The AIB Discussion Thread

ixus

"I want 650K per annum!"

AIB lifts bad loans by €1bn

Posted by Gwen Robinson on Nov 19 04:36.

Bad loans at Allied Irish Banks this year will be €1bn ($1.5bn) more than previously estimated, it announced on Wednesday, although the lender said most of these bad loans were in a portfolio that is likely to be bought by the country’s “bad bank”, the National Asset Management Agency. In May, AIB said that full-year bad debt charges would run to €4.3bn, but it now says this will be closer to €5.3bn, an increase of 23% - most of which is on a €24bn loan portfolio that is likely to transfer to Nama.

AIB lifts bad loans total by €1bn

Bad loans at Allied Irish Banks this year will be €1bn ($1.5bn) more than previously estimated, it announced on Wednesday, although the lender said most of these bad loans were in a portfolio that is likely to be bought by the Irish taxpayer via the country’s “bad bank”, the National Asset Management Agency (Nama).

Shares in AIB fell 6 per cent or 11 cent to €1.8 in early trading in Dublin.

In May, AIB had estimated that full-year bad debt charges would run to €4.3bn, but the group now says this figure will be closer to €5.3bn, an increase of 23 per cent.

The bank said that most of this €1bn increase would be on a €24bn loan portfolio that the Irish minister of finance indicated in September would be likely to transfer to Nama.

In total, AIB expects €10.5bn of impairments on the €24bn portfolio that it will transfer to Nama, or 44 per cent of the loan book.

The Irish finance ministry has indicated it will take a 30 per cent discount on average on all the loans it buys and transfers to Nama.

Two months ago, AIB had said it anticipated a discount of less than 30 per cent on these loans due to a slightly better quality of loan book, but on Wednesday it said it would not know the precise discount until negotiations with the Irish finance minister were complete.

“In the meantime, it is our view that there is no reason to believe that the average discount applicable to AIB’s Nama eligible loans will fall significantly outside the minister’s guidance of 30 per cent,” it said in a statement.

Roughly 85 per cent of these loans that will be transferred to Nama were originated in the Republic of Ireland, with the remainder from the UK.

AIB’s total loan book in the Republic is €78bn, €57bn of which will not be transferred to Nama. Residential mortgages account for €27bn of this €57bn, and these mortgages remain relatively unaffected by delinquency, with only €500m – or about 2 per cent – impaired. The other €30bn of non-Nama loans has a slightly higher rate of impairments at €3.7bn, or 12 per cent.

Excluding problems in the €24bn loan portfolio to be transferred to the Irish state, and other bad debt provisions, AIB said it expected to make an underlying operating profit of about €2bn in 2009.

However, increased impairments will still reduce net customer lending by about 4 per cent this year. This reduction will mainly be felt in Ireland, while the group anticipates a modest increase in the size of its Polish loan book

Twiggy69

I am listening to various views that it is likely that the government will need to invest several billion euro in A.I.B. early in the New Year.

Is it time to bail out, at the moment? If I sell now, I will break-even...What to do???

iknorr

Im thinking about doing exactly the same.

Are BOI in the same boat?

Twiggy69

Apparently not, it has to do with the fact that the AIB need to raise multiples of it's worth.

Just wondering what's the cheapest method to sell the shares??? AIB charged me nearly €600 to purchase €15,000 worth of shares!!!

I'm listening to McCarty on Newstalk now

iknorr

Im not in ireland at the mo, i missed it.

So boi are ok but AIB are nackered?

Iv shares in both. Both are falling at the mo and have been for the past month or so. Im at about 50% what i had 2 months ago .still in profit though.

What did he say on newstalk

Twiggy69

Then I'd recommend you listen to www.Newstalk.ie on the web, like I do....I find it's pretty insightful. You can also "listen back" to previous shows, this morning's show will be up on their website, so you can catch every word of it.

Basically McCarty was saying that the billions that have poured into the Banks has been NAMA based to shore up the losses from defaulting property developers...now he is worried about the possible downside of defaulting commercial & domestic loans & mortgages.... Cheerful git isn't he...suppose we shouldn't shoot the messanger...

iknorr

Yeah just found it now.

At least he has the balls to say it like it is....

gizmo555

Twiggy69 wrote: »

Just wondering what's the cheapest method to sell the shares??? AIB charged me nearly €600 to purchase €15,000 worth of shares!!!

