Monday, March 29, 2010

Ireland to Report Bank Writedowns Tuesday

by Calculated Risk on 3/29/2010 07:52:00 PM

Two different perspectives, first from The Times: Ireland on the brink of full-scale bank nationalisation

The Republic of Ireland faced the prospect last night of having most of its banking system nationalised amid growing speculation that the Dublin Government would raise its stakes in both remaining private sector operators — Allied Irish Bank and Bank of Ireland.

[A] report [yesterday] that the Government’s stake in AIB would rise from 25 per cent to 70 per cent and its holding in BoI would be lifted from 16 per cent to 40 per cent.
...
With the Irish Nationwide and EBS building societies being merged and nationalised, and Anglo Irish Bank, the other large banking company, also nationalised, most of the industry would be in the State’s hands.

Ireland is the first significant Western country to be faced with the humiliation of wholesale bank nationalisation in this crisis, although the Republic took its three main banks into state ownership 18 months ago.
But Karl Whelan at The Irish Economy blog writes: Super Tuesday Leaks
There is nothing new about the idea of the state potentially owning 70 percent of AIB. Even based on previous expectations for NAMA discounts, this was always a possibility. ... [I]t is hard to reconcile the continuing circulation of the same ownership statistics as before with the new information (if such it is) on discounts and also on capital levels.
The world has come full circle. The main stream media screams "nationalization" and the blog keeps the numbers in perspective.

Note: NAMA is National Asset Management Agency, a "bad bank" set up by the government to take many of the distressed assets in Ireland. This was a very different approach than in the U.S.