the loss would be different. I believe it's 12 years that the bank has a claim to all income and assets until the debt is payed off. I'm pretty certain that it would have a material impact on the actual booked losses, obviously the booked provisions are the same and those are treated the same as losses for the year end balances but the provisions can still always be written back at a later date.

The interim mentions provisions.

IPM wrote:

Current estimates for full year impairment provisions for the bank are circa 10 -15% below the 2009 level.

The other interesting fact was that they booked all provisions fully as they should but they where showing forbearance and allowing people to pay what they could, they mention that 85% of loans in arrears are paying at a minimum the interest on the loan. The provisioning seems to have peaked and they believe arrears will peak this year. That would be my guess too, they seem correct on the provisions prediction so we will see by Q2/Q3 next year if arrears are currently peaking.

Raskolnikov wrote: »

Investing in IL&P would only make sense if the government announced that it was nationalising the Permanent TSB banking part, and leaving investors with the Irish Life bit. As it stands though, the banking operation is so rotten and poorly performing, it will take the overall group down.

Difficult to tell - as long as the company isn't too messed up by the regulators/government I think the losses will have peaked in 2009 and 2010 will end up with a smaller loss. I think liquidity and not solvency is the problem now. It's in the ECB's hands. We will see tomorrow if they refuse to support European banks or not.

neil.p.b

OfflerCrocGod wrote: »

I think liquidity and not solvency is the problem now. It's in the ECB's hands. We will see tomorrow if they refuse to support European banks or not.

ECB supplied 17% of their total funding this year, They said in their interim results that reliance on funding from the ECB was reducing though

Raskolnikov

OfflerCrocGod wrote: »

Yes the bank still losses but the size of the loss would be different. I believe it's 12 years that the bank has a claim to all income and assets until the debt is payed off. I'm pretty certain that it would have a material impact on the actual booked losses, obviously the booked provisions are the same and those are treated the same as losses for the year end balances but the provisions can still always be written back at a later date.

You're assuming that lenders are pursuing repossession cases into bankruptcy. This is not the case. Three people in the entire country claimed bankruptcy for the entire period of 2009. link

OfflerCrocGod wrote: »

The interim mentions provisions.
The other interesting fact was that they booked all provisions fully as they should but they where showing forbearance and allowing people to pay what they could, they mention that 85% of loans in arrears are paying at a minimum the interest on the loan. The provisioning seems to have peaked and they believe arrears will peak this year. That would be my guess too, they seem correct on the provisions prediction so we will see by Q2/Q3 next year if arrears are currently peaking.

They have also stated, and I am going to quote the interim report here

The key assumption used in the group’s provisioning models and methodology, constructed in conjunction with Oliver Wyman, is house prices. The group’s assumption is that house prices fall 40% peak to trough. The latest permanent tsb / ESRI house price index states that the peak to trough fall is at 35% indicating that the market would have to fall a further 8% in order for the 40% peak to trough assumption to be met.

All the assumptions you read are based on Irish house prices being close to bottoming.

The average indexed LTV of the Irish residential mortgages and residential investment property loans now stands at 66% (2009: 63%) with cases over 100% representing 25% (2009: 22%) of the portfolio.

Studies have shown negative equity is the precursor to mortgage default.

With average UK property prices now 7.53% above the trough reached in April 2009, as per the Halifax House Price Index, the average index linked LTV of the UK mortgage portfolio is 83% (2009: 85%) with cases in negative equity representing 22% of the total portfolio at the end of June 2010.

The UK mortgage book isn't too rosy looking either.

OfflerCrocGod wrote: »

Difficult to tell - as long as the company isn't too messed up by the regulators/government I think the losses will have peaked in 2009 and 2010 will end up with a smaller loss. I think liquidity and not solvency is the problem now. It's in the ECB's hands. We will see tomorrow if they refuse to support European banks or not.

First thing, you have just admitted that your entire thesis is reliant on ECB forebearance. I don't understand your position on this, but it's your perogative.

