4 replies on “A Strategy for Resolving Europe’s Problem Loans”
I think the authors in the IMF should be asked to read and understand Cormac Butlers loan losses accounting problems before devising a strategy dealing with same.
The IMF report on the matter is so bad its untrue.
I’d encourage readers to understand Butlers arguments first before looking for strategies to solve the problem. The basic issue at hand is that to properly write down the problem loans will require enormous amounts of additional capital were the loans to be properly recognised as actually being bad. Butlers basic argument is that the Auditors and the Regulators are happily abiding by the IFRS despite the fact that IFRS are not allowing the true extent of the problem to be revealed.
The total cost to the State of the bailout has been revealed as €60bn.
Spending watchdog, the Comptroller and Auditor General, says servicing that includes €9bn in borrowing to meet interest payments.
Meanwhile, the Exchequer has recovered more than €5bn from selling stakes in banks – while winding up Nama is expected to yield about €1bn.
The Comptroller found that the cost of consultants and legal advisers during the bank recapitalisation programme came to €149m paid out by the state to 19 firms.
Among the payments were €33m to law firm Arthur Cox, €23m to Blackrock Financial Management, €21m to Ernst and Young, and €13m to KPMG.
Payments below the €10m mark included €9m to Goldman Sachs, €8m to PricewaterhouseCoopers, €7m each to Merrill Lynch and NM Rothschild & Sons, and €5m to Boston Consulting Group.
The biggest payments were by the Central Bank – €23m to Blackrock and €21m to Ernst and Young.
The Department of Finance had one single bill of €19m to Arthur Cox.
NPL (net performing loans) in Ireland are about 18% of total loans but Figure 1 has net and gross at the same level.
@ David O’Donnell
It should be strange that Ernst and Young can earn so much from the State including from Irish Water while it’s being sued in effect by the State for negligence as an auditor of Anglo Irish Bank — why do these cases take years for a trial to start?
The Public Accounts Committee said in 2011 that the State itself was one of the primary drivers of high legal costs — it’s the biggest customer for legal services and there is no market rate.
Irish Government’s timidity on legal services reform
@ YoB: Thanks for that Cormac Butler link – very interesting! I’ll have to read it several times – and study it carefully. Its no wonder we are in deep financial doo doo.
4 replies on “A Strategy for Resolving Europe’s Problem Loans”
I think the authors in the IMF should be asked to read and understand Cormac Butlers loan losses accounting problems before devising a strategy dealing with same.
The IMF report on the matter is so bad its untrue.
I’d encourage readers to understand Butlers arguments first before looking for strategies to solve the problem. The basic issue at hand is that to properly write down the problem loans will require enormous amounts of additional capital were the loans to be properly recognised as actually being bad. Butlers basic argument is that the Auditors and the Regulators are happily abiding by the IFRS despite the fact that IFRS are not allowing the true extent of the problem to be revealed.
http://www.publications.parliament.uk/pa/jt201314/jtselect/jtpcbs/27/27iv31.htm
FYI: Nietzsche’s Eternal Hibernian Recurrence ….
The total cost to the State of the bailout has been revealed as €60bn.
Spending watchdog, the Comptroller and Auditor General, says servicing that includes €9bn in borrowing to meet interest payments.
Meanwhile, the Exchequer has recovered more than €5bn from selling stakes in banks – while winding up Nama is expected to yield about €1bn.
The Comptroller found that the cost of consultants and legal advisers during the bank recapitalisation programme came to €149m paid out by the state to 19 firms.
Among the payments were €33m to law firm Arthur Cox, €23m to Blackrock Financial Management, €21m to Ernst and Young, and €13m to KPMG.
Payments below the €10m mark included €9m to Goldman Sachs, €8m to PricewaterhouseCoopers, €7m each to Merrill Lynch and NM Rothschild & Sons, and €5m to Boston Consulting Group.
The biggest payments were by the Central Bank – €23m to Blackrock and €21m to Ernst and Young.
The Department of Finance had one single bill of €19m to Arthur Cox.
http://www.irishexaminer.com/breakingnews/ireland/spending-watchdog-adds-up-total-cost-of-bailout-to-the-state-698290.html
NPL (net performing loans) in Ireland are about 18% of total loans but Figure 1 has net and gross at the same level.
@ David O’Donnell
It should be strange that Ernst and Young can earn so much from the State including from Irish Water while it’s being sued in effect by the State for negligence as an auditor of Anglo Irish Bank — why do these cases take years for a trial to start?
The Public Accounts Committee said in 2011 that the State itself was one of the primary drivers of high legal costs — it’s the biggest customer for legal services and there is no market rate.
Irish Government’s timidity on legal services reform
http://www.finfacts.ie/Irish_finance_news/articleDetail.php?Irish-Government-s-timidity-on-legal-services-reform-210
@ YoB: Thanks for that Cormac Butler link – very interesting! I’ll have to read it several times – and study it carefully. Its no wonder we are in deep financial doo doo.
Brian.