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Analyst take: NCB Research
FY11 Results Preview Facts: Bank of Ireland will report full year 2011 results on Monday, February 20th at 7am. We will be most focused on the performance of pre-provision profits and the arrears trajectory, particularly in the Irish residential mortgage and SME books. Bank of Ireland is the first of the covered banks to report under the new Irish Central Bank guidelines regarding a more conservative approach to provisions and the requirement to „significantly improve the number and granularity of their asset quality and credit risk disclosures?. Analysis: We expect pre-provision profits of €535mn