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Anglo Irish Bank: The nationalised former builders'
bank today reported a loss of €17.7bn in 2010 - - the
greatest in Irish corporate history and equivalent to about 50% of annual Irish tax revenues.
So far, the state has
injected €29.3bn in the defunct bank that is in a wind down
Total liabilities at 31 December
2010 were €68.6bn, down from €81.0bn at 31 December 2009. Customer deposits
declined from €27.2bn at 31 December 2009 to €11.1bn at 31 December 2010.
Borrowings from banks increased to €46.6bn at 31 December 2010 and include
€45.0bn from central banks compared with €23.7bn at 31 December 2009. Debt
securities in issue at 31 December 2010 were €6.9bn compared with €15.1bn at 31
At 31 December 2010 euro denominated
borrowings from central banks totalled €45.0bn, and include €28.1bn borrowed
under special liquidity facilities. Total borrowings from central banks are up
from €26.3bn at 30 June 2010.
Headcount at 31 December 2010 was 1,296 representing a decrease of 16% over the
The key financial results for the year ended 31 December 2010
are as follows:
Loss for the year of €17.7bn, which includes
impairment charges of €7.8bn and a loss of €11.5bn on disposal of
eligible assets to NAMA;
Impairment/bad debt charges include €2.6bn relating to NAMA
(State toxic property loans agency)
Operating profit before impairment and loss on disposals
to NAMA of €1.8bn, due mostly to the liability management exercise,
relating to subordinated bonds, conducted towards the end of 2010;
Effective 31 December 2010 the bank received an increase
to the promissory note of €6.42bn, bringing total capital support over
the past two years to €29.3bn;
Core Tier 1 and Total regulatory capital at year end
2010 of €4.0bn and €4.6bn respectively, with risk weighted assets of
At 31 December 2010 the bank expected to transfer a
further €1.1bn of nominal loan assets to NAMA;
Following the completion of loan asset transfers to
NAMA, nominal customer loans will be approximately €35.8bn with
cumulative specific provisions at 31 December 2010 of €8.8bn.
Anglo Irish Bank closed at 22 euro cent on
the Irish Stock Exchange, on its last day of trading - -Jan 16, 2009 - - before becoming a
On February 21, 2007, the ISEQ index rose
to an-all time high of 10,041 and the Financial sub-index rose to
18,098. Bank of Ireland closed at €18.65; Anglo Irish closed at €16.64
and AIB closed unchanged at €23.95.
A year later, on February 21, 2008, AIB
closed at €13.80, Anglo Irish Bank finished at €8.84, while Irish Life &
Permanent closed at €10.20 and Bank of Ireland traded at €9.50.
Six issues dominate the Irish market
and in recent years, overseas residents, dominated by institutions, have
owned more than 60% of Irish bank shares. Ireland's biggest company CRH,
accounts for about 27% of Irish market capitalisation and foreign residents hold up to 90% of the issued shares.
Market awaits PCAR and PLAR announcements:
Davy economist, Conall Mac Coille, comments - - "The market will be clearly
focussed on the outcome of the Prudential Capital Assessment Review
(PCAR) and Prudential Liquidity Assessment Review (PLAR) later this
evening. We expect that capital requirements to be met by the Irish
sovereign will lie somewhere in the range of €19.5-24.3bn, bearing
in mind the €17.5bn of internal resources committed by the sovereign
to the €35bn set aside for the banking system within the IMF/EU
We will also be looking for the targets announced in the PLAR to be implemented over a drawn out timeframe so that fire-sale
losses can be avoided. Furthermore, it now seems likely that the
short-term public support of the Irish banks will be replaced with a
medium-term funding solution from the European Central Bank.
Today also sees the release of the Irish trade data for
January following the surprise quarterly decline in Irish exports in
Q4 announced in the national accounts. There is currently a large
and unusual discrepancy between the monthly trade data and final
quarterly national accounts export data. This discrepancy relates to
a statistical adjustment applied only to the final quarterly data
but not to the monthly data. So it will be very difficult to be
confident of any signal regarding the strength of the export sector
from the headline numbers in today's trade data.
In the UK, the Nationwide measure of house prices released
this morning indicated that the annual rate of inflation rose 0.1%
in March from -0.1% in February. This meant that house prices rose
by 0.5% on the month. Clearly, the UK housing market has weakened,
but recent data suggest that the low level of transactions continues
to support prices. The GfK measure of UK consumer confidence
released early this morning posted a reading of -28, flat on the
month but following sharp falls through 2010 and remaining at a very
From Anglo Irish Bank's
Annual Report 2006
Economic View: Today’s stress tests to
be more than just another line in the sand; Goodbody's
chief economist, Dermot O’Leary, comments --
"Given that we have had numerous so-called 'lines in the sand' drawn over the
past twelve months in relation to the Irish banking sector, but to little avail
in terms of solving the problems fully, what will make today’s announcement any
We can think of a few important ones:
(1) the tests have been completed by independent outside agencies whose
reputation is on the line; (2) the tests are now being completed under the
watchful eye of the IMF/EU/ECB, as they are a key condition set out in the
agreement between the troika and the Irish Government last December; (3) there
is intense pressure on Irish officials at European level to ensure the debacle
of last year’s stress tests, where Ireland is partly blamed for the failure of
the tests in Europe overall, is not repeated; (4) it appears that modelling for
loan losses in mortgage books will be based on international experience of the
biggest housing busts, with the media reporting that the example of Nevada is
being used as a test case for possible losses on the Irish mortgage book despite
the cultural and historical differences between defaults in the US and Ireland;
(5) funding is already in place to meet
the capital shortfalls that will be announced given the €35bn that has been made
available as part of the IMF/EU deal, with the €18bn-€23bn range originally
leaked at the weekend seemingly sticking; (6) judging from media reports,
today’s announcements will include a more widespread restructuring of the
banking system (see Financials piece below for more details), with the
possibility of forced mergers of institutions going well beyond the measures
that have been taken to date; and (7) Finally, although not confirmed as yet, it
is hoped that the efforts of the Irish authorities will be aided by additional
liquidity support from the ECB. As we noted yesterday, the quid-pro-quo for this
or any further ECB support may be a pledge by Irish officials not to take any
action in terms of burden-sharing with senior bank-bondholders, but this may not
be resolved in full later today. There is no doubt that the announcement due at
4.30pm will represent a significant watershed in this crisis.
