Bank of Ireland shares

bankboucy

bankboucy wrote: »

In regard to Irish banks - everyone is fighting the last war.

This crisis is an income statement recession - the GFC was a balance sheet recession and the largest you and I are likely to see in our lifetimes. Household & Bank balance sheets were completely destroyed with negative equity, the negative wealth effects then hit incomes and credit was completely withdrawn from the economy as Irish banks were no longer able to source inter-bank capital meaning they desperately attempted (& failed) to rebuild their capital base by choking off the oxygen source that was fueling a large chunk of Ireland's GDP which was overly dependent on credit fueled construction related activities (the paradox of thrift writ large). Bank balance sheets then had limited shock absorbers and tangible book value was destroyed in the process wiping out existing shareholders. Bank's were on paper better businesses then (higher ROE) but they were inherently more leveraged and by extension more dangerous as any 2008 vintage BOI/AIB diluted shareholder found out. Ireland Inc. had stupidly tied itself to the banks such that every inch of fiscal space that could have been used to support the real economy with stimulus got pored into zombie banks & got locked up as regulatory capital on bank balance sheets - stagnant and un-lent. In short the Irish bank bailout had ‘no velocity’ in the real economy, zero in fact.

Irish/European bank's today are boring, don’t make as good returns but are orders of magnitude less likely to destroy shareholder equity. On the continent the profit pool for banks has shrunk so much that its clear that there is 2-3x the number of banks needed in most large European countries and consolidation is the only pathway to rational returns where banks earn at least their cost of capital over a cycle. In this one instance Ireland is a country from the future - unless people haven’t noticed, we already have a consolidated banking sector - AIB / BOI / Ulster - own about 70% of the mortgage market and near 90%+ of SME lending. Ulster seems ready to exit stage left too for those not following the news.

Today BOI is stuffed to gills with capital and not sh*tty overnight interbank capital, no boring 0% yielding current account customer deposits & negative yielding corporate deposits (+ some CoCo bonds). BOI has dealt with non-performing loans to a greater degree than most European/Irish banks with NPL exposure down to 4%. The loans they've written for the past 11 years I can assure you have been written to a very conservative standard under the watchful eye of the CBI/ECB & SSM. BOI's legacy culture of being Ireland's least likely underwriting bank team to 'reach' for deals persists (BOI ‘only’ joined the Anglo Irish bank / Celtic tiger madness fairly late..c.2006) and if there's one thing bank execs do well its self preservation and post GFC BOI was not going to be writing PoS loans as it, first fought for survival, then raced to get the government out off its shareholder registrar (Wilbur Ross / Prem Watsa say thanks). CET1 capital buffers are very large at BOI and currently a clear 5% over their new revised 9.27% regulatory minimum. ALOT!!! of bad things need to happen to get to breach regulatory levels and wipe out shareholder equity with dilutive capital raise. Look at the ECB/SSM stress tests to see what the banks have been built to ride out. People also don’t default on mortgages with 30-40% positive equity………..just doesn’t happen.

This crisis is terrible but it wont be enough to destroy book value of the Irish banks. In the last crisis billions of euros was pored into the black hole of balance sheets- the sovereign borrowing for this purpose did nothing to stimulate the real economy - it repaired bank balance sheets and never reached Joe Public’s wallet. Instead of Keynesian spending to boost the economy, austerity was imposed as all spare fiscal space was used to plug the holes in the banks we'd stupidly guaranteed. Rates weren't even at zero then (anyone remember the ECB raising rates in 2011?!!!?) The Irish economy is much more balanced this time - the FDI sectors we rely on should remain robust (Tech / Healthcare / Financial Services). AIB/BOI can actually lend through this crisis given the capital buffers they have - all very different than the last time. Ireland 2009 - 2014 was a financial wasteland mired in an internal devaluation & a deflationary bust. The government this time can, should and is borrowing at near zero rates to support damaged household incomes bridging them from the COVID to the post-COVID economy. Vaccines give us a timeline for this - Q3 2021 for mass vaccination and normal-ish economy. The EU via ECB will be accommodative and has done a fluffed Eurobond with federal like stimulus payments. The ECB will hoover up any bonds we print keeping nominal rates on new Irish borrowing at effective negative rates. State aids rules have been thrown out the window - the Irish government can and should support Irish SME’s robustly to bridge them to health (this includes helping them pay their loans!!). The credit guarantee scheme should see a situation arise where banks SME legacy loan book will be bailed out by new credit guarantee loans for businesses with a post-pandemic future (rightly so).

