Noonan announces that the Anglo promissory notes will be restructured

[PaddyJoe]

. Key benefits of the Transaction for the Bank

and (ii) there is no change in the ECB Discount of 5.5%, the commercial return for the Bank from the Transaction would be expected to amount to up to A36.4 million (based on an interest margin of 1.35%).
In addition, the Bank’s reasonable and vouched costs and expenses in connection with the Transaction will be reimbursed by IBRC.

Hmm. Not a bad deal for shuffling a few pieces of paper around.
Any thoughts as to what 36 million euro could be better employed doing?

[ang]

. Key benefits of the Transaction for the Bank

Hmm. Not a bad deal for shuffling a few pieces of paper around.
Any thoughts as to what 36 million euro could be better employed doing?

Now the BoI shareholders have their say. David Davin Power says the main concern coming from shareholders is - Are the Government good for the money ?

This transaction shows up the incompetent straw clutching of this Government and the lengths and depths they will go to for power.

[ang]

BoI - EGM Resolution on PN's passed.

Mr Noonan will be pleased.

[PaddyJoe]

Hmm. More creative accountancy to push payments to Anglo out over 40 years or so. Good to know that least one more generation of Irish people will share the burdens of Seanie Fitzpatrick's legacy

Under a plan being weighed by officials, Enda Kenny’s government would inject as much as 40 billion euros ($52.4 billion) of notes of as long as 40 years in duration into the bank, said one of the people, who ask not to be named because the talks are private. These may be used as collateral for European Central Bank funds, replacing 30 billion euros of so- called promissory notes used for the bank’s 2010 bailout.

http://www.businessweek.com/news/201...ce-anglo-irish

[DCon]

Talk of a 40 year bond.

This will make the net cost more, but reduce the annual cost.

Typical politician solution

THE GOVERNMENT is considering issuing a 40-year bond to refinance the bailout of Anglo Irish Bank, allowing it to significantly reduce its annual repayments to cover the cost of the bank’s collapse.

The bond would replace the promissory note scheme through which the State pays off Anglo Irish Bank’s debts, according to Bloomberg reports, citing two sources familiar with the matter.

The main advantage of issuing a long-term bond is that the State would not have to pay the €3 billion a year it gives to the Irish Bank Resolution Corp (the former Anglo) on the back of the promissory notes. At present, the bank takes that money and gives it to the Irish Central Bank, which is funding IBRC through emergency liquidity assistance.

Under the proposal, the State would issue the long-term bond to IBRC. It, in turn, would take the bond to the ECB as collateral which, if acceptable to Frankfurt, would allow the central bank to provide funding, replacing that currently coming from the Irish Central Bank.

The ECB is understood to prefer that Ireland avail of the ESM route but this would require the approval of all members of the bailout fund.

The difficulties in securing such agreement were highlighted yesterday in Berlin when German chancellor Angela Merkel ruled out quick agreement on banking debt relief for Ireland through the ESM, saying there is “no change in the German position.

A long-term bond would not, in iteself, cut the total cost of repaying the State’s debt in relation to Anglo, merely postpone them. It is understood the Government would continue to press for a way of reducing that cost in the longer term – possibly following a resolution of any negotiations with Spain over its requirements to cover bank bailouts.

Ireland is hoping that its remaining functioning banks will be recapitalised retrospectively by the ESM once it is up and running.

http://www.irishtimes.com/newspaper/...324122349.html

[MPB]

So much for Noonans promise to have the ESM cough up for Irelands Private Bank debt.

Will we ever have a Govt with enough to sense to realise that just reneging on all Private Bank debt is the quickest way back to the sovereign bondmarkets.

Even the possibility of not having to pay this unfair debt was enough to halve our interest rates.

Imagine what would happen if we did it for real.

[disability student]

Verbal thug (Noonan) was giving us lot of false hopes and lies as well since he became a finance minister 18 months ago.

His job as a minister of propaganda and spins would suits him well instead of finance minister for Ire inc likewise to Kenny's job as a salesman.

That deal would cost us more which we have to cough up more as a taxpayer. One word that comes to mind... idiotic government ,who seems to have no business sense at all whatsoever.

Nothing re debt reduction nor part of debt slashed that the Greece had achieved. Ireland government have been spineless indeed in comparison to the present Greece govt who got something out of their deal with the troika.

[Richardbouvet]

The govts nicely-nicely approach can now be seen to have failed.

All Anglo repayments should now be suspended indefinitely.

