The AIB Discussion Thread

-mr.x-

What do yee think the future for the two banks are under this new recap scheme.?

ranger4

-mr.x- wrote: »

What do yee think the future for the two banks are under this new recap scheme.?

God only knows, recent news isnt helping present situation.

Stabshauptmann

Im trying to understand the factors that influence bank shares before investing. Forgetting about historic prices and the "sure they must bounce back" advise the taxi man gives, what factors will influence bank prices positively / negatively.

For example, before the end of the month, the European Commission will present guidelines that will allow EU member states to remove toxic assets from banks' balance sheets and help unclog credit flow without distorting competition.

Surely this is the type of thing that would reassure investors and boost share prices?

How would share prices react if a bank was to sell off a subsidery or a business unit?

What types of things would cause bank share to go up and down, and do you see any of these on the horizon?

Btw, its BoI Im looking at most.

ranger4

Kaptain Redeye wrote: »

Im trying to understand the factors that influence bank shares before investing. Forgetting about historic prices and the "sure they must bounce back" advise the taxi man gives, what factors will influence bank prices positively / negatively.

For example, before the end of the month, the European Commission will present guidelines that will allow EU member states to remove toxic assets from banks' balance sheets and help unclog credit flow without distorting competition.

Surely this is the type of thing that would reassure investors and boost share prices?

How would share prices react if a bank was to sell off a subsidery or a business unit?

What types of things would cause bank share to go up and down, and do you see any of these on the horizon?

Btw, its BoI Im looking at most.

We are in the eye of a storm at moment and markets are very volitile, Bank stocks are being bounced all over the place, I am holding my aib for longterm but still cant rule out a forced possible merger with aib-boi or god forbid nationalisation, Maybe when more figures come to light with aibs expected bad debt and expected earnings in march the present volitilty might dampen down a notch.

Stabshauptmann

One thing I cant understand is why did BoI and AIB share's plumet after the Bank Guarentee was announced?

ranger4

Kaptain Redeye wrote: »

One thing I cant understand is why did BoI and AIB share's plumet after the Bank Guarentee was announced?

possibly because markets expected more than recap e.g a possible insurance of bad debt, or more info with how the gov are going to deal with the bad debt problem which is going to get worse as time goes on, Look what happend in the states with bank plan lack of detail spooked investors.

Idu

Kaptain Redeye wrote: »

One thing I cant understand is why did BoI and AIB share's plumet after the Bank Guarentee was announced?

Take your pick from:

-The market probably doesnt believe that 7billion is enough.
-The banks have said they wont actively seek deliquent mortages for a year so thats more bad streams of revenue being kept on the books.
-Most banks around the world who have been recapitalised havent seen their shares rise substantially.
-All of the stories coming out of Anglo - they probably believe AIB and BOI have similar hidden secrets
-Global markets have reacted negatively to the US bailout plan
-General lack of understanding in how they can move their business model forward in the coming years
-Recapitalistation moves the government to the top of the table and there's not much faith in their ability to run anything these days
-Fear of nationalisation/merger

pocketdooz

Kaptain Redeye wrote: »

Im trying to understand the factors that influence bank shares before investing. Forgetting about historic prices and the "sure they must bounce back" advise the taxi man gives, what factors will influence bank prices positively / negatively.

For example, before the end of the month, the European Commission will present guidelines that will allow EU member states to remove toxic assets from banks' balance sheets and help unclog credit flow without distorting competition.

Surely this is the type of thing that would reassure investors and boost share prices?

How would share prices react if a bank was to sell off a subsidery or a business unit?

What types of things would cause bank share to go up and down, and do you see any of these on the horizon?

Btw, its BoI Im looking at most.

It's very simple really.

Banks shares wil be influenced by the same factors as other equities:

Future growth potential of the Company,
Future growth potential of the Market and Region they are in,
Management reliability, track record and experience,
Talent and productivity of employees,
Current profitability,
Future profitability,
Relative value compared to other equities in the market,
Levels of risk (will they still be around in 5 years),
Competitive advantage,
Barriers to entry of other firms into their industry,
Brand name and reputation and how that may affect their value in the future,
Ability of the Company to control variable costs going forward (think bad loans and headcount),

and so on . . .

This isn't magic here - they are dogged companies, that operate as banks in economies that are in recession, with unemployment that has basically doubled in 12 months, ballooning bad debt levels, restricted and expensive access to credit etc.etc.

That is why they are a pile of sh1t as equity investments . . .



.

pocketdooz

From the BOI statement issued today:

"based on a continued marked deterioration in economic conditions Bank of Ireland estimates for loan impairment charges for the 3 years to March 2011 are revised up from €3.8 billion to €4.5 billion . . . there is a downside risk to this estimate which may result in an additional loan impairment charge of up to €1.5 billion for the 3 years to march 2011"

Sorry, I know this is meant to be the AIB thread but Redeye asked so felt I should give him some info . . .

All this info. is publicly available by the way.