Now whats Bank of Ireland worth then today?????

In a post-Covid stabilized world of 0% interest rates & Eire growing GDP 2-3% a year. Lets call it Ireland 2022 to be safe (so negative earnings for BOI in 2020 & 2021). I’m going to repeat the write downs on H1 2020 c.700m, into H2 2020 & 2021…so a hit to equity of another c.2bn. Share holder equity of BOI in 2022 would likely be reduced to c.7bn then. Bank of Ireland can earn conservatively 8% on equity so about c.500 million a year in 2022. 50% retained/50% distributed to shareholders. Book will then grow c.3.x% a year in that scenario, so 2023 earnings 637m (7% on 9.1bn), 2024 = 659m, 2025 =682m, 2026 = 706m etc. Maths are super rough!. I'll leave terminal growth rate at 2%. DCF the earnings at a 10% risk free rate - banks are cyclical & don’t deserve a market multiple of 15x. Bank of Ireland's intrinsic value IMO is c.6 euro a share.

I could add in credit for future headcount/cost cuts once IT transformation is complete - but people are people and sacking colleagues/friends requires stomach European's in relatively small communities/markets like Ireland/Dublin don’t have. If real efficiency, branch closures and slashing and burning was done I'm positive RoTE could get up to 10%. Depends on how ambitious Francesca McDonough is and what her post-BOI ambitions are.

The other thing I gave BOI no credit for was the net present value of its carried forward losses from the GFC of c.1bn...have no doubt that is genuine asset sitting inside the bank for the next decade+….…the net present value of that could easily be 500m between friends. If you wanted to be aggressive you could back that out of the price you’re paying today for BOI maybe say its worth 0.59 a share alone.

Saw some folks a few threads back talk about challenger banks - for sure AIB/BOI need to wake up and realize the duopoly they’ve been re-handed in the Irish market is permanent only if they work at it…this needs to be done before a 3rd online digital player emerges with real scale I looked at Revolut/N26 and sorry they’re just not at the races in terms of deposits not even close……AIB/BOI are in a very privileged position collecting such low cost deposits from the Irish population and should immediately team up with PTSB/Ulster & create a cross institution instant payment app to kill revolut & stop Venmo or Square in the future. A digital only millennial sub-brand banking app of BOI should be looked at (Santander is doing something similar).

Finally think with Sinn Fein off the table for possibly the next 4.5 years. The big risk to the banks - Government meddling (this is why AIB imo is untouchable as an alternative investment given 90%+ ownership by the state and even the hints Sinn Fein might control it one day), is somewhat reduced, lets see how stable this coalition is…….the populist thing to do is to drive the banks into unprofitable lending & double down on repossession barriers/asset recourse…….I think Paschal Donohue + others in FF are pragmatic enough to understand that like it or lump it a functioning profitable market led banking system is key pillar of economic prosperity. Ireland already ran the experiment of what happens to an economy without a functioning prudent underwriting led banking system.

Lots of people on here trading BOI - I suggest not doing that - I’ve bought and held since 1.70………when its 20% off my conservative estimation of 6 euro per share intrinsic value (c.4.80) I’ll look again to see if my thesis is still in tact and only then consider my next move. Jumping in and out is a dangerous game - a true trader plugged into the ziegesit is a rare beast (Paul Tudor Jones & Stanley Druckenmiller come to mind)……I’d suggest most here aren’t traders. Big moves in stocks happen on tiny amounts of days......nobody can tell when exactly......but you can tell that over time a business earning 0.60c a share in a quasi-monopoly business with high barriers to entry in a western European democracy with good demographics can easily trade at x10 eps......or 6 euro......dont double guess it.

