Anglo buying back debt at a discount? Normally, that might make sense. But that is surely not an “investment” that should be made at all? Is the capital they have been given not for a more productive purpose? Are they not being slimmed down? If not even wound down?

No wonder it is news!

I did predict that there would be more leaking and frankly, I am suprised at the small scale of it, so far.

http://www.independent.ie/business/irish/nama-to-demolish-developments-that-will-never-be-viable-2100082.html

This is from the article. It is nonsense. The success of NAMA is going to be based on other factors and anyone with a brain knows it.

So why write that?

What should the criteria be?

Looks like Anglo gettin into Derivatives/CDSs …… Carswell in today’s Irish Times ……….

“[Anglo] Staff were also concerned by an internal note circulated last week by the AEC which detailed minutes of comments made by Mr Hunersen [Head of Anglo Corporate Development] at this month’s briefing. The note claimed that Mr Hunersen had said that Anglo planned to buy back the loans it was transferring into Nama at a significant discount to the price at which they were going in and that Anglo also planned to start trading in high-risk credit default swaps (CDS). Anglo management sources dismissed the internal staff note as inaccurate, saying that the note misinterpreted his comments. According to the sources, Mr Hunersen said during the briefing that the Irish bank system, including Anglo, would have to support Nama assets when they were refinanced into the market. He told the AEC that the bank planned to reduce its post-Nama loan book through syndication and securitisation deals, the sources said. They said that Mr Hunersen had not outlined in the discussion with staff this month any plans to start proprietary trading in CDS – contrary to the note circulated to employees, which was described by the sources as “unhelpful”.

Spots and a Leopard spring to mind - my apologies to all real leopards.

We are all in the CUBE at the mo - it’s called Naa_Maa. Dig for facts - we need facts so that we can map it, find our way out of it, and then put an end to it.

Seven_of_ Nine just energised to Washington/New York …. just meself and Blind Biddy at the mo.

“@Greg, no need to leave Eoin out just because his opinions are different.”

LorcanRK,

How can you be sure that Eoin is not David O’Donnell?

Provide me with any difference between Eoin and David O’Donnell.

I dare you.

“…the procedures, policies and processes of the Cube …”

Well Holy God.

The blind be seein.

How’s Blind Biddy.

Did Blind Biddy get to see the Cube?

Do you know the way out?

Does Biddy know the way out?

http://www.youtube.com/watch?v=01hUyIrubWE

Accepted and very reasonably put.

Eoin and I have history.

I withdraw my previous.

Yes - I support your comment here. Eoin is willing to engage. The ‘cut and thrust’ of differing viewpoints, and most (if not all) here can handle it, is what is of real value. Whether I agree or disagree is not the issue - but in a substantive blog the full range of validity claims - objective facts and states of affairs, social norms, and subjective experiences re genuineness/authenticity are available. And do we need this at the moment ………. do we what?

@Greg
There have been no ‘warnings’ - merely an aesthetic difference of opinion on certain metaphorical illustrations. My relationship with Seven_of_9 is sound and she is an invaluable source of insight on the procedures, policies and processes of the Cube. Blind Biddy has taken to her as well.

It is quite a testament to the people running this site that all informed opinion is welcome and debated here, without such debates generally disintegrating to name calling and other unpleasantness that is so common elsewhere.

For example, if Eoin had not made his comment earlier suggesting that Anglo’s collateral may have been government bonds, I would not have felt the need to enter the debate at all..

Now now.

We’ve been warned before.

No Ferengi and no Alan Dukes.

The other 199 will all claim to be Irish on Wednesday - then they revert to being fundamentalist_free_mawrket_eeering buddies of Ghensis Khan, Sharah Phelan, Dik_een Chain_ee, F0x Newz OReilly and co on Thursday and the other 364 days in the year as they support the rip off of the known universe for an elite bunch of Ferengi.

Seriously, the timeline is important here …….. and we are running out of people in upper_echelon positions we can trust to give us facts - 2_of_7 is a real dis_apointment …

“I’d believe more from the Trots”

How many do you know?

I think its fair to say that Gurdgiev is a little bit to the right of Lenin.

He is not a “Guru” to me. I am an atheist.

I simply gave the link.

Your knowledge of the American Biographical Institute is beyond me.