Sharewatch offer a small trade service for people who don't want to go to the trouble of opening an stockbroking account. They charge a flat €50 for deals up to a value of €15k. I've used this service myself to dispose of some shares I'd acquired through my then employer and it was very easy and straightforward.

http://www.sharewatch.com/smalltrades.php

Twiggy69

Many thanks gizmo555, I visited their site earlier and they seem the way to go.

Nearly 600 yoyo to A.I.B to buy 15,000 worth of shares... the robbing bas!ards


I'm surprised a few more contributors are not active with their views on selling AIB shares now????

ranger4

Seems to be more confidence holding boi stock over aib with their larger losses even with their m&t and polish bank stakes. sharewatch offer decent enough transaction charges in comparison to most other irish brokers.

Twiggy69

Interesting, because when I purchased the shares in Feb 2009., I got two BOI shares for the price of 1 AIB...the BOI share price has overtaken AIB now for some time...

iknorr

So what do you gentlemen think about the share in AIB sell or hold?

On a side note.... remember that you can avail of the 1270 capital gains free profit if u sell before the end of the year. The bed and breakfast "strategy"

Raskolnikov

You guys are all crazy!

When these things were going up, you weren't able to pile in fast enough. Now we've seen a little bad news and it's like a stampede out of a swimming pool that's just been pissed in.

iknorr

Crazy to sell after a 50% decrease in value since it peaked a few weeks back ? i think not.
i would have sold earlier but theres an ickle problem with my tax :eek:

Floodzie

I bought AIB at 1.95 a little while ago and it's all been downhill since... my usual rule is to sell after a 10% drop... well I'm an idiot for not taking my own advice HOWEVER I was reassured by all the talk from the government that AIB would not be nationalized, and in a few years surely they would be worth a bit more than I paid... I've never hung on to a share that's done this badly before and it hurts!!

Now I'm hearing that nationalization may be forced so perhaps I should just sell and take being burnt.

As crazy as it sounds I am going to hang on until the shareholders meeting about NAMA on the 23rd - hopefully there will be a little bounce. I'll see whether to sell then.

Whatever happens I have learnt a valuable lesson, stick to my rules come what may.

Raskolnikov

iknorr wrote: »

Crazy to sell after a 50% decrease in value since it peaked a few weeks back ? i think not.
i would have sold earlier but theres an ickle problem with my tax :eek:

No, you're crazy for the following reasons

• Buying something you don't have a bulls notion of
• Selling on no real news and fear
• Investing in far too short a time period

Raskolnikov

Floodzie wrote: »

HOWEVER I was reassured by all the talk from the government that AIB .... in a few years surely they would be worth a bit more than I paid

:eek::eek::eek::eek::eek::eek::eek::eek::eek:

You're hearing things or only hearing what you want to hear.

The government have only ever commited to ensuring that no Irish bank will go bankrupt. Preventing the banks from going bankrupt and bailing out common stock shareholders are two completely different things.

Did you not learn anything from Anglo Irish Bank? Shareholders there were decapitated, they were left with nothing!

ranger4

Raskolnikov wrote: »

:eek::eek::eek::eek::eek::eek::eek::eek::eek:

You're hearing things or only hearing what you want to hear.

The government have only ever commited to ensuring that no Irish bank will go bankrupt. Preventing the banks from going bankrupt and bailing out common stock shareholders are two completely different things.

Did you not learn anything from Anglo Irish Bank? Shareholders there were decapitated, they were left with nothing!

Present gov do not want to fully nationalise and delist aib-boi and i believe they woint as long as they remain in power for another few years and the two banks are aided with their recovery, all bets off if a snap election called as fg and Labour muppets would distroy shareholders with banks, Nice rise with boi sp so far in us today, aib not doing so well.

pocketdooz

ranger4 wrote: »

Present gov do not want to fully nationalise and delist aib-boi and i believe they woint as long as they remain in power for another few years and the two banks are aided with their recovery, all bets off if a snap election called as fg and Labour muppets would distroy shareholders with banks, Nice rise with boi sp so far in us today, aib not doing so well.

Of course they don't want to.

What they want to do and what debtholders, the markets and other stakeholders demand are totally different things.

Should this be merged into the other AIB thread ?

.

ranger4

pocketdooz wrote: »

Of course they don't want to.

What they want to do and what debtholders, the markets and other stakeholders demand are totally different things.

Should this be merged into the other AIB thread ?

.

So we agree that present gov would be draged kicking and screaming into full nationalisation of boi-aib.:D boi presently up over 4% in us at mo, aib not fairing too well.

Floodzie

ranger4 wrote: »

So we agree that present gov would be draged kicking and screaming into full nationalisation of boi-aib.:D boi presently up over 4% in us at mo, aib not fairing too well.