.

ranger4

pocketdooz wrote: »

From the BOI statement issued today:

"based on a continued marked deterioration in economic conditions Bank of Ireland estimates for loan impairment charges for the 3 years to March 2011 are revised up from €3.8 billion to €4.5 billion . . . there is a downside risk to this estimate which may result in an additional loan impairment charge of up to €1.5 billion for the 3 years to march 2011"

Sorry, I know this is meant to be the AIB thread but Redeye asked so felt I should give him some info . . .

All this info. is publicly available by the way.




.

Pocketdooz, are we likely to see a larger loss with aibs loan impairment estimate which will be released in march.

pocketdooz

ranger4 wrote: »

Pocketdooz, are we likely to see a larger loss with aibs loan impairment estimate which will be released in march.

Larger loss than what ? BOI's or their existing impairment estimate?

vs. BOI's I don't know . . .

but wrt to their existing impairment estimate - Yes, I would be 99% sure that their new bad debt impairment estimate will be significantly higher than their existing estimate

ixus

Janets_on_the_clubs and Pocketdooz have hit it on the nail as usual.

An investor (potential or otherwise) or "speculator" doesn't need to know anymore than what they've posted.

There is absolutely no justification for being long any Irish bank.

ranger4

pocketdooz wrote: »

Larger loss than what ? BOI's or their existing impairment estimate?

vs. BOI's I don't know . . .

but wrt to their existing impairment estimate - Yes, I would be 99% sure that their new bad debt impairment estimate will be significantly higher than their existing estimate

Do you believe its only a matter of a year or so before we see a possible aib-boi merger or dare i say nationalisation. I think worst case senario would be a possible merger with aib-boi, I intend to hold my aib stake.

ixus

Ranger4, why would they merger? They do the exact same thing. If they did, there would have to be a massive amount of redundancies. Do you think the govt would want or allow that? How would that affect the economy and repayment of loans (hence more losses)?

I also believe it would not pass competition laws, similar to Ryanair and Aer Fungus.

Forget about mergers.

ranger4

ixus wrote: »

Ranger4, why would they merger? They do the exact same thing. If they did, there would have to be a massive amount of redundancies. Do you think the govt would want or allow that? How would that affect the economy and repayment of loans (hence more losses)?

I also believe it would not pass competition laws, similar to Ryanair and Aer Fungus.

Forget about mergers.

was also thinking that the gov will not go down the route of nationalising all of the banks so i guess they will stumble along for as long as the present downturn lasts and maybe in a 3-4 years or so they will be in some small profit with possible share values up slightly but not to the high levels of the past, wouldnt this be the most likely senario, after all every country needs the services of banks.

ixus

ranger4 wrote: »

i guess they will stumble along for as long as the present downturn lasts and maybe in a 3-4 years

...you're getting there....

ranger4 wrote: »

or so they will be in some small profit with possible share values up slightly but not to the high levels of the past, wouldnt this be the most likely senario, after all every country needs the services of banks.

..getting a bit wobbily there...

Think Depression and deleveraging. If you have a few minutes; read this.

People are being badly burned in the property market, by car loans and by losing their jobs. This will (should) have a massive psychological impact on people whereby they are less likely to jump in the water without dipping their toes and increasingly likely to save for a rainy day rather than consume.

Think how this would affect banks earnings and profits and how long it will take for the banks to build a proper lending model.

I guess 5+ years. (just throwing out a figure there)

ranger4

ixus wrote: »

...you're getting there....



..getting a bit wobbily there...

Think Depression and deleveraging. If you have a few minutes; read this.

People are being badly burned in the property market, by car loans and by losing their jobs. This will (should) have a massive psychological impact on people whereby they are less likely to jump in the water without dipping their toes and increasingly likely to save for a rainy day rather than consume.

Think how this would affect banks earnings and profits and how long it will take for the banks to build a proper lending model.

I guess 5+ years. (just throwing out a figure there)

I agree it will probably take 4-5 years before banks start to make possible profit, Markets will also anticipate this senario and start buying in, maybe withinn a few months or so, people will start to buy back into equities as intrest rates fall further.

Idu

ranger4 wrote: »

I agree it will probably take 4-5 years before banks start to make possible profit, Markets will also anticipate this senario and start buying in, maybe withinn a few months or so, people will start to buy back into equities as intrest rates fall further.

ranger4

Idu wrote: »

Did you find what your looking for idu.

silverharp

ranger4 wrote: »

as intrest rates fall further.

What you talking about Willis?
be careful in this game of projecting the present into the future and assuming low interest rates is one

Idu

ranger4 wrote: »

Did you find what your looking for idu.

No. I was looking for a reason to be long AIB

ranger4

Idu wrote: »

No. I was looking for a reason to be long AIB

I suspect you woint have to wait too long if gov adopt the idea of using anglo as bad bank.:D

pocketdooz

ranger4 wrote: »

I suspect you woint have to wait too long if gov adopt the idea of using anglo as bad bank.:D

Ranger, you always come across as somebody who's looking for answers which is good but I thihnk you need to take a wider view of AIB/BOI. You seem to treat each event in isolation as if there will be one magic bullet which will make the banks a good equity investment again.

