What is the taxpayers' stake in the banks worth?

Brendan Burgess

Brendan Burgess

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How much are our stakes in the continuing banks worth?

We injected...

AIB|19.8 bllion
Bank of Ireland|€4.7 billion
IL&P|€4 billion

I have looked at the market capitalisation per the Irish Stock Exchange Website


810,872,701

AIB 27,381,506,249 (516 billion shares at 5 cents)

Bank of Ireland 3,646,033,207 ( 30 billion shares at 12 cents)

I must be reading this wrong.

We invested €19.8 billion and own over 90% of AIB. Surely it is not worth 90% of €27 billion?

Is AIB worth 10 times more than Bank of Ireland?
 
OK, I have got more information from [broken link removed]


An attempt to derive a current valuation is set out in Table 2. The NTMA 2011 Annual Report provided the results of an independent valuation of their directed holdings in the pillar banks. This covered their ordinary share capital as well as their preference shares and came to €8 billion.

However, this ignores the Exchequer’s ownership of Irish Life, which I have valued at cost, €1.3 billion, and CoCos which are hard to value. Again, I include them at cost, €3 billion. On this basis, the current market value of the State’s holdings is about €12 billion.

We thus have two extremes, a current, distressed, value of €12 billion, and a cost, (excluding PNs) of €33 billion . The answer is likely to lie between these extremes with a value in excess of the lower range being justified by the long term economic value (LTEV) formula and, perhaps, the unique circumstances pertaining to a once-off retrospective exercise.
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I'm not sure why Pat McArdle would suggest that the "true value" of the banks must be somewhere between what we paid and what they are currently valued at on the market. What we paid for them is completely irrelevant, the banks were insolvent when we bought equity in them, every penny of equity we bought, up to the point where the bank's were once again solvent, is gone forever.

Can anyone understand the last sentence "...The answer is likely to lie between these extremes with a value in excess of the lower range being justified by the long term economic value (LTEV) formula and, perhaps, the unique circumstances pertaining to a once-off retrospective exercise."
 
They had a valuation done which said that they were worth €12 billion on a fire sale basis.

The Long Term Economic Value is higher than that - I agree, but probably not by that much.

I don't understand the last paragraph.
 
So 18 months on.

We've got our money back from BOI.
We've got €1.3bn from Irish Life.

Will AIB be able to make a contribution in the medium term?
 
Did we receive more than our initial investment back from BoI - I seem to remember reading that somewhere?
 
DerKaiser said:
So 18 months on.

We've got our money back from BOI.
We've got €1.3bn from Irish Life.

Will AIB be able to make a contribution in the medium term?
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DerKaiser;

Since AIB is so big in our economy and have taken a fair share of the best of Bos,Acc, Danske etc,s business , they, whilst being insolvent (for the 2nd time!) will very quickly become ongoingly profitable.
Shortly thereafter they will start paying Dividends to US the taxpayer.
Then the Government will sell them at a price that washes out an element of the money WE put in.

So it will mean we have carried their risk @ our cost , yet we will sell when they actually are in the way of being strong.
Please tell me I am wrong in my appraisal?
 
The taxpayer put a lot of money into AIB to bail out the depositors and the bondholders, but primarily Irish citizens with deposits in AIB.

So it was a transfer from the taxpayers to the depositors.

We put €20 billion into AIB. It's very hard to see it worth €20 billion any time soon. It's even hard to see how the market capitalisation of €40 billion is justified.
 
Brendan Burgess said:
The taxpayer put a lot of money into AIB to bail out the depositors and the bondholders, but primarily Irish citizens with deposits in AIB.

So it was a transfer from the taxpayers to the depositors.

We put €20 billion into AIB. It's very hard to see it worth €20 billion any time soon. It's even hard to see how the market capitalisation of €40 billion is justified.
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Brendan,

Bet you a fiver that by 2019 Aib will be sold and Mr Taxpayer will be salted.
If not, the whole financial edifice will be in ruins.

ps. Soothsaying ain,t my forte!
 
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