The World Tonight programme is running a series on fiscal adjustment in Europe, with the attendant lessons for the UK. Last night’s programme includes a report from Ireland plus an interview with Kevin Daly (minutes 07:30 to 17:00); tonight’s programme will report from Greece.
Year: 2010
An Taoiseach gives his views on the Irish Banking Crisis in this speech.
[This month will see much more on this topic, with the two scoping inquiries on the banking crisis due at the end of May.]
AIB have released an interim management statement. As expected, the bank has not been able to pay the state its cash dividend of €280 million, so they are issuing shares for this amount instead. The NAMA bonds are referred to “enhancing our contingent liquidity resources.”
As an aside—and sorry to bring up Frank Fahey twice in two days—I’d note when I appeared on the radio with Deputy Fahey in February, he told listeners that the government would definitely be getting its cash dividend from AIB in May. I noted at the time that the coupon stopper was in place “to prevent the reduction of own funds by financial institutions which are still reliant on State aid to fulfil regulatory capital requirements” and so this was highly unlikely. To my mind, the fact that government politicians are sent out to continuously over-promise in relation to their banking strategy ultimately ends up just undermining their credibility.
Update: I just noticed that the Department of Finance press release contains the following:
The Minister explained:
“The €280 million in ordinary shares issued to the Fund will count towards the additional €7.4 billion equity capital requirement determined by the Financial Regulator so that AIB will meet the new base case capital standards.”
I’m not sure I understand this. The state is not putting any extra funds in, just receiving shares that dilute the existing ownership. Can the issuance of these pieces of paper in exchange for no money really raise regulatory capital? If this trick works, why can’t the bank’s ownership just issue a few million more shares to themselves for free? Then reaching the €7.4 billion target will be no bother.
There is still one day left to late-register for the upcoming conference, “Regulating Financial Market Liquidity and Stability,” taking place tomorrow, Friday, May 14th , 5 pm – 7 pm, at the Irish Institute of Bankers in the IFSC. The recent chaotic response of EU policymakers to the Greek debt crisis highlights the importance of the conference’s theme.
REGISTRATION: The event is free, but delegates must pre-register by emailing Irene Moore (irene.moore@ucd.ie), by the end of the day today (Thursday 13th May).
Registration begins at 4:45 p.m. and the talks begin promptly at 5 p.m. (You must register and pick up a name tag in order to enter the Institute of Bankers hall.)
Governor Honohan reviews the current situation in relation to the Irish banking system and the Irish sovereign in a speech to the Small Firms Association: you can read it here.