If AIB don't raise equity?

C

canicemcavoy

Registered User
Messages
601
From the IT yesterday:

[broken link removed]



From The Phoenix's Moneybags a few weeks ago:


Assuming that AIB do not raise the additional €5bn, what happens then? I'm curious as I hold deposits there.
 
The taxpayer coughs up the money required - ie bank is nationalised in all but name.
 
Lenihan has already said any money required for AIB would come the national pension fund and not through extra borrowing.
 
There was a banker on the radio last week saying that AIB are making a huge mistake selling the polish operation as it is a very profitable business for them.
Doesn't sound like they have much option thoough.
 
Sunny said:
Lenihan has already said any money required for AIB would come the national pension fund and not through extra borrowing.
Click to expand...

According to this article, in July there was €24bn in the fund:

http://www.breakingnews.ie/business/pension-fund-holds-241bn-465727.html

€3.5bn was put into AIB in February, so presumably there was at least €27 in it then. If €10bn is required, that'll bring it down to €14bn (that is, halve it). What knockon effect does halving the fund have?
 
The fund isn't halved - but it will have a lot of its eggs in the one basket ie Irish banks.

This isn't a great recipe for an investment fund - remember the golden rule is diversification. Any novice investment advisor would be able to spot the problem with this.

Still, I suppose it was a sort of rainy day fund although it was meant to fund the pension shortfall coming up in the next decade, so how will that be funded now? Maybe the investment in the irish banks will turn into a golden egg.
 
Think the shares were up today so maybe state has made something on them?

I'm pretty sure debt/gdp ratio was above 100% in the 80's even early 90's but different circumstances

Surely state could liquidate this anytime it wants, saving for pensions in 30/40 years time seems less pressing than jobs for people today?
 


Assuming AIB is insolvent, which I think is a pretty reasonable assumption, then at least some of the money injected in a recapitalisation "dissappears" (technically the value if transferred from the new shareholders i.e. us to bondholders until the point where the bank is solvent again.) So even if the €10bn or whatever doesn't all disappear at least some of it will, the NPRF could not value a €10bn equity stake in AIB at €10bn.

tvman
 
You must log in or register to reply here.
Menu
Log in
Register