Revisiting my post & price target from a few months ago - fair play to all those who took a chill pill and didn't let their twitchy figures get in the way.

Nice to see BOI/AIB took my hint and begun work on the cross institution payments app to kill revolut/N26

Ulster and KBC exiting changes the dynamic completely now......Ireland is now the single best market in the European Union for bank shareholders.....its a true oligopoly..

My extremely conservative estimation of loan loss provisions never came to pass.....the Irish state backstopped the incomes of those needing to pay mortgages and the banks gave forbearance where they could. It turned out the crisis hit a small subsection of Irish society and on average those people we're less likely to have mortgages than those that didn't have a hit to their income. The loan book is in great in shape - with some tick up in NPL's. The low NPL's across the banking sector as a result of COVID should also see the risk models that currently have GFC defaults in them roll off soon.......this will reduce the risk weighting of the Irish mortgage book. Hence the below:

Bank of Ireland is by my estimation hugely over capitalized now......the Davy deal will be easily digested and represents in my opinion a better use of excess capital than dividends......especially the wealth management fee based business. I remain skeptical of investment banking piece which inevitably will blow up in BOI's face at some point in the future. Capital returns policy moving forward will be key.....I hope Ms.McDonaugh is innovative here and does as all banks should IMO and not committ to regular dividends but rather flexibly move between special dividends and buybacks depending on the market/mood and where their opportunity sits at any one time.

I also see some moves afoot at a European level to address bank profitability & a slow slow recognition that ZIRP hasn't had the desired effect but rather is slowly draining the European banking system of blood, reserves remain unlent and something needs to change - I could see some post-COVID measures that may allow banks to earn some positive carry on their reserve deposits at the ECB. If this occurs BOI/AIB....as the only banks in Europe with a descent margin beforehand....could very soon be in very very very good shape from an ROE basis with a captive domestic market.

Writing back some of the loan loss provisions to equity, dividing up 80% of UB's pre-COIVD new mortgage business between AIB & BOI (with 20% going to small players) + expanding pool of Irish mortgages each year to reflect increasing new builds at 30-35k+ adding in Davys fee income (minus cost to capture).....+ NIM's margin expansion driving ROE closer to 10% + liberal buybacks with any share price with 5.x or 6.x handle on it & below book.......I could see BOI trading to 8 euro in fairly short order (summer 2022)......multiple expansion for the two remaining pillar banks now is in my opinion inevitable when the monopoly becomes more apparent to the financial markets.

BOI has traded around a 10x P/E for most of the last few years......given the durability of the franchise now with UB & KBC gone..& broader market trading at 23x/ 24x PE.......I'd guess a 14x PE wouldnt be too crazy......on earnings of 70c per share (higher if buybacks reduce share count) - it wouldn't shock me AT ALL to see Bank of Ireland 36 months from now trading at 9.50 a share.....thats a 22% CAGR from here for the next 3 years not including dividends.....and if yield curves surprisingly steepen....well banks might turn out to be seriously profitable.

know some of you cypto loving, NIO riding, diamond hands mofos dont get out of the bed for less than 200% CAGR.....but it will do me very well thank you especially when I see bubbles everywhere else. Again though OWN dont TRADE.

bankboucy

Oh on the above - my pair trade with this is Glenveagh Properties @ 0.88.......BOI needs, mainly, homes to lend against.....GLV is the structural winner here....it is at scale the lowest cost producer of starter homes in the country (3,000 homes built/sold a year in 2023) it is worth in my opinion ~1.80 a share....3,000 homes at an average selling price of 320,000 = 960m gross revenue @ 20% profit margin = 192m -25m in central HQ/PLC costs = 167m......~150m net income after tax....GLV is currently trading at 5 times my 2023 target of ~150m net income & below the cost of the land it acquired three years ago.....crazy..........the government is hell bent on driving housing construction in the next three years......help to buy, shared equity etc etc. lower for longer rates......i see little reason what would stop Glenveagh reaching its enhanced IPO targets.

