I’ve spent twenty years in senior manufacturing and development roles, actually MAKING something and generating real revenue; these bankers are essentially parasites feeding on an otherwise decent society. Our government of self-inflated teachers, publicans and solicitors are criminally liable for what they’re doing if you ask me - damn them all and theior flagrant disregard for their citizens - are there any politicians with MORAL authority anymore, or just expedient hacks? Fv@k the bondholders - welcome to capitalism guys - you placed your money and took yer chances - my family don’t underwrite your business dealings Goddammit!!!!!!!!!!

“Who said anything about INBS?” Are you now saying that Finger’s Baby does not have unrestricted access to the MPM? If so why are you so exercised by what happened? Nobody else, except maybe DE, gives a fig about this mere bridging exercise.

@Tull
“it might allow Anglo to wind down its depo competition. This wd be good for the other banks, good for the NPRF & good for the economy”
Yes, that would be the primary advantage. The depositors costs are crystallised (retail and non-retail and from other banks). The ARB is then over-capitalised which should leave us with the position that anything the ARB can do should reduce the cost. It would also be good for the ARB as it would be paying a lower cost of capital. It would be good for operating costs since only one bank would be operating

I reckon about 29 bn in deposits of this type. Since it is being done for the depositors and we are operating a “no bondholder left behind” system, I don’t see any reason not to do that to bondholders too. So another 17-19 bn. So we’re probably talking about 50 bn between depositors and bondholders with NAMA bonds, promissory already/in future making up about 30 bn of that. Hence another 20 bn required.

50 bn is at the top end of even the most pessimistic estimates (sorry Mr. Mathews!), personally I reckon 35 bn (and have done so for some 2 years) as the LTEC (long-term economic cost) of the Anglo loan book. I have no idea what the derivatives book will cost in the wind-down process. I doubt anyone else does either! An 8% loss on the trading book would bring us up to 50bn, so we would not see anything back.

As I say, I still reckon it is possible to sell off the existing banky bits of Anglo to a foreign buyer. Might be worth a few hundred million? Selling the deposit book and the cash behind it might be worth a few hundred million on its own.

Largely, though, I see no reason to maintain a competitive funding bank at a time when, as you say, competition for deposits is fierce.

“I don’t think anyone is suggesting that INBS have unlimited ability to do this.”

Maybe you haven’t been following the plot but Hog thinks precisely this. I thought at first it was sarcasm of a lesser wit than is usual of that genre. But she assured me that no, she meant it.

What has Kenny got to do with anything?

I don’t think anyone is suggesting that INBS have unlimited ability to do this. But I see no reason why we couldn’t use it to fund Anglo.
Do you have any evidence to suggest otherwise.

The fact that you actually believe that the INBS facility gives us the opportunity to raid the ECB vaults for 400bn proves you have got that wrong.

I told this would be a NON issue. Kenny is out today predictably criticising the Anglo split but not a whimper about Finger’s Baby having an unlimited Money Printing Machine.

Do you think we have pre approved this with the ECB? And if we have how do you know we couldn’t use it in other cases.

I agree with hoganmahew, I think we are very close to the point with our debt doesn’t look “manageable” despite some opinions to the contrary.

The economist has an interesting projection of our debt ratio.
You can probably deduct another few percentage to allow for less losses on NAMA but IMO the growth rates are very optimistic and the net costs for the banks looks low.

And that is before the 120% of GDP is converted to 140% of GNP!

We are at the stage of clambering over women and children to get into the boat.

Your sarcasm proves my point. NAMA hasn’t a money printing machine. INBS hasn’t a mpm. These innovative devices for providing liquidity are totally at the gift of the EU authorities both in their design and in their quantum.

So the national debt becomes 400% of GDP.

And all of it is sitting at the ECB costing us 1% (it doesn’t mean we can only charge the banks that…).

Does that make us systemic? Too Big To Fail?

What ECB is going to be able to take the loss by withdrawing facilities on us?

