BOI- O.M.G!!!

Solnskaya

So, private equity is to invest 1.1 Billion into BOI in return for an undisclosed(read substantial) shareholding. Considering that the taxpayer has already invested 26+ Billion, and will end up with probably a 15% shareholding, anybody concur that this is just another massive stitch-up of the taxpayer and the previous, wiped out small shareholders? 1.1 billion is being lauded as the best thing since sliced bread, and as for the taxpayers 26+ billion, well, sure that had to go in lads, sorry about that. A massive swindle, or just how it goes?? To me, it's just another massive swindle amongst a lot of massive swindles. Did I mention the phrase "massive swindle?"

waster81

Its all good, private sector screwing us again

donegal11

listening to the last word? anyway If it was such good value why aren't there lines of investors ready to do business with BOI. In reality Irish banks are too risky and potential investors could be left like previous shareholders as in out of pocket. I believe government investment is also in preference shares which is very different to ordinary equity as you have no voting rights, but get returns if any first.If you think its a great deal i suggest you should get in on the action and buy some BOI shares :pac: ,I know I wouldn't.

Scofflaw

Solnskaya wrote: »

So, private equity is to invest 1.1 Billion into BOI in return for an undisclosed(read substantial) shareholding. Considering that the taxpayer has already invested 26+ Billion, and will end up with probably a 15% shareholding, anybody concur that this is just another massive stitch-up of the taxpayer and the previous, wiped out small shareholders? 1.1 billion is being lauded as the best thing since sliced bread, and as for the taxpayers 26+ billion, well, sure that had to go in lads, sorry about that. A massive swindle, or just how it goes?? To me, it's just another massive swindle amongst a lot of massive swindles. Did I mention the phrase "massive swindle?"

Your figures are almost unbelievably spurious. The state hasn't put €26bn into BoI, while the 15% state shareholding is a minimum (32% maximum). I'm not sure where "substantial" comes from either, since the maximum private share is 37%.

We were expecting to have to put €5.2bn into BOI, which has now been reduced substantially, between burning junior bondholdings and this investment:

As a result of this transaction, the State will now make a significantly lower capital contribution to Bank of Ireland than the €5.2 billion that was required following the stress tests that were announced in March. This has been successfully reduced through ongoing and future burden sharing with subordinated bondholders estimated at €2.4 billion. Today’s announcement of new private sector investment will reduce the capital requirement by a further €1.1 billion on completion of the transactions and will reduce the burden on the Irish taxpayer by that amount.

At an overall banking system level, by reducing the State’s funding of the PCAR €24 billion capital requirement to below €18 billion, the State will be able, for all practical purposes, to finance the PCAR requirement without recourse to external borrowing from the EU/IMF Funding Programme. This provides an additional saving on interest costs, which will supplement the significant interest rate savings agreed at Thursday’s Heads of Government meeting. It is also worth noting that the €3 billion included as contingent capital will attract an interest rate payment for the State of 10%. As this rate of interest is significant higher than the costs of funds, no additional interest rate burden will arise from this amount of the recapitalisation required.

http://www.merrionstreet.ie/index.php/2011/07/bank-of-ireland-capital-investment/?cat=12

While I'm sure the state has given more shareholding than it would in ordinary circumstances - hence the tone of the government statement above, which is defensive - these are not ordinary times by any means. And your statements in the OP are grossly inaccurate - either you're poorly informed, or you're trying to misinform.

regards,
Scofflaw

Solnskaya

Not even going to bother arguing. Pretty much sums up how the Irish mugpayer has been taken for a total ride for the last few years. Please, would the next government spokesman please step up and inform us why this is such a great deal. No doubt plenty of people will swallow another dose of bad medicine, sure it's all been run so well up to now.:rolleyes:

RichardAnd

Solnskaya wrote: »

No doubt plenty of people will swallow another dose of bad medicine, sure it's all been run so well up to now.:rolleyes:

No, the ordinary person will swallow it and then blame the resulting odious feeling on their neighbours who are bank staff/public servants/unemployed/tracker mortgage holders/independently well off...