Secondly, while you're right to state that solvency isn't the issue, you're wrong to state that liquidity is. The issue with the company is funding. 40% of the loan book is in money losing tracker mortgages, no bank in the world will be stupid enough to buy these, so these things are going to be a serious drag on performance for years and years to come. They cannot increase rates in a serious way, otherwise defaults would skyrocket because so much of their loan book is already underwater. That means, the only area they can control is funding costs. If they go to the private market, they're ****ed, no investor is going to give them a decent rate they can make money off from. That leaves one option - the ECB continuing the emergency repo deal that allows them to exchange trash for cash. I wonder just how long the ECB will continue to support a private institution?

I hope your position works out for you, but I think you are dead wrong, and crazy to rely on the kindness of the ECB, and catching a falling knife.

Raskolnikov

neil.p.b wrote: »

ECB supplied 17% of their total funding this year, They said in their interim results that reliance on funding from the ECB was reducing though

I'll give you one guess who is supplying the funding shortfall.

neil.p.b

Raskolnikov wrote: »

the banking operation is so rotten and poorly performing, it will take the overall group down.

So your price target for the share is 0c?

mono627

Raskolnikov wrote: »

Three people in the entire country claimed bankruptcy for the entire period of 2009.

:eek:

I don't know why this figure shocked me so much. Shouldn't really be that shocking given the archaic bankruptcy laws in this country, they're a serious disincentive to set up a business here!

Raskolnikov

neil.p.b wrote: »

So your price target for the share is 0c?

Zero or pennies, it's all much of a muchness.

As a matter of interest, where do you guys see house prices in Ireland going in 2011, and where do you see them at by the end of 2013?

OfflerCrocGod

Raskolnikov wrote: »

You're assuming that lenders are pursuing repossession cases into bankruptcy. This is not the case. Three people in the entire country claimed bankruptcy for the entire period of 2009. link

That is due to the horrid effects of being declared bankrupt, this is not a bad thing. People will do anything to try and escape that faith, they will flog their mother to pay the mortgage. In the US you just post the keys and walk off. Only 50 houses have been repossessed in the last quarter in Ireland which shows the flexibility of the banks and loan carriers.

Raskolnikov wrote: »

They have also stated, and I am going to quote the interim report here
All the assumptions you read are based on Irish house prices being close to bottoming.

Indeed.

Raskolnikov wrote: »

Studies have shown negative equity is the precursor to mortgage default.

I can believe that, I'm just wondering what are the percentages like when comparing full recourse vs no recourse and then the recovered losses, which full recourse should of course help with.

Raskolnikov wrote: »

The UK mortgage book isn't too rosy looking either.

Seems arrears and provisions have already peaked there so I'm far less worried about it, especially as it's being wound down and has been closed since 2008.

Raskolnikov wrote: »

First thing, you have just admitted that your entire thesis is reliant on ECB forebearance. I don't understand your position on this, but it's your perogative.

My position is that the market always overreacts, the ECB's job is to be LOLR, as long as it does that and supports banks when the markets are scared then given time current problems
seem fixable. During the Lehman crisis even HSBC could have collapsed if it hadn't been for the strong support of central banks. Markets can be very irrational.

Raskolnikov wrote: »

Secondly, while you're right to state that solvency isn't the issue, you're wrong to state that liquidity is.

If solvency isn't the issue then why would the bank take down the entire group? The problem is getting liquidity/funding to roll over term debt, they where making very good progress in funding the entire year before Greece blew sky high. Now they need to rely on the ECB until the markets calm down, which will probably take several months. They need to raise about €2Bil a year until 2013 (inc.), that seems achievable.

Raskolnikov wrote: »

The issue with the company is funding. 40% of the loan book is in money losing tracker mortgages, no bank in the world will be stupid enough to buy these, so these things are going to be a serious drag on performance for years and years to come. They cannot increase rates in a serious way, otherwise defaults would skyrocket because so much of their loan book is already underwater.

They've increased SVR three times in the last year or so.

Raskolnikov wrote: »

That means, the only area they can control is funding costs. If they go to the private market, they're ****ed, no investor is going to give them a decent rate they can make money off from. That leaves one option - the ECB continuing the emergency repo deal that allows them to exchange trash for cash. I wonder just how long the ECB will continue to support a private institution?

I hope your position works out for you, but I think you are dead wrong, and crazy to rely on the kindness of the ECB, and catching a falling knife.

