AIB gets €100,000 for bank stake formerly worth €216m

gizmo555

Holy Sh1t!!! From today's (23 June) Irish Times:

ALLIED IRISH Banks has sold its half share in a Bulgarian commercial lender for €100,000 – just 3½ years after paying €216 million for the investment.

The Irish bank, which is 93 per cent owned by the State, said last month that it sold the 49.99 per cent share in Bulgarian American Credit Bank but didn’t disclose the price paid or the identity of the buyer at the time.

It emerged yesterday that the stake was bought for €100,000 by the Bulgarian businesswoman Tsvetelina Borislavova, a former minority shareholder in CIBank, the Bulgarian subsidiary of the Belgian banking group, KBC.

At the time of AIB’s purchase of the stake, chief executive Eugene Sheehy said the investment was part of its strategy for central and eastern Europe “which involves acquiring and investing in businesses at reasonable valuations in targeted high growth markets”.

Can someone remind me what package Mr Sheehy left AIB with, after acquiring this "reasonably valued" investment for the bank? I certainly can't believe many ordinary mug punters in Bulgarian holiday homes managed to achieve the 99.5% loss of capital which AIB has racked up here . . .

Dannyboy83

I misread it as 100m, thinking that's a big loss.

Then I reread - €100,000..............why would they even sell for that amount?

Welease

Dannyboy83 wrote: »

I misread it as 100m, thinking that's a big loss.

Then I reread - €100,000..............why would they even sell for that amount?

I would assume so that are not liable for paying any debts, maturing bonds etc owed by the bank.

GSF

Dannyboy83 wrote: »

I misread it as 100m, thinking that's a big loss.

Then I reread - €100,000..............why would they even sell for that amount?

its a bit more than the 1cent you sometimes get for selling an essentially worthless asset?

godtabh

if some one invested €216m in AIB 3.5 years ago how much is it worth now!

GSF

godtabh wrote: »

if some one invested €216m in AIB 3.5 years ago how much is it worth now!

about €1.7m approx by my maths

jmayo

Just listening to John Murray this morning on RTE and as he said it was a loss of something like 99.995%, he commented that it is now worth less than what Irish buyers were paying for single one bed apartment in Sunny Beach.

Just goes to show how badly run our banks were that they not alone concentrated on a property bubble here, they chased after property bubbles elsewhere.

I guess they only did what some of the Irish "property millionaires" were doing.
Muppets the lot of them. :mad:

InigoMontoya

Damn, a few more investments like that and they might have to do something drastic.

Like cut someone's bonus.

Slightly.

GSF

InigoMontoya wrote: »

Damn, a few more investments like that and they might have to do something drastic.

Like cut someone's bonus.

Slightly.

Now steady on there now...:eek:

Nijmegen

The woman is also, apparently, the girlfriend of the prime minister over there.

I'd say though that the bank must be carrying losses or similar, so the headline figure may not tell the whole story. If they buy a bank with debts of €100m for €100,000 they're actually making a change to your balance sheet of €100,100,000.

Upon further inspection of the Irish Times article:

The Bulgarian bank, set up in 1996 to lend to small and medium-sized businesses, has to repay a €35 million bond next month and make a €25 million payment on a €75 million loan from AIB.

Ms Borislavova’s company has said that it would provide a loan of €35 million to the Bulgarian bank.

In actual fact, the bank is carrying debts of €115m it's taking off of AIB's books.

gizmo555

jmayo wrote: »

Just listening to John Murray this morning on RTE and as he said it was a loss of something like 99.995%,

He's absolutely right, I only just realised my desktop calculator doesn't have enough zeroes to calculate the loss properly . . . .:eek:

digme

the funny thing is aib isn't paying sh!t for it.... slaves work and pay tax and then that tax goes direct to aib.............

EggsAckley

...

Thargor

Lets all ignore the facts about the massive debts the bank was carrying, because populism is such fun!

thebman

Thargor wrote: »

Lets all ignore the facts about the massive debts the bank was carrying, because populism is such fun!

I don't think anyone is ignoring that, it was just mentioned a few posts ago.

However if it had 100 million of debt and was purchased at a little over 200 million euro then it is still a poor saving for AIB really in my book.

I would have hoped for better. Realistically it is just supposed to sell newspapers though.

hinault

€215m liability to be picked up by the Irish taxpayer.

Thanks Mr.Lenihan.:mad::mad::mad:

later12

With its debt maturity profile, and its present financial situation, €100,000 seems like a deal for a 50% stake in BACB.

hinault

edit : wrong reply

Nijmegen

later10 - Firesales, eh?