AIB and the National Debt

Farmer Pudsey

With AIB in theory worth over 70 billion (at 14.5cent/share) what are the chances of the goverenment offloading there 99% of it. After fees in theory they would end up with 70 billion to pay down the national debt. Will we ever get this chance again. Can we find a few idiots to buy it. Even if we could offload 10% of it we could put 7 billion into the economy or pay down the national debt.

It amazing how a basket case can turn around:rolleyes:. In theory we have turned a profit on the banking crisis. Even to offload at a 30% discount we have nearly 50 billion. These figures are staggering. Can we take this chance

woodseb

absolutely zero chance of this happening, zilch, don't spend any more time on it

the stock market value is just an anomally, the NTMA only hold AIB at around 10bln, which is also debatable compared to BOI

everdead.ie

This is only caused by the small amount of AIB shares being traded the real value of AIB is way way less.

It would take some very Patriotic person to srike it rich and then buy it off the state at even an 80% discount.

gaius c

Farmer Pudsey wrote: »

With AIB in theory worth over 70 billion (at 14.5cent/share) what are the chances of the goverenment offloading there 99% of it. After fees in theory they would end up with 70 billion to pay down the national debt. Will we ever get this chance again. Can we find a few idiots to buy it. Even if we could offload 10% of it we could put 7 billion into the economy or pay down the national debt.

It amazing how a basket case can turn around:rolleyes:. In theory we have turned a profit on the banking crisis. Even to offload at a 30% discount we have nearly 50 billion. These figures are staggering. Can we take this chance

It's a bit like China's dollar holdings. It's only worth it's paper if it is NOT sold. Make any moves to sell them and the "worth" will evaporate.

andrew

The government doesn't own 99% of AIB shares.

In general, my understanding (via public DOF, NPRF data) is that the All-in value of the states investment in Bank Recapitalisation at end-2013 is around €25bn

Rightwing

You can't short sell the shares, the value is no where near that listed.

gaius c

Rightwing wrote: »

You can't short sell the shares, the value is no where near that listed.

You can short them actually. That ban was lifted a while ago.

The price rise is artificial because only a fraction of their shares are actually trade-able, a bit like the housing market in a way.

Geuze

Note that the State own 99% of AIB.

The residual 1% shareholding is what is traded in the market.

Please note that the price of these shares bears no real link to the true value of AIB.

Geuze

http://www.irishtimes.com/business/s...y-34-1.1650178

AIB is 99.8 per cent owned by the State. The residual shares trade on the Irish Stock Exchange, giving it a notional market value of €72.9 billion.

This has no bearing with reality and is purely a factor of speculative buying by retail investors in the stock not held by the State.

noodler

Geuze wrote: »

http://www.irishtimes.com/business/s...y-34-1.1650178

AIB is 99.8 per cent owned by the State. The residual shares trade on the Irish Stock Exchange, giving it a notional market value of €72.9 billion.

This has no bearing with reality and is purely a factor of speculative buying by retail investors in the stock not held by the State.

Thank god somebody said it!

If the other 99.8% of the shares came onto the market, you would see a massive decline in the share price.

Oh if only AIB were worth that much.

noodler

andrew wrote: »

The government doesn't own 99% of AIB shares.

In general, my understanding (via public DOF, NPRF data) is that the All-in value of the states investment in Bank Recapitalisation at end-2013 is around €25bn

I think its more like 13bn for AIB and BoI.

http://www.irishtimes.com/business/sectors/financial-services/value-of-state-holdings-in-aib-and-boi-up-by-34-1.1650178

Although, I think that is just the ordinary shares.

Theres also some CoCos in AIB and preference stock in both institutions.


Never heard a valuation for PTSB.

Rightwing

gaius c wrote: »

You can short them actually. That ban was lifted a while ago.

The price rise is artificial because only a fraction of their shares are actually trade-able, a bit like the housing market in a way.

That's in theory, any time I've tried to short sell, I can't.

Farmer Pudsey

noodler wrote: »

I think its more like 13bn for AIB and BoI.

http://www.irishtimes.com/business/sectors/financial-services/value-of-state-holdings-in-aib-and-boi-up-by-34-1.1650178

Although, I think that is just the ordinary shares.