To be clear this pair trade is effectively a leveraged, in the case of BOI, bet on the Irish economy emerging from COIVD and continuing to deliver ~ 3% p/a growth

ingeneer

bankboucy wrote: »

Oh on the above - my pair trade with this is Glenveagh Properties @ 0.88.......BOI needs, mainly, homes to lend against.....GLV is the structural winner here....it is at scale the lowest cost producer of starter homes in the country (3,000 homes built/sold a year in 2023) it is worth in my opinion ~1.80 a share....3,000 homes at an average selling price of 320,000 = 960m gross revenue @ 20% profit margin = 192m -25m in central HQ/PLC costs = 167m......~150m net income after tax....GLV is currently trading at 5 times my 2023 target of ~150m net income & below the cost of the land it acquired three years ago.....crazy..........the government is hell bent on driving housing construction in the next three years......help to buy, shared equity etc etc. lower for longer rates......i see little reason what would stop Glenveagh reaching its enhanced IPO targets.

To be clear this pair trade is effectively a leveraged, in the case of BOI, bet on the Irish economy emerging from COIVD and continuing to deliver ~ 3% p/a growth

Any reason for Glenveigh over Cairns? I think they are both similar markets and size.

I've been looking at CRH for similar reasons (i.e. construction boom), but worldwide, hopefully coupled with the possible infrastructure plans in the US. It's at an all time high though so thinking I've missed the opportunity.

bankboucy

ingeneer wrote: »

Any reason for Glenveigh over Cairns? I think they are both similar markets and size.

I've been looking at CRH for similar reasons (i.e. construction boom), but worldwide, hopefully coupled with the possible infrastructure plans in the US. It's at an all time high though so thinking I've missed the opportunity.

Cairn is less aspirational around what they are trying to achieve in terms of being an at scale builder their aim is to top out at maybe ~1,400 homes per anum (vs. GLV at 3,000).....they bought their land bank earlier than Glenveagh did and it seems to me that capitalizing on this cheaper bank is their aim and its somewhat more short term and more modest in its aspirations.

While Glenveagh is putting the pieces in place to be the low cost provider of starter homes with at scale of ~3,000 homes in house production per anum:

Too see the long term nature you need to see that GLV is taking costs out of home construction in Ireland for the first time and vertically integrating certain functions - they've purchased their own infill quarry for the disposal of inert material.......they've invested in off site construction partners factories for timber frame homes.....they've invested in systems and technology to streamline and standardize the construction process across sites biometrics etc......their at scale purchasing power will allow them to contract for labor & materials at discounted rates vs. the spot market. Glenveagh more than Cairn has a philosophy driving what its doing and its slowly assembling the pieces it needs to be the structural winner in Ireland.

Their partnership division is a low capital cost hedge built in against the usually captial intensive nature of homebuilders, its take alot of time and investment to get it where it is today but this is a real differentiator vs Cairn - it is tendering on government contracts with Fingal CoCo recently selecting them to build a scheme in Donabate public/private development, the land development agency + other CoCo's will be able to leverage GLV's labor contracts/lower costs to deliver public housing on public lands way lower than any CoCo/LDA could (or other builder for that matter) and for this GLV will supply only its expertise/labor on a Cost+ basis. The knowledge/skill required for these public tender contracts is not easy. GLV has that muscle now and it will be hugely profitable part of the business that will drive its own captive home building business like a fly wheel (greater scale = lower costs = greater scale etc etc.). Cairn hasn't got this business or vision IMO.

GLV is being built for the long term and is sacrificing short term profitability to make key investments to position itself for the future. Buying GLV vs. Cairn is a no brainer.

ingeneer

bankboucy wrote: »

Cairn is less aspirational around what they are trying to achieve in terms of being an at scale builder their aim is to top out at maybe ~1,400 homes per anum (vs. GLV at 3,000).....they bought their land bank earlier than Glenveagh did and it seems to me that capitalizing on this cheaper bank is their aim and its somewhat more short term and more modest in its aspirations.

