# Summary of Anglo numbers



## Brendan Burgess (31 Mar 2010)

I am trying to get my head around the factual numbers and hard estimates for Anglo Irish Bank. This assumes we keep it open as the Minister plans. Please  fill in the gaps or correct/challenge any assumptions I have made.

PDF of 2009 [broken link removed]
*
Taxpayers total cost/investment*


Equity paid over in 2009|  €4.5 billion
  Paid in April 2010| €8.5 billion
  Potential extra| €10 billion
  Total| € 23 billion -

Total loan book| €72 billion
  Book value of investment and property loans| €55 billion
Book value of loans
 going to NAMA| €36 billion 
  Estimated write down| 50%
  Estimated price NAMA will pay| €18billion 
  Loss recognized on transfer to NAMA| €18 billion -
*My guess of the unrecoverable cost* - i.e. loss to the taxpayer


Unrecoverable |€18 billion

  Value left| €5billion   I base this guess on the fact that the €4.5 billion and €8.5 billion are to pay for losses. I guess that 50% of the anticipated €10 billion is to increase the reserves to an adequate level.

  This ties in with the €18 billion loss recognized on transfers to NAMA. 


*Funding *


Tier 1 bonds|  €2 billion
  Senior bonds| €  
?

  Retail deposits| € ? *Minister’s speech on D Day*
  Anglo Irish Bank
  The unavoidable reality is that the bank has incurred losses from its large-scale property lending and needs substantial further capital. Unpalatable as it is, only the taxpayer can provide that capital. It is the least worst option. For that reason, I am providing €8.3 billion this week to support the capital position of the bank to take account of the bank's losses to date. 
  Additional capital support is likely to be required depending on the NAMA discount on the first tranche of Anglo’s loans. The bank will provide comprehensive information on its financial position in its annual report for the 15 month period to end-2009 which will be published later this week. 
  I must point out that the bank will need further capital to cover future losses and accomplish the restructuring of the bank and its balance sheet. The current estimate is that this could be of the order of a further €10 billion. 
  However, notwithstanding very substantial work underway on the bank’s Restructuring Plan, there are still significant uncertainties about this figure including the size of the discount on all of its loans transferring to NAMA, the scale of future losses on its loans that are not transferred to NAMA and the exact nature and the scope of any split of the bank under its plans and the EU Commission Decision on the plan. 
  It is because of the heavy loan losses already incurred on a loan book of €72 billion and those in prospect that the injection of resources in this bank is so large. There is simply no alternative that meets the bank’s unavoidable obligations at a lower cost consistent with the maintenance of the hard-won stability of the banking system in Ireland.
  The bank is expected to transfer about €10 billion of loans to NAMA in the first tranche. This tranche will not transfer until early April as the valuations have not been finalised. *The latest available unaudited estimate of the discount is in the order of 50%. *
  The bank’s capital support is being provided by the State in a way which spreads the cash requirements over an extended period of time. I am injecting the capital this week in the form of a promissory note, payable over a number of years into the future. In essence this means the amount will be paid over a period of 10 to 15 years, thereby reducing the impact on the Exchequer this year and stretching the payments into the future.


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## Brendan Burgess (31 Mar 2010)

One of the suggestions is that we should not bail out the bondholders. 

Does anyone have the figures for these?


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## Brendan Burgess (31 Mar 2010)

From the [broken link removed]



> The bank has written off €15.1 billion on bad loans, including €10.1  billion on €35.6 billion in loans to be transferred to the National  Asset Management Agency (Nama).
> 
> 
> Anglo said it expects to transfer  loan assets with a nominal value of €35.6 billion to Nama in 2010 with a  carrying value of €25.5 billion. After this transfer, it said, Anglo  would have about €36.5 billion in customer loans with cumulative  specific provisions of €3.7 billion.




Nominal value| €35.6 billion
Write off |€10.1 billion
Carrying value| €25.5 billion -
This suggests that the Anglo haircut will be only 28%. Doesn't seem right


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## DerKaiser (31 Mar 2010)

My reading is this (approx):

€12bn invested by the state to date
€3bn in capital on current loan recovery assumptions

So the cost to us €9bn to date.

This assumes the next €20bn of NAMA transfers will only have a €5bn haircut
It also assumes that the post NAMA loans of €36bn will only need to be written down by €4bn
Both of these seem optimistic, hence a potential further €10bn?

The liabilities include:
€15bn senior debt (€7.5bn govt backed maturing in sept)
€2.5bn subordinated debt

Potentially €10bn bondholders to hit?

The remaining liabilities are customer and other bank deposits.


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## canicemcavoy (1 Apr 2010)

Brendan, Dan Boyle claims that Anglo has €30billion worth of deposits (hence his claim that the bailout is the lesser of 2 evils rather than having to hand the €30 billion back). Do you have any figures to back that up?


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## Sunny (1 Apr 2010)

canicemcavoy said:


> Brendan, Dan Boyle claims that Anglo has €30billion worth of deposits (hence his claim that the bailout is the lesser of 2 evils rather than having to hand the €30 billion back). Do you have any figures to back that up?


 
Here is the their results from yesterday

[broken link removed]


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## canicemcavoy (1 Apr 2010)

Thanks, Sunny. I presume that all deposits are covered by the figure "Customer funding" on page 12 of that PDF? At the end of 2009, it stood at €27.2 billion.

However, a year previously, it stood at almost €50 billion! So it's likely that currently it's less than €27.2 billion (I really can't see people rushing to add to Anglo's deposits in the last 3 months).


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## Bronte (1 Apr 2010)

Why anyone would continue to believe any figure that any accountant, banker or politician or regulator puts out in the media is beyond me.

The whole thing is a pack of lies and more fool the Irish people for believing it.  So vexed about this I can't even write.


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## DerKaiser (1 Apr 2010)

canicemcavoy said:


> Thanks, Sunny. I presume that all deposits are covered by the figure "Customer funding" on page 12 of that PDF? At the end of 2009, it stood at €27.2 billion.
> 
> However, a year previously, it stood at almost €50 billion! So it's likely that currently it's less than €27.2 billion (I really can't see people rushing to add to Anglo's deposits in the last 3 months).


 
There's certainly been a trend that retail deposits have been dwindling with probably the ECB propping up the balance sheet.

By september I doubt there would be any individual customer deposits in excess of €100k and I doubt we could default on the people who've been propping up the balance sheet willingly. 

In other words there is probably only about €10bn that could be defaulted on. €2.5bn subordinated debt should be told to take a running jump as a start. 

Last year's discounted buyback of subordinated debt is looking foolish. 

Every cent paid out to those bondholders, no matter how high the discount, was a cent too much, and the management should have known that.


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