# Anglo - 'this bank is dead'?



## rmelly (23 Dec 2008)

http://www.rte.ie/business/2008/1223/anglo.html

The share price of anglo has dropped even further, again, despite the re-capitalisation plans, so is it not time for the government to admin defeat, and force a merger with AIB or BOI under the bailout legislation and re-capitalise the merged entity? It seems they are just delaying the inevitable, at the expense of the taxpayer?

What happens if shareholders say no on January 16th?


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## theresa1 (23 Dec 2008)

As a brand the name is dead but then look at how National Irish Bank recovered after all the scandal.


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## smiley (23 Dec 2008)

theresa1 said:


> As a brand the name is dead but then look at how National Irish Bank recovered after all the scandal.



very true..and lots of other banks like aib after the trader scandal that time.

the show aint over until the fat lady sings.


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## rmelly (24 Dec 2008)

It's not the name I'm referring to, nor is it the Fitzpatrick loan issue.

http://www.independent.ie/business/...rs-approval-for-836415bn-bailout-1583640.html



> Anglo management indicated earlier this month it could write off up to €2.76bn of bad loans over the next three years, though analysts largely believe the outcome will be higher.


 


> Observers believe that the group will ultimately be merged with a larger rival or wound down under government control.


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## theresa1 (24 Dec 2008)

I would like to see the Bank merged with PTSB, EBS and Nationwide and become a real third force to compete against BOI and AIB. I cant see a winding down somehow.


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## Brendan Burgess (24 Dec 2008)

The best approach internationally to help out otherwise good banks is for the government to buy their bad loans. 

Encouraging an otherwise good bank like AIB or Bank of Ireland to merge with Anglo would be the reverse and could be sufficient to bring down AIB or Bank of Ireland.

However, from a taxpayer's guarantee point of view, it would be helpful if AIB picked up the guarantee by acquiring Anglo. 

However, a merged AIB and Anglo would find it difficult to lend again and get the economy going.

Brendan


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## capall (24 Dec 2008)

No bank is going to merge with anglo and take on their existing loan book of over 70 billion of mainly commercial lending
Nobody else is going to invest in Anglo

The best we can hope for with anglo is that it will be wound down in an orderly fashion.


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## rmelly (24 Dec 2008)

I see this morning that Donal O'Connor has resigned as chairman of the DDDA, in which both Fitzpatrick and Bradshaw had involvement until recently - more good coroporate governance?


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## barryl (24 Dec 2008)

I think the most likely outcome for anglo is for the the government to carry them to the far side of the downturn and diversify their business model.


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## mainasia (25 Dec 2008)

A lot of wishful thinkers here, a bank with 70-80 billion euro in standing loans (almost all property related) in a small economy like Ireland that is seeing a catastrophic property related bust during a likely global depression. They will be writing off 10s of billions of those loans as common sense indicates the developers have no money to pay them back (a lot were based on guarantees from stock market assets, land and other property these guys had that were valued at boom heights). Anglo never had a business model, the model was make money now for the board from post-dated paper cheques. The previous scandals mentioned are in the ha'penny place compared to this situation. The government have guaranteed developers loans through their all out bank guarantee thereby putting the whole economy at risk of IMF bailout next year. The bank should be removed from the scene without contaminating the other banks which have their own problems.


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## barryl (26 Dec 2008)

I dont think its wishfull thinking as anglo are now the governments problem.Its in the governments interest to prop them up throughout the downturn,nobody else will.


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## isaidhey (26 Dec 2008)

with the gov guarantee in place doesnt that mean the taxpayer has to carry the can for all the bad debts in anglo?  God knows how many dud loans they have in their books considering they were the most reckless of them all.  I think the only reason the gov is keeping Anglo on life support is to keep developers afloat.  IF anglo was wound down the loans would be called and the full extent of damage would be there for all to see.  Is anybody going to be charghed with reckless trading or do the culprits get off scot free?


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## smiley (26 Dec 2008)

mainasia said:


> They will be writing off 10s of billions of those loans as common sense indicates the developers have no money to pay them back
> 
> Anglo never had a business model, the model was make money now for the board from post-dated paper cheques. The The bank should be removed from the scene without contaminating the other banks which have their own problems.



Have you been able to look through Anglos whole loan book or something? How do you know they are going to be writing off so many billions??
And the bank having no business model??

So tell me about the flaws in their business model??


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## Carramore (26 Dec 2008)

How do we know that they're going to writing off billions?  Simple.  The market says so.  After making various write-downs at 30 September last, Anglo said that the net assets available to shareholders amounted to €4.1 billion.  At Wednesday's closing price, you could buy the entire bank for less than €200 million.  If you don't believe the market, and put your trust in the "official" figures produced by Anglo Irish, mortgage your house, remortgage it if needs be, and buy as many shares in Anglo Irish as you can.  My simple advice to you is don't.  Believe the market.


