The Irish Times - Front Page - 29/09/10

 

One of the headlines of the Irish Times today (29 September 2010) reads: “Ireland will not need emergency funding, says EU commissioner.” That’s according to Olli Rehn, European Economics commissioner, who does not foresee the need for the Irish government to seek emergency financial aid from supranational institutions such as the EU or the IMF to rebuild the international investors’ confidence in the country.  An optimism shared by Taoiseach Brian Cowen who also dismissed the idea yesterday that Ireland will need to resort to external financial help to sort out its economy. So Ireland does not appear in such a bad situation from the EU standpoint, compared to, say, Greece or Spain, for example.

That may not be the case for long if we are to judge by another headline of today’s Irish Times (ironically placed right next to the other one cited above on the printed edition – see on the right-hand side) which warns that “Anglo Irish ‘worst case’ bill may top €30bn.” I thought the ‘worst case’ scenario was a €20bn bill, or maybe it was €25bn? My confusion probably comes from the fact this figure (and others) keeps changing, and seems to be always on the rise. So can we take that €30bn seriously? In the same Irish Times article, financial correspondent Simon Carswell points out that “this will meet minimum capital rules up to the end of 2012 but the banks may need more capital beyond this date should losses rise.” How and where would we find more capitalat that point? More bonds? But how can we afford issuing more government bonds when interest rates on 10-year bonds have already risen close to 7%? So, I wonder, can we completely dismiss the idea that Ireland may need to seek help from the EU and/or the IMF at some point?

Delphine Ancien

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