While Glenveagh is putting the pieces in place to be the low cost provider of starter homes with at scale of ~3,000 homes in house production per anum:

Too see the long term nature you need to see that GLV is taking costs out of home construction in Ireland for the first time and vertically integrating certain functions - they've purchased their own infill quarry for the disposal of inert material.......they've invested in off site construction partners factories for timber frame homes.....they've invested in systems and technology to streamline and standardize the construction process across sites biometrics etc......their at scale purchasing power will allow them to contract for labor & materials at discounted rates vs. the spot market. Glenveagh more than Cairn has a philosophy driving what its doing and its slowly assembling the pieces it needs to be the structural winner in Ireland.

Their partnership division is a low capital cost hedge built in against the usually captial intensive nature of homebuilders, its take alot of time and investment to get it where it is today but this is a real differentiator vs Cairn - it is tendering on government contracts with Fingal CoCo recently selecting them to build a scheme in Donabate public/private development, the land development agency + other CoCo's will be able to leverage GLV's labor contracts/lower costs to deliver public housing on public lands way lower than any CoCo/LDA could (or other builder for that matter) and for this GLV will supply only its expertise/labor on a Cost+ basis. The knowledge/skill required for these public tender contracts is not easy. GLV has that muscle now and it will be hugely profitable part of the business that will drive its own captive home building business like a fly wheel (greater scale = lower costs = greater scale etc etc.). Cairn hasn't got this business or vision IMO.

GLV is being built for the long term and is sacrificing short term profitability to make key investments to position itself for the future. Buying GLV vs. Cairn is a no brainer.

That's an interesting read. Also Cairn were in the news recently regarding advice to leave a chief executive out of some scheme (link below) seemed unusual to me. Thanks for posting.

https://www.irishtimes.com/business/construction/cairn-homes-investors-urged-to-reject-chief-executive-share-bonus-plan-1.4556342

Chuckie_Egg

Anyone trading this, it has entered oversold territory again and now looks like we will see a third attempt to break the 5.30 resistance in the next few days. 5.80 is the next resistance.
I suspect that a catalyst in the form of a rating agency upgrade which seems overdue now. Currently Moodys is Baa2, and Standard & Poor's is BBB-, if these get upgraded then we will see a large influx of funds from pensions and investment funds which were locked out of investing due to the ratings, this would cause another rapid sharp move upwards in the share price.

Morleystreet

Chuckie_Egg wrote: »

Anyone trading this, it has entered oversold territory again and now looks like we will see a third attempt to break the 5.30 resistance in the next few days. 5.80 is the next resistance.
I suspect that a catalyst in the form of a rating agency upgrade which seems overdue now. Currently Moodys is Baa2, and Standard & Poor's is BBB-, if these get upgraded then we will see a large influx of funds from pensions and investment funds which were locked out of investing due to the ratings, this would cause another rapid sharp move upwards in the share price.

Are you in the know Chuckie 😀. You called the branch cuts before the announcement, so if the rating agencies upgrade in the next few days then I’ll be listening on your every word!

Chuckie_Egg

Morleystreet wrote: »

Are you in the know Chuckie 😀. You called the branch cuts before the announcement, so if the rating agencies upgrade in the next few days then I’ll be listening on your every word!

Moodys updated only a few days ago so I would think it would be after the interim results in August before they reassess again.
And sorry no inside info

Bass Reeves

Chuckie_Egg wrote: »

Moodys updated only a few days ago so I would think it would be after the interim results in August before they reassess again.
And sorry no inside info

Ya cannot see an upgrade untill neater interim results, as well you may well see a good sized interim dividend as there was none last year

Morleystreet

Momentum definitely stopped for now and taken a sharp enough dive in last week or so from being above 5.40 to barely staying at 5.0 now. Any reasoning on the drop?

daheff

Morleystreet wrote: »

Momentum definitely stopped for now and taken a sharp enough dive in last week or so from being above 5.40 to barely staying at 5.0 now. Any reasoning on the drop?