Are the other 199 all Irish?

I’m going to piggyback your “timeline” idea. But from another angle.

“Yes - excellent stuff from LorcanRK and Eoin here ………. & Ronan L above …….. we are into NAMA exploded territory here -”

No offence David but I’d leave Eoin out of that.

I suggest you look at his comments again.

Ronan L does trojan work.

In 2005 the American Biographical Institute awarded 200 “Man of the Year” awards at between $195 and $ 295 each. Where are the other 199?

Yes - excellent stuff from LorcanRK and Eoin here ………. & Ronan L above …….. we are into NAMA exploded territory here -

On the Link - I’d believe more from the Trots - Monsieur Gurdgiev, who apparently does not visit this blog, albeit well versed in economics, is the recipient of the World Medal of Freedom, 2006 and Man of the Year, 2005 awards from the American Biographical Institute. Its awards have been denounced as scams by too numerous to mention http://en.wikipedia.org/wiki/American_Biographical_Institute … can one really trust this guy to be ‘true’ to say nothing about the ideological bent of a social scientist who labels a social science as ‘true’ - let alone a republic as ‘open’? I’ll stick with the pragmatists around here for me facts.

Not directly related but an interesting take on off-balance sheet financing.

http://www.rooseveltinstitute.org/policy-and-ideas/ideas-database/bring-transparency-balance-sheet-accounting

Excellent stuff.

Really very disturbing.

Gurdgiev also covers it here.

http://trueeconomics.blogspot.com/2010/03/economics-12032010-anglos-latest-fun-in.html

On Dates, Times, & Anglo_Irish : Mike Aynsley (new CEO) arrived post this €10billion that I’m trying to figure out: as did the present Governor of the Central Bank. Presently 4 Directors, and Minister to appoint a few more non-execs in coming weeks. Alan Dukes to take over as Chair in June as O’Connor stands down.

“DONAL O’CONNOR (58)
was appointed Chairman in December 2008 and Executive Chairman in February 2009, having joined the Board in June 2008. He was the Senior Partner of PricewaterhouseCoopers (PwC) in Ireland and was a member of the PwC Global Board and Chairman of the Eurofirms Board. He is a Non-executive Director of Elan Corporation plc and Readymix plc. He is a former Chairman of the Dublin Docklands Development Authority and a former Director of the Irish Auditing and Accounting Supervisory Authority.

ALAN DUKES (63)
who joined the Board in December 2008, is a Director and Public Affairs Consultant of Wilson Hartnell Public Relations Limited. He has served as Minister for various portfolios including Finance and Justice and is a former leader of Fine Gael. He was Director General of the Institute of European Affairs from 2003 to 2007.

MAURICE KEANE (67)
who joined the Board on 21 January 2009, is a former Group Chief Executive and a former member of the Court of Directors of Bank of Ireland. He is a director of DCC plc and Axis Capital Holdings Limited and is also a member of the National Pension Reserve Fund Commission. He is a former chairman of BUPA Ireland Limited and Bristol & West plc

MIKE AYNSLEY (51)
joined the bank as Chief Executive Officer in September 2009. Mr. Aynsley has over 30 years industry and consulting experience in banking and in financial services in Australia, New Zealand, the Asia Pacific Region and the United Kingdom. Prior to joining Anglo, Mr. Aynsley was working on a number of high-level projects since January 2006, in the areas of financial sector development, risk management, liquidity management and governance risk assessment. Previously, he held senior positions, including Chief Risk Officer in New Zealand for ANZ Bank and National Bank of New Zealand. Prior to this he was a Global Partner, Banking and Financial Services with Deloitte Consulting for five years. He was General Manager - Global Markets, Global Wholesale Financial Services for National Australia Bank from the early nineties, having held senior management positions with Security Pacific National Bank from the early eighties in Australia, Japan and the United Kingdom. He holds a Master of Business Administration degree from Macquarie University, which he obtained in 2007.”

http://www.angloirishbank.com/About-Us/Company_Directors/

On Corporate Responsibility

“We take a responsible approach to environmental issues and are proactive in seeking innovative ways in which to become more efficient. In addition, a fundamental aspect of our Corporate Responsibility (‘CR’) strategy has been our commitment to supporting the development of the wider community.”