Theres also some CoCos in AIB and preference stock in both institutions.


Never heard a valuation for PTSB.

I think that BOI is valued at about 8 billion on the stock market at present. PTSB at between 2.5-3 billion. AIB is completely out of sync being valued at about 72 billion. It shares are tyrading at 14c each when reality they are only worth 1.5c/share compared to BOI/PTSB.

Maybe we could remortgage it with the ECB;) and they would take it in lieu of some of the dosh we owe. Unlikly I think

noodler

Farmer Pudsey wrote: »

I think that BOI is valued at about 8 billion on the stock market at present. PTSB at between 2.5-3 billion. AIB is completely out of sync being valued at about 72 billion. It shares are tyrading at 14c each when reality they are only worth 1.5c/share compared to BOI/PTSB.

Maybe we could remortgage it with the ECB;) and they would take it in lieu of some of the dosh we owe. Unlikly I think

The link I posted says our BoI Stake is 3bn. If we only own 15% then that would mean the whole banks' market capitalisation would be about 20bn.

A PTSB valuation based purely on share price is also probably a non-goer for the same reason, i.e. we own 99%.

Farmer Pudsey

noodler wrote: »

The link I posted says our BoI Stake is 3bn. If we only own 15% then that would mean the whole banks' market capitalisation would be about 20bn.

A PTSB valuation based purely on share price is also probably a non-goer for the same reason, i.e. we own 99%.

Was not aware that we owned that much of PTSB

noodler

Farmer Pudsey wrote: »

Was not aware that we owned that much of PTSB

Oh yeah, the whole thing for all intents and purposes. It seems like it will be hardest one ot get back to profitability and the European Commission still haven't approved a restructuring plan for it.

Rightwing

noodler wrote: »

Oh yeah, the whole thing for all intents and purposes. It seems like it will be hardest one ot get back to profitability and the European Commission still haven't approved a restructuring plan for it.

The state did collect €1.3 bln from the sale of Ir life, so PTSB is now limited.

noodler

Rightwing wrote: »

The state did collect €1.3 bln from the sale of Ir life, so PTSB is now limited.

Not too sure what you are trying to say?

It is no longer Irish Life & Permanent (IL&P) alright.

The State seperated them and sold Irish Life, however it remains in full ownership of PTSB.

Rightwing

noodler wrote: »

Not too sure what you are trying to say?

It is no longer Irish Life & Permanent (IL&P) alright.

The State seperated them and sold Irish Life, however it remains in full ownership of PTSB.

I'm agreeing with you, it will be hard to get it back to profitability given that they sold the successful part of it. Who'd want to buy shares in it now? Seemed like a smash and grab raid by the state on shareholders.

Noonan speaking today from Davos:

The Minister for Finance said he may “test the market” for a sale of the State-owned bank, in an interview with Bloomberg TV at the World Economic Forum in Davos.

He does not expect the Irish banks to need more capital when the stress tests are done later this year.

"There's a political timetable as well," Mr Noonan said.

"The Government will have an election at the latest at the end of March, early April 2016, so we might test the market sometime ahead of that," he added.

The national debt is “entirely sustainable,” despite heading for 123pc of the size of the economy, he said.

The debt will fall further as the State runs down cash balances and the value of bank shares rise, he added.

noodler

Yeah it is wortth saying that debt of 123%GDP is a Gross measure and includes borrowings or cash balances the NTMA currently hold on reserve.

The State could pay back 20bn of this debt in the morning if they wanted and the debt would fall by 10-15 percentage points.

Then you could add in the 13bn from BoI/AIB valuations etc. Basically we do have some assets to offset that highe debt figure.


Saying the national debt is "entirely sustainable" is good to alleviate the concerns of investors but does probably make it more difficult to obtain debt relief from the Euro Area / ESM.

gaius c

Looks like we might get to see what AIB shares are really worth.

Rightwing

gaius c wrote: »

Looks like we might get to see what AIB shares are really worth.

Time will tell, but Noonan seems to think you can burn shareholders and they'll be back for more of the same.

noodler

Rightwing wrote: »

Time will tell, but Noonan seems to think you can burn shareholders and they'll be back for more of the same.

Umm?

What?