Sudakshina Unnikrishnan, VP, commodities research at Barclays Capital explains why the bank recently raised its target price on crude oil. She also discusses agricultural commodities:
Irish Financials: Today is the day – PCAR 2011; Goodbody's Eamonn Hughes
comments - - "The Central Bank, Minister for Finance
and NTMA will all be putting us out of our misery this afternoon (from 4.30pm)
when the results of the stress tests are finally revealed. The banks themselves
are also likely to outline their reaction subsequently (so it will be busy
night!). However, the media commentary this morning and overnight on the
electronic media is putting some colour on the plans and fleshing out some of
the expectations building in the market over the last few days.
Firstly, both AIB and BOI’s shares will be temporarily suspended today ahead of
the announcements, following IL&P yesterday. The figures being bandied about now
are up to €5bn for BOI and €3bn for IL&P. With the EBS indicated to be somewhere
around the €1bn level, with presumably AIB holding out the balance if the
€18-23bn emerging consensus range for the system holds. However, bear in mind
that these figures include the PCAR targets from H210 which are still
outstanding - €4.7bn in the case of AIB and €1.4-1.5bn for BOI. It also appears
that more capital will be going into Anglo Irish and we note that €29bn has been
committed with its worst case estimate at €34bn. Given the figures being
mentioned, it’s hard to see either BOI or IL&P avoiding majority state ownership
and AIB is already 93% owned. The coverage indicates that the PCAR impact has
been harsh on mortgages with losses in the state of Nevada being used as a
It appears that IL&P is understood to be putting its life assurance operation up
for sale, with the embedded value at €1.746bn at end December and a statutory
NAV of €1.278bn. Presently, UK life assurers are trading on about 0.85x EV. It
appears that IL&P will be given time to sell its life operation and also its 30%
JV with Allianz (likely back to the latter) and that the final decision on the
amount of capital that must be injected will be taken after that. Elsewhere, the
State halted the sale of EBS yesterday to the Cardinal consortium and it now
appears that EBS will be backed into AIB. Also, the indications are that BOI
will also be given time to raise some of its capital target, which by inference
means some of it will also be going in immediately.
Finally, it still appears that the €60bn medium term funding facility from the
ECB to wean the banks off the ELA (domestic central bank funding) is
outstanding, though the domestic authorities are hoping the ECB announces it
In terms on impact on valuations etc, there is still much that is outstanding,
given the circularity around the impact of capital raises on valuations per
share. However, we should be in a better position to comment tomorrow on what’s
JPMorgan Chase CEO Jamie Dimon discusses regulation and the government, municipal defaults, and what a failure to extend the U.S. debt limit would really mean:
In New York Wednesday, the
Dow rose 72 points or 0.58% to 12,351.
The S&P 500 added 0.67%
and the Nadaq advanced 0.72%.
MSCI Asia Pacific Index rose 0.7% Thursday.
Japan's Nikkei 225 gained 0.48%; China's Shanghai Composite fell 1.13%;
Australia's S&P/ASX 200 Index rose 0.33% and the Bombay Stock Exchange's Sensex
index climbed 1.32% in Mumbai.
BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index
averaged 59% lower in 2009 than a year earlier.
Thursday, July 15, 2010, the index fell for the 35th straight session, by 9
points, or 0.537%, to 1,700 points,
On Friday July16th, the BDI rose 20
points or 1.12% to 1,700 to break the 35-session losing streak.
Wednesday this week, the BDI slipped 27 points or 1.72% at 1,545.
The Financial Times reported
earlier in January, that Australia’s flooding and fears of ship oversupply has
pushed down a gauge of the cost of hiring ships to carry coal, iron ore and
other dry bulk by nearly half since October to the lowest level since the
aftermath of the financial crisis. The Baltic Dry index, the widely watched
measure of dry bulk charter rates, fell to 1,453, nearly half the 2,784 peak
reached on October 27, 2010.
margin between the US benchmark WTI (West Texas Intermediate) used on the New
York Mercantile Exchange and Brent is almost $12.
said in early February that a surge in oil inventories in Cushing, Oklahoma,
where WTI is delivered into America’s pipeline system, has depressed the value
of the benchmark against other yardsticks. The
International Energy Agency said on Thursday that with “few relief valves” to
cut the stock overhang in Cushing, the price dislocation “may persist for months
[or years] to come”.