AIB Watch

Today’s media have lots of what appear to be leaks about what AIB’s capital requirements are going to be. I say “appear to be” because reliable leaks tend to lead to all the journalists singing off the same hymn sheet and reporting the same figures. In this case, Business and Finance are reporting a capital requirement of €7.5 billion, the Irish Independent reported a requirement of “up to” €7 billion and the Irish Times are reporting “some €6 billion to €7 billion”. So I’d take these with a pinch of salt for now.

What isn’t being reported, however, is quite how bad that news (if such it is) would be for AIB’s current shareholders. AIB’s 2009 annual report showed that the bank had risk-weighted assets of €120 billion at the end of last year. If €20 billion in property loans are transferred to NAMA and replaced with NAMA bonds (formerly known as free money from Europe) then (assuming a risk weight of one for the property loans) this would reduce risk weighted assets to €100 billion.

It has been heavily flagged that the Regulator will be looking for a core equity capital requirement of 8 percent, so this would require the bank to have €8 billion in core equity capital and I’d assume that the preference shares would not count towards this total.

The annual report tells us that at the end of last year, the bank had what it called “core equity capital” of €9.5 billion, but this included €3.5 billion in government shares.

Now consider what a capital requirement of even €6 billion would imply. If the bank needs to have core equity of €8 billion, then a requirement of €6 billion means that after the transfers and writedowns, AIB would have equity capital of €2 billion. This would mean losses of €7.5 billion on the transfers and writedowns. As far as I can see, this would mean the transfers wiping out the private equity in the bank.

Perhaps I’ve done these calculations wrong: Commenters feel free to tell me what’s wrong with the above. There certainly seem to be shareholders out there who don’t agree with it. In any case, we won’t have long to wait.

106 thoughts on “AIB Watch”

  1. I presume that if the preference shares are converted to ordinary shares then this increases the share capital. Thereafter, if losses are incurred they apply to all ordinary shares individually and equally. Therefore, the ratio of private ordinary shareholders to Govt ordinary shareholders remains the same.

  2. @ Zhou

    You can presume that if you want and maybe that’s happening. However, to convert the prefs to ordinaries prior to a huge loss would hardly be in the taxpayer’s interest, would it?

  3. @ Karl

    AIB’s average share price over the last 30 (business) days is €1.30.

    If the full €3.5bn was converted at that price the State would end up with 75% of the equity.

    If converted at €1.67 (closing price Friday last) the State would end up with 70% of the equity.

    That’s without any additional “investment”.

    Now I’ll read the rest.

  4. On a second glance, I don’t think the State can convert prefs to ordinaries. I think the reason the private shareholders are not wiped out is because the prefs share capital and the ordinaries share capital rank parri-passu on liquidation.

  5. @ zhou_enlai

    “1. I forgot about the approx €250m of ordinary shares which were paid in lieu of the coupon.”

    For AIB?

  6. @ zhou_enlai,

    “On a second glance, I don’t think the State can convert prefs to ordinaries.”

    I’m inclined to agree but for different reasons.

    A conversion will make no difference to current solvency rules.

    Basel III may never see the light of day in its current form.

    Too demanding for too many banks.

  7. @ Greg/Zhou

    the prefs on the AIB’s aren’t due until May i believe, so hasnt occurred yet (though likely will)….

  8. @ Karl Whelan

    “You can presume that if you want and maybe that’s happening. However, to convert the prefs to ordinaries prior to a huge loss would hardly be in the taxpayer’s interest, would it?”

    Would the conversion not take place on the basis of share price?

  9. @Karl
    I see your point. I suppose we should try to tease it out. My initial trial is as follows:

    – Presumably the shares rank parri-passu so they can absorb losses in the same way as ordinary share capital.
    – If the bank dies not enter liquidation then the prefs do not constitute an immediate liability. However, the capitalised cost of the coupons would have to be taken into account by anyone investing in new share capital.
    – Furthermore, the prefs can only be repurchased at par.
    – If the ordinary shareholders have no intention of repurchasing the prefs then they can use the €3.5b for losses and just pay the coupon.
    – This gives the ordinary shareholders with money to shield themselves from losses today but leaves them with an annual liability which is linked to the par value of the prefs rather than the value of ordinary shares.

    Therefore, IF
    there is share capital of say €9.5n
    including €3.5b prefs
    and losses of €7.5b are incurred
    THEN the €3.5b is wiped out first
    leaving €6b of ordinary share capital to absorb losses of €4b
    leaving a net €2b of ordinary share capital SUBJECT TO an annual liability of €250m in ordinary shares referenced by share prices prior to payout.

