Another 6 billion for AIB....

Hal Emmerich

RTE

The Government has put another €6 billion into AIB to enable it to meet capital targets set by the Central Bank ahead of the July 31 deadline.
AIB needed to raise a total of €14.8 billion. Yesterday, it announced that the State's stake had risen to 99.8% after the issue of €5 billion of new shares to the State, through the National Pensions Reserve Fund Commission.


But that still left the bank short of its target, resulting in the need for today's €6 billion. The Government will not receive any new shares in AIB in return.


AIB said the Central Bank had confirmed that it had now met its capital requirements.


Meanwhile, the bank's executive chairman has said banks must charge more for credit if they are to achieve commercial viability.
David Hodgkinson told the MacGill Summer School in Glenties that while this was a very unpopular concept, given the amount of taxpayers money injected into the banks, it was not possible to build a sustainable future for any bank lending funds without receiving a return.


'We absolutely must do much better at making credit accessible but we cannot continue to misprice risk,' he said.
Mr Hodgkinson said it must be acknowledged that a return to more normal banking conditions requires concerns about the euro zone debt crisis to abate.


Fairfax takes 9% stake in BoI - report
Canada's Fairfax Financial Holdings and US buyout firm WL Ross & Co will each take a 9% stake in Bank of Ireland after their investment this week, the Toronto-based company has told the Irish Independent.
The two were among a group of investors who bought a €1.1 billion stake in the bank on Monday. Following the result of a rights issue yesterday, their combined stake stands at 34.9%.


Bank of Ireland named the other investors as Boston-based Fidelity Investments and the California-headquartered pairing of investment firm The Capital Group and property company Kennedy Wilson.


Fairfax Financial's chief executive Prem Wasra told the newspaper that as well as its and WL Ross & Co's near-20% holding, The Capital Group will take a stake of about 6% in the bank. He said Kennedy Wilson will get a much smaller amount after investing €25m.


A spokesperson for Bank of Ireland said it was not for the bank to comment on the size of the individual stakes, as the State had sold the shares in the bank. However, a source close to the process said that they were correct.


The Fairfax CEO added the group of investors saw real value in the only Irish lender to effectively avoid nationalisation.
'We looked at the long-term future of the bank, we think it's appropriately capitalised to deal with the stress test scenarios... We see real value here,' Wasra told the newspaper.


'The bank has an excellent disciplined credit culture. In a property and construction tsunami, no bank is spared,' he added, referring to the property crash.

Wasra, who founded the Toronto-based insurer and investment company in 1985, has been dubbed as 'Canada's Warren Buffett' for past investment wins, including bets against the US housing market that brought in billions when it collapsed in 2007.

I don't understand how after the new shares issue last/this week the state can own 98%, and Fairfax Financial and WL Ross can own 34% after putting in a huge €1.1 billion.

The state gets a big fat nothing for the €6 billion today, were we not better off nationalising it and selling it at a later date????

Also, I thought the Pension Reserve fund had been used up?

afrodub

Confidence must be maintained to avoid another downrating by creditors so I support this move it will create stability in the market.

Hayte

I'm pretty sure that AIB has been delisted from the Irish and London stock exchange. Assuming they they were traded however it does beg the question: why would anyone want to buy shares in a company that is so massively loss making that its sinking an entire country?

bryaner

afrodub wrote: »

Confidence must be maintained to avoid another downrating by creditors so I support this move it will create stability in the market.

Kicking the can down the road again!!

Tipp Man

Hal Emmerich wrote: »

RTE


I don't understand how after the new shares issue last/this week the state can own 98%, and Fairfax Financial and WL Ross can own 34% after putting in a huge €1.1 billion.

The state gets a big fat nothing for the €6 billion today, were we not better off nationalising it and selling it at a later date????

Also, I thought the Pension Reserve fund had been used up?

The state owns 98 or 99% of AIB

Fairfax are involved in BOI - different banks

afrodub

bryaner wrote: »

Kicking the can down the road again!![/QUO

Its a sensible decision anything less would be reckless,stability is paramount to maintain confidence in the banking system,without this the consequences are dire !!!

thebman

afrodub wrote: »

Confidence must be maintained to avoid another downrating by creditors so I support this move it will create stability in the market.

Will it? Hasn't so far. If you have a plan that isn't working then sure sticking with might produce stability but is it the kind of stability we want?

Our stability seems to be a stable decline in our economy and a stable need from our banks for more capital from the state.

I prefer the kind of stable that produces the conditions for economic growth!

Hal Emmerich

Tipp Man wrote: »

The state owns 98 or 99% of AIB

Fairfax are involved in BOI - different banks

I read it twice and missed it twice:rolleyes::o.

I can only blame the post time:P

Liam Byrne

afrodub wrote: »

Confidence must be maintained to avoid another downrating by creditors so I support this move it will create stability in the market.

What "confidence" ?

afrodub

This sort of negative `mindset` is self fulfilling,the conditions are not that dire as some,with motives IMO,would have you believe.

Maintaining "confidence" is vital at ALL costs failure to act confidently and decisively leads the markets to have doubts and the potential consequences are simply not worth the risk.

Its what mature and acccountable Governernce is about and actual responsibility requires !

Bullseye1

How can the deficit go down if we continue to pour money into these black holes?

thebman

Bullseye1 wrote: »

How can the deficit go down if we continue to pour money into these black holes?

AIB is less of a black hole than FAS *cough SOLAS* or the Health Boards *cough HSE*.

The government is good a throwing money in holes, seems it is the thing they are most efficient at. At least AIB has some chance of paying back the government for its mistakes.

The above may not be supposed to make money but they are supposed to fulfill their duties in an efficient manner that maximises the money that is poured into them.