Game on boys, game on. It’s time to go postal on this one.

Guaranteeing the NAMA II bonds does not weaken the position of the creditors of ARB. The way I see it, in a liquidation, ARB would pay x/€ to both NAMA II holders and seniors but the gubbermint would then make good the NAMA II bonds in the hands of FB, just like the deposit guarantee would work.

@DE

Drop the “INBS can print money” theme, it is a NON issue.

You make it seem like INBS could write let’s say a billion, billion I.O.Me’s and then repo them all at ECB and divvie the lot out to the populace and we would all live happily ever after. The I.O.Me’s are a deft bridge until INBS is over this funding hump and gets its NAMA bonds. It is done totally at the permission of the European and Irish authorities. It is not a money printing machine delivered to Fingers’ successors.

But hardly makes sense to plan for something we are highly unlikely to do.

I still think this new Anglo construct makes very little sense. Has the DoF released any additional info yet

i know! Its possible im just completely misreading, or missing the context, of your quote:

“But if they were government guaranteed we wouldn’t be defaulting, would we?”

Possibly you were just stating the obvious rather than asking a question. Anyways, what i was suggesting in my original “big D” comment was that if we did decide to renege on a government obligation (guarantee or general debt) than i’d rather it was a private investor rather than the ECB we were doing it to. But purely a hypotethical question, not something im suggesting or expecting.

European Crisis Flares up in Ireland
http://online.wsj.com/article/SB10001424052748703453804575479252913466146.html?mod=ITP_pageone_0

FRONT page WSJ.

Great breakfast reading

“But if they were government guaranteed we wouldn’t be defaulting, would we?”

huh? Do you mean we wouldn’t default on govt g’teed ones?

At this point I have given up on us defaulting on senior bonds, I just don’t think it is going to happen.

But if they were government guaranteed we wouldn’t be defaulting, would we?

That is a valid point.

The first option should be to sell guaranteed bonds on the market. But this other “stroke” would allow us to access instant funding if there was a run on deposits.

I’m still not sure what the I understand the importance of keeping the deposits in Anglo. They seem to be adding to the fragility of the system and are expensive.

“In a speech in Riga, Ms Merkel said that debt-laden governments must stick to their deficit- cutting programs because Germany won’t agree to have the euro fund turned into a permanent facility to provide aid.

‘The crisis mechanisms now in place are temporary,’ she said in the Latvian capital. ‘Germany won’t agree to an indefinite prolongation. Otherwise, people would say ‘we’ve got such a nice rescue package in place that this can go on forever.” ”

Might not be safe to work on the assumption that ECB will allow repo by Irish banks on a long term basis.

yes. But i think we should be trying to keep the deposits first, and fall back on the bonds later. At some stage the ECB may get a bit queasy with providing such a huge level of what amounts to mini-QE via this type of transaction. And if we ever did decide to consider the big D, i’d prefer to be doing it on foreign private investors rather than the ECB itself.

It makes you wonder why the NTMA bothers with all this auction nonsense…

I find this uncomfortable given past disagreements but I think we agree. If Anglo= NAMA2 and the NAMA 2 bonds are govt guaranteed, why not use the ECB. It is cheaper than deposits. The presumption is that the ECB would be willing to accept another 30billion NAMA bonds.

The domestic sourced deposits will then migrate to the other banks.

so you think the INBS operation was a good idea that we should replicate?

I don’t understand the necessity to retain the deposits when they could just be replaced with other more secure forms of funding.

If an unsplit Anglo has the same capacity to issue government guaranteed bonds and repo them with the ECB like INBS has just done, then if there was ever a flight of deposits they could be replaced very quickly with funding through the ECB in this way.

Even better would be to transfer the deposits with the assets going to the funding bank to AIB, BOI or ILP. At least this way the deposits could be used to increase lending capacity in the economy.
The ARB could then issue bonds to itself and repo with the ECB to replace the funding.