Another €25bn?

ferike1

So it seems the banks need yet another injection of €25bn on top of the deferred injection of €10bn. Is anyone really surprised by this anymore?

professore

This has been well flagged for months now - I have heard it on at least 3 separate occasions on Vincent Browne - once by the Anglo chairman Alan Dukes - and I don't even watch VB that much. So claiming it is a "shock" doesn't wash.

ferike1

So where are we going to get this money from?

ilovesleep

Is this an extra 25B on top of the 85B bailout package already. If so, wouldn't this money have to be raised quickly for the banks. This money will have to come from our pockets ie higher taxes, cuts. Would this mean we'll have to do these - higher taxes, cuts - all in one go very soon. That is cut the deficit in one go. Therefore the 85B bailout package would go all for the banks, nothing for a deficit, or perhaps just a very tiny bit.

Max Power1

ferike1 wrote: »

So where are we going to get this money from?

Wasnt it negotiated along with the €10bn?

So many loans/bailout figures given its difficult to keep track though.

ferike1

From my understanding this is on top of what was already given by the IMF. Seems the banks failed their stress tests and more money is needed! Surprise surprise. Banks are worse off than we though etc etc. Cheapest bailout ever (insert rhetoric here)...

Scofflaw

ferike1 wrote: »

From my understanding this is on top of what was already given by the IMF. Seems the banks failed their stress tests and more money is needed! Surprise surprise. Banks are worse off than we though etc etc. Cheapest bailout ever (insert rhetoric here)...

That bit, at least, is not so - it's the other IMF/EU €25bn that was available in a contingency basis:

Under the terms of last November's €85bn IMF/EU deal, €35bn of that was allocated for capitalisation of the banks. The initial €10bn was due to go in last month but was deferred because Mr Lenihan said he "had no mandate" to carry out that transfer. The remaining €25bn was kept as a contingency fund to be used only as a last resort.

However, given the deeper level of losses on the balance sheets of the banks as revealed by the stress testing, it now seems the entirety of that contingency fund could be used up to fill the ever-increasing hole in the Irish banks.

You could say it's another opportunity to let the banks collapse.

cordially,
Scofflaw

ferike1

Fair enough, so we use up the whole contingency fund. Anyone want to short sell/place bets on that not being enough. I don't think we have ever been given a conculsive figure, its always just a little (couple ten of billions) more.

HellFireClub

Everyone else involved here has sussed the game is up, everyone except ourselves that is!

tweedledee

God this country and its subserviant people are fcuked .............

Seth Brundle

Just out of curiosity, how is the transaction made? Does the DoF simply hand over a cheque for €X billion or do they actually contractually oblige the banks to do anything?

Do we get anything from them even if its a breakable promise like they'll start lending out money again?

Tea drinker

WOW that's a big surpise! I really trust the bankers.
Also Patrick Honohan said two weeks ago we wouldn't need the full fund, I mean he wouldn't be in the job as Central bank governor if he was CONSTANTLY wrong about stuff. I mean flipping a coin more accurate type of scenario.

http://www.independent.ie/national-news/banks-will-need-another-euro25bn-2577524.html


chinese lady takes the place of the banks:
http://www.youtube.com/watch?v=K7luMp6lb9M

10 billion... and then 25 and then 35 and then and then and then

Scofflaw

kbannon wrote: »

Just out of curiosity, how is the transaction made? Does the DoF simply hand over a cheque for €X billion or do they actually contractually oblige the banks to do anything?

Do we get anything from them even if its a breakable promise like they'll start lending out money again?

Eh, well, we already own them, right? Or, rather, we're the shareholders, via the government. So I guess we could...threaten to pull the plug? But maybe they wouldn't believe that?

not waving but drowning,
Scofflaw

ilovesleep

So whats the final figure? Whats happens when the banks need more and more and more.