[Dr. FIVE]

Enda being questioned on debt deal now. Nothing to report other then opposition agreed Merkel has stabbed Enda in the back

[Dr. FIVE]

Whelan lays it all out

http://www.karlwhelan.com/IrishEcono...tember2012.pdf

[Greengoddess]

http://namawinelake.wordpress.com/20...l-questioning/

[Captain Con O'Sullivan]

The bullshyte out of Noonan and his prissy little statement that IBRC, although in hock to the Irish taxpayer to the tune of 48billion, declines to comment on the interest rate on the promissory notes due to 'commercial sensitivities' is laughable.

What is less commercially sensitive about a bust bank than the fact it is bust? Are they worried about the reputation of the brand or something?

It is a broke bank, which was run by people who are still under investigation by the gardai, an organisation which we know was essentially fluffing politicians with insider loans, reporting 'imaginative' accounts to the Irish stock exchange for at least eight years and engaging in share-ramping its own shares in an attempt to defraud the markets- what the hell has this abortion of an institution got to worry about in terms of 'commercial sensitivities'?

Even more interestingly- why is the Irish Government promising to pay 45% of Ireland's GDP to people who should have lost their investment and should in reality be looking to have the former boards of the 'banks' involved legs broken?

If it is a choice between that odious debt and seeing the entire boards of these companies found hanging, mysteriously, under O'Connell bridge I know which one is the more appropriate resolution.

[Captain Con O'Sullivan]

Noonan is reading the Central Bank's script- that organisation is one that constantly refers to 'commercial confidentiality' and 'commercial sensitivity' when it doesn't want to answer questions.

It is as notorious as Harney with her 'That would be a matter for the HSE'.

There is sweet FA 'sensitive' about IBRC- every banking analyst between here and Melbourne knows chapter and verse on IBRC and the fraud that is the state guarantee over the illicit debts of a fraudulent organisation.

[disability student]

IRBC is technically a 'defunct' bank which should been liquidated long time ago in my view as they were insolvent.

It's a financial fraud committed on a massive scale as Central bank/Financial regulator have been asleep on their watch. None of them have been brought to justice. Love to see someone bring them up to Euopean court of justice for reckless and irresponsbile behaviour & also neglient on their part, which had wrecked our economy big time.

[disability student]

The question of restructuring the Promissory Notes used in 2010 to recapitalise Anglo Irish Bank (€25.3 billion) and Irish Nationwide (€5.3 billion) has been ongoing for more than a year now. [A smaller promissory note of €0.25 billion was also provided to EBS.]

As well as a €25.3 billion of Promissory Notes which were provided in four tranches in 2010, Anglo Irish Bank also received €4 billion of cash from the Exchequer in 2009. In total €29.3 billion has been committed to the bailout of this bank.

Obviously, the problems emerged on the asset side of the bank and this is an incredible amount of money to have to provide to a bank that, on the night of the guarantee, had about €73 billion of loans to customers outstanding. This loans have proved to worth only about half that amount.

So who was owed money by Anglo on the night of the guarantee? Who was in line to face losses given that more than half the value of the loans issued by the bank were not going to be repaid? Here is an abridged and amended version of the liability side of the Anglo Irish Bank balance sheet as reported for the 30th of September 2008.

Anglo Liabilities

At the time of the guarantee Anglo owed over €100 billion. The €4 billion of shareholder equity was wiped out pretty much as soon as the bank began to provide for the massive losses on its loan book. During 2009 and 2010, €3.3 billion of losses were imposed on subordinated creditors of the bank. After these €7 billion of losses, the first five creditors on the above list were repaid in full.

On the night of the bank guarantee there was just under €11 billion of senior unsecured bonds in issue from Anglo Irish Bank. Most of the money provided to Anglo Irish Bank did not go to ensure repayments to bondholders could be made; it went to depositors.

Of the €72 billion of deposits in Anglo on the 30th of September 2008, around €19 billion were in customer accounts which comprised “demand, notice and fixed term deposit accounts from personal savers with maturities of up to two years” . For the €32 billion of non-retail deposits the annual report says:

Non-retail deposits are sourced from commercial entities, charities, public sector bodies, pension funds, credit unions and other non-bank financial institutions. At 30 September 2008 non-retail deposits were more concentrated and shorter in duration than at the prior year end.

In addition, at 30 September 2008 non-retail deposits included €7.3 billion of deposits from Irish Life Assurance plc, a non-bank affiliate of the Irish Life & Permanent group, which matured on or before 3 October 2008.

Of the €20 billion of deposits from banks, half were on terms that would require them to be repaid in eight days or less. In fact, of the total deposits held by the bank, around €47 billion had an agreed maturity or notice period of less than one month. The bailout of Anglo was of deposits from banking and non-banking institutions and also the individual customer accounts of (wealthy) depositors.

Although in line to absorb losses, the €11 billion of senior unsecured bonds in Anglo on the night of the guarantee did not consume the €29 billion that has been committed to the bank.


Link:http://economic-incentives.blogspot....-in-anglo.html