UK Govt would like Ireland to buy Ulster Bank?

everdead.ie

Rightwing wrote: »

No, the UK is offering us the interest rate they got the loan at themselves. That was nothing more than a favour to us.

Oh right interesting I guess Dara O'Brien isn't the best source of information

Cody Pomeray

gaius c wrote: »

Edna has met Ulster Bank.
It's a done deal at this stage I'd say.

He met representatives of the bank last week; the British parliamentary draft report only emerged early this week.

Rightwing

everdead.ie wrote: »

Oh right interesting I guess Dara O'Brien isn't the best source of information

http://www.independent.ie/business/irish/uk-slashes-its-interest-rate-on-our-7bn-bailout-loans-26863834.html

Under the new pricing the UK will charge Ireland just 0.18pc above its own borrowing costs for the bailout loans, and the new rate applies to all past and future loans.
Under the original structure of the UK deal, repayments were calculated by adding 2.29pc to a formula known as the sterling seven-and-a-half-year swap rate -- meaning an interest rate of 4.5pc.
The new formula will be based on the average yield on UK government debt in the six months before a loan is made, plus the 0.18pc charge.
The UK has seen its borrowing costs plunge in recent months as investors flee the eurozone and opt to lend to countries including the UK that are not part of the common currency.

Cody Pomeray

Rightwing wrote: »

The UK has seen its borrowing costs plunge in recent months as investors flee the eurozone and opt to lend to countries including the UK that are not part of the common currency.

A lot of swings and roundabouts really, but if you insist on making this claim, then you should find that the benchmark UK cost of borrowing is up 2% on this time last year; it is now at a 12 week high. You may be confusing falling prices with rising yields.

On the other hand, Germany's cost of borrowing has increased to a lesser extent, and the cost of borrowing has reduced for Italy, Spain, France, Portugal, Ireland and Greece, in some cases substantially.

The UK costs of borrowing have visibly not "plunged".

Rightwing

Cody Pomeray wrote: »

A lot of swings and roundabouts really, but if you insist on making this claim, then you should find that the benchmark UK cost of borrowing is up 2% on this time last year; it is now at a 12 week high. You may be confusing falling prices with rising yields.

On the other hand, Germany's cost of borrowing has increased to a lesser extent, and the cost of borrowing has reduced for Italy, Spain, France, Portugal, Ireland and Greece, in some cases substantially.

The UK costs of borrowing have visibly not "plunged".

I don't 'insist' on making any claim - it's taken from the article I posted showing that UK are not charging us 2-3% extra interest. The article is about a year old.

Cody Pomeray

It's considerably out-dated information. It's bad form not to use quotation marks, let alone the fact that the information is from 2012.

Rightwing

Cody Pomeray wrote: »

It's considerably out-dated information. It's bad form not to use quotation marks, let alone the fact that the information is from 2012.

It's essentially information taken from the link posted.

Hope that helps.

Rightwing

Looks like RBS have no intention of selling off Ulster Bank, makes sense to me, the time to do that was about 5 years ago.

http://www.independent.ie/business/irish/rbs-chief-hester-says-group-has-no-plans-to-sell-off-ulster-bank-29324180.html

THE chief executive of Royal Bank of Scotland (RBS) says his bank has no plan to sell Ulster Bank.
The 100pc-owned Irish unit of RBS is part of the "core" RBS bank, Stephen Hester said in a long interview with the Irish Independent.
RBS has been forced to pump almost £14.3bn (€16.8bn) into Ulster Bank to cope with losses on boomtime lending, prompting speculation that the parent could pull out of Ireland altogether rather than keep ploughing in fresh capital.
That speculation was fuelled further this week by reports that the UK Treasury could ask the government here to take over Ulster Bank.
However, in a frank response to the question, Stephen Hester said pulling out of Ulster Bank has never made financial sense.
"Keeping Ulster Bank was always 'Plan A.' Of course we looked at alternatives, but there has never been a moment in the last five years when leaving Ireland was the preferred option," he said.

