David McWilliams writing in the Sunday Business Post issues two cheery predictions for 2010.

First, the two big Irish banks – AIB and Bank of Ireland – will need to either be:

(a)    nationalised by St Patrick’s Day at the latest (he predicts February) due to the massive hole in their capital base (only €90b of the €400b loan book is being taken into NAMA) and high loans-to-deposit ratios (160% in 2008) that means no creditors will invest in the banks, thereby freezing credit and increasing the potential that large depositors will start to withdraw their deposits.

(b)   taken over by a larger European Bank who are in a better position to negotiate with creditors.

He prefers the second option – “giving the two big banks away”.  He argues, (more…)