AIB and BOI Shares suspended

aftermn

I see on the RTE site that trading in BOI and AIB shares will be suspended from 6.30am in the morning. What's happening?

I know stress test results are due, is there more t it then just restraining panic?

There were rumours that large scale re-organisation or amalgamation were iminent. Might it all happen in one big bang.

Scofflaw

Not sure that there needs to be more to it than it says on the tin:

The Irish Stock Exchange and the Central Bank say the suspension of bank shares is being done in order to avoid the possibility of information or rumours having a 'disorderly' effect on the market in the banks' shares.

Obviously, not everyone would accept that, leading inevitably to exactly the kind of speculation the Exchange is talking about...

cordially,
Scofflaw

the culture of deference

Its time for BOI AIB ILp merger me thinks.

hardCopy

When are the results due out?

robd

hardCopy wrote: »

When are the results due out?

4.30pm today.

Bob_Latchford

16:30 I heard.

How can they be so out time after time after time? Makes you think when you hear of the hole being doubled today

robd

aftermn wrote: »

I see on the RTE site that trading in BOI and AIB shares will be suspended from 6.30am in the morning. What's happening?

I know stress test results are due, is there more t it then just restraining panic?

There were rumours that large scale re-organisation or amalgamation were iminent. Might it all happen in one big bang.

Irish Life & Permanent crashed 45% on Tuesday due to rumours of state aid due to outcome of stress test. Shares suspended of all 3 institutions to combat rumour mill.

RichardAnd

robd wrote: »

4.30pm today.

So if there's a black out today at 4:30, I'll know why

Less facetiously though, I'm curious to know what effect the publication of these reults will yeild.

beeftotheheels

Bob_Latchford wrote: »

16:30 I heard.

How can they be so out time after time after time? Makes you think when you hear of the hole being doubled today

Because it is a house of cards.

At the time of the guarantee AIB and BOI had a lot of deposits, and convinced BL that their business model was sound and that they were in a liquidity crisis and not a financial crisis. BL made the guarantee and hilariously, other States were worried about money flowing into the Irish banks.

As time has gone on it is clear that they are in a financial crisis and that their business model was unsound. They are realizing losses on transfers to NAMA and providing against future losses on loans in their own books. As a result of these losses, and the huge debts they have which we have guaranteed, they (and we) have been downgraded by the ratings agency.

If a bank has a lower credit rating then certain investors are no longer allowed to put money on deposit in it e.g. pension funds. They withdraw their deposits (which used to provide a cheap source of funding for the banks) and this makes the hole in the banks a bit bigger. We try to fill that hole but the markets no longer believe us or our banks so deposits keep coming out, losses keep stacking up, and the hole keeps growing.

The theory would be that if we put enough cash in to fill the hole then market confidence would return, deposits would return, the ratings agencies would be happy and would upgrade the banks, and then the institutional deposits could return further strengthening the banks.

This is poker. Liar's Poker!

http://www.amazon.com/Liars-Poker-Rising-Through-Wreckage/dp/0140143459

Cannibal Ox

Have I gone crazy, or this is being totally underplayed? The numbers being thrown around for the next bailout after this are crazy. Bloomberg's latest figure is €27.5 billion. RTE is saying €23billion. Both are way more then the figure thrown out during the election. If you go with Bloomberg, that'll be 80% of the IMF/ECB fund gone. Have I completely misunderstood this? Halt to shares, Noonan talking about massive restructuring, all 6 banks under state ownership, ministers talking about bond haircuts, are we going to look back and see this as a massive moment?

Have I just bitten a whole load of hype and completely misjudged how important the next few hours are?

3DataModem

If I was the EU/IMF/FG/LAB I would be offering Lowry 100m in cash to literally bu m a chicken live on the 6 o clock news. This would at least stop public panic while all media resources are tied up with the Lowry story.

aftermn

It appears there was more to it then just the stress tests. Merger of AIB and EBS, Sell off of the life part of IL&P, extra time given to BOI to reach targets.
Nearly, but not quite a big bang approach.
Apparently the bank part of IL&P is now untouchable because of the tracker element on its books. It is left hanging, nobody's child, destined to lose money for the next 30 years, unless they can lure people off the trackers.
With the above and the stress scenario already almost upon us, will this be any different from the original stress test? Overtaken by events.

hmmm

Cannibal Ox wrote: »

Bloomberg's latest figure is €27.5 billion. RTE is saying €23billion. Both are way more then the figure thrown out during the election. If you go with Bloomberg, that'll be 80% of the IMF/ECB fund gone. Have I completely misunderstood this?

Part of the ECB/IMF deal was an amount which was made available to cover any future losses in the banks - I presume that's where you are getting your 80% from? It was expected at the time the ECB/IMF deal was signed that we would be calling down most if not all of that money so this is not unexpected.

Honohan himself said tonight that the stress test results were "not as bad as were expected", so I wouldn't be too shocked. The markets were expecting these results.

jaffa20

the culture of deference wrote: »

Its time for BOI AIB ILp merger me thinks.

BOI would avoid at all costs i think being in the strongest position.

Scofflaw

hmmm wrote: »

Part of the ECB/IMF deal was an amount which was made available to cover any future losses in the banks - I presume that's where you are getting your 80% from? It was expected at the time the ECB/IMF deal was signed that we would be calling down most if not all of that money so this is not unexpected.

It's the €10bn Lenihan was supposed to put in before the election, plus perhaps €14bn of the €25bn IMF/EU bank contingency fund - 'perhaps' because some of the money can come from sale of assets in the restructuring, and some more from haircuts on junior debt.

hmmm wrote: »

Honohan himself said tonight that the stress test results were "not as bad as were expected", so I wouldn't be too shocked. The markets were expecting these results.

Back when the IMF/EU deal was negotiated, the government said that they believed the banks needed €10bn, but that their estimates might be out by more than 300%:

The package is divided up into €50bn for broad government spending, €10bn to recapitalise the banks... and an extra €25bn for the back pocket. That’s the easiest way to think about the “contingency funding” allocated to the Irish banks. Because, although the authorities have drawn up an absurdly detailed prediction of which banks need what in terms of fresh capital – €2.199bn for Bank of Ireland, €5.265bn for Allied Irish Banks, €438m for EBS and €98m for Irish Life & Permanent – they reckon they might be more than 300 per cent, or €25bn out. Hence the big back pocket.

Source

cordially,
Scofflaw