    THEREAFTER
    IF share capital is reduced to €100m
    AND each share is worth say €0.10
    THEN the coupon can be paid by way of €2.5b shares @ €0.10 notwithstanding that the coupon shall exceed the entire share capital of the bank and cannot ultimately be worth the nominal amount of the coupon.

    What do you reckon?

    @Eoin/Greg

    Apologies – BoI has paid over the [then] €250m in ordinary shares. AIB not due to pay until 13 May 2010 as per Eoin.

    @Greg
    The preference shares cannot be automatically converted. Any conversion would have to be a matter of negotiation.

    Brian Lenihan, 3 Feb 2010:
    There is no provision in the recapitalisation agreements for the conversion of the preference shares into ordinary shares. The bank can repurchase at par up to the fifth anniversary of the issue and thereafter at 125% of par. As I have indicated before, the Government is open to the possibility of further recapitalising the banks concerned, if this is required, and any conversion options would form part of that consideration.

    http://debates.oireachtas.ie/Xml/30/DAL20100203A.PDF

  10. @ Karl,

    Technically speaking (and I know you have a Basle III view of this) the Preference Shares are carried in the balance sheet @ €35 million book.

    I can’t see how the Share Premium Account can be converted into ordinaries. What would be the procedure in current company law?

  11. EDIT – substitute “by way of 2.5b shares @ €0.10 each” for “by way of €2.5b shares @ €0.10”.

  12. @ zhou_enlai

    “There is no provision in the recapitalisation agreements for the conversion of the preference shares into ordinary shares.”

    Anything less than a conversion at current share price will be an admission of the complete failure of the first attempt at a “rescue”.

  13. @ zhou_enlai

    “If the bank dies not enter liquidation then the prefs do not constitute an immediate liability.”

    I hate to keep pointing this out but the prefs have a book value of only €35 million.

    In the event of a liquidation the Share Premium account (the balance of the €3.5bn) is fully available to cover losses.

  14. @ Zhou

    “Therefore, IF
    there is share capital of say €9.5n
    including €3.5b prefs
    and losses of €7.5b are incurred
    THEN the €3.5b is wiped out first
    leaving €6b of ordinary share capital to absorb losses of €4b
    leaving a net €2b of ordinary share capital SUBJECT TO an annual liability of €250m in ordinary shares referenced by share prices prior to payout.”

    I’m assuming the other way around. The preference shares are senior to the ordinary shares, so it should be the ordinaries that are wiped out first. But tis all idle speculation for now.

  15. @Greg

    Can you expand on that? The NPRF handed over cash for the Prefs. Are you saying the bank can only touch that cash (save €35m) in the event of a liquidation?

  16. @zhou: They are called preference shares for a reason. They get preference over ordinary shares in liquidation as well as other losses. They DO NOT rank pari passu with ordinary. Ordinary shareholders absorb the losses first, then preference shareholders and then subbies. This is a rather fundamental tenet of capital structure.

    In your example, it is the 6b that gets wiped out first and then 1.5 of the 3.5b. Now if the government decides to convert them to ordinary first, they will be transferring taxpayer money to existing shareholders.

  17. @KarlW: “require the bank to have €8 billion in core equity capital and I’d assume that the preference shares would not count towards this total.”

    I think they may.

    Tier 1: (for AIB)
    perpetual preferred securities – [I think these were refinanced out]
    paid up ordinary share capital
    eligible reserves
    equity and non equity minority interest in subsidiaries
    non cumulative preference shares
    non cumulative perpetual preferred securities
    reserve capital instruments
    and undated capital notes

    minus reserve capital instruments (goodwill & 50% reductions on nonconsolidated financial entities – eg: M&T)

  18. @ zhou_enlai

    If I understand you correctly, this is how I see it.

    The preference shares are carried at €35 million book in the balance sheet.

    If everything carries along, honky dory, there is now problem. The bank has a contractual commitment to honour its obligations on the full €3.5bn. Coupon is paid on Par not Nominal. Redemption is at Par not Nominal. Ignoring the bells and whistles.

    The bank is only carrying a liability of €35 million. The Share Premium Account is available generally and not ring-fenced to protect the Prefs.

    In a liquidation the prefs would only be paid nominal.

    Could be wrong but I don’t think so.