View

Rightwing wrote: »

Under the new pricing the UK will charge Ireland just 0.18pc above its own borrowing costs for the bailout loans, and the new rate applies to all past and future loans.
Under the original structure of the UK deal, repayments were calculated by adding 2.29pc to a formula known as the sterling seven-and-a-half-year swap rate -- meaning an interest rate of 4.5pc.

Neither of those formulae mean the UK is charging Ireland the same as it costs them to borrow the monies they are loaning us as they are charging a "service charge" on top of the rate they are paying in both cases.

While the reduced rate was and is welcome it seems to have come about as a direct response to the Eurozone making a decision to reduce what they were charging us. As such, neither UK decision was a "charitable donation" but would appear to fit into a larger EU process by both the Eurozone and non-Eurozone states, without which we would be paying considerably more to borrow from "the markets" presuming we could borrow at affordable rates at all.

everdead.ie

I see that the times in Britain is running with the story that because Ulster bank has accounted for 10 billion pounds in losses since 2010 it equates to a back door bailout of Ireland.

I suppose the difficulty with that is it is part of a British Banking group (RBS) which didn't really have a choice in the matter they either let it fail or they kept it going to try and recoup some of the losses.

This quote in particular from an Irish article is telling.

The lender, acquired by RBS in 2000, doubled its assets to £55bn in the four years before Ireland’s property bubble burst, according to a report published in 2011 by the UK Financial Services Authority. While Ulster Bank accounted for only 3% of RBS’s assets in 2007, it has generated almost €13bn of bad loan losses, filings show.

http://www.irishexaminer.com/business/features/rbs-pays-heavily-for-ulster-bank-bailout-227538.html

Dannyboy83

The impression I had from this forum was that most of our bank bailout money went not to France or Germany but to London.

Surely by their logic, they owe us a few quid?

Dampintheattic

everdead.ie wrote: »

I see that the times in Britain is running with the story that because Ulster bank has accounted for 10 billion pounds in losses since 2010 it equates to a back door bailout of Ireland.



This quote in particular from an Irish article is telling.


http://www.irishexaminer.com/business/features/rbs-pays-heavily-for-ulster-bank-bailout-227538.html

Revenge for Skibbereen

everdead.ie

Dannyboy83 wrote: »

The impression I had from this forum was that most of our bank bailout money went not to France or Germany but to London.

Surely by their logic, they owe us a few quid?

Actually the logic as far as I can tell is completely flawed and very strange given it sounds like a headline from the sun that will just cause xenophobia against the Irish.

They call funds given to Ulster bank a bailout despite the fact that without these funds it would have gone bankrupt causing RBS to loose significantly more.

The money also would have just gone out on bonds it owed to other banks they certainly didn't give any money out to it's customers.

By their logic their is also the fact that given the losses sustained by Irish banks on their British loans and our bailout of those banks we have given a significant bailout to the UK.

In particular the 30% haircut Irish banks had to take on the loans given to nama.

which were in the region of 1/3rd of the total 88 billion in loans so just about 29.33 billion which if you take the 70% value they received for those loans they would of lost 8.8 billion on their British loan books.

While the UK accounts for just one-third of Nama's assets it has generated almost four-fifths of the total sale proceeds since the bad bank was first established in 2009

(Even though it has been easier to sell the UK properties Irish banks still lost money selling them to Nama)

30% haircut number I got from wiki but I am pretty sure it is right.


They also still have signifcant exposure to the Market BOI in particular.

At the end of last year Bank of Ireland had a UK loan book of €51bn, AIB had an €8.3bn UK loan book, Permanent TSB had €7.7bn of British loans on its balance sheet while who knows what treasures lie buried in IBRC, which houses the loans of Anglo and Nationwide?

Source http://www.independent.ie/business/dan-white-osborne-needs-ulster-deal-for-rbs-sale-but-can-we-help-29330832.html

Fratton Fred

everdead.ie wrote: »

Actually the logic as far as I can tell is completely flawed and very strange given it sounds like a headline from the sun that will just cause xenophobia against the Irish.