Feel free to add to the list

Scofflaw

Solnskaya wrote: »

Not even going to bother arguing. Pretty much sums up how the Irish mugpayer has been taken for a total ride for the last few years. Please, would the next government spokesman please step up and inform us why this is such a great deal. No doubt plenty of people will swallow another dose of bad medicine, sure it's all been run so well up to now.:rolleyes:

However badly it's been run, there's no value at all in making up spurious claims.

regards,
Scofflaw

BornToKill

Solnskaya wrote: »

Considering that the taxpayer has already invested 26+ Billion, and will end up with probably a 15% shareholding, anybody concur that this is just another massive stitch-up of the taxpayer and the previous, wiped out small shareholders?

As has already been pointed out,this is a totally inaccurate figure. The State has not put €26bn into BOI.

Solnskaya wrote: »

Not even going to bother arguing.

No, please do. I'd love to hear how having to put less money into the banks is such a bad thing.

eigrod

Does the state get a (direct) cut of the €1.1bn in the form of tax ?

Solnskaya

I'm not sure if it's dimness, naivety or alterior motive, but you gotta love the way people leap to the defence of one moronic decision after the other. First the bank bailout was "the only course of action", lol. Then, NAMA was "the only game in town" mor ya, then it was "we're gonna burn the bondholders", yeah right. Then, "there is no discussion taking place with either the IMF nor the ECB" Hmmm. The list goes on and on. Even the minister on The last word was embarassed when questioned on the details of this new consortiums potential investment.
Any of ye ever heard of a bargain??? The avowed intention of the state is to have a two pillar banking system, BOI and AIB. Neither will be allowed to fail, no matter what. And anybody with a brain knows there are two kinds of investors, those who are the fodder, and those with the inside track. The ordinary guy investing 10K in BOI stock could very well(probably guaranteed)get burnt, but an outside consortium will have a very different playing field, guaranteed and protected by the state.
If you spend 200k building a house, can't repay the mortgage and its repossessed and then resold by the bank for 20k to a preferred buyer, is that a bargain? This is a valuable institution, propped up temporarily with state money, being pieced out for peanuts to preferred buyers. Simple as. Bring out all the stats you like, I care less, there are an awful lot of "experts" on here who told us NAMA was a doosie, the bailout was "inevitable", and Iceland was a nation of mugs. I know who I believe to be the mugs, and there's no volcanoes in the locale. The same people defending this will be the people who advocated NTR's involvement with the M50, saying it was in the taxpayers interest.

oflahero

Being angry doesn't get you a free pass to get your numbers wrong. Coming out with "So what if I've got the wrong figure - you must be on THEIR side!" really doesn't help you.

hinault

€8.7 billion is the recapitalisation figure from Joe Irish Public.

€3.5 billion in 2009 + €5.2 billion was earmarked in March 2011.

I agree with the sentiment expressed by the OP.
€1 billion investment in a bank that is due to receive €8.7 billion from the Irish taxpayer isn't exactly something to shout about.

BOI currently has a capitalised value €450 million.

Good loser

Solnskaya

You're all over the place.

Lots of charges and (misplaced) anger.

You don't base your case (even remotely) on facts and/or stats.

Solnskaya

oflahero wrote: »

Being angry doesn't get you a free pass to get your numbers wrong. Coming out with "So what if I've got the wrong figure - you must be on THEIR side!" really doesn't help you.

Help me with what? I clear liquidated and scrapped assets for a living mostly these days, like I give a crap what the economy does. It just bugs me that the state is once again giving away a valuable asset it bought dear with OPM. If you want to argue semantics, knock yourself out, but I bet there are thousands moaning and giving out about exactly this in two years time. Anyhoo. So, to toe the line- it's a great move, achieving maximum value for the taxpayer and freeing up much needed capital for SMEs. This investment shows that international investor confidence is returning and bodes well for Ireland Inc. going forward. We the gobbernment feel we have achieved maximum value for the state given the current market conditions.There, happy now?. To me, it's just another Corrib/M50/PPars etc.