CORPORATE GOVERNANCE STATEMENT
“Below is the text of the Corporate Governance Statement from the 2008 Annual Report & Accounts.

On 15 January 2009 the Government announced that it would take steps that would enable the Bank to be taken into State ownership. The legislation providing for the transfer of all the shares of the Bank to the Minister for Finance was enacted under Irish law on 21 January 2009. On the same date the Bank was re-registered as a private limited company.

This Corporate governance statement describes how the Bank applied the principles of The Combined Code on Corporate Governance (’The Combined Code’) issued by the Financial Reporting Council in June 2006 and the Bank’s compliance with The Combined Code’s provisions throughout the financial year ended 30 September 2008.

The Directors believe that the Group has complied with the provisions of The Combined Code throughout the financial year ended 30 September 2008.”

On the final sentence - methinks the exception may prove to be the rule here - ‘voluntary’ compliance has had its day in Corporate Governance wrt Irish banks as far as this citizen is concerned.

Thank you.

This makes 2_of_7’s distinctions between 12billion to float and 20billion to drown look ridiculous. Asset stripping (AIMB), ring fencing (Anglo Irish Covered Bonds LLP), - in whose interests? Who gave IAMB a licence in Dec 08? Who authorised it? Who did these deals in Feb/March 09? Who authorised them? Blind Panic in Sept08 can be understood somewhat (if not agreed with) - not in Dec 08 and certainly not in Feb/Mar 09. This is TREASONABLE carry-on from a citizen perspective.

“from the same report that have around €7.5bn in financial assets rated A or better which are available for sale.”

Would those assets be the same as these ones? “Loans of €7,709m (30 September 2008: €6,295m; 31 March 2008: €5,621m) which have been transferred to Anglo Irish Covered Bonds LLP, a Limited Liability Partnership which is consolidated by the Group. The transferred loans secure bonds issued under the Bank’s €10,000m (30 September 2008: €5,000m; 31 March 2008: €5,000m) UK covered bond programme. Bonds issued externally under this programme are included within debt securities in issue”

From my reading of the Anglo report, the bank seems to be ring-fencing certain of its better assets in different vehicles, like Anglo Irish Covered Bonds LLP mentioned above. The report also mentions Anglo Irish Mortgage Bank (which could operate as a stand alone institution as it has a banking licence) here:

“Loans of €5,850m (30: September 2008: €nil; 31 March 2008: €nil) which are included in the Anglo Irish Mortgage Bank (’AIMB’) cover assets pool as collateral for commercial mortgage asset covered securities. AIMB, a wholly owned subsidiary of the Bank, was incorporated on 10 October 2008, and obtained its Irish banking licence on 10 December 2008. Its principal activity is the issuance of commercial mortgage asset covered securities, in accordance with the Asset Covered Securities Act, 2001 (as amended). AIMB is regulated by the Financial Regulator and is a designated commercial mortgage credit institution”

I think it is fairly unrealistic to suppose that the Master Loan Repurchase Agreements are backed by anything like the best of Anglo’s assets. The UK stuff, which is possibly quite good, has been shipped off in its own vehicle. The new mortgage bank seems to have tied up many of the performing mortgage debt. The ecb repos have netted them €13.5bn in liquidity.

The central bank have lent them €10bn on €14.8bn of what is left. What are the chances of the €14.8bn left being anything other than crud? If it was better quality, then there are many other funding options open to the bank..

The ’shocking and controversial’ part comes in because the Master Loan Repurchase Agreements seem to ensue that we are now committed to paying for the mess that is anglo no matter what happens. Because the CB have kept the operation in-house then the exchequer is left either paying Anglo directly, or making up the CBs losses if the collateral they hold has to be liquidated and turns out to be worth less than the €10bn* they have committed to the bank.

*The €10bn was at mar ‘09. the figure appears as part of the bank’s ‘other assets’ in table C2 of the monthly statistics. In feb ‘09 that number was €1.5bn. In mar ‘09 it jumped to €11.7bn. Currently it stands at €14.6bn.

interesting. Won’t this stuff just end up going to NAMA though anyway (when we’ll take actual physical ownership rather than just collateral claim)? So is it really that shocking or controversial? Would this not also fall under the emergency central bank assistance it has been receiving?

