Irish Banks

[rubytuesday]

Just like all western countries Ireland has had its share in having the tax payer bailout banks. But it looks like they might be considering an alternative by making the bank "Bondholders" either partly or totally responsible.
Bondholders are financial or banking organisations lurking behind every main street trademark banking names. The Bank of America has them, Barclays has them, even the Federal Reserve & the Bank of England has them, in fact it seems every main & central bank has them.

Here for example is a list of the "Bondholders" for the Allied Irish Bank 2.bp.blogspot.com/_HLD-3KNiebg/TLr-M1e2p-I/AAAAAAAAAAg/9gcaIADoGBw/s1600/ai-bondholders.gif Up until now the main concern with making "bondholders" contribute to the bail out is that they would simply take their business elsewhere resulting in a potential bankruptcy of any country. Not " too big to fail" but "too big to cross". Which perhaps explains the ECB's reluctance

Now we have to assume that "Bondholders" are not charitable organisations and that their involvement has been very lucrative for decades, indeed some may have done extremely well from the bank bailouts and the subsequent injections of cash from taxpayers.

Bondholders' position now looking precarious

www.independent.ie/business/irish/bondholders-position-now-looking-precarious-2599965.html

The ECB seemed to yet again block any attempt to make senior bondholders share the burden of bank recapitalisation last night. But other key players were taking a different view.

Juergen Stark, an ECB board member, warned in an interview that solving problems by making bondholders pay would not work and would only cause uncertainty elsewhere in Europe. Stark also described reports of a new medium term liquidity deal for Irish banks as "just a rumour'', indicating differences over such a deal remain.

Meanwhile, some of the most influential players in the bond market are now expecting haircuts to be applied to those holding Irish bank bonds, particularly in Anglo Irish and Irish Nationwide.
Contact on the issue between the NTMA, the Department of Finance and the ECB is believed to be continuing ahead of tomorrow's announcement.

In unusually frank comments, Pimco, the world's largest bond fund, yesterday said the Irish Government and the ECB had to "face reality'' that some senior bondholders would have to face losses.

Losses

Andrew Bosomworth, one of the fund's European strategists, said bondholders needed to face "bail in'' arrangements in the Irish banks, code for forcing some losses on these investors. "I am reasonably concerned,'' he said.

He added the Government would have to break the unwritten code that senior bank debt in Europe could not be touched. The current policy had not worked. "This is fuel for moral hazard,'' he said. "Look, Ireland is closing kindergartens to pay senior bondholders -- ethically that is a very questionable policy. Some of the senior bondholders have got to be bailed in here,'' he said in an interview with Bloomberg.

Padraic Garvey, a bond strategist with ING Bank, said applying haircuts to bonds "had wide popular appeal'' in Ireland and this was beyond "just rhetoric''. He said the prices of the bonds now included a "fear factor''.

The Government and members of the EU and ECB are looking at the €3.7bn of senior unguaranteed bonds in Anglo Irish and Irish Nationwide. The Anglo paper has been trading at between 50 and 65 cents in the euro on fears that a new policy could be introduced against these securities.

However, the small savings available, if losses were forced on the holders, are understood to be a key consideration for the ECB. Bigger savings could be made either by pulling bonds of AIB and Bank of Ireland into the picture or moving against senior secured unguaranteed bonds.

"With prices well below par at this stage there are options available across different classes. We'll have to see which option is taken,'' said one market source.

- Emmet Oliver and Donal O'Dovovan

[rubytuesday]

Position of bondholders in Irish banks looks precarious as Ireland follows Iceland
birdflu666.wordpress.com/2011/04/02/position-of-bondholders-in-irish-banks-looks-precarious-as-ireland-follows-iceland/

While the new Irish premier Enda Kenny appears to be ready to cheerfully transfer the entire wealth of Ireland to criminal banks and break all his election promises, Kenny has met with unexpected resistance among the people and also the media.

Day in, day out, economists like David McWilliams writing in the Irish Independent, explain the nature, scale and consequences of this gigantic bank fraud and it looks like the Irish government will have to bow to the will of so many eventually and stop demanding virtually the entire annual tax revenue of Ireland to pay the bondholders of the fraudulent, fractional reserve banking debts.
The Irish Independent reports that “haircuts” for bondholders are expected.
If Ireland is forced into bankruptcy by the criminal banks acting through the ECB and IMF, then the tab will ultimately have to be paid by Austrian and German tax payers, among others, via the enlarged european stability fund.

—

Bondholders’ position now looking precarious

By Emmet Oliver and Donal O’Dovovan Wednesday March 30 2011 , Irish Independent

The ECB seemed to yet again block any attempt to make senior bondholders share the burden of bank recapitalisation last night. But other key players were taking a different view. Juergen Stark, an ECB board member, warned in an interview that solving problems by making bondholders pay would not work and would only cause uncertainty elsewhere in Europe.