Solnskaya

Good loser wrote: »

Solnskaya

You're all over the place.

Lots of charges and (misplaced) anger.

You don't base your case (even remotely) on facts and/or stats.

Apt username. Misplaced!LOL. Is that you Richie?? This is a pawnshop transaction, bottom dollar for the family silver, simply put. Or is that too"all over the place"?

Scofflaw

hinault wrote: »

€8.7 billion is the recapitalisation figure from Joe Irish Public.

€3.5 billion in 2009 + €5.2 billion was earmarked in March 2011.

I agree with the sentiment expressed by the OP.
€1 billion investment in a bank that is due to receive €8.7 billion from the Irish taxpayer isn't exactly something to shout about.

BOI currently has a capitalised value €450 million.

€1.1bn of private capital, €2.4bn of bondholder losses. Between them they reduce the taxpayer input to BOI from €8.7bn to €5.2bn. That's the size of this budget's austerity cuts, so if they're something to shout about - and they appear to be - presumably this is too.

cordially,
Scofflaw

hinault

Scofflaw wrote: »

€1.1bn of private capital, €2.4bn of bondholder losses. Between them they reduce the taxpayer input to BOI from €8.7bn to €5.2bn. That's the size of this budget's austerity cuts, so if they're something to shout about - and they appear to be - presumably this is too.

cordially,
Scofflaw

Thanks for this.

I take your point.

I would still contend it is €5.2 billion too much however.

Scofflaw

hinault wrote: »

Thanks for this.

I take your point.

I would still contend it is €5.2 billion too much however.

Sure. Still, at least in BOI's case we may yet get something back.

cordially,
Scofflaw

Diarmuid

Solnskaya wrote: »

It just bugs me that the state is once again giving away a valuable asset it bought dear with OPM.

That will explain the long queue of interested buyers.. :rolleyes:

ei.sdraob

The devil is in details, the billionaire involved (same guy whose 600 m
illion offer for much smaller EBS was turned down) is only putting in 241 million now the rest might come later...

Monty Burnz

waster81 wrote: »

Its all good, private sector screwing us again

Sorry, but that represents a total misunderstanding of the situation.

irishh_bob

if the share price response is anything to go by , the jury is still very much out on how wonderfull this news is , was ten pence last friday , is 10 . 5 pence today having been at eleven for a while yesterday :rolleyes:

Hoffmans

whatever about the ops figures the words massive swindle are spot on...........

ei.sdraob

irishh_bob wrote: »

if the share price response is anything to go by , the jury is still very much out on how wonderfull this news is , was ten pence last friday , is 10 . 5 pence today having been at eleven for a while yesterday :rolleyes:

For 241 million one party is getting a large share of the bank, they will proceed to sell the deposit book leaving the "bank" gutted the remainder of the money pledged will not materialise ...

Monty Burnz

Hoffmans wrote: »

whatever about the ops figures the words massive swindle are spot on...........

Nonsense. If you think these guys are getting a great deal, cash in your assets and buy BOI shares. Put your money where your mouth is.

irishh_bob

ei.sdraob wrote: »

For 241 million one party is getting a large share of the bank, they will proceed to sell the deposit book leaving the "bank" gutted the remainder of the money pledged will not materialise ...

so the share price will be stuck at ten cent forever , you would think some kind of short term bounce was likely

fred252

why did the government have to pay goldman sachs to broker this deal and how much would they have been paid?

robtri

Solnskaya wrote: »

So, private equity is to invest 1.1 Billion into BOI in return for an undisclosed(read substantial) shareholding. Considering that the taxpayer has already invested 26+ Billion, and will end up with probably a 15% shareholding, anybody concur that this is just another massive stitch-up of the taxpayer and the previous, wiped out small shareholders? 1.1 billion is being lauded as the best thing since sliced bread, and as for the taxpayers 26+ billion, well, sure that had to go in lads, sorry about that. A massive swindle, or just how it goes?? To me, it's just another massive swindle amongst a lot of massive swindles. Did I mention the phrase "massive swindle?"

is there anything stopping you getting in on this investment if it is going to be so lucrative?

