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Not all 800 banks who tapped the ECB’s second three-year liquidity op — obvs. But…
[DJ] Intesa Sanpaolo Took Up EUR24B Of ECB’s LTRO – CEO
Junior bondholders in Allied Irish Banks will take the Irish government to court on Thursday over its plans to slash the value of their investments in a test case of Ireland’s tough stance on burden-sharing, reports Reuters. Dublin is hoping to cut around 5bn euros (£4.4bn) from a 70bn-euro bill for bailing out its banking sector by imposing losses of up to 90% on junior bonds in AIB, Bank of Ireland , Irish Life & Permanent and EBS Building Society . But two bondholders in AIB, Aurelius Capital Management and Abadi Co, are challenging the court order issued by Finance Minister Michael Noonan imposing losses of between 75 and 90% on 2.6bn euros of AIB’s subordinated debt.
Stress tests on Ireland’s four main lenders will reveal a capital hole of around €20bn (£17.6bn) in results to be published on Thursday of tests on Bank of Ireland, Allied Irish Banks, Irish Life & Permanent and EBS Building Society, reports Reuters, citing the Sunday Business Post. Earlier, the FT reported that Ireland is trying to secure a deal with the European Central Bank to contain the country’s banking crisis after the test results are published. Dublin wants about €60bn ($85bn) in medium-term funding from the ECB to replace emergency help from Ireland’s central bank. But the ECB is demanding that Dublin first honour its pledges to recapitalise its banks – and could threaten to cut off support. The standoff presages a fraught week for the new government of Enda Kenny, the Irish prime minister, with missteps likely to weaken investor confidence in Irish banks and the eurozone’s stability.
Some palaver in the market on Tuesday that one or the other of a) Ireland or b) Allied Irish Banks had missed a coupon payment…
It’s not true. On either count. Read more
So. This is an interesting chart:
Ireland’s bank restructuring moved forward on Thursday after Dublin approved the transfer of deposits from Anglo Irish Bank and Irish Nationwide Building Society, the nationalised institutions most affected by the collapse of Ireland’s property market, reports the FT. Allied Irish Banks has bought €8.6bn ($11.9bn) worth of deposits from Anglo Irish for an undisclosed sum, while Irish Life & Permanent acquired the €4bn deposit book of Irish Nationwide. The deal improves the loan-to-deposit ratios of AIB and Irish Life – a key objective of the bank restructurings. The sales follow an auction run by the National Treasury Management Agency – the government’s national debt auction body – which indicated there had been some international interest.
Santander of Spain, the eurozone’s biggest bank by market cap, has launched a €4.29bn ($5.8bn) bid to buy all of Poland’s Bank Zachodni WBK, in which it agreed last year to buy a 70% stake from troubled Allied Irish Banks, reports the FT. The offer for AIB’s stake as well as the 30% owned by minority investors runs from Feb 24 to March 25. Santander has been expanding aggressively in emerging markets as well as in the US and UK in efforts to cut its dependence on Spain’s troubled domestic banking market. The Santander group’s net profit fell 8.5% to €8.18bn in 2010, largely because of provisions and write-offs for bad loans in Spain. The BZ WBK bid, announced on Monday, had been expected, although some analysts expected Santander to wait until it had regulatory approval for the purchase of the AIB stake. Santander is offering 226.89 zlotys a share, a premium of almost 10 zlotys on BZ WBK’s Friday close of 217 zlotys.
The price action in Allied Irish Banks on Thursday morning:
Allied Irish Banks, which has already received €3.5bn (£3bn) in state aid, has been forced to drop plans to pay €40m in bonuses to 2,500 staff, after Brian Lenihan, Irish finance minister, threatened to withdraw taxpayer support for the bank, reports the FT. The move, which requires special legislation, came after Lenihan wrote to the bank on Monday warning that its financial survival depended on not paying the bonuses. The bonuses were awarded in respect of 2008, before the financial crisis. No bonuses were awarded for 2009 or 2010. But the issue has unleashed public anger despite the bank’s claims last week that it had a contractual obligation to pay bonuses following legal action by several staff members earlier this year.
The Fed’s Term Auction Facility — started in 2007 to boost short-term liquidity amongst commercial banks — carried a number of caveats.
This was one of them: Read more
Have you ever heard of Inter-Alpha? We hadn’t until this weekend, although we tend not to frequent the conspiracy sites that lump it in alongside the world’s Bilderbergs, Rothschilds, and the Stonecutters.
It is a group of banks that meet together to, erm, discuss stuff, but there’s no conspiracy. The truth is that Inter-Alpha’s list of members, are much, much more intriguing than that. Read more
Now, this a relief rally.
Allied Irish/Bank of Ireland CDS, via Markit.
The banking team at RBS have produced an excellent note on what Ireland’s quoted banks will look like post-recapitalisation.
And it makes for uncomfortable reading. Read more