AIB ripped off for $750M ???

bonkey

Theres an article here about an investigation into one of AIBs US subsidiaries who is investigating a fraud case where they believe around 750 million bucks has been "liberated" from the bank. One of the employees of the bank involved in the investigation has gone missing and has been named as a suspect.

OK - this wont break AIB, nor even their subsidiary (among the top 50 banks in US), but I wonder if this will have any adverse impact on the markets.

The US economy is reeling somewhat because of the whole Enron affair, and the reported feelings are that investors are getting very shaky about companies presenting complex balance sheets, because they could be fixing the figures a la Enron.

Add to that a big *bank* thats been ripped off for 3/4 billion, across multiple trades and a timespan of 1 year, and you start wondering.....

Sure, AIB is Irish, but the subsidiary was in the US. Even if not quoted, the impact is that people will lose even more faith in large companies. How could a bank not notice a large number of trades over a year, losing them such an amount of money?

Can any large business feel safe? Turning a profit and meeting forecasts is no longer enough. You need to convince people you arent scamming them, nor are you being scammed by your own people.

Sheesh....what a mess.

jc

Xterminator

WELL THE BANKS HERE HAVE BEEN RIPPING US (THE CONSUMER) OFF FOR SO LONG, IF IT WERENT OUR MONEY, I WOULD FIND IT FUNNY!

Well I would. Highest interest rates on redt Cards, highest interest rates on mortages, feck all choice .. etc. etc.

X

bonkey

Originally posted by Xterminator
WELL THE BANKS HERE HAVE BEEN RIPPING US (THE CONSUMER) OFF FOR SO LONG, IF IT WERENT OUR MONEY, I WOULD FIND IT FUNNY

Its not your money, unless you have shares in AIB. Its the banks money.

As for ripping you off....thats a very dodgy assertion. In some areas, bank charges are too high, in others they are not.

Take your credit card. Almost every major credit card company in Ireland was losing money until the late 90s. While this was happening, people complained about their CC charges being too high. The major banks would consider making £15 per cardholder (on average) as exceptional profit. As for the interest rates on them....if you see a credit card as a cost-effective way of running up debts, then you need your head examined. The rates are deliberately high to encourage people to pay back their debts in a timely fashion. If you cant control your spending vs. your income, its a bit rich to blame the bank for taking so much interest off you. Besides, no-one forced you to have a credit card in the first place.

Transaction rates are a reasonably accurate reflection of the cost to the bank of actually performing that transaction. Sure, you may say "what does an ATM cost to run", but you forget the millions spent annualy on the IT support, the manpower cost of restocking and the cost of maintenance.

On mortages, you are probably correct - the banks were overcharging here for years, and probably still are. However, economists are generally in agreement that decreasing the interest rates here would in effect simply cause the house-prices to rise as people could afford to borrow more. The net effect is that you spend more for your house, and the bank make the same (or more) interest off you anyway.

Primarily, banks do nto make money out of their services. They make money out of having money - through investments, loans and all that. It is not unreasonable for them to demand that a service break even, which is effectively what they do in most cases.

In cases of loans - it is a rare situation where someone was forced to borrow. You *choose* to borrow for that new car, that house, or that stereo. You make that choice in the full knowledge of the banks charges. In doing so, surely you lose the right to claim they are ripping you off. You could choose not to borrow and not to purchase.

As to finding it funny....if you find it funny that there are increasing signs of massive amounts of carelessness, lack of accountability, and dodgy dealings going on in the largest financial sectors of the western world....fair enough. Personally, I find the implications a little disturbing.

jc

Saruman

Bonkey would this not have some sort of ripple effect? Its about confidence at the end of the day.. if an investor is not confident about the accounting etc of a particular company then that will transfer to in this case the holding company AIB.. then there will be questions and nervous inversters will think twice about investments with other companies.. the whole Enron scandal is one example. I may be way off but thats how i see it... i heard a discussion on the last word (today FM) last night. Economists were discussing the Enron afair.

Saruman

I dont think Banks are ripping us off, with some exceptions i think NIB was one was it not?
Anyway i have never had a bad experience with bank charges or ripping us off.. even my credit card is acceptable because i always have the money to back up my purchase and so pay no interest!
Mortgage rates are not off the scale.. house prices are...

