If, like me, you are curious about what exactly €40 billion buys you these days, then perhaps you were keen to see what revelations would be contained in the Anglo Irish Bank Annual Report released today. If so, I strongly recommend you read the Group Chief Executive’s Review (pp. 4-6), where we get a glimpse of Anglo Irish Bank’s future plans. You just couldn’t make this stuff up! At first, I actually thought that maybe Mario Rosenstock had written it. But alas, it would be funny if it wasn’t such a never-ending fiasco. Here are just a few of the pearls of wisdom provided by the Group Chief Executive, Mike Aynsley:
First things first: “The ‘new bank’ will in time be profitable, well funded and maintain strong capital and liquidity ratios.” Thanks, lads.
“Our aim is to create a medium-sized commercial bank with a well contained risk appetite and stable funding base, operating in Ireland, the UK and the US.” Steady on, lads! Wasn’t it that “risk appetite” that got us into this mess in the first place?
Thankfully, however, help is on the way: “The restructured organisation will have a role to play in the national recovery, acting as a domestic and international fundraising platform for the Irish economy and providing commercial banking services to assist Ireland’s recovery and growth”
“Finally, I would like to thank the Minister for Finance”….. so would a lot of subordinated bondholders, I suspect!
Declan Curran
Ireland after NAMA 
March 31, 2010 at 10:32 pm
http://www.turbulenceahead.com/2010/03/commanding-pits-of-economy.html
Hmmm… their claims seem to contrast with some of the stuff mentioned by Gerard O’Neill at link above. Or perhaps the stuff in the link is current and the stuff claimed is long term.
Long term and current are vague terms however.
April 1, 2010 at 7:29 am
€40bn? That’s €4bn already spent (gone forever) plus €8.3bn yesterday (gone forever as well?) plus “upto” €10bn in future capital requirements (BL indicated that was the upper limit but there are rumblings it could now be more) plus the cost of buying NAMA loans (€36bn gross loans at a 50% haircut =) €18bn.
The €4bn + €8.3bn are spent and the €18bn is supposed to represent the true value of the assets underpinning the loans. So in terms of decision-making are we really talking about the €10bn?
The cost of winding up Anglo has been put at between €18-30bn?
So Declan, what would YOU do? And it would be very welcome if you could include some quantifications in any answer (and if you use terms like ‘bondholders’ acknowledge that some of them are credit unions and what we might term benign investors).
April 1, 2010 at 9:53 am
@namawinelake
its difficult to quantify the position with regard to winding up Anglo Irish at the moment as many of the estimates of how much such a wind up would cost (be it 30bn or 70bn) are based on internal reviews that have yet to be made public. Brian Lucy’s call for full disclosure of these reviews on Vincent Brown’s show last night was very timely.
Its understood that subordinated bondholders in Anglo only account for 2 billion, so calls to wipe them out won’t solve the problem. That said, a number of our banks may benefit from the resolution regimes suggested by many commentators (where debt would be swapped for equity).
April 1, 2010 at 1:16 pm
@Declan
Fair enough but this is just crazy – not having the information I mean. Surely the Opposition must have access to the liquidation option details (in fact if you study yesterday’s news at six on RTE 1 you can get a glimpse of some figures in Mike Aynsley’s presentation pack).
Obviously there are questions of dealing with the crisis expediently and there are questions of commercial confidentiality – is Anglo now covered by the FoI? – but here we are giving Anglo another €8.3bn and another €10bn (possibly plus) being considered. This is 4 times the Budget cuts last November and remember the trailing, discussion, debate and argument about those.
Debate in this country needs to rise above the “let them burn/swing/rot in jail” but if the information isn’t available how is that going to happen? The pretence that money paid to Anglo is an investment in Anglo is now laughable and it seems we really need to get a handle on the systemic importance of that Bank to the economy and put a €value on it and that €value needs to be subjected to intelligent debate (even if it takes a few months and even if it means aggregated and in some cases specific data is released to the public).
Otherwise we’re all just children at a pantomine cheering and booing cartoon heroes and villains. That may be all some of us are capable of, but you guys at irelandafterNAMA and Brian Lucey should be able to do better.
April 1, 2010 at 1:48 pm
Agreed – a detailed cost/benefit analysis of the options regarding Anglo Irish’s future, based on full information disclosure, is required. In the meantime, debate such as that between Kevin McConnell and Brian Lucy in today’s Irish Independent and the ongoing analysis of Anglo’s annual report on Irisheconomy.ie must be commended.
My post was merely pointing to Anglo’s medium/long term aspirations and strategy (or lack thereof). The future role envisaged by a new Anglo is only one element of the wider Anglo debate, but an important element nonetheless.