Why are IL&P shareholders not revolting?

The Central Bank's stress tests and provisions for the fire sale of the UK loan book are crazy. It is of no benefit to the taxpayer, to the shareholders or to the borrowers.

The top guys in IL&P will have nice jobs in the newly floated Irish Life and will be free of the hassle of PTSB.

I can't understand why the shareholders are not revolting.

The AGM is on May 18th. There should be serious questions for the board.

Brendan Burgess said:

The Central Bank's stress tests and provisions for the fire sale of the UK loan book are crazy.

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Many here (Switzerland) consider the UK to be piggy no. 4, so reducing your exposure to the UK might not be such a bad idea....

Jim

A shareholders' group has been set up

I haven't had a chance to study it in detail, but it seems that the general points are correct.



Brendan

I have read a bit more of the site and, as I say, it's generally well written and I agree with most of it.

The Central Bank and Dept of Finance are wrong on their strategy for PTSB

It has serious problems but they can be worked through over time.

It is not easy to solve PTSB's liquidity position
PTSB is the most highly leveraged of the Irish lenders. Unfortunately, that leaves it with little scope for arguing with what its main funder, the Central Bank and ECB tells it to do. It is funding most of its mortgage book with emergency liquidity at ECB rates of 1.25%. Without this, it would have shut years ago. So the directors can't dictate terms. That does not mean that they should not dispute the solution. However...

PTSB has serious liquidity problems. But these could be resolved over 5 years. I have proposed 8 ways for PTSB to speed up its deleveraging programme

Unfortunately the executive directors' interests are not aligned with the shareholders' interests
The executive directors and board of Irish Life & Permanent have a great company Irish Life and a problem company PTSB. They would love to get rid of PTSB. The government is solving the problem for them. After the demerger of Irish Life, the top guys will still have well paid jobs in Irish Life, free of any salary restrictions applying to Irish bailed out banks, while the taxpayer will be left holding PTSB which will be ridiculously overcapitalised.

Having said that, I agree that PTSB should be separated out from Irish Life
Irish Life is being held back by PTSB and it should be separated out so that it can thrive on its own. That does not mean that PTSB should be taken into state ownership.

It's not in the public interest to take PTSB into state ownership
A divested PTSB could reach the liquidity targets set by the Central Bank and ECB over about 5 years. It would mean withdrawing from new business in the mortgage market but that will happen anyway.

After 5 years, PTSB could be a very useful contributor to the Irish mortgage and banking market.

• It would offer choice
• It is a customer focused bank
• It had a good brand name which could be rebuilt

The shareholders are meeting tomorrow for a Special General Meeting and the overseas shareholders have managed to get some motions down for discussion.

It's very odd that there is no vocal Irish shareholder challenging the government and Central Bank on this.

Brendan

It turns out that they are revolting.

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Terrible to see the toll its taking on the top [broken link removed]...

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What's the point of revolting? As Noonan said on the One O'Clock, the gov't will just go to the courts.

I think that they should have been more vocal, earlier, about arguing about the stupidity of the Government's plans for ptsb. They might have been able to negotiate a better deal.

They may well be wiped out now by a court imposed deal.

Brendan

I heard one bloke who was made redundant from IL&P and invested all his money in their stocks. He was complaining of being wiped out. But surely to God given that he was made redundant and seemed to see the writing on the wall, he shouldn't have invested this stupidly?

I genuinely feel for shareholders, it's very rough, but there has to be an onus on themselves to be prudent and defensive when it comes to your savings and investments. Nobody can or should be saved from bad decision -making of this kind.

horusd said:

I heard one bloke who was made redundant from IL&P and invested all his money in their stocks. He was complaining of being wiped out. But surely to God given that he was made redundant and seemed to see the writing on the wall, he shouldn't have invested this stupidly?

I genuinely feel for shareholders, it's very rough, but there has to be an onus on themselves to be prudent and defensive when it comes to your savings and investments. Nobody can or should be saved from bad decision -making of this kind.

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I had the same thoughts hearing Gaybo complaining about his advisors who advised him to invest lots of his hard-earned in Irish blue-chip financial stocks. What kind of advisor did he have that hasn't heard of diversification?

Complainer said:

I had the same thoughts hearing Gaybo complaining about his advisors who advised him to invest lots of his hard-earned in Irish blue-chip financial stocks. What kind of advisor did he have that hasn't heard of diversification?

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But sure you can't lose on property