The ECB is more then happy to support German banks, maybe IPM should move it's headquaters I think the world economy is turning and we will be in the expansion phase next year. I hope the ECB won't upset the apple cart and send the world spiralling down again. Greek, Irish, Spanish and Portuguese banks all need the ECB, surely it wouldn't be mad enough to push them all into oblivion. It would be a second Lehman!

OfflerCrocGod

Raskolnikov wrote: »

Zero or pennies, it's all much of a muchness.

As a matter of interest, where do you guys see house prices in Ireland going in 2011, and where do you see them at by the end of 2013?

My base case is bottoming next year Q2/Q3 and slightly up from there by 2013. Live register is down again this month and PMI shows New Orders are up again.

OfflerCrocGod

Oh and of course out closest and most important trade partner is doing well. "Economists have been guilty of excessive pessimism since the recovery began – just as they were guilty of excessive optimism in the dying days of the bubble."

neil.p.b

Raskolnikov wrote: »

As a matter of interest, where do you guys see house prices in Ireland going in 2011, and where do you see them at by the end of 2013?

Bottoming Q1 2011, up 2% by 2013.

OfflerCrocGod wrote: »

They need to raise about €2Bil a year until 2013 (inc.), that seems achievable.

The €2 billlion has been secured for 2011 and 2012

foundation10

IL&P business plan has been broken on the mortgage side, borrowing on the cheap interbank rate and then onward lending as tracker mortgage, was good when interbank was cheap and readily available. It is over exposed as doesnt have adequate deposits to cover mortgages.

I would read too much either into the unemployment figures as this is more than likely a departure from the country by individual.

Personal debt hasn't even surfaced yet we have to face up to the fact that all our banks will eventually come under state control before we see the end of this crisis.

Mr_Roger_Bongos

neil.p.b wrote: »

Bottoming Q1 2011, up 2% by 2013.

So from Mar 2011 to Jan 2013 you see +2% rise?

Thats a long time with very little change, do you see much movement in share price through to mid 2012 if that's the case?

Thanks to Raskolnikov and Offlercrocgod for an interesting read so far!

neil.p.b

Mr_Roger_Bongos wrote: »

So from Mar 2011 to Jan 2013 you see +2% rise?

Conservative view, after bottoming next year i can't see any significant increase, bulk of that +2% rise coming in 2012.

Mr_Roger_Bongos wrote: »

Thats a long time with very little change, do you see much movement in share price through to mid 2012 if that's the case?

No, but that's irrelevant, the growth in housing prices is not going to bear any significant correlation on its share price

Mr_Roger_Bongos

neil.p.b wrote: »

No, but that's irrelevant, the growth in housing prices is not going to bear any significant correlation on its share price

What will have a significant correlation?

OfflerCrocGod

neil.p.b wrote: »

No, but that's irrelevant, the growth in housing prices is not going to bear any significant correlation on its share price

Of course it will, the loans default and they sell the house for enough to cover the loan the losses will be minimal if any. They sell at 40% down then they lose a lot and must garnish from the defaulters wages for years to get something back.

neil.p.b

OfflerCrocGod wrote: »

Of course it will, the loans default and they sell the house for enough to cover the loan the losses will be minimal if any. They sell at 40% down then they lose a lot and must garnish from the defaulters wages for years to get something back.

We're talking about a small positive growth percentage for Ireland over the next two years here. It will be minimal. What i'm saying is whether someones house price increase by 2% or 4% in the next 2 years will make no huge difference to the company. Talking about someone being able to sell their house for enough to cover their loan and selling at a 40% loss has nothing to do with the increase in housing prices over the next 2 years.

Urquell

Not too bad last these couple of days. Got in on Monday at 1.07. Currently 1.22.

Anyone else in at the mo? Im thinking of leaving it in for the rest of the week, see what happens. Its a quiet time after the budget, no major activity expected that I can see til January...

AP_MAN

yah, I got in bit earlier @ 0.79c... I guess it could touch 1.50c ish soon at the pace it is going on now...

Urquell wrote: »

Not too bad last these couple of days. Got in on Monday at 1.07. Currently 1.22.