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## Towger (26 Dec 2008)

From links on 'the pin'; Here is an example of some of international comments and things they have been up to: Chicago Sun-Times [broken link removed]


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## z109 (26 Dec 2008)

Anglo shares now at 12c (US) valuing the bank at 90some million USD. Um, not very much. Even given the same level of loss rates as the banks in Sweden took during their downturn, Anglo is likely to have losses over the next few years of 7.5 billion euro - barring some miraculous upturn in the commercial property, land values, and new home residential markets. 

The question is not how dead is Anglo, but whether what killed it was contagious, whether it has been passed on already, and whether there is a cure.


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## barryl (27 Dec 2008)

I think the government will maintain all of anglos irish assets\liabilites and call in and sell off uk,us,deals.Icant see how they have any other choice.


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## capall (28 Dec 2008)

Carramore said:


> How do we know that they're going to writing off billions?  Simple.  The market says so.  After making various write-downs at 30 September last, Anglo said that the net assets available to shareholders amounted to €4.1 billion.  At Wednesday's closing price, you could buy the entire bank for less than €200 million.  If you don't believe the market, and put your trust in the "official" figures produced by Anglo Irish, mortgage your house, remortgage it if needs be, and buy as many shares in Anglo Irish as you can.  My simple advice to you is don't.  Believe the market.




In fact the market is not always right. It is driven by fear and greed and emotion as well as information and analysis. If the market was always right there would be no such thing as a market bubble or crash

It is possible that the backlash against Anglo Irish at this point is overdone. It would be very interesting to see how their property/developer loans compare in quality to AIB or BOI.


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## smiley (28 Dec 2008)

capall said:


> In fact the market is not always right. It is driven by fear and greed and emotion as well as information and analysis. If the market was always right there would be no such thing as a market bubble or crash
> 
> It is possible that the backlash against Anglo Irish at this point is overdone. It would be very interesting to see how their property/developer loans compare in quality to AIB or BOI.



I couldnt agree more. As Warren Buffet has stated--he would be a beggar on the street with a tin cup if the market was always right.

The market could be right on this occassion but it could also be very wrong indeed.
The bank has been a plc since 1971 and has been a very well run outfit with an excellent return on equity for its shareholders.

So, they have been doing something right since 1971.

The media as ever as been on an all out 'hate campain' against the bank well before the sean fitzpatrick loan fiasco. The media were saying the same things about Anglo back in 2001 when we had a recession post 9/11. Google it, youll find the same old media hysteria.

This whole situation is similar enough to 1990, when Warren Buffett began buying shares in Wells Fargo who had massive exposure to real estate. The short sellers said the bank was finished while buffett kept buying. Buffett won the contest in the end.


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## Duke of Marmalade (28 Dec 2008)

I can't find any commentator who sees any merit in the Anglo bail out.  Alan Ruddock argues in the _Sindo_ that it is not too late to change its mind.  Surely with the share price tanking towards zero post the bail-out announcement it is appropriate for a U-turn.

The thing that baffles me in all this is that PWC seem to support the line that Anglo is perfectly sound.


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## Padraigb (28 Dec 2008)

Duke of Marmalade said:


> ...The thing that baffles me in all this is that PWC seem to support the line that Anglo is perfectly sound.



I presume that they examined the loan book.

As a non-specialist with only a passing interest, I don't know what the lending mix is like. How well is it known to those who have a real wish or need to know?


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## smiley (28 Dec 2008)

Duke of Marmalade said:


> I can't find any commentator who sees any merit in the Anglo bail out.  Alan Ruddock argues in the _Sindo_ that it is not too late to change its mind.  Surely with the share price tanking towards zero post the bail-out announcement it is appropriate for a U-turn.
> 
> The thing that baffles me in all this is that PWC seem to support the line that Anglo is perfectly sound.


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## smiley (28 Dec 2008)

Commentators? Bad news sells. Always has and always will. If they cant find bad news they make it up or twist things. The media also suffer from the same herd mentality that most analysts suffer from. Even if some commentators think anglos problems are not as bad as the market thinks they arent going to risk saying so.

Pwc have said the loan book is fine. Then the loan book in my mind is fine. The market in the short term doesnt believe it, but as ever Mr.Market is totally irrational at the moment.


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## smiley (28 Dec 2008)

Padraigb said:


> As a non-specialist with only a passing interest, I don't know what the lending mix is like. How well is it known to those who have a real wish or need to know?



padraig..have a look at the most recent webcast. It's gone through in detail by the company directors. Its also easy to understand.


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## Padraigb (28 Dec 2008)

smiley said:


> padraig..have a look at the most recent webcast. It's gone through in detail by the company directors. Its also easy to understand.



Thanks for the suggestion, smiley -- but how/where do I find it?


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## Padraigb (29 Dec 2008)

Padraigb said:


> Thanks for the suggestion, smiley -- but how/where do I find it?



It's okay: I found it and watched it. Informative.

There was little to indicate that there were big problems ahead, but it was interesting to note investor concern about the borrower base not being widened. With hindsight, one might ask if the bank became overdependent on a relatively small number of big customers.

I don't know if the sector breakdown of the loan book makes anybody any wiser.


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## capall (29 Dec 2008)

Who are those big customers besides Quinn ?


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