Indeed. Like I said I'll wait until after the 23rd and see how things are. There should be a small bounce.

I think with something like bank shares it's sensible to buy and hold (my original intention with my AIB purchase) but these are strange times, particularly with nationalisation a real possibility.

Seems to be more bad news about AIB than BOI lately. However, someone who works in AIB recently told me that they are handling about 2/3 of all the new mortgages (still a small number compared to last year obviously) but then they are probably biased! :-) Anyone know where I can confirm that?

Good luck everyone!

pocketdooz

ranger4 wrote: »

So we agree that present gov would be draged kicking and screaming into full nationalisation of boi-aib.:D boi presently up over 4% in us at mo, aib not fairing too well.

Yes, I agree with that. They don't want to do it but then again it was only this time last year they pumped €3.0 billion or so into each bank (correct me on the details if you want) and thought that would be it.

Haha, get out of that - neither bank has recognised nearly any of their losses or bad loans or made adequate provisions.



.

iknorr

Raskolnikov wrote: »

No, you're crazy for the following reasons

• Buying something you don't have a bulls notion of
• Selling on no real news and fear
• Investing in far too short a time period

Making a statement like that shows ur not so savvy yourself.

Jumping to conclusions? Do u practice that in the market also?

Erm iv been watching the banks for 2 years before i bought.
Who needs news when its after falling by over 50% and shows no signs of turning. I should have sold when it dropped by about 10% (fluctuations were always large) and crossed a SMA7
Define a short time investing? Is it not better to work off percentages rather than setting time limits. FYI.....8-9 months is not a short time. ( for funds it is....for shares its not. )

Im assuming from your statement that u hang onto ur shares for years, no matter what happens to them. This is the typical attitude of Irish people holding shares. They get emotionally attached and lazy.

ixus

Threads merged. Lets keep these to one thread please.

I like Mc Carthy's straighforwardness. The fact that he is raising the likelihood of nationalisation (someone who is pretty close to what's going on) makes me even more certain that it will happen.

The tremors are beginning again and they ain't aftershocks, another major shake up lies ahead.

iknorr

whats his take on BOI

Skid

I thought Brian Lenihan's comments on Primetime on Budget Night said a lot about where he thinks the banks are going, scroll to about 25 minutes in ...

http://www.rte.ie/player/#v=1062125

He talks (unprompted) about recapitalisation, and how it might lead to nationalisation. It seems to be a change in his previous tone that nationalisation of AIB and BoI will not happen.
My interpretation of this is that nationalisation of at least one of the two large banks is a distinct possibility.

iknorr

Im outside the country atm, it wont allow me to view it.

Strange that they would do that though, after promising that they wouldnt. only time will tell i suppose.
If they do nationalise a bank, either the largest or second largest in the country, that wouldnt do any favors for investing in this country.

Floodzie

iknorr wrote: »

If they do nationalise a bank, either the largest or second largest in the country, that wouldnt do any favors for investing in this country.

True, but they may also decide to nationalise, take the pain (or the damage to the country's image, which, let's face it is already pretty severe at the moment) and move on.

Still going to wait until after the 23rd to sell, but the AIB sp of 1.25 this morning is making it tough...

If I wasn't worried about nationalization I'd happily hang on for as long as needs be, but Lenihan's comments (linked to earlier in this thread) are worrying me.

iknorr

http://www.independent.ie/business/irish/taxpayers-to-learn-how-much-bailout-will-cost-by-march-1975085.html

(i cant see the rte video where i am but..)
He says hes opposed to 100% nationisation. What does that mean with regards to me & joe soap with a few grand shares? if they take 30% does that mean we loose 30% of our shares?

But with NAMA taking all these bad loans away....im failing to see why people are panicing. Like you, If i knew they banks were not going to be nationalised then i would invest even more right now, cos i think they are extremely undervalued.

Skid

Here is the same clip from Primetime, I think this one can be viewed outside Ireland.

http://www.rte.ie/news/2009/1209/primetime.html

Select clip that says Brian Lenihan, Minister For Finance & Richard Bruton, Fine Gael Finance Spokesperson, discuss the measures contained in the Budget. The Bank discussion starts at about 10 mins 40 in.


If you take Brian Lenihan's comments on Primetime with those in The Irish Independent, it seems to me as though he expects the Government to end up with a majority stake in one or both of the banks, but that he hopes not to move for full nationalisation. If this happens I would expect AIB shares to fall further, although I think the recently price falls indicate that many traders have already sold on the assumption that the Government will end up with a controlling stake.