Solnskaya

robtri wrote: »

is there anything stopping you getting in on this investment if it is going to be so lucrative?

Yes, there is, same thing as is stopping you. I'm not on the govt. list of preferential investors, I would just get screwed like all the other small private investors. This"why don't you buy the shares then?" talk is very dumb.

Monty Burnz

Solnskaya wrote: »

Yes, there is, same thing as is stopping you. I'm not on the govt. list of preferential investors, I would just get screwed like all the other small private investors. This"why don't you buy the shares then?" talk is very dumb.

Can't you just buy shares on the open market?

Solnskaya

Monty Burnz wrote: »

Can't you just buy shares on the open market?

Indeed you can, and so far it's gone well for all the other small shareholders in BOI, not. Then again, there are many angles to come from when buying shares, and many different classes of shareholding. The good angles are not available to small investors, they are reserved for institutional and "wholesale" buyers. If any of ye think that individuals with access to several hundred million in capital in the current market are going to be offereing good terms in return for their investment, think again. Only the vulture capitalists are going to be buying the like of BOI, and yes, asset stripping, asset sweating and gutting are all they will be interested in-which is fair enough, I have no problem with that. But, I do have a problem with the Daffodils that parse off assets for little or no actual return. You dont buy a thing for €6 and sell it for €1.50 and expect people to applaud-not unless you happen to be the Irish Govt, going by the responses here.

Scofflaw

Solnskaya wrote: »

Indeed you can, and so far it's gone well for all the other small shareholders in BOI, not. Then again, there are many angles to come from when buying shares, and many different classes of shareholding. The good angles are not available to small investors, they are reserved for institutional and "wholesale" buyers. If any of ye think that individuals with access to several hundred million in capital in the current market are going to be offereing good terms in return for their investment, think again. Only the vulture capitalists are going to be buying the like of BOI, and yes, asset stripping, asset sweating and gutting are all they will be interested in-which is fair enough, I have no problem with that. But, I do have a problem with the Daffodils that parse off assets for little or no actual return. You dont buy a thing for €6 and sell it for €1.50 and expect people to applaud-not unless you happen to be the Irish Govt, going by the responses here.

If you buy something for €6, only to find out that it will cost you a further €5 to keep it, then selling it for €1.50 is a profitable action.

cordially,
Scofflaw

Solnskaya

Scofflaw wrote: »

If you buy something for €6, only to find out that it will cost you a further €5 to keep it, then selling it for €1.50 is a profitable action.

cordially,
Scofflaw

With "profits" like that, you will not stay going for long. Unless some poor sap is forced to subsidise your cock-up.:rolleyes:

Alopex

hope to god this isn't some trick like anglo tried to pull when they lent people money to buy shares in themselves

Solnskaya

Alopex wrote: »

hope to god this isn't some trick like anglo tried to pull when they lent people money to buy shares in themselves

Did you mean "tried to pull" or "pulled"?? I don't think it's a trick, it's just the way the wealth stay wealthy, you acquire assets cheaply, preferably using other peoples money, and then you hard nose them for all your worth. Sadly, our leaders got this the wrong way around, and they hard nose their own people and then throw away the assets. Still, no fuss here, as per usual, it's fine and fair to the Irish eyes. A joke.