They call funds given to Ulster bank a bailout despite the fact that without these funds it would have gone bankrupt causing RBS to loose significantly more.

The money also would have just gone out on bonds it owed to other banks they certainly didn't give any money out to it's customers.

By their logic their is also the fact that given the losses sustained by Irish banks on their British loans and our bailout of those banks we have given a significant bailout to the UK.

In particular the 30% haircut Irish banks had to take on the loans given to nama.

which were in the region of 1/3rd of the total 88 billion in loans so just about 29.33 billion which if you take the 70% value they received for those loans they would of lost 8.8 billion on their British loan books.
(Even though it has been easier to sell the UK properties Irish banks still lost money selling them to Nama)

30% haircut number I got from wiki but I am pretty sure it is right.


They also still have signifcant exposure to the Market BOI in particular.



Source http://www.independent.ie/business/dan-white-osborne-needs-ulster-deal-for-rbs-sale-but-can-we-help-29330832.html

Calling it a back door bailout is a bit Daily Mailish, but I don't think you are comparing like for like there.

The RBS funding was to cover bad debt against loans made to Irish investors in Ireland. A lot of the BoI etc debt in the UK was made to Irish property developers who are now struggling.
http://m.guardian.co.uk/business/2011/jan/23/ireland-property-entrepreneurs-relinquish-london-trophies

There was an article in the Times I think talking of how these guys would look at properties in the morning, meet the bank over lunch and have the money available in the afternoon, this is what gave Anglo, AIB and BoI the reputation as the most reckless lenders in the UK in a report published ( and quickly retracted) by Merrill Lynch.

everdead.ie

Fratton Fred wrote: »

Calling it a back door bailout is a bit Daily Mailish, but I don't think you are comparing like for like there.

The RBS funding was to cover bad debt against loans made to Irish investors in Ireland. A lot of the BoI etc debt in the UK was made to Irish property developers who are now struggling.
http://m.guardian.co.uk/business/2011/jan/23/ireland-property-entrepreneurs-relinquish-london-trophies

There was an article in the Times I think talking of how these guys would look at properties in the morning, meet the bank over lunch and have the money available in the afternoon, this is what gave Anglo, AIB and BoI the reputation as the most reckless lenders in the UK in a report published ( and quickly retracted) by Merrill Lynch.

It's true that the Irish banks in the UK were even more reckless than they were in Ireland but I still think it doesn't stand up RBS is a British company with an Irish subsidiary which doubled it's loan book in four years and introduced the 100% mortgage leaving no gap for the houses to decrease in value.

If RBS had tried to wind down Ulster bank it could of ended up taking a much larger loss on the bank then again if it had sold it early enough or had decided to opt into Nama it could of actually deacresed the actual exposure the British Tax payer has had to pay.

It is a case of poor* management at Ulster Bank and RBS that allowed this to happen just as it was at Anglo, AIB,PTSB, BOI, NIB, KBC etc.

It is simply the responsibility of RBS to handle Ulster bank as it's parent company which is why the capital was injected into it and this is why the Loans in the UK are the responsibility of the Irish banks and now Nama.

The money never went to the Irish Government or the people so it is difficult to understand why a paper of such repute would try and sensationalise reckless banking as anything else.




*Probably needs a much stronger term than "poor"

mistermouse

Ulster Bank run quite a few branches in Northern Ireland too.

If their Parent company who it seems started quite a frenzy in Ireland with Mortgage offers, couldn't control their reckless lending then its hardly the Irish state's problem.

As I see it RBS and its sub bank Ulster, saw the Irish Market as a playground, RBS fuelled 100% mortgages and lost. If anything, not only do we owe Ulster Bank no favours but RBS owe Ireland at least an apology for fuelling the lending.

Out of all the problems with IT in that group, Ulster bank was also last to be sorted and the UK banks got priority

Its sour grapes in this case seeing how the government foolishly guaranteed Irish Banks

1966

Stephen Hester leaving RBS now ...... What's going on there??