Morgan Kelly’s Bank Loss Calculations

There has been some debate on this website and elsewhere about the calculations underlying Morgan Kelly’s recent Irish Times article. Morgan has kindly agreed to provide a spreadsheet illustrating his calculations. You can find the spreadsheet here.

From Morgan’s email to me: “As you can see, my optimistic scenario is for a loss of 75 bn, offset by 25 bn equity, leaving the Irish Times figure of a 50 bn bill for John Taxpayer. My realistic scenario is for a loss of 105 Bn.

I also include a brief calculation of the post-nationalization value of AIB and BofI. Given their extraordinary operating costs of 4.5 Bn, the taxpayer is looking at an annual loss of 1.5 Bn, and that is before including the cost of tracker mortgages.”

Update: Note this is a slightly updated version of the spreadsheet put up Sunday night, fixing a typo. The “realistic loss” scenario should have been 105bn not 115bn.