Page 14: “Total borrowings from central banks as at 31 March 2009 of €23.5 billion includes a special short term liquidity facility arranged through the Central Bank of Ireland in the early part of 2009. This facility stood at €10 billion at 31 March 2009.”

I also stand by my claim that McWilliams claim about Anglo and their lack of collateral just isn’t true - from the same report that have around €7.5bn in financial assets rated A or better which are available for sale.

If the collateral they had was government bonds, then surely Anglo would using the normal ECB repo operations?

Page 42 of the last report from Anglo(here http://www.angloirishbank.com/Investors/Reports/Interim_Reports_2009/Interim_Report_2009.pdf ) sheds (a little) light:
“Loans of €14,868m (30 September 2008: €nil; 31 March 2008: €nil) which have been assigned as collateral under a Master Loan Repurchase Agreement with the Central Bank and Financial Services Authority of Ireland.”

and on page 44 we get:

“€10.0 billion (30 September 2008: €nil; 31 March 2008: €nil) borrowed under a Master Loan Repurchase Agreement (’MLRA’) with the Central Bank and Financial Services Authority of Ireland. The interest rate on this facility is set by the Central Bank and advised at each rollover, and is currently linked to the European Central Bank marginal lending facility rate. Collateral assigned under these agreements is derived from the Bank’s customer lending assets.”

So it certainly doesn’t look like government bonds to me.

Thanks for this. I would like to know more - and know that DMcW on a self-interest crusade at times and bit of loose cannon in international meedja ….. I also note activity by AIB - couple of billion - looks like further action before the discussion on the guarantee comes up ……… but if all these are Gov_Bonds - surely we are entitled to know ……… I find this lack of data/information/real_facts to be frightenign considering how much we are on the hook for with these cowboys …………. Gov Bonds or otherwise €10 billion is ten_billion …….. and at this stage I’ve lost trust in 2_of_7 as well …….. what is real? what is spin? IF we lose trust in present Central Bank it will be time to head for the mountains and tora_bora …

the McWilliams article is stretching itself just a tad there. The collateral being used could as easily be government bonds as it could be dodgy loans. Indeed, i would have thought the Central Bank was only allowed take in collateral of a minimum investment quality/rating.

For instance, his line that “But the only collateral Anglo has are worthless loans like the land for Woodbrook golf course in Shankill” is categorically false.

Back after the weekend.

You are correct I have applied the discount rate over 1 year - it is a simplifying assumption that all the cash comes in in year 1. Reality is that cashflow would be spread out over a number of years and the discount rate for year t would be 1/(1+r)^t

http://www.thepost.ie/newsfeatures/four-steps-to-the-banking-big-bang-47940.html

Four steps to the banking big bang

Cliff Taylor in metaphorical mode ……………

D McWilliams in Today’s Sunday Business Post

“In the past year, the Irish Central Bank has lent €10 billion to Anglo, using an instrument that it would prefer you knew nothing about. This instrument, called the ‘‘master loan repurchase agreement’’, is a hangover from when we had our own currency. Evidence of its existence is buried deep in the Central Bank’s balance sheet under the ambiguous title ‘‘other assets’’. The reason this is important is that it shows that, since Anglo was nationalised, it has gobbled up another €10 billion of our money. When Enda Kenny says there will be riots if Anglo receives another cent of public money, in away he is behind the times. The money has already been given to Anglo, via this secretive facility. Since last March, the Central Bank has lent Anglo €10 billion in return for so called collateral of €14.5 billion. But the only collateral Anglo has are worthless loans like the land for Woodbrook golf course in Shankill, which Davy Stockbrokers now estimates is worth 5 per cent of its 2006 purchase price. If we were to apply the same discount to the Central Bank’s loan to Anglo, we would see that the Central Bank - acting in our name - has lent €10 billion in exchange for collateral that is worth just over €750million.SotheCentral Bank has probably already lost over €9 billion. The only way this will ever be recovered is if Nama succeeds in driving the price of this land in Shankill backup.”

http://www.sbpost.ie/commentandanalysis/outsiders-pay-for-insider-greed-47921.html

Phew! One, two, three, four, five ……. can anyone else substatiate this? 2_of_7? Anyone?