  19. @ Karl D

    Right – the Reg can do what it wants and define tier 1 however they feel like. But if their objective is to move towards where the Basle 3 standards are going, then I’d imagine they wouldn’t want to include prefs in any standard for core equity.

  20. @KarlW

    BaselIII does have a move toward T1 being common shares and retained earnings, the idea being to constrain the procyclical build-up of leverage in the system, but it isn’t there yet.

    Basel doesn’t always get it right either, it was a specific direction of Basel1 to use securitization to reduce liabilities in banks and that was pursued to the degree that we are where we are today in part because of it.

    In any case, I just don’t think the argument on T1 holds at present.

  21. @zhou
    You may include some 200 mn in respect of the preference dividend some column or other. That the full 280 mn isn’t due until May doesn’t mean that the 200ish mn isn’t due as part-payment now. No?

  22. @ yoganmahew

    I doubt that the dividend accrues on a daily basis.

    If the prefs cease to exist there is no accrual. IMO

  23. NAMA announcement http://nama.ie/Pub…ide30March2010.pdf

    Meat
    • The portfolio size is approximately €80 billion.
    NAMA will acquire some 14,000-15,000 loans.
    • The largest 100 borrowers account for
    approximately 50% of the portfolio. Some 1,400
    other borrowers make up the rest.
    • About 67% of NAMA’s prospective assets are
    based in the Republic of Ireland and approximately
    6% in Northern Ireland. The rest are overseas, with
    the bulk of these (approximately 21%) in the UK.
    • About 43% of NAMA’s prospective assets are land,
    about 26% are development and about 31% are
    commercial

    Write-downs wil presumely be announced by the minister later

  24. @Greg

    If the banks is only showing a €35m liability on its books and it can use the €3.5bn to pay debts in the meantime then isn’t that money the first to be used up in a depletion of capital, or alternatively, isn’t that money depleted at the same rate in the euro as the rest of the ordinary share capital?

  25. “About 43% of NAMA’s prospective assets are land, about 26% are development and about 31% are commercial”

    43% land ????

  26. Replacing these property-related loans with Government Guaranteed Securities will remove uncertainty about the soundness of banks’ balance sheets and make it easier for them to access funds in the international financial markets. Banks cleansed of risky categories of loans will be free to concentrate on their core business of lending to and supporting businesses and households.”

    http://nama.ie/Publications/2010/NAMABriefGuide30March2010.pdf

  27. Details of the NAMA SPV

    NAMA has secured a combined investment of €51m from three institutions (€17m each) for a
    51% shareholding in National Asset Management Agency Investment Ltd, the NAMA Special
    Purpose Vehicle. The investors are Irish Life Assurance, New Ireland and major pension and
    institutional clients of AIB Investment Managers (AIBIM). NAMA will hold the remaining 49% but
    will have a veto over all decisions that are not in accordance with the objectives of NAMA as
    specified under the NAMA Act.

  28. 43% wite down for AIB but only €3.29b transferred.

    LorcanRK quoted NAMA as saying 43% of assets to be transferred comprise “land”.

    Only 21% of the assets transferred today comrpise “land”.

    These terms should be defined by NAMA when used.

    Will land experience the greatest writedowns? If so, is the worst to come?

  29. @ zhou_enlai,

    “LorcanRK quoted NAMA as saying 43% of assets to be transferred comprise “land”.”

    That’s directly from here (LorcanRK link).

    http://nama.ie/Publications/2010/NAMABriefGuide30March2010.pdf

    Does this not change the entire NAMA business plan?

    “Will land experience the greatest write downs? If so, is the worst to come?”

    Agreed.

    And the smaller loans could be even worse than the larger ones.

    This is not going to end well.

  30. @Zhou,

    “Only 21% of the assets transferred today comrpise “land”.

    These terms should be defined by NAMA when used.

    Will land experience the greatest writedowns? If so, is the worst to come?”

    Is that 21% not post discount?

  31. @All

    Fingers at 58% closely followed by Shwnee at 50%. Luvly hurlin boyos! AIB @ 43%, EBS @37%, BoI @ 35% – followers of fools. on 16.5 billion.

  32. @Ahura

    You are correct. The 21% refers to the portion of securities actually exchanged for that asset type. I still wonder what the ratio of the assets transferred was.

  33. 7,4 billion needed for AIB
    8.3 b into Anglo this week -promissory notes
    and more – maybe 10 b in the future
    it get worse.

    At least he admitted that our worst fears have been surpassed

  34. @Ahura Mazda
    nothing at all on the NAMA bonds though Rte cut him off prematurely

    Regulator requires 8% Tier1 by end of year

  35. @ Al & All

    Al has booked the room.

