That’s because it’s ghostly and hard to spot. (And it is All Hallows’ Eve.)
First it was the buried announcement that Irish banks with government share ownership are about to get Spanish-style flexibility on deferred tax assets… (though not nearly as far as the Spanish proposal for tax-credit conversion) H/T Lorcan
Next it was Bank of Ireland’s stock rising by more than 4 per cent in Dublin late on Thursday. Read more
And why this could well have been the best possible deal for Ireland.
________________________ Read more
Click for the feed from the Irish parliament, where legislators have until the morning to pass an emergency bill liquidating Anglo Irish’s resolution company, unlocking a promissory note deal which might be on its way, before creditors of Anglo hit the LITIGATE button. Or something. (The entire prom note deal is needed by the Irish government before the notes’ next circa €3bn interest payment, because that’s what they promised the public.) Read more
Well, see if you can make out what they’re saying here.
Chart du jour from the IMF staff’s Article IV report for Ireland — forecasting the path for Irish debt to GDP if a deal is reached with the ECB to reschedule those promissory notes, and if direct ESM equity replaced bank recaps under the bailout.
On this quiet, Olympics Friday — some bank bail-in reading, courtesy of a judgement by the High Court of England and Wales.
It’s come down surprisingly hard on a small, but very important, weapon in the armoury of bailing-in bank bondholders: exit consents. Read more
How far will Spain’s bad bank be like Ireland’s?
There’s a superficially similar structure. Read more
Spot the eurozone country that doesn’t actually have to issue bonds in these closing 5-year bond yields on Friday:
Spain 5.4 per cent Read more
“We’ll avoid the accounting implications of this deal, though we think it might be an interesting study,” we said last week of Ireland’s circuitous non-deferral deferral of a €3.06bn cash payment to a dead bank under the infamous promissory notes.
Oops. Read more
We have an Irish promissory notes deal! A weird one.
This is not the deal to restructure the notes (used to reanimate the IBRC, the Anglo Irish after-life vehicle) overall. This is not a deal ‘with’ the ECB at all, technically. It’s in order to defer a €3.06bn cash payment that Ireland would have had to send to the bank at the end of this month. One plan was to swap out the cash for a long-term Irish government bond, achieving the deferral for, potentially, the bond’s lifetime. Read more
Pacta sunt servanda
– Olli Rehn, noted scholar of Latin (‘pacts are binding’) Read more
A tidy scoop from RTE, who’ve uncovered key Irish government documents setting up Emergency Liquidity Assistance to banks:
It’s a little over a week until we get the results of Europe’s second round of stress tests.
Here on FT Alphaville we’ve often wondered what’s the point, given that every one seems to think that the assumptions used by the stress test administrators, the European Banking Authority, are too lax. Read more
Yes, Anglo Irish and Irish Nationwide have been stitched together to make… the Irish Bank Resolution Corporation. It will take about a decade to ‘resolve’ them.
Although we’re sure readers can think of a better name. Keep it clean… Read more
A big hat-tip to Lorcan for this — the Irish 2011 census, which includes a nice chart of increases in housing stock, 2006-2011:
After a very vocal campaign highlighting the unfairness of Bank of Ireland’s proposed exchange offer for subordinated debt — which included £75m worth of so-called Pibs that the Irish bank inhereited from Bristol & West held that are mostly held by pensioners– it looks like a victory has been declared. Read more
Meanwhile in Europe … Money markets are also moving.
Recent bidding patterns at the European Central Bank’s seven-day funding operation below: Read more
Irish taxpayers… 0?
For your perusal — a letter sent on Monday by Brown Rudnick to Bank of Ireland, challenging some (coercive) terms in its debt buyback. Read more
Here’s PricewaterhouseCoopers’ (theoretical) non-performing loan (NPL) barometer:
Has a credit event occurred with respect to Allied Irish Banks’ buyback of sub debt? Read more
Quite a bombshell in Bank of Ireland’s latest, after-hours update on its bid to raise €4.35bn in capital to plug crisis losses:
If stockholders approve the proposals, the combination of the proceeds of the Rights Issue, together with any Core Tier 1 capital raised through the [Liability Management Exercise], the exercise of the call options under any amended terms of the existing securities, the further burden sharing with subordinated bondholders anticipated by the Minister in his statement on 31 May 2011 and the issue of the Contingent Capital Instrument will be sufficient for the Group to meet the regulatory requirements established by the Central Bank under the March 2011 PCAR.
First, it was Allied Irish Banks, and a capital structure which had egregiously flipped to favour equity over credit.
Now, as of Tuesday, it’s spread to Bank of Ireland: Read more
Ulster Bank Group accounts for 10% of the Group’s total gross customer loans or 9% of the Group’s Core gross customer loans. The impairment charge of £1,294 million for Q1 2011 was £135 million higher than the £1,159 million impairment charge for Q4 2010. This was driven by continued deterioration across most portfolios during the quarter…
From page 114 of the RBS IMS for the first quarter of 2011. Read more
Not too surprising to see Lloyds’ effort at kitchen-sinking Irish exposures in its Q1 results, with impairments up £500m more than guided to £1.14bn…
Even so, it’s a nice test case of how bad Irish property loan losses could conceivably get, and/or the appetite for recognising losses – compared to Irish lenders and the recent stress tests in Ireland. Read more
So bad a mess even the hedging looks bust.
Quite apart from threatening to overturn the foundation-stone financial hierarchy of debt over equity… Read more
We’re unsure if this is exorcism, omen, or what.
According to the Irish Times: Read more
Dubliners out and about on Thursday, might notice that Anglo Irish has disappeared. The nationalised bank has removed signage from its offices ahead of a planned rebranding.
From Bank of Ireland’s just-published annual report for 2010:
The Central Bank requires that banks have sufficient resources (cash inflows and marketable assets) to cover 100% of expected cash outflows in the 0 to 8 day time horizon and 90% of expected cash outflows in the 8 day to 30 day time horizon. The Group notified the Central Bank of a temporary breach of regulatory liquidity requirements in January 2011 (that breach was remediated in January 2011) and a breach in April 2011. The breaches have been associated with the contraction in unsecured wholesale funding, changes in the eligibility criteria of the ECB and increased usage of Monetory Authority funding. The Actions agreed with the Central Bank to de-lever the balance sheet post the PLAR exercise are expected to reduce the Group’s funding and liqudity risk.