Alopex

Solnskaya wrote: »

Did you mean "tried to pull" or "pulled"?? I don't think it's a trick, it's just the way the wealth stay wealthy, you acquire assets cheaply, preferably using other peoples money, and then you hard nose them for all your worth. Sadly, our leaders got this the wrong way around, and they hard nose their own people and then throw away the assets. Still, no fuss here, as per usual, it's fine and fair to the Irish eyes. A joke.

yeah meant pulled. don't know why I said "tried to pull"

Solnskaya

Scofflaw wrote: »

If you buy something for €6, only to find out that it will cost you a further €5 to keep it, then selling it for €1.50 is a profitable action.

cordially,
Scofflaw

Scoffy, the more I look at this, the more I think you might be advising our government-please tell me you meant to say somthing other than "a profitable action" to describe a loss?? Surely you meant "a less unpalatable option" or somthing- you seem to be falling into the trap of seeing a loss as a profit, it's very fashionable in certain circles the last few years.

Monty Burnz

Solnskaya wrote: »

you seem to be falling into the trap of seeing a loss as a profit, it's very fashionable in certain circles the last few years.

A loss/a profit - they are just points on a number line. Rational people try to move in one direction of the number line (the lower loss/higher profit direction).

robtri

Solnskaya wrote: »

Yes, there is, same thing as is stopping you. I'm not on the govt. list of preferential investors, I would just get screwed like all the other small private investors. This"why don't you buy the shares then?" talk is very dumb.

only thing dumb is that answer... anyone can buy shares and invest money in this....

good to see you looked into this before you came to your conclusion ...

Solnskaya

robtri wrote: »

only thing dumb is that answer... anyone can buy shares and invest money in this....

good to see you looked into this before you came to your conclusion ...

1. That is a naive post. Not even going to bother explaining why.
2. Look into this a bit more yourself, as you clearly support this course of action, take a few grand, say 10K, and buy in, that ought to be enough to sting when you lose it and sting more when other levels of shareholders don't lose theirs. Did you buy Eircom? A lot of people lost money there, just ordinary people mostly. On the other side, a lot of people made money. That's the great thing about money, every time someone loses, someone else wins. In this case, the loser is the Taxpayer, but their money has not vanished, it's just moved onto someone's balance sheet.

Monty Burnz

Solnskaya wrote: »

2. Look into this a bit more yourself, as you clearly support this course of action, take a few grand, say 10K, and buy in, that ought to be enough to sting when you lose it and sting more when other levels of shareholders don't lose theirs.

Why would they not 'lose theirs'? They are merely underwriting the rights issue. Their shares will not be senior to any others.

Scofflaw

Solnskaya wrote: »

Scoffy, the more I look at this, the more I think you might be advising our government-please tell me you meant to say somthing other than "a profitable action" to describe a loss?? Surely you meant "a less unpalatable option" or somthing- you seem to be falling into the trap of seeing a loss as a profit, it's very fashionable in certain circles the last few years.

Looked at overall it's a loss, obviously, since you're €4.50 down with nothing to show for it. On the other hand, once you're in a position you can't get back from, you have to do what's best from that position. Simply wishing you weren't in that position is kind of useless.

Obviously, if you do have a time machine that will allow us to go back to September 2008 and come out of it without the bank debts, then you really shouldn't hold out on us all.

cordially,
Scofflaw

Solnskaya

Scofflaw wrote: »

Looked at overall it's a loss, obviously, since you're €4.50 down with nothing to show for it. On the other hand, once you're in a position you can't get back from, you have to do what's best from that position. Simply wishing you weren't in that position is kind of useless.

Obviously, if you do have a time machine that will allow us to go back to September 2008 and come out of it without the bank debts, then you really shouldn't hold out on us all.

cordially,
Scofflaw

Disengeniouse Scoffy, at the time you advocated that guaranteeing the Bank Debts was the best and only, inevitable and irrevocable course of action. If you buy dear, in this example at €6, you need to set a position whereby you make a choice, either put a stop at €5, and if that's not possible, hold. Warren Buffets view on this issue is simply "don't lose money". The Government is taking a wholly immoral view on the banks anyway. The original aim was to "get credit flowing". Now the aim appears to be "get out, no matter the cost". They are burning the Ferrari to avoid buying tyres. Respectfully,Solnskaya.