Rightwing

noodler wrote: »

Umm?

What?

Ammm?


When?

noodler

Rightwing wrote: »

Ammm?


When?

Could you explain the thought process which led you to believe that the Government burned shareholders?

Rightwing

noodler wrote: »

Could you explain the thought process which led you to believe that the Government burned shareholders?

There is a court action at the moment where IL&P shareholders are suing the state for just that.

As for AIB, they certainly didn't, the bank was insolvent, but I struggle to see people getting involved in Irish banks again that have a history of failing.

noodler

Rightwing wrote: »

There is a court action at the moment where IL&P shareholders are suing the state for just that.

As for AIB, they certainly didn't, the bank was insolvent, but I struggle to see people getting involved in Irish banks again that have a history of failing.

The BoI sold shares in 2010, and again the following summer when the Government reduced their stake from 34% to 15%.

There has not been an issue there yet. Obviously AIB will be a stiffer test.


Okay so it is just IL&P (as it was formerly known that you are referring to):

The diluton of other shareholders stakes in IL&P was hardly down to the Government, they were shareholders in an institution with a 4bn capital hole.

The very fact that PTSB cannot see itself making profits for a couple of years at most and that the European Commission still hasn't greenlit their restructuring plan speaks volume for the state of play there.

The shareholders had already lost everything way before the Government intervened imo - they just didn't know it yet. It seems to me that the main shareholder group leading the charge simply made a bad investment choice in 2011 when they bought into IL&P and now need someone else to blame


I can't predict the counterfactual but if the Government had not intervened then where would IL&P have gotten the money to satisfy the results of the Central Bank's PCAR in 2011?

Rightwing

noodler wrote: »

The BoI sold shares in 2010, and again the following summer when the Government reduced their stake from 34% to 15%.

There has not been an issue there yet. Obviously AIB will be a stiffer test.


Okay so it is just IL&P (as it was formerly known that you are referring to):

The diluton of other shareholders stakes in IL&P was hardly down to the Government, they were shareholders in an institution with a 4bn capital hole.

The very fact that PTSB cannot see itself making profits for a couple of years at most and that the European Commission still hasn't greenlit their restructuring plan speaks volume for the state of play there.

The shareholders had already lost everything way before the Government intervened imo - they just didn't know it yet. It seems to me that the main shareholder group leading the charge simply made a bad investment choice in 2011 when they bought into IL&P and now need someone else to blame


I can't predict the counterfactual but if the Government had not intervened then where would IL&P have gotten the money to satisfy the results of the Central Bank's PCAR in 2011?

Everyone agrees that the state had to intervene. But I think their gripe was, that worst case scenario, the bank needed €4bln, Ir banks banks are the most capitalised in Europe so this was never going to be needed, and Ir Life was worth €1.3 bln. The state took 99% of the group.
For BOI, they gave far more cash up front and took a much smaller stake relatively.

noodler

Rightwing wrote: »

Everyone agrees that the state had to intervene. But I think their gripe was, that worst case scenario, the bank needed €4bln, Ir banks banks are the most capitalised in Europe so this was never going to be needed, and Ir Life was worth €1.3 bln. The state took 99% of the group.
For BOI, they gave far more cash up front and took a much smaller stake relatively.

The State is currently down 2.7bn on the IL&P intervention and I cannot see any timescale for when this will ever be repaid through disposing of the bank etc.

We'll wait for the results of this legal action but I think it, again from all I can ascertain, that if the State had to inject 4bn (the amount the CBI demanded it should be said) then we as taxpayers had to be compensated fully.

The prospect of us owning a minority stake in PTSB (or formerly IL&P) whilst after spending 4bn to save it doesn't sit easy with me as a taxpayer.

Rightwing

noodler wrote: »

The State is currently down 2.7bn on the IL&P intervention and I cannot see any timescale for when this will ever be repaid through disposing of the bank etc.

We'll wait for the results of this legal action but I think it, again from all I can ascertain, that if the State had to inject 4bn (the amount the CBI demanded it should be said) then we as taxpayers had to be compensated fully.

The prospect of us owning a minority stake in PTSB (or formerly IL&P) whilst after spending 4bn to save it doesn't sit easy with me as a taxpayer.

