Hi in looking at the governments credit guarantee scheme I can’t help thinking that in practice it’s bailing out not just businesses (which I agree with supporting) but the banks again. All the capital poured in by taxpayers post-GFC + capital buffer increases were meant to ensure banks had sufficient capital buffers To ride out a crisis like this.....but here we are a decade later underwriting large swathes of bank balance sheets.
Now with the guarantee in place....... aib/BOI/ ulster will undoubtedly focus first on extending credit to existing borrowers such that the old (non-credit guarantee) loans won’t go delinquent (new loans to pay old loans) and effectively the credit/default risk moved on to the governments balance sheet. I know skiin in the game has been written in (20%) but in practise the Irish taxpayer has stepped in and underwritten big chunks of the existing SME loans book?
interested in anyone’s thoughts on the above?
Now with the guarantee in place....... aib/BOI/ ulster will undoubtedly focus first on extending credit to existing borrowers such that the old (non-credit guarantee) loans won’t go delinquent (new loans to pay old loans) and effectively the credit/default risk moved on to the governments balance sheet. I know skiin in the game has been written in (20%) but in practise the Irish taxpayer has stepped in and underwritten big chunks of the existing SME loans book?
interested in anyone’s thoughts on the above?