Good loser

Solnskaya wrote: »

1. That is a naive post. Not even going to bother explaining why.
2. Look into this a bit more yourself, as you clearly support this course of action, take a few grand, say 10K, and buy in, that ought to be enough to sting when you lose it and sting more when other levels of shareholders don't lose theirs. Did you buy Eircom? A lot of people lost money there, just ordinary people mostly. On the other side, a lot of people made money. That's the great thing about money, every time someone loses, someone else wins. In this case, the loser is the Taxpayer, but their money has not vanished, it's just moved onto someone's balance sheet.

What the hell are you talking about? Eircom?

Don't you know a price/value only applies to the instant of a transaction?

For all investments the precise price/value dissappears as the deal closes.

You seem to think we live in an economic world where values are retained or discarded as it suits your convenience.

One bunch of investors are buying into BOI at 10c per share. 75 million shares were traded in BOI today between 10c and 11c. So what it's a market.

Scofflaw

Solnskaya wrote: »

Disengeniouse Scoffy, at the time you advocated that guaranteeing the Bank Debts was the best and only, inevitable and irrevocable course of action.

Eh, no. I said I could understand why they did it, and the possible arguments for it. I'd have preferred a proper resolution mechanism for Anglo.

Solnskaya wrote: »

If you buy dear, in this example at €6, you need to set a position whereby you make a choice, either put a stop at €5, and if that's not possible, hold. Warren Buffets view on this issue is simply "don't lose money". The Government is taking a wholly immoral view on the banks anyway. The original aim was to "get credit flowing". Now the aim appears to be "get out, no matter the cost". They are burning the Ferrari to avoid buying tyres. Respectfully,Solnskaya.

Given they have to borrow the money to buy tyres, that's not quite as odd as it seems. It's your contention, then, that the government is selling this shareholding too cheaply - although you haven't actually provided any real figures on how cheaply they're selling it.

cordially,
Scofflaw

irishh_bob

Good loser wrote: »

What the hell are you talking about? Eircom?

Don't you know a price/value only applies to the instant of a transaction?

For all investments the precise price/value dissappears as the deal closes.

You seem to think we live in an economic world where values are retained or discarded as it suits your convenience.

One bunch of investors are buying into BOI at 10c per share. 75 million shares were traded in BOI today between 10c and 11c. So what it's a market.

the share is back at 10 cent today despite the ( alledged ) large purchase

ei.sdraob

That's because the bulk of the money might come later and there is the share rights issue. Why buy shares in a company now when no one knows what % they will actually own once a judgement is made, and of course the government can step in at any time and dilute it further.

irishh_bob

ei.sdraob wrote: »

That's because the bulk of the money might come later and there is the share rights issue. Why buy shares in a company now when no one knows what % they will actually own once a judgement is made, and of course the government can step in at any time and dilute it further.

even so , such news normally gives a boost to a stock

ei.sdraob

irishh_bob wrote: »

even so , such news normally gives a boost to a stock

The billionaire involved is in the business of buying up failed banks (3 in us, 2 in japan), outsourcing as much as possible to India (hes on board of few large companies there) and stripping the banks for all they have, in this case the deposit book will most likely go walking out the door.

Monty Burnz

ei.sdraob wrote: »

The billionaire involved is in the business of buying up failed banks (3 in us, 2 in japan), outsourcing as much as possible to India (hes on board of few large companies there) and stripping the banks for all they have, in this case the deposit book will most likely go walking out the door.

Should we care?

ei.sdraob

Monty Burnz wrote: »

Should we care?

Yes we still own a chunk of this bank (exact % to be determined) and putting in directly and indirectly via NAMA billions more than the bank is actually worth.