You need to dig deeper into what is going on. If the govt. might adopt some hair-brained idea of dumping all the bad debts on the tax-payer (Anglo) so what ? What does that realy mean? In the long-term ? Higher taxes, more govt. debt ? What will the criteria be for a "bad debt"? Will AIB and BOI just be allowed to dump any non-performing asset on Anglo's balance sheet ? . . . I doubt it. What about the inherent lack of trust people now have for the Irish banking industry? What happens when the govt. lift the Govt. deposit guarantee in 18 months time - a run on the banks a few months prior to that event, who knows?

AIB and BOI are going to be removed from the MSCI world index soon, which will be terrible for them as they will not be part of indexer's portfolios any longer. They have also just been downgraded by all 3 major rating agencies and are likely to be 30-40% govt-controlled by the end of 2010 (best case scenario if they are both still standing by then imo).

Do some deep research on these companies and you'll see they are crumbiling. Just because they govt (who have a good reputation for f*king everything up) are coming up with some desperate scheme to make Anglo a dumping ground for toxic debt, doesn't mean it is a good thing for the other 2 banks.

ranger4

pocketdooz wrote: »

Ranger, you always come across as somebody who's looking for answers which is good but I thihnk you need to take a wider view of AIB/BOI. You seem to treat each event in isolation as if there will be one magic bullet which will make the banks a good equity investment again.

You need to dig deeper into what is going on. If the govt. might adopt some hair-brained idea of dumping all the bad debts on the tax-payer (Anglo) so what ? What does that realy mean? In the long-term ? Higher taxes, more govt. debt ? What will the criteria be for a "bad debt"? Will AIB and BOI just be allowed to dump any non-performing asset on Anglo's balance sheet ? . . . I doubt it. What about the inherent lack of trust people now have for the Irish banking industry? What happens when the govt. lift the Govt. deposit guarantee in 18 months time - a run on the banks a few months prior to that event, who knows?

AIB and BOI are going to be removed from the MSCI world index soon, which will be terrible for them as they will not be part of indexer's portfolios any longer. They have also just been downgraded by all 3 major rating agencies and are likely to be 30-40% govt-controlled by the end of 2010 (best case scenario if they are both still standing by then imo).

Do some deep research on these companies and you'll see they are crumbiling. Just because they govt (who have a good reputation for f*king everything up) are coming up with some desperate scheme to make Anglo a dumping ground for toxic debt, doesn't mean it is a good thing for the other 2 banks.

Hello Pocketdooz, you make some very valid points there with aib-boi downgrades and for the lack of any investor confidence with the irish banks now and for the forseable future but isint this lack of confidence with banks a global issue and not just a irish one, the us uk and most other eu countries have also been looking at idea to adopt some kind of bad bank scheme perhaps such a scheme could be adopted and might be the start on the long rocky road of bringing some confidence back to banking sector,As for the 2010 gov insurance scheme i would think this will be extended for a further period to try avoid a run on savings etc, I doint believe the irish gov want to fully nationalise the likes of aib-boi so maybe the next round of recap funds should come with conditions like forcing the banks to adopt a open and more transparent buisness model which would cut out the chances of hidden loans and Cooking the Books lodgements that weve seen with anglo-IL&p etc, etc, I truly doint know what will happen with aib-boi but there again do you or anyone else here on this site?

Time Magazine

ranger4 wrote: »

I truly doint know what will happen with aib-boi but there again do you or anyone else here on this site?

I think most people's argument on this thread is that the complete lack of knowledge about AIB/BoI mean they shouldn't be touched with a barge pole.

ranger4

The Economist wrote: »

I think most people's argument on this thread is that the complete lack of knowledge about AIB/BoI mean they shouldn't be touched with a barge pole.

boi anounced on thursday its loan loss impairment charge for three years upto march 31, 2011 Could hit 6billion and is up from estimated 3.8bn in nov, I wonder if the bank would make a quarterly statement going forward showing actual loan losses upto that march 31 2011 date on a quarter yearly basis and if the losses were on track with its estimated 2011 target couldnt this be seen as ganing a true reading with their bad loan book going forward?

silverharp

ranger4 wrote: »

boi anounced on thursday its loan loss impairment charge for three years upto march 31, 2011 Could hit 6billion and is up from estimated 3.8bn in nov, I wonder if the bank would make a quarterly statement going forward showing actual loan losses upto that march 31 2011 date on a quarter yearly basis and if the losses were on track with its estimated 2011 target couldnt this be seen as ganing a true reading with their bad loan book going forward?

This just proves they have no clue about the quality of their loan book, nothing has changed that they could not have forecast in Nov. It's going to take a couple of years minimum to get an idea of how bad it is going to be.
For example I havnt heard much aout commercial property, as far as BOI is concerned this might look healthy from their point of view.

Bearcat

I notice banks shares are going really south today.

I think collapse is on the cards......something has to be be done now as if they are nationalized and then we miss on a interest repayment on the national debt....well folks we are as good as broke.

daveirl

This post has been deleted.

pocketdooz

I saw a splodge of wet tarmac that looked like the AIB logo on my road this afternoon. Must be a sign to buy - I think I'll borrow a few grand, sure I'm in it for the long haul and I can afford to lose. They can't go down anymore surely . . .