Brendan Burgess
Founder
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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.
PDF of 2009 [broken link removed]
Taxpayers total cost/investment
Paid in April 2010| €8.5 billion
Potential extra| €10 billion
Total| € 23 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
Value left| €5billion
This ties in with the €18 billion loss recognized on transfers to NAMA.
Funding
Senior bonds| € ?
Retail deposits| € ?
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.