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IL&P

  • 28-06-2011 8:12am
    #1
    liammur
    Closed Accounts Posts: 3,461 ✭✭✭


    IL&P trading at 2.5 cents today. Surely there is something wrong here. AIB has cost the tax payer many billions and is worth a multiple of this. Are the government losing the plot about 'burning' everybody?


Comments

  • #2
    Raskolnikov
    Registered Users, Registered Users 2 Posts: 10,148 ✭✭✭✭Raskolnikov


    liammur wrote: »
    IL&P trading at 2.5 cents today. Surely there is something wrong here. AIB has cost the tax payer many billions and is worth a multiple of this. Are the government losing the plot about 'burning' everybody?
    IL&P is being 99% nationalised. The Life part of the business is being sold, leaving shareholders with just the banking part. Even being fully diluted, it doesn't look all that cheap to me, especially considering that we're going back to the kind of banking earnings of 2000 figures.


  • #3
    liammur
    Closed Accounts Posts: 3,461 ✭✭✭liammur


    Raskolnikov wrote: »
    IL&P is being 99% nationalised. The Life part of the business is being sold, leaving shareholders with just the banking part. Even being fully diluted, it doesn't look all that cheap to me, especially considering that we're going back to the kind of banking earnings of 2000 figures.

    I'm not saying it's cheap - far from it, and who would have the confidence to touch an Irish bank share after what is little more than theft by the government.


  • #4
    Raskolnikov
    Registered Users, Registered Users 2 Posts: 10,148 ✭✭✭✭Raskolnikov


    liammur wrote: »
    I'm not saying it's cheap - far from it, and who would have the confidence to touch an Irish bank share after what is little more than theft by the government.
    Not sure where you're getting that idea from. Europe told the Irish government that to bring the capital ratio up to scratch. Anyway, the real villain here is management - they were the ones that ran the company into the ground.


  • #5
    liammur
    Closed Accounts Posts: 3,461 ✭✭✭liammur


    Raskolnikov wrote: »
    Not sure where you're getting that idea from. Europe told the Irish government that to bring the capital ratio up to scratch. Anyway, the real villain here is management - they were the ones that ran the company into the ground.

    The capital ratio will be the highest in the world at 33%. Surely if IL&P are putting up a fraction of the money (1bn +, they should be entitled to more and 99.3% nationalisation.


  • #6
    coylemj
    Registered Users, Registered Users 2 Posts: 25,624 ✭✭✭✭coylemj


    Raskolnikov wrote: »
    Not sure where you're getting that idea from. Europe told the Irish government that to bring the capital ratio up to scratch. Anyway, the real villain here is management - they were the ones that ran the company into the ground.

    I don't think that's very fair. IL&P was hurt by the lack of funds available to Irish banks, not by reckless lending. They were tarred with the same brush that (rightly) held up AIB and BOI to be risks not worth taking so no Irish bank could access funds on the interbank market. That's why the Irish Government had to go to the IMF long before the Govt. coffers were bare, the banks were running out of money so since then the Irish banks have been accessing money from our Central Bank and the ECB.

    IL&P is being forced to sell off the life division which in a fire sale will only bring in a fraction of it's true value and they will be left with a bank (PermanentTSB) that has to comply with new capital requirements and with no access to funds to recapitalise they have no option but to fall back on the Govt,. for more money.

    The Govt. is entitled to seek a good deal for the taxpayer and in return for the new capital they are asking for 99% control which means ordinary shareholders are going to see their equity effectively wiped out. The alternative is that existing shareholders and international investors cough up the cash which is not going to happen.


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  • #7
    liammur
    Closed Accounts Posts: 3,461 ✭✭✭liammur


    coylemj wrote: »
    I don't think that's very fair. IL&P was hurt by the lack of funds available to Irish banks, not by reckless lending. They were tarred with the same brush that (rightly) held up AIB and BOI to be risks not worth taking so no Irish bank could access funds on the interbank market. That's why the Irish Government had to go to the IMF long before the Govt. coffers were bare, the banks were running out of money so since then the Irish banks have been accessing money from our Central Bank and the ECB.

    IL&P is being forced to sell off the life division which in a fire sale will only bring in a fraction of it's true value and they will be left with a bank (PermanentTSB) that has to comply with new capital requirements and with no access to funds to recapitalise they have no option but to fall back on the Govt,. for more money.

    The Govt. is entitled to seek a good deal for the taxpayer and in return for the new capital they are asking for 99% control which means ordinary shareholders are going to see their equity effectively wiped out. The alternative is that existing shareholders and international investors cough up the cash which is not going to happen.

    The interesting point is, from a shareholders point of view, it doesn't matter if IR Life gets €1 or €1.5bn from the trade sale, the govt is not taking this cash into consideration. This is where the wrong is occuring.


