Irish Bank Bailout breakdown

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Raging Bull

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I remember when the politicians were giving all our money away to Banks etc... that about 7 billion was to be targeted for distressed consumers for the purposes of debt relief. Can anyone find any link to it as it appears to be airwashed from history.
 
I don't remember that.

Don't forget - we gave the money to the depositors and the bondholders in the banks. Not to the shareholders or to "the banks".

Brendan
 
Raging Bull said:
I remember when the politicians were giving all our money away to Banks etc... that about 7 billion was to be targeted for distressed consumers for the purposes of debt relief. Can anyone find any link to it as it appears to be airwashed from history.
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I remember when they borrowed money to replace the savings and deposits of members of the public which the Banks had lent to developers who had subsequently gone bust. Rather than calling it "Borrowing from future generations to replace the lost savings of old people" we called it "Recapitalising the Banks".
 
As I say, I don't remember it.

But I could be wrong. Feel free to post here when you find a link to it.

Brendan
 
Raging Bull said:
I remember when the politicians were giving all our money away to Banks etc... that about 7 billion was to be targeted for distressed consumers for the purposes of debt relief. Can anyone find any link to it as it appears to be airwashed from history.
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The total cost of recapitalising the banks so that they did not default and depositors and investors didn't lose their money was €42 billion. It was probably cheaper than the alternative.
The owners of the Banks didn't get a cent from the bailout, rather the money was used to maintain the banking system and prevent a total collapse of the economy. The cost of continuing to pay pensions, welfare, wages and general running costs was a multiple of that figure. That was done to prevent a broader collapse of the economy and society in general.
Raging Bull said:
We did it was about 6.7Bn but the banks just took it and gave very little relief
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What relief are you talking about?
 
Purple said:
The total cost of recapitalising the banks so that they did not default and depositors and investors didn't lose their money was €42 billion.
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The costs were set out here in 2017 - not sure if this has been updated since.

How much will the bank bailout eventually cost?

Summary |€bn Anglo|29.3 AIB|18.4 Irish Nationwide|5.4 BoI|4.7 I.L&P|2.7 EBS|2.4 Total|62.9 How much will we get back? Anglo has said recently that it may have more than it needs and could give back around €2 billion in time. Bank of Ireland has attracted outside investors recently, so they...
www.askaboutmoney.com

No mention of €7 billion for borrowers.

Brendan
 
Brendan Burgess said:
The costs were set out here in 2017 - not sure if this has been updated since.

How much will the bank bailout eventually cost?

Summary |€bn Anglo|29.3 AIB|18.4 Irish Nationwide|5.4 BoI|4.7 I.L&P|2.7 EBS|2.4 Total|62.9 How much will we get back? Anglo has said recently that it may have more than it needs and could give back around €2 billion in time. Bank of Ireland has attracted outside investors recently, so they...
www.askaboutmoney.com

No mention of €7 billion for borrowers.

Brendan
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I can't find any information more recent than 2019. I agree that there's nothing about €7 Billion.
 

AIB state sale would not impact salary cap, McGrath told​


The submission [by DoF officials] also said that the State had now clawed back €16.1 billion from the €20.8 billion that it had invested in AIB during the financial crash.

It added: "Our remaining shareholding in AIB (25.5%) is worth approximately €3.1 billion today.

The use of the word invested is a bit loose. Should he really be selling at all until such time as it's clear that State recovers the full €20.8bn + the cost of that (est. €9.5bn).? Even at that, it'd be breakeven after, what, 14/15 years.

I'm not a shareholder so I've no skin in the AIB game.
 
GSheehy said:
Should he really be selling at all until such time as it's clear that State recovers the full €20.8bn
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How we arrived here, is irrelevant.

The state owns a 25% stake worth €3 billion.

Whether or not we should sell it depends on the outlook for the share price and whether or not we think that the state should own a share in a private bank.

Forget the state and AIB for the moment.

If you had bought shares in a company 5 years ago for €10,000 and today, they are worth €500. Are you saying that you should hold onto them until you get your money back? You should make a decision based on today's circumstances. (It's a bit more complicated by the CGT issue for individuals which does not affect the state.)
 
No, I'm saying that it might be prudent for the State to hold onto "....one of the best performing bank stocks in Europe"

What's the benefit to the bank/management and/or other shareholders for the State to sell?
 
It's always worth reversing this to clarify your thinking.

If the state did not own any shares in AIB today, should it invest €3.1 billion to buy a 25% stake in it?

What do you think?

Should the state use taxpayers' money to buy stakes in CRH? In Ryanair?

While it has €200 billion of state borrowing?

Brendan
 
The banks were bailed out in 2008-11as a support to the rest of the economy which could not have survived without the services the banks provided.

The money-in, money-out framing is very reductive and we should be able to move on at this point.

The issue is whether there is an ongoing benefit in the state owning Irish banks. My only strong feeling on this issue is that it’s complying irrelevant what the taxpayer put in.
 
GSheehy said:
The submission [by DoF officials] also said that the State had now clawed back €16.1 billion from the €20.8 billion that it had invested in AIB during the financial crash.
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I would like to know where this €16.1 billion (plus the billions repaid by BoI) went? The government of the day increased the national debt to recapitalise these banks. I can only assume that these clawed back funds were used to pay down the national debt? If not, what was the money used for?
 
Brendan Burgess said:
Should the state use taxpayers' money to buy stakes in CRH? In Ryanair?

While it has €200 billion of state borrowing?
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Yes, it absolutely should. The state should have investments/funding uncorrelated to the ebs and flows of the Irish economy. Norway has a 44% Debt to GDP ratio, with the worlds largest sovereign wealth fund. There will always be a level of debt held on the books.

Dr Strangelove said:
The money-in, money-out framing is very reductive and we should be able to move on at this point.
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I always felt that NAMA and the bank stakes should have been placed in the National Pension Reserve Fund (now ISIF) and managed for the long term. We have blown alot of opportunity/long term wealth generation trying to show those investments as "profitable".
 
Brendan Burgess said:
I don't remember that.

Don't forget - we gave the money to the depositors and the bondholders in the banks. Not to the shareholders or to "the banks".

Brendan
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In 2010 the Government issued a ‘promissory note’ for 31 billion EUR to the banks [or more correctly the IBRC], which could then be used as a deposit to borrow euro from the European Central Bank, via its Emergency Liquidity Assistance program. The concept and issuance of the promissory note was approved by the ECB. The money received from the ECB was used to pay back bank depositors and other creditors of the banks.

There was a lot more to it that this and Karl Whelan wrote a paper in 2012 “ELA, Promissory Notes and All That: The Fiscal Costs of Anglo Irish Bank” that deals with it. It’s on his website at Whelan-PNotes-September2012.pdf (karlwhelan.com) .
 
Firefly said:
I would like to know where this €16.1 billion (plus the billions repaid by BoI) went? The government of the day increased the national debt to recapitalise these banks. I can only assume that these clawed back funds were used to pay down the national debt? If not, what was the money used for?
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Dividends rec'd from State-owned banks are recorded as income to the State, just like dividends from semi-states I presume.

Proceeds from selling shares in BoI and AIB are capital receipts, and should be in the Capital budget, along with other capital receipts.

See the 2023 Finance Accounts:

Finance Accounts 2023

www.gov.ie www.gov.ie
 
2023 Finance Accounts:

419m in dividend income

BoI shares: 590m capital income from selling BoI shares in 2022, nothing in 2023

AIB shares: 700m in 2022, 287m in 2023
PTSB shares: 55m in 2023
 
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