WhiteWashMan

the missing money is only half of AIB'S year end earnings.
it will have no effect on the amount of money they loan or pay out etc .cant rememer technical word for it all.

but rememebr berrings (sp?) bank got stung for 800 million sterling an no one noticed that going missing. in fact, come to think of it, they kept giving it to him!

bonkey

Berings *lost* a chunk of money, because they did not keep track of the deals their staff were taking part in.

AIB were defrauded a chunk of money.

It is one thing to be able to spend and spend and spend, but its another thing to actually make money, and then defraud the bank out of the profits.

That said, it probably biols down to knowing the system well enough.

jc

Occidental

Am I the only one who finds the idea of a thread about a bank being ripped off under the title of Humanities hilarious.

Samson

Originally posted by Xterminator
highest interest rates on mortages(sic)

I don't actually think that is correct at the present time, as far as I am aware AIB have one of the better mortgage rates among the county's financial institutions at the moment (according to my accountant anyway).
Although with this sh!t in the States they may up their rates !

Or, were you referring to Irish interest rates in general ?

tribble

Besides, no-one forced you to have a credit card in the first place.

I take it you've never traveled in the states then?
Try even booking a hotel (in person or otherwise) without one... :rolleyes:

EvilGeorge

but if I had the balls I'd be a rich man on the run too!

bonkey

Originally posted by tribble
I take it you've never traveled in the states then?
Try even booking a hotel (in person or otherwise) without one... :rolleyes:

I think XTerminator was referring to Irish Credit Card rates. If he was talking about credit card rates in general (or AIB in specific), then the classification of "highest" becomes a bit pointless - highest compared to what?

Regardless....you pay interest on what you spend and do not pay back in a timely fashion. If you cannot afford that hotel room, then putting it on your credit card is your conscious decision to spend beyond your means. If you can afford it, then not paying your bill in a timely fashion is your fault.

The problem with credit-cards is that people see them as easy, "free" money - a neat way to cover those extra expenses when theres so much month left at the end of the money. It is almost invariably this type of spender who complains about CC interest rates being too high. I fail to see how the bank is at fault here.

jc

franco

Now is the time to invest in a few AIB shares methinks.

Meh

Originally posted by Clain
I’m sorry, this is really juvenile on my part, but a bank has lost a enormous amount of money.

If you've got a pension or an equity-based SSIA (like a lot of people on this board), you can wipe that smile off your face -- you've just lost a lot of money. Up until this news, AIB was the biggest company on the Irish stock market.

WhiteWashMan

Originally posted by bonkey

AIB were defrauded a chunk of money.

i suspect that AIB also *lost* a chink of money as berrings did...

b20uvkft6m5xwg

Barings Bank

Now known as... ING Barings
They have an office on Stephens Green beside Loretto:)

Xterminator

Originally posted by Samson


I don't actually think that is correct at the present time, as far as I am aware AIB have one of the better mortgage rates among the county's financial institutions at the moment (according to my accountant anyway).
Although with this sh!t in the States they may up their rates !

Or, were you referring to Irish interest rates in general ?

I was referring to Irish rates in general, for both mortages and credit cards. I was bemoaning the lack of choice in the Irish market, which I had hoped would benift from the single market.

I use this example

"Egg credit card. _here


Egg Card APRs (variable) are 11.6% (0% fixed until 1 August 2002) for new purchases and balance transfers (for new accounts opened between 1 February 2002 and 28 February 2002), 12.9% standard rate and 15.2% for cash advances thereafter.
No annual fee.

AIB_Visa A.P.R. 25.64% on no fee card (23.68% on fee card fee per annum £10)
Source _:here

By the way i have to have a credit card to do business over the internet. And my choices are limited because of the cartel here in ireland.

Also the money the banks have are their customers and their shareholders monies.

X

Boston

Originally posted by WhiteWashMan


i suspect that AIB also *lost* a chink of money as berrings did...

in one sense right, it another wrong

yes they lost the money, but, as i suppect we will find, it wasnt anything like berrings,

berrings was a rough trader. i have the strong supicion that this was not the case with aib, that he did infact have the full knowleadge and approval of the imediate managment.

Victor

Originally posted by Meh
Up until this news, AIB was the biggest company on the Irish stock market.

This doesn't show the full picture. TESCO PLC (€28bn), CGNU (€30bn), DIAGEO (€42bn) all have secondary listings in Dublin (I don't think they are part of the ISEQ though).

However, AIB was top of the ISEQ for only 5 trading days (Elan was bigger before last week, BOI is now bigger. Valuations are in €m