    I expect you all to assume the requisite position.

    Complimentary KY Jelly courtesy of the management.

  36. €24bn cost of Anglo.

    Remind me again why that radi dog should not be put down.

    Oh yeah, the bondholders have already been paid off by Grianna Fail. The ECB is owed €30bn, the Central Bank of Ireland is owed €10bn.

    Now who just phucked whom.

  37. @All

    No definitive line drawn here in The Minister’s speech.

    We are still expected to mortgage an entire generation to prop up Anglo_Irish debts and to take over €20 billion of dead input on ‘trust’ and possibly more …. SHOUT STOP ………… VOTE IT DOWN.

  38. If you look at the geographic spread – Ire 4.9b UK 3.2b and other .4b and the supposed recovery in the UK then the future Ire tranches could be subject to a much larger haircut. Land looks like 12% with investment properties 65% so it looks like the first tranch is the best of a bad lot.

  39. @All

    This is the reckless politics of craven fear and ineptitude. We are more than strong enough to wipe and negotiate Anglo_Irish debt over a medium term if we had an executive with an ounce of balls, a smidgin of moral authority, and a modicum of courage. We would not lose out on the reputation – the puerile spin – but would gain respect across the globe – if there are losses in Germany or France or UK so be it …….. the rest of the economy can recover it in time but not if we follow the present plan which is to drown us in such debt that we cannot recover. VOTE THIS DOWN.

  40. Lenihan had the chutzpah to “accuse” those who didn’t believe 30% discount was sufficient of being naysayers.

    Did he forget that he has ownership of the NAMA business plan?

  41. Anyone any idea about the funny paper he is issuing. Can you trade promissory notes and how can these count towards regulatory capital.

  42. Lenihan on Anglo

    “I can assure the House that the bank shares my overriding objective to maximise the potential return for the taxpayer in recognition of the State support.”

    That’s ok then.

    😈 😈 😈

  43. @pod
    I suspect these are NAMA bonds by another name. They will carry a coupon that the state will pay to Anglo each year…

  44. @ podubhlain

    No can’t be traded. Don’t count as capital.

    Just IOU’s from the State. Probably legally binding because the Minister of Finance signed them.

    Also possibly illegal. Who gave him the authority?

    No money bill was passed.

  45. An article about Greece contrasts Ireland with Kazakhstan…

    Simon Johnson

    Kazakhstan may be far removed from the eurozone, but its recent economic experiences are highly relevant to the latter’s current travails. As the weaker members of the eurozone struggle with debt crises and austerity, Kazakhstan is emerging from a massive banking-system collapse with a strong economic recovery.

    For most of the last decade, Kazakhstan gorged on profligate lending, courtesy of global banks—just like much of southern Europe. The foreign borrowing of Kazakh banks amounted to around 50 per cent of GDP, with most of the money used for construction. As the cash rolled in, wages rose, property prices reached near-Parisian levels, and people fooled themselves into thinking that Kazakhstan was Asia’s latest tiger.

    The party came to a crashing halt in 2009, when two sharp-elbowed global investment banks accelerated loan repayments hoping to get their money back. The Kazakh government, which had been scrambling to support its overextended private banks with capital injections and nationalisations, gave up and decided to pull the plug. The banks defaulted on their loans, and creditors took large “haircuts” (big cuts in the value of their loans).

    But—and here’s the point—with its debts written off, the banking system is now recapitalised and able to support economic growth. Despite a messy default, this fresh start has generated a remarkable turnaround.

    The western European way of dealing with crazed banks is different. The Irish banking system’s external borrowing reached roughly 100 per cent of GDP. When the world economy dived in 2008-09, Ireland’s party was also over.

    But here’s where the stories diverge, at least so far. Instead of making the creditors of private banks take haircuts, the Irish government chose to transfer the entire debt burden onto taxpayers. The government is running budget deficits of 10 per cent of GDP, despite having cut public-sector wages, and now plans further cuts to service failed banks’ debt.

    Greece is now at a crossroads similar to that of Kazakhstan and Ireland: the government borrowed heavily for the last decade and squandered the money on a bloated (and unionised) public sector (rather than modern—and vacant—property), with government debt approaching 150 per cent of GDP.

    The arithmetic is horrible. If Greece is to start paying just the interest on its debt—rather than rolling it into new loans—by 2011 the government would need to run a primary budget surplus (excluding interest payments) of nearly 10 per cent of GDP. This would require roughly another 14 per cent of GDP in spending cuts and revenue measures, ranking it among the largest fiscal adjustments ever attempted.

