Irish Nationwide of Systemic Importance?

[Brendan Burgess]

According to the RTE website...

Speaking in Cork, Mr Cowen said under EU guidelines it was important for all governments to support financial institutions of systemic importance and Irish Nationwide is one of them.

This makes just no sense at all.

Anglo is not of systemic importance other than if it had collapsed, it could have brought down AIB and Bank of Ireland.

Has there been any government definition of "systemic importance"

 

[Brendan Burgess]

An interesting analysis of The Irish Nationwide by Constantin Gurdgiev of TCD

http://trueeconomics.blogspot.com/2009/04/time-to-dump-some-bad-risk.html

The Irish Nationwide has €8 billion of commercial loans and €2 billion of residential loans.

It has €1.2billion of reserves

My analysis:

I would guess that the residential loans are ok. The Irish Nationwide never really lent high LTVs. They have not been active in the residential market, so a lot of these loans are old and so would have an even lower LTV.

The €8 billion is a net figure after c. €500m in write downs.

So they can write down 14% of their loans before calling on the taxpayer.

It's impossible to know what the percentage write down will be.

Brendan

 

[GSheehy]

Has there been any government definition of "systemic importance"

It looks like it is just EU code, for keeping the door open on possible support, so that state aid does not distort competition rules.