Anyone else in at the mo? Im thinking of leaving it in for the rest of the week, see what happens. Its a quiet time after the budget, no major activity expected that I can see til January...

irishh_bob

i got in at 1.04 , the descision by the goverment to allow a dail vote on the bailout package could test it next week

neil.p.b

Possibly, but i don think there's too much of a chance of it being majority voted against considering the budget hasn't been. I can still see 1.50 within a month.

Urquell

neil.p.b wrote: »

Possibly, but i don think there's too much of a chance of it being majority voted against considering the budget hasn't been. I can still see 1.50 within a month.

Thats Interesting. I was going to post that the Vote on Wednesday might make the market Jittery a small bit. Im into BOI and IL&P right now. Was going to wait til tomorrow morning and sell into a Rise early. I expect the Vote to pass, I just dont want to be holding Bank Shares on the run up.

Are you holding on to your IL&P shares Neil through the vote? Im definitely getting out of BOI tomorrow!

neil.p.b

Can't be sure as of right now it's too early to tell, but i'd say i will. I don't see there being a fall significant enough to try and get out and in around it. I'll most just likely hold for the next 3-4 weeks/1.50+, whichever comes first.

Urquell

This one seems to have been caught in the end-of-year sell off before Xmas. Stock dropped off after Bowlers annoucement and never stopped. I got out while their was still time so it wasnt a dead loss.

No more good news on the Immeadiate Horizon and quite honestly, it would suit me if the price dropped down some more. They still require less than 100 mil to make their Tier 1 Capital Requirements by the end of Feb. Hopefully this should not be a problem and there will be a nice boost on that annoucement.

Couple of questions :
- Any ideas on how they will find the last €100 mil for Tier 1, im presuming some sort of Asset sale?
- are they still in the Hunt for EBS? wouldnt this require significant Govt equity in IL&P to fund this venture if they tried to buy it up?

Raskolnikov

Is Irish Life Permanent any different than the Rest?

Looks like it might have been crappier than even I suspected.

beagle001

Where do you see it heading rashlinikov?

Raskolnikov

At the moment, it still looks like 0 cent.

Anyone buying or holding now might as well be standing in front of a moving freight train. Look at the technicals or fundamentals, the picture isn't rosy.

displaced dub

Happy that i got into this made a nice few bob and then legged it, this is the way the bank stocks are going.

Hard to imagine that the following

AIB (virtually nationalized)
Anglo (nationalized)
BOI (Government stake getting larger)
Irish Nationwide (nationalized)
ILP (heading to the nationalized route)
EBS (Large Government stake)

At this stage if your holding bank stocks you need your head examined.

irishh_bob

bailed out this morning at 11 o clock , lost 230 euro out of a 500 euro investment in december

pocketdooz

displaced dub wrote: »

Happy that i got into this made a nice few bob and then legged it, this is the way the bank stocks are going.

Hard to imagine that the following

AIB (virtually nationalized)
Anglo (nationalized)
BOI (Government stake getting larger)
Irish Nationwide (nationalized)
ILP (heading to the nationalized route)
EBS (Large Government stake)

At this stage if your holding bank stocks you need your head examined.

EBS has been sold to a private equity consortium.
.

displaced dub

irishh_bob wrote: »

bailed out this morning at 11 o clock , lost 230 euro out of a 500 euro investment in december

hard to believe but you might he happy to have lost some money as opposed to friday when you would have lost the lot.

displaced dub

pocketdooz wrote: »

EBS has been sold to a private equity consortium.
.

you right pocket, its hard to keep track of them at this stage.

irishh_bob

displaced dub wrote: »

hard to believe but you might he happy to have lost some money as opposed to friday when you would have lost the lot.

thats if the transaction has enough time to clear

OfflerCrocGod

displaced dub wrote: »

Happy that i got into this made a nice few bob and then legged it, this is the way the bank stocks are going.

I also flipped them from 0.70 to 1.05 and walked away to wait for things to clear down. It does seem as if Ireland is being forced to pay for every single fault of its once private banking system which is odious. Provide cheap funding from the ECB and let them be as zombie banks and it would have ended up costing less. Damn Germans.

pocketdooz

pocketdooz wrote: »

EBS has been sold to a private equity consortium.
.

Looks like a deal isn't done til it is actually done ....

http://www.bloomberg.com/news/2011-03-30/ireland-scraps-ebs-sale-to-wilbur-ross-cardinal-capital-team.html

.