    Worse still, these large interest payments will mostly be going to Germany and France, further removing income from the Greek economy. If Greece is ever to repay some of this debt, it will need a drastic austerity programme lasting decades. This would cause its GDP to fall far more than Ireland’s. Moreover, Greek public workers should expect huge pay cuts, which, in the country’s toxic political climate is a sure route to civil strife.

    European leaders are wrong to think that Greece can achieve a solution through a resumption of normal market lending. It cannot afford to repay its debt at rates that reflect the inherent risk. The only means to refinance its debt at an affordable level would be to grant long-term, subsidised loans that cover a large part of the liabilities due in the next three to five years.

    The alternative for Greece is to manage its default in an orderly manner. Reckless lending to the Greek state was based on European creditors’ terrible decision-making. Default teaches creditors—and their governments—a lesson, just as it does the debtors: mistakes cost money, and your mistakes are your own.

    With each passing day, it becomes more apparent that a restructuring of Greek debt is unavoidable. Some form of default will surely be forced upon Greece, and this may be the most preferable alternative. A default would be painful—but so would any other solution. And default with an “orderly” restructuring would instantly set Greece’s finances on a sustainable path.

    After tough negotiations, the government and its creditors could eventually slash Greece’s debt in half. Greek banks would need to be recapitalised, but then they could make new loans again.

    A default would also appropriately place part of the costs of Greece’s borrowing spree on creditors. The Germans and French would need to inject new capital into their banks, and the world would become more wary about lending to profligate sovereigns.

    Ultimately, by teaching creditors a necessary lesson, a default within the eurozone might actually turn out to be a key step toward creating a healthier European—and global—financial system

  46. Money Bills

    Article 21

    1. 1° Money Bills shall be initiated in Dáil Éireann only.

    1 2° Every Money Bill passed by Dáil Éireann shall be sent to Seanad Éireann for its recommendations.

    Article 22

    1. 1° A Money Bill means a Bill which contains only provisions dealing with all or any of the following matters, namely, the imposition, repeal, remission, alteration or regulation of taxation; the imposition for the payment of debt or other financial purposes of charges on public moneys or the variation or repeal of any such charges; supply; the appropriation, receipt, custody, issue or audit of accounts of public money; the raising or guarantee of any loan or the repayment thereof; matters subordinate and incidental to these matters or any of them.

  47. @ podubhlain,

    5% nice.

    Should be able to buy Irish Treasuries @ 6%/7%/8% yield and make a good turn for a good days work.

  48. Where is the cheap (money for nothing) we were promised by BL.

    Greg. Could whatever they are voting on tonight be classed as a money bill.

  49. @ podubhlain

    No.

    No Bill has been presented to the House.

    Even if one had been they would have to guillotine.

    That would mean we live in a Grianna Fail dictatorship.

    In any event a Money Bill must be approved by the Senate.

    Seanad Éireann has 21 days to approve a Money Bill.

    They are acting beyond that mandated by the Constitution.

  50. @ Frank Galton

    Help me out here Frank.

    What exactly am I looking for in the Order Paper?

    There are 4 PDF’s

  51. Are there links to the renewal of the bank guarantee after Sep 2010 ?
    One of the analysts on RTE drivetime programme said that subbies aren’t covered under the terms of the renewed guarantee after the current one expires. Elsewhere (eg on propertypin) I’ve read opinions to the effect that the government would never renege on the subordinate bondholders so long as the senior debt was guaranteed.

  52. @ podubhlain

    “Where is the cheap (money for nothing) we were promised by BL.”

    I didn’t believe that and neither did you.

    This has been one long exercise in propaganda.

    The decisions were made a long time ago.

    Think of one word to describe that.

  53. It looks like one is the government motion and then the others are the opposition amendments (only look at the supplementals).

    But none of them make any reference to the amounts of money being appropriated.

  54. @ Frank Galton

    Oops 😳

    Get it.

    No Bill.

    Well exactly.

    the raising or guarantee of any loan or the repayment thereof

  55. @ Frank Galton

    You agree that the “raising or guarantee of any loan” is a matter under the Constitution for a Money Bill to be presented to the House?

  56. B of I and AIB are issuing statements to stock exchange based on the announcements. So this is having real economic effects. With no bill.

  57. Greg, I am not a constitutional law expert but your interpretation looks correct to me. There may be some technicality that we are missing.