Just wait for the default. Just wait for it. I know people who is walking from their jobs.

ednwireland

looks like its going to be 35bn - irish banks just a bottomless pit.

now, what the heck were the ecb/imf upto surely they should have figured out where the bottom was before they brought in the bailout package, but as i suspect it was all a show to sure up the euro and prevent a run on european countries which would have ended in disordely collapse of the euro, but lets be honest the bond markets werent fooled which is why we are still up ay 9+%. when is someone going to shout stop and somehow fihgure out where this black hole ends or how to stop it.
surely if they pump more money in its just serious sovereign default time.


or is it just the ECB/IMF havent a clue either at this point

dan_d

I've heard the rumours but could someone link to an actual article about this?
I can't find it anywhere.

ednwireland

dan_d wrote: »

I've heard the rumours but could someone link to an actual article about this?
I can't find it anywhere.

http://www.independent.ie/business/irish/banks-likely-to-need-most-of-euro35bn-in-funds-2579347.html

honestly its so confusing at this point its hard to know what money they are talking about

ilovesleep

Nothing short of a war is going to help us now at this stage

dan_d

Thanks.
Between the lines, it sounds like FG are realising the reality of the situation.
And unfortunately, that situation is falling into the "worse case scenario" side of things.
I notice Anglo is not included in this.I think a few hard and fast decisions need to be made here. Fair enough, FF did not know at the time of the bank guarantee the extent of the holes in the balance sheets.They've spent the last 2 and a half years finding out. We should now know (or at least almost know) how big the problem is. So based on that information, can decisions be made regarding the extent of how much we can and are prepared to bail them out, and what happens if the figures required exceed that number?

And could someone more in the know than me please explain these 2 paragraphs (the second two)

Asked if Ireland could afford to put in the extra money, Mr Noonan said that "sustainability" was a bigger issue than affordability. The bailout plan left Ireland a €25bn cushion in case the banks needed more than the original €10bn. "As we move to restructure the wider banking system, particularly AIB and Bank of Ireland, the issue of most concern to me now is the pace of deleveraging (selling down the bank's assets so they can repay money they've borrowed)," he said.
"If you can get agreement on the deleveraging side, obviously then you don't have the same add-on from banking coming across on the sovereign side."

I understand the deleveraging idea but what is the actual pace of deleveraging right now - is it good or bad at present? And what does he mean by the last sentence?

And why are we still dealing with the same bank officials? Why have all the top layers of management of these banks not been kicked out and replaced by completely fresh people?

ferike1

But as long as deposits keep leaving the banks more and more money will need to be pumped in?

HellFireClub

ferike1 wrote: »

But as long as deposits keep leaving the banks more and more money will need to be pumped in?

+1, it's a great time to be a poor man! At this stage, if the headlines in the morning said we needed to throw in another hundred Bil, I don't think anyone would be surprised, people are gone beyond shock or surprise at this stage...

macman2010

[
Asked if Ireland could afford to put in the extra money, Mr Noonan said that "sustainability" was a bigger issue than affordability.

Sounds like "we pay the money or we default"

"If you can get agreement on the deleveraging side, obviously then you don't have the same add-on from banking coming across on the sovereign side."

I understand the deleveraging idea but what is the actual pace of deleveraging right now - is it good or bad at present? And what does he mean by the last sentence?

I think he is refering to fire selling of the banks assets and profitable operations. If they are sold off or under sold for less than the real value of them will end up costing us more money in the long run.
Holding onto the profitable sections of the bank for longer would be a better schenario, but the ECB and IMF want them sold off ASAP.

HellFireClub

macman2010 wrote: »

Asked if Ireland could afford to put in the extra money, Mr Noonan said that "sustainability" was a bigger issue than affordability.

Sounds like "we pay the money or we default"

"If you can get agreement on the deleveraging side, obviously then you don't have the same add-on from banking coming across on the sovereign side."

I understand the deleveraging idea but what is the actual pace of deleveraging right now - is it good or bad at present? And what does he mean by the last sentence?

I think he is refering to fire selling of the banks assets and profitable operations. If they are sold off or under sold for less than the real value of them will end up costing us more money in the long run.
Holding onto the profitable sections of the bank for longer would be a better schenario, but the ECB and IMF want them sold off ASAP.

It's obvious that Noonan hasn't a clue what the issue is, nor has he the first or last notion as to how to resolve it. We'd get more respect in the medium and the long term for coming out and saying that we are defaulting on bank debt and that's the end of it, and tough sh*t to bondholders who lent recklessly. Next problem...