  • #8
    Raskolnikov
    Registered Users, Registered Users 2 Posts: 10,148 ✭✭✭✭Raskolnikov


    liammur wrote: »
    The capital ratio will be the highest in the world at 33%. Surely if IL&P are putting up a fraction of the money (1bn +, they should be entitled to more and 99.3% nationalisation.
    The capital ratio is so high because the ECB have modeled for future losses on the IL&P loan book. IL&P are completely dependent on ECB and Irish government support, it quite frankly amazes me that investors are getting to keep any money.


  • #9
    liammur
    Closed Accounts Posts: 3,461 ✭✭✭liammur


    Raskolnikov wrote: »
    The capital ratio is so high because the ECB have modeled for future losses on the IL&P loan book. IL&P are completely dependent on ECB and Irish government support, it quite frankly amazes me that investors are getting to keep any money.

    A similar analogy would be:

    The Ir govt are completely dependent on ECB/IMF/EU. It amazes me that they are getting any loans, let alone complaining about interest rates.


  • #10
    beagle001
    Closed Accounts Posts: 764 ✭✭✭beagle001


    Writing was on the wall a long time ago regarding ILP,people who did not get out then have nothing to whinge.
    The govt for once only wants to maximise the return for the taxpayer with 99% nationalisation which in my opinion is very fair.
    Shareholders have only the management to blame on this issue.


  • #11
    liammur
    Closed Accounts Posts: 3,461 ✭✭✭liammur


    beagle001 wrote: »
    Writing was on the wall a long time ago regarding ILP,people who did not get out then have nothing to whinge.
    The govt for once only wants to maximise the return for the taxpayer with 99% nationalisation which in my opinion is very fair.
    Shareholders have only the management to blame on this issue.

    Not many banks in the world , if any would pass the stress tests irish banks were subjected to. They seem to be bending over backwards to accomodate the 2 pillar banks.


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  • #12
    beagle001
    Closed Accounts Posts: 764 ✭✭✭beagle001


    ILP is no saint,the ECB knows full well that further bad loans are coming down the line and especially in the residential mortgage sector it's a ticking time bomb for ILP.
    They are planning ahead for further bad losses and the stress tests are a necessity,it's a pity they did not do this 10 yrs ago.


  • #13
    liammur
    Closed Accounts Posts: 3,461 ✭✭✭liammur


    beagle001 wrote: »
    ILP is no saint,the ECB knows full well that further bad loans are coming down the line and especially in the residential mortgage sector it's a ticking time bomb for ILP.
    They are planning ahead for further bad losses and the stress tests are a necessity,it's a pity they did not do this 10 yrs ago.

    Yes, should have been done 10 years ago. Govt have definitely maximised returns for tax payers here, not so sure about the fire sale of the IR Life at a low price tho, nor does the 'burning' give confidence to bondholders, another reason why our rate is heading to 13%


  • #14
    OfflerCrocGod
    Registered Users, Registered Users 2 Posts: 6,334 ✭✭✭OfflerCrocGod


    liammur wrote: »
    Not many banks in the world , if any would pass the stress tests irish banks were subjected to. They seem to be bending over backwards to accomodate the 2 pillar banks.
    Not many banks in the world have as high an arrears rate as Irish banks. I'm so happy I got out of ILP with some good profit (~0.70 to ~1.10), dangerous game though.


  • #15
    liammur
    Closed Accounts Posts: 3,461 ✭✭✭liammur


    OfflerCrocGod wrote: »
    Not many banks in the world have as high an arrears rate as Irish banks. I'm so happy I got out of ILP with some good profit (~0.70 to ~1.10), dangerous game though.

    Well done on your profit. Who would ever have thought that ILP would go to 3c. An investigation should be carried out, as the leaks were out before the announcements.


  • #16
    Grecco
    Closed Accounts Posts: 1,007 ✭✭✭Grecco


    OfflerCrocGod wrote: »
    Not many banks in the world have as high an arrears rate as Irish banks. I'm so happy I got out of ILP with some good profit (~0.70 to ~1.10), dangerous game though.

    If I can remember that was back before Christmas wasn't it, I did the much the same thing except it was 51p to 107p. I didn't have much profit as I used funds from a loosing position in AIB shares that I had bought at 50p that tanked down to 33p. talk about a get out of jail free card :rolleyes:
    I never looked at a Bank share again


  • #17
    OfflerCrocGod
    Registered Users, Registered Users 2 Posts: 6,334 ✭✭✭OfflerCrocGod


    Grecco wrote: »
    If I can remember that was back before Christmas wasn't it, I did the much the same thing except it was 51p to 107p. I didn't have much profit as I used funds from a loosing position in AIB shares that I had bought at 50p that tanked down to 33p. talk about a get out of jail free card :rolleyes:
    I never looked at a Bank share again
    November. I looked at bank shares during the Greek crisis and then I bought heavily. LLOY has been by far the best performer but RBS and BARC have done well and I'm happy with them. Now to start easing out of those positions...


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