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Markets News: National Irish Bank reports 9-month loss of €600m; MF Global collapse biggest Wall Street bust since Lehman
By Finfacts Team
Nov 1, 2011 - 8:47 AM
Danske Bank Group today announced its financial results for the nine months to 30th September 2011. Profit before tax was €482m, down 28% on the first nine months of 2010.
Its Irish unit, National Irish Bank, reported an operating profit before impairment charges of €32m, a decrease of 11% on last year. Income fell 17% to €103m due to reduced customer demand and the impact of impaired loans. Costs fell by 19% to €71m, driven by the bank’s restructuring programme. Bad debt charges of €632m were set aside, leading to a loss before tax of €600m.
National Irish Bank’s total loan book was €9.0bn, down 8% on last year. Commercial property loans amounted to €3.3bn, with most of the bank’s loan impairment charges in this area. NIB said the quality of the bank’s €3.4bn mortgage book remained satisfactory.
Customer deposits increased by 18% to €5.0bn.
Commenting on the results, Andrew Healy, CEO, National Irish Bank said:“Impairments remain very high mostly due to the continued weakness of
the property market in Ireland. This said, they are slightly down on the
previous quarter and we hope to see a downward trajectory moving forward.
Deposit and cost performance is encouraging, with the benefits of our
restructuring programme particularly being seen on the cost line.
National Irish Bank and Danske Bank Group remain strongly committed to
Ireland. We believe the changes we have made to our business create a good
platform for growth once market conditions improve.”
MF Global Holdings, the US commodities and futures brokerage, that
made calamitous bets on Eurozone debt, collapsed into bankruptcy Monday when a
potential buyer quit over a discrepancy of hundreds ofms of dollars in
the beleaguered securities firm's books, people familiar with the matter said
according to The Wall Street Journal.
MF Global run by Jon Corzine, former: New jersey governor, US senator and
CEO of Goldman Sachs - - the investment bank, two weeks ago had a market
capitalization of $612m but it had plunged to a valuation under $200m - - on
losses on risky bets made by Corzine.
The New York Times reports that MF Global began buying the debt of European
countries like Italy, Portugal, Spain and Ireland last year, in a bet that the
discounted prices of those bonds would soon recover.
The Journal
says the firm filed for Chapter 11 bankruptcy protection Monday, the
eighth-largest corporate bankruptcy in US history and the biggest failure by a
securities firm since Lehman Brothers Holdings filed for Chapter 11 in
September 2008.
It's reported that there was a difference of about $900m on what customers
had on deposit at the brokerage.
MF Global collapse
:
Trade levels in Irish equities increases by 26.3% in Q3 compared to Q2:
The Irish Stock Exchange [ISE] said on Monday that trades were up were up
26.3% with over 684k trades recorded in the third quarter compared to the second
quarter of 2011 [542k]. The daily average trade figures on the ISE’s markets
were also higher in Q3 with an average of 10,367 trades recorded per day [Q2:
8,882 trades], a rise of 16.7%, with year on year figures showing growth of
11.7%. Turnover rose by 5.5% to €8.8bn [Q2 2011: €8.3bn] with daily
average turnover in equities down slightly to €133m [Q2: €136m] reflecting the
higher number of days in Q3 [66 days compared to 61 days in Q2].
Irish companies trading on ISE raise €7.7bn in third quarter: Six companies
trading on the Main Securities Market and Enterprise Securities Market raised
€7.7bn the third quarter bringing to €10.1bn the amount of money raised by Irish
companies in the first nine months of 2011. The key transactions during Q3 were
both related to the banking sector. Bank of Ireland raised €2.5bn while the
Government invested €5bn in AIB plc through the issuance of new shares.
Market capitalisation of companies included in the ISEQ indices rose by
almost €15bn during the quarter to €65.8bn at the end of September 2011, an
increase of 29.3%.
Economic View: Draghi gets thrown into the Eurozone cauldron;
Dermot
O’Leary, chief economist at Goodbody comments -- "If European leaders had
planned to present a united front at tomorrow’s G20 summit in their fight
against the sovereign crisis following last week’s crisis summit deal, the
markets, after an initial endorsement, have put paid to that. While the major
concerns revolve around the lack of specific details, Greece added an extra
layer of uncertainty last night by calling for a confidence vote in the
Government and for a referendum on Greece’s second aid package.
The confidence vote will take place this Friday, with the referendum likely
to take place in either December or, more likely, January. One would have
thought that Greek people would be in favour of a 50% write-down on their
sovereign debt, but a weekend poll suggests that the majority is against the
second package. This news, along with the bankruptcy of MF Global, made
yesterday very much a risk-off day for markets: in Europe, German 10-year bund
yields fell by 10 basis points, although there was only little movement in Irish
yields.
Italian bond yields rose and thus remain above the important 6% level. New ECB
President Draghi will be severely put to the test as he starts his term today.
While his predecessor Trichet was loath to intervene aggressively in the market
for sovereign bonds, ongoing uncertainty will dictate that the ECB will continue
to have a large role to play in how this crisis plays out. Although we don’t
expect it, a rate cut at his first policy meeting this Thursday would be a clear
statement of intent."
Irish Financials: AIB set to sell US loan book for 15-20% haircut;
Eamonn Hughes, head of research at Goodbody, comments -- "Press reports
indicate that AIB is set to sell a $600m pool of US commercial property loans to
Blackstone Group and Wells Fargo for a 15-20% haircut.
The disposal represents a further step in the de-leveraging process for the bank
and the domestic banking system in general. The haircut is higher than that
incurred by BOI last week in its de-leveraging update, but looks to be inside
some of the more stressed average haircuts that will have been applied in the
PLAR (bank stress tests)exercise."
US
Markets
The Dow Jones Industrial Average closed down Monday 276 points
or 2.26% to 11,955. The Nasdaq
Composite lost 1.93% and the S&P 500 dipped 2.47%.
Asia
Markets
The MSCI Asia Pacific Index
dropped 1.9% Tuesday.
Japan's
Nikkei 225 fell 1.70%; China's Shanghai Composite added 0.07%; Australia's S&P/ASX
200 declined 1.152% and the Bombay Stock Exchange Sensex 30 index in Mumbai
dropped 1.39%. South Korea's Kospi dipped 0.04%.
The 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.
On Thursday, July 15, 2010,
the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700
points,
Bloomberg report.
On Monday this week, the BDI fell 53 points or 2.63% to
1,965.
Crude oil for November 2011
delivery is currently trading on the
Chicago York Mercantile Exchange (CME/Nymex) at $91.52 down $1.67 from
Monday's close. In London, Brent for November delivery is trading on the
International Commodities Exchange at $107.89.
The North Sea benchmark accounts for two-thirds of the global market.
The margin between the US
benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange
and Brent is over $16.