Stark also described reports of a new medium term liquidity deal for Irish banks as “just a rumour”, indicating differences over such a deal remain. Meanwhile, some of the most influential players in the bond market are now expecting haircuts to be applied to those holding Irish bank bonds, particularly in Anglo Irish and Irish Nationwide.

…

Losses Andrew Bosomworth, one of the fund’s European strategists, said bondholders needed to face “bail in” arrangements in the Irish banks, code for forcing some losses on these investors. “I am reasonably concerned,” he said. He added the Government would have to break the unwritten code that senior bank debt in Europe could not be touched. The current policy had not worked. “This is fuel for moral hazard,” he said. “Look, Ireland is closing kindergartens to pay senior bondholders — ethically that is a very questionable policy. Some of the senior bondholders have got to be bailed in here,” he said in an interview with Bloomberg.

[rubytuesday]

The Irish show the way. There's no reason why taxpayers in Ireland, UK or USA should bail out the banks while still wealthy "bondholder" banks & financial institutions, such as Goldman Sachs , continue to make hay when the sun ain't shining.

Bank of Ireland to Impose Up to 90% Losses on Bondholders

www.bloomberg.com/news/2011-05-3 ... -deal.html

Bank of Ireland Plc will seek to impose losses of as much as 90 percent on 2.6 billion euros ($3.7 billion) of subordinated debt as it offers bondholders an exchange for cash or equity.

The lender, ordered to raise 5.2 billion euros of capital, said in a statement it expects to offer to pay cash of 10 percent of nominal value for Tier 1 securities and 20 percent for Tier 2 debt, with no settlement of accrued interest. The Dublin-based bank said it may also offer an equity-swap alternative at a premium to the cash offer with a payment of accrued interest.

“We were expecting the terms of the offer to be bad, but this is worse than expected,” said Stephen Lyons, a fixed- income analyst with Dublin-based securities firm Davy. “Another approach would have to been to engage with subordinated bondholders and not leave such a bad taste in the mouths, particularly for investors that might take the equity alternative, who the bank may wish to participate in a subsequent share sale.”

Bank of Ireland’s 747 million euros of lower Tier 2 senior subordinated 10 percent bonds due 2020 were quoted at 30 cents on the euro, down from 52.5 cents, according to Jefferies International Ltd.

Burden Sharing

“The bank understands that the government will take whatever steps it considers necessary to maximize burden sharing” of losses with subordinated bondholders, Bank of Ireland said.

The lender also said the buyback will include a proposal to amend the terms of the bonds to include giving it the option to call the notes for cash at a price that would be “materially less” than offered in the tender. Anglo Irish Bank Corp. included a call at a level that wiped out holdouts in its bondholder offer last year.

EBS Building Society, which must raise 1.5 billion euros, said it’s offering to buy back 160 million euros and 30 million British pounds of junior securities at discounts of 80 percent. The Dublin-based lender said it will seek to pass an extraordinary resolution amending terms of bonds so that bondholders who refuse to take up the offer may be paid just 1 cent in the future for every $1,000 of debt held.

Bail Out

Ireland’s government, which has injected 46 billion euros into its banks in the past two years, is seeking to share the cost of bailing out the country’s lenders. The Irish central bank in March ordered Bank of Ireland to raise 4.2 billion euros of equity and 1 billion euros in contingent capital by the end of July, to boost reserves and cover loan losses.

“The levels of burden-sharing” being sought “are the minimum acceptable to the government,” Finance Minister Michael Noonan said in a statement. If the debt exchange offers “fail to deliver the expected core Tier 1 capital gains to each of the banks, the government will take whatever steps are necessary” under new laws introduced last year “to ensure that burden sharing is achieved.”

The take up of Bank of Ireland’s junior bonds exchange offer will determine how much needs to be raised from a share sale. The government has promised to provide any capital the bank cannot raise privately.

Irish Life

Separately, Irish Life & Permanent Plc, directed by regulators to raise 4 billion euros, said it will buy back as much as 840 million euros of subordinated liabilities, with the discount of 80 percent applying to most of the securities.

One security will be discounted by as much as about 91 percent, the company said, adding “no payment in respect of accrued interest” in relation to the debt will be paid.

On May 11, Allied Irish Banks Plc (ALBK) said it would offer to buy back junior debt at a discount of as much as 90 percent of face value, after the government obtained a court order allowing it to alter the terms of the bonds. The order is currently being challenged by two New York-based investment firms Abadi & Co. and Aurelius Capital Management LP. The case is set to be heard by the Dublin-based High Court on June 2.

Bank of Ireland was down 9.8 percent at 17 euro cents at 12:15 p.m. in Dublin trading, having earlier fallen as much as 10.4 percent. Irish Life fell 1 euro cent to 12 cents.

Irish two-year government notes rose, sending the yield down 71 basis points as of 12:49 p.m. in London. The 10-year bond yield dropped five basis points to 11.02 percent.

-- With assistance from Finbarr Flynn and Cormac Mullen in Dublin and John Glover in London. Editors: Michael Shanahan, Dara Doyle