€2.7bn. State recouped 1.3 from sale of Ir Life. BOI tapped the markets for more cash, these were options IL&P may have had too.

But all that aside, I can't see shareholders rushing in for banks. I think Noonan is dreaming if he thinks he'll be able to float AIB as soon as 2016.

noodler

Rightwing wrote: »

€2.7bn. State recouped 1.3 from sale of Ir Life.

I think I mentioned that about 4 or 5 times in the last three posts! But it was 4bn at the time and it is that transaction which is under dispute.

Rightwing wrote: »

€BOI tapped the markets for more cash, these were options IL&P may have had too..

If there is no possibility of private sector interest (shareholders or other banks) in PTSB now then it beggars belief that there would have been interest in March 2011 with a 4bn hole unfilled and the true extent of its mortgage arrears issue only coming to light. As I have said, the fact PTSB's existence doesn't even seem to be 100% assured yet is the proof of the pudding imo.

Rightwing wrote: »

But all that aside, I can't see shareholders rushing in for banks. I think Noonan is dreaming if he thinks he'll be able to float AIB as soon as 2016.

I read a quote last week in which he said a "part" of AIB then today the media quote is just "AIB". It seems more realistic to me that the Preference shares or CoCos would be sold before any ordinary stock but perhaps I have that arseways.

2016 seems optmistic for AIB in terms of full disposal but I wouldn't be overly shocked if a deal was done to reduce the State's 99.8% stake before the next election - I just hope the State's stake isn't sold at a 'below fair price' level just so the Government has a good news story going into the election - Noonan has already said there will be 'political considerations'.

Rightwing

State is about €2bn up on BOI, I'd look to be locking in some of that profit now if I were Noonan, rather than being too greedy and concentrate on AIB.

gaius c

Rightwing wrote: »

Time will tell, but Noonan seems to think you can burn shareholders and they'll be back for more of the same.

Those shareholders owned the bank.
Maybe they shouldn't have burned their own bank to the ground hmm?

Rightwing

Rightwing wrote: »

State is about €2bn up on BOI, I'd look to be locking in some of that profit now if I were Noonan, rather than being too greedy and concentrate on AIB.

http://www.independent.ie/business/irish/more-than-400m-wiped-off-states-boi-stake-in-just-two-weeks-30094414.html

Didn't take too long for this to unwind:
---
A PLUNGING share price has wiped more than €400m off the value of taxpayers' stake in Bank of Ireland in just two weeks.
The bank's share price has fallen by around a quarter since the last day of February.
In financial terms, it means the State's 14pc stake in the bank was valued at €1.76bn on the last day of February but €1.35bn yesterday.
The paper losses are certain to raise questions about whether Michael Noonan and the Department of Finance missed an opportunity to recover value for taxpayers when the shares were at their recent high.
----
I fully expect these share to go a lot lower, grossly over valued imo.

noodler

Rightwing wrote: »

http://www.independent.ie/business/irish/more-than-400m-wiped-off-states-boi-stake-in-just-two-weeks-30094414.html

Didn't take too long for this to unwind:
---
A PLUNGING share price has wiped more than €400m off the value of taxpayers' stake in Bank of Ireland in just two weeks.
The bank's share price has fallen by around a quarter since the last day of February.
In financial terms, it means the State's 14pc stake in the bank was valued at €1.76bn on the last day of February but €1.35bn yesterday.
The paper losses are certain to raise questions about whether Michael Noonan and the Department of Finance missed an opportunity to recover value for taxpayers when the shares were at their recent high.
----
I fully expect these share to go a lot lower, grossly over valued imo.

That changes nothing regarding the State still being up over 2bn!

antoobrien

Rightwing wrote: »

http://www.independent.ie/business/irish/more-than-400m-wiped-off-states-boi-stake-in-just-two-weeks-30094414.html

Didn't take too long for this to unwind:
---
A PLUNGING share price has wiped more than €400m off the value of taxpayers' stake in Bank of Ireland in just two weeks.
The bank's share price has fallen by around a quarter since the last day of February.
..
I fully expect these share to go a lot lower, grossly over valued imo.

That was caused by the two main shareholders "taking profits". This is a normal consequence of a major shareholder dumping a truck load of shares onto the market.