http://www.irishtimes.com/newspaper/finance/2009/0825/1224253193741.html

It appears there is equally as much disagreement over the extent of our ‘economic woes’ in Canada as there is on this side of the Atlantic.

With two opinions there are so utterly opposing, the only certainty we can offer those working in global risk is the assurance that someone is wrong.

T-Shirt I spotted on a trip to California in June:

“Come Over to the Dark Side — We Have Cookies”

There is nothing to say that NAMA will be good for taxpayers. There is nothing to say that NAMA will be good for developers. There is even nothing to say that NAMA will be good for bank shareholders, beyond the bets of the market - it is more likely that CIBC are interested in being part of a recapitalisation of a cleaned up bank than in buying out existing shareholders. This will be dilutive.

If only we had some thin-sliced ham…

This is a ridiculous conclusion.

If AIB is rid of its toxic loans and there is no clawback on NAMA losses, of course it may be a potential for investment but that doesn’t mean NAMA is a good proposition as a bailout of developers.

“State-owned Anglo Irish Bank also had no objection and would advance companies €8 million for the development at North Wall in Dublin, the court heard.”

Who in Anglo ok’ed that?

That is a bloody disgrace.

http://www.independent.ie/opinion/analysis/dreadful-week-for-nama-but-it-has-a-fighting-chance-1860880.html

But this doesn’t change the essential point. If the taxpayer puts the money in, shouldn’t the taxpayer get the gain from selling a bank on (by first becoming a shareholder), rather than private investors?

AIB now and AIB after NAMA are two completely different companies. Today AIB is a (probably) insolvent company that would not survive without the continued largesse of the ECB.

Post NAMA AIB will be a partly state owned bank that should have a sounder financial footing. Coming, of course, after massive shareholder dilution.

Anybody saying that they will take a stake in AIB post NAMA is not talking about taking a stake in today’s AIB. They are two different companies.

It is not unlike saying that I will buy a large share in that oil exploration company, but only after they find oil.

Looks like CIBC have some toxic stuff of their own-
“Opinion was divided on Bay Street as to whether the bank will now have to seek further emergency capital. In January, CIBC raised $2.9 billion of new equity that diluted the interests of existing investors but shored up the bank’s flagging balance sheet. The capital infusion has helped lift CIBC to the best Tier 1 capital ratio among the 25 biggest banks in North America.

“The additional disclosure should lessen fears that an additional dilutive equity issuance will be required,” Malhotra said.

But Brad Smith, a Blackmont Capital analyst, said the bank may need more capital because the risk of additional losses is still high.

“CIBC’s risk profile continues to have above-average leverage to U.S .economic and credit developments, which will require close scrutiny over the medium term,” Smith said. “While it is still in our view not possible to establish a reliable estimate of ultimate mono-line hedge losses, we would not be surprised to see incremental pre-tax losses in the $2-billion to $7-billion range, depending on the extent of softening experienced in the U.S. economy.”

At the worst end of that range, the bank would have to raise more funds to support its domestic retail bank, Smith said”.

Another story from NY Times in Jan -
OTTAWA — The Canadian Imperial Bank of Commerce said on Monday that it would issue 2.75 billion Canadian dollars in stock at substantially discounted prices as part of an effort to ease investor anxiety about its subprime mortgage exposure.

“The bank, based in Toronto, has by far the biggest exposure of any Canadian bank to troubled American mortgage debt, about $9.8 billion. It also confirmed that it would take a $462 million write-down on the unhedged part of that debt as well as a $2 billion write-off for subprime exposure insured by the troubled underwriter ACA Financial Guaranty Corporation.”

in fairness, the reports seem to suggest that CIBC are only looking for a stake in AIB rather than full ownership, andf they may not want to be minority shareholders in a majority-state-owned bank.

http://www.economist.com/businessfinance/displaystory.cfm?story_id=14215012

Would this be considered good news for the tax payer. As if such banks are interested surely the government are giving more options regarding the haircut. Is there any data of the affect of a countries banks being owned and ran by the likes of CIBC or others? i.e Good or bad news for the economy and/or average consumer?

It is not to say that the two views may differ, rather that it does not necessarily follow that they will or that the board of directors of the bank will even pay any heed to what one of its analysts thinks.

Lets face it - AIB was busy doing sale-and-leaseback transactions on its buildings when its analysts were telling the rest of us that there was nothing to be worried about!

RTE reporting it is in fact CIBC who approached AIB! Bring on the Death Star….

This to me smacks of a larger haircut than some shills, eh, sorry, commentators have envisaged. The result of this higher haircut would be that the banks would be effectively nationalised if the government alone recapitalised them. So the government needs recapitalisation partners.

You have to laugh at the rational stock markets…

@jl
Darth Vader to be the new CEO?

try the Canadian Imperial Bank of Commerce. I presume the new title would be Allied Imperial Banks