  58. @ Frank Galton -Order paper looks like a self congratulatory motion.

    @ Greg -Is he covered by the original NAMA Bill. It gave him vast powers up to and including raiding the kids piggy bank.

  59. @ podubhlain

    “Is he covered by the original NAMA Bill. It gave him vast powers up to and including raiding the kids piggy bank.”

    No he is not.

    NAMA has its own powers and the Minister has some (quite extensive supervisory and oversight powers).

    NAMA does not confer the right upon the Minister to commit the State to promising (guaranteeing) money held by the Treasury in trust for the Citizens. Only the Dáil can pass a money bill and the Senate has 21 days to consider such a bill.

    He has exceeded his authority under the Constitution.

  60. @podubhlain

    We discussed the NAMA Bill – he essentially has carte-blance – ‘which in the opinion of the Minister’ – is the phrase that allows him to drive a herd of elephants anywhere he wants to ……. the Bill was designed with this intent …. the decison for blanket-bail-out was not made today …… if anyone spots any backbenchers – hold on to them! for a day or two ….

  61. The Supreme Court are sipping water at the mo ………… just in case a constitutional can be found ……..

  62. Greg – would’nt like to try an injunction. They get prickly during vacation.
    Methinks David is right. He can drive his elephants anywhere.

  63. @ David O’Donnell

    Fine Gale, Labour and Sinn Fein don’t have to wait for the Supreme Court.

    They can call it what it is.

    The Minister has exceeded his authority under the Constitution.

    He admitted in the Dáil that he has made promises or guarantees on behalf of the Treasury without the approval of the Dáil and Senate.

    On Anglo.

    “The bank’s capital support is being provided by the State in a way which spreads the cash requirements over an extended period of time. I am injecting the capital this week in the form of a promissory note, payable over a number of years into the future. In essence this means the amount will be paid over a period of 10 to 15 years, thereby reducing the impact on the Exchequer this year and stretching the payments into the future.”

    He has committed the Treasury to the expenditure on money without a Money Bill having been approved by the Dáil and Senate.

    Regardless of whether he now introduces a Money Bill he has already breached Article 21 of the Constitution.

  64. Anyway – back to basics

    The first tranche is obviously the best of the litter. Look at location and type of investment. This is hardly representative of the entirety.

    So it appears that a truly awful bunch of loans are going to be followed by some real s**T.

    The first lot are bound to have reasonable paperwork -not so the next.

    Then we are paying 5% on bonds. How much are promissory notes paying?

    Was it Bewleys they used to trade these things once upon a time.

  65. @ podubhlain

    As you say podubhlain back to basics.

    Despite today’s shocking admissions the worst has yet to come.

    The Minister didn’t mention GDP/GNP growth once.

    If we don’t get 4/5/6% growth for the next decade today’s estimates of losses are understated.

  66. Greg
    It gets worster

    Promissory Notes = Tier 1 Capital
    Just read that doc flagged by David.
    Is this Basle 4

  67. @ podubhlain

    “It gets worster”

    Well it sure as feck isn’t Basel III.

    Promissory Notes (promises to pay) are now part of Core Tier I?

    Happy Days.

    Oh Happy Days.

    When Jesus Wept. When Jesus Wept.

    Or as Elvis says.

    “When Jesus washed my sins away”

  68. @POD,
    Are you sure about the 5% coupon? It’s not the 5% that are subordinate?

    With regards the promissory notes, I don’t believe they have to pay interest. They could be pretty much like a letter of credit.

  69. @Ahura Mazda
    Heard Frank Daly say it in interview after the news -maybe he got it wrong.
    Document still quoting 6 month Euribor @1%
    If the promissory notes don’t pay interest, are not negotiable then what is the point in issuing them. Looking at it again he is issuing notes providing for periodic payments by the Minister to credit institutions and which will constitute Core Tier 1 capital of the credit institution at the time of the issue of the note

    and he wept

  70. Greeks failed to get 12 year notes away. got 309m of 1b.
    Gov.called for more talks today.
    spreads widen – mondays bonds in negative territory.
    not looking good.

  71. @Greg
    sorry Daly was on about subs. I picked him up wrong.
    The link on promissory notes is listed by David above – item 34 on Glossory
    Just listening to Cowen – I think he is blaming Greenspan
    Good video of Elvis

  72. @ podubhlain

    “Good video of Elvis”

    Look at the beginning again.

    The two Mafioso having a laugh. Then think of Anglo.

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