Lots of bank stocks seem to be having a bad couple of days. Hopefully the rot will stop tomorrow.

bankboucy

Morleystreet wrote: »

Momentum definitely stopped for now and taken a sharp enough dive in last week or so from being above 5.40 to barely staying at 5.0 now. Any reasoning on the drop?

FED meeting was yesterday.

The market prior to this had begun to think, because of higher than expected inflation, that the FED would act to tighten conditions by a making some moves yesterday that would show that rates would rise sooner than previously shared at the most recent FOMC meetings.

In advance of this banks stocks, that fundamentally enjoy the widening of spreads between short term and long term rates had begun to rise in expectation that (1) a faster growing economy is good for loan growth & (2) Net interest margin spread widening (in a risiing rate environment) would drive profitiabilty on loans. increasing bank profits.

The FED yesterday seemed to indicate that they have no plans to ‘move up’ their projected rate increases and are non-plussed on inflation which they still consider transitory.

The lower for longer message has hurt expectations on future bank profitability in the USA and Europe. Its also re-energized the growth vs. value trade for now……the discounted cash flow model (using todays ultra low rates) allows for a dollar of earnings in 2030 to remain not a million miles away from being worth a dollar of earnings today so growth stock who’s future profits sit way out in the future can attract a large multiple in this type of world and conversely a dollar next year, is not so highly prized given the cost of the money is low.

bcklschaps

I think there's also the issue of Finance Ireland and Avant money muscling in on the mortgage market here thats effecting the listed Irish banks SP's recently.

https://www.independent.ie/business/personal-finance/property-mortgages/spanish-bank-to-shake-up-mortgage-market-here-with-30-year-fixed-rate-loans-40552755.html

Morleystreet

Down another 7% alone today. That’s a huge drop now over the last 2 weeks. That drop would even be considered a bloodbath on the crypto forum!

Morleystreet

Morleystreet wrote: »

Down another 7% alone today. That’s a huge drop now over the last 2 weeks. That drop would even be considered a bloodbath on the crypto forum!

Really can't see any point in comparing/ referring to " cryptos"

---

'apples and oranges really

Morleystreet

Ken Mc Carthy wrote: »

Really can't see any point in comparing/ referring to " cryptos"

---

'apples and oranges really

Think you missed my point. A 14% or so drop in a share in 2 weeks is a huge drop. It was a tongue in cheek comment that a 14% drop ( in a cryptocurrency) might even raise eyebrows in the crypto world ( where huge % swings are par for the course). I’m not comparing BOI to a crypto.

daheff

Government to sell part of its 13.9% remaining stake in BOI

Price drops a further 4.5%. Thanks Pascal -NOT!!!


Only upside is it won't be below a "certain price per share"

https://www.rte.ie/news/business/2021/0623/1230797-bank-of-ireland/

zimmermania

Who knew?,after all this is Ireland and the"right" people always know in this country.

c montgomery

They were value last week at 5.10 and they are a steal today.
I'm in for the long term but can't see prices increasing much when so many shares are going to be available over the coming weeks.

I'll keep adding when I can

bcklschaps

Short term pain, long term gain.

BIRG want the Government off their backs ASAP.

daheff

daheff wrote: »

Government to sell part of its 13.9% remaining stake in BOI

Price drops a further 4.5%. Thanks Pascal -NOT!!!


Only upside is it won't be below a "certain price per share"

https://www.rte.ie/news/business/2021/0623/1230797-bank-of-ireland/

Probably a stupid question but WHY announce / publicise intention to 'offload' ??? Surely, a drip-feed approach of say, 3% of total per Month, with appropriate pauses, would be the more advantageous strategy???

garrettod

I assume its because its a state owned asset, and its sale is in the national interest.

I'm expecting the sale proceeds to broadly offset what the state is going to need to invest into PTSB, to help them fund part of Ulster Bank, so announcing the sale of BoI shares may be intended to deflect future negative comment on putting money into the Permo.

cal naughton

garrettod wrote: »

I assume its because its a state owned asset, and its sale is in the national interest.

I'm expecting the sale proceeds to broadly offset what the state is going to need to invest into PTSB, to help them fund part of Ulster Bank, so announcing the sale of BoI shares may be intended to deflect future negative comment on putting money into the Permo.

The state won't touch ptsb with a barge pole. The state has no business being in enterprises which should be private

garrettod

cal naughton wrote: »

The state won't touch ptsb with a barge pole. The state has no business being in enterprises which should be private

You can argue for, or against, that one. There's an argument that banking is an essential service, that the likes of the payment system is essential, and if we aren't drawing in privately owned banks, then we need the state to intervene, to ensure the service is maintained.

The flip side of the argument is that other essential services such as power, are in private ownership - so why not all Banks, and everything else (ie An Post, Coillte etc).?

Moving on, if you've been reading what's going on at PTSB, and the plan to bring part of Ulster Bank's business on board, then you'll know that PTSB need funding, and that the State is the largest shareholder. The deal for part of UB is politically motivated, with birth competition considerations and possibly job saving in mind. So, watch this space....

BillyBiggs

birdmany wrote: »

Thinking of buying Bank of Ireland shares with a 25 year time horizon. Is this wise?

Can anyone tell me their book value at the moment?

Don’t, literally buy anything but Irish bank shares. Dogecoin literally makes more sense and you could profit from that at least.

garrettod

BillyBiggs wrote: »

Don’t, literally buy anything but Irish bank shares. Dogecoin literally makes more sense and you could profit from that at least.

Whatever about Dogecoin, I'm inclined to agree about the prospects for Irish Banks.

The Irish Market is too small to offer any real potential for growth, and the Irish banks aren't big enough to really make an impact in larger markets.

Add to that the need for massive investment in technology, and the associated costs,

...then add the threat from Fintech (Revolut and PayPal, to give two examples), and you have to ask how Irish Banks can make more profit and grow successfully, over the next couple of decades.

Just to put a cherry on top of all of that, consider the impact of regulation - the cost to Irish Banks for having to keep signify capital in reserve, due to the demands of the Irish Central Bank.

Sure, the Central Bank blames the high level of loans still in arrears as justification for wanting excessive capital to be retained against potential losses - but almost all loans have seen some debt reduction in the last decade, while the property security held against them has most likely increased in value, so reduced the risk - and need for so much capital to be held in reserve, by the Banks.

Then, look at our Government and judicial system, who won't evict those who default on their loans, so the properties can be sold and Banks can get their money back...

Is it any wonder that we aren't seeing any new banks of any significance entering the Irish Market, or that the State probably cannot sell both AIB and PTSB?

Banking in Ireland is in deep trouble, so investing in it doesn't seem like a great idea IMHO (which also supports my reasoning for the State being the most likely investor in PTSB, to help fund the deal with Ulster Bank, that I've mentioned a little earlier in this thread).

Irish Banks are scrambling to do deals to buy stockbrokers / investment houses, sell their customers all sorts of investments, to help try and get excess customer deposits off their Balance Sheets, but that'll only achieve so much, and for a limited time - Irish people are afraid of the stock markets, they much rather property, and always have done. A large number of the public getting burned during the Eircom flotation probably only added to that mindset, while there's been little of substance done at national level, to counter it.

Thargor

Bit of a suspicious drop before the announcement no? Thought there would be more talk about leaks, someone obviously knew something.

garrettod

Thargor wrote: »

... someone obviously knew something.

Someone always does

Let's not forget what country we live in

Geuze

cal naughton wrote: »

The state won't touch ptsb with a barge pole. The state has no business being in enterprises which should be private

The State already owns ptsb.

daheff

Thargor wrote: »

Bit of a suspicious drop before the announcement no? Thought there would be more talk about leaks, someone obviously knew something.

in fairness, look at banks globally for the past 2 weeks. Share prices are down between 5 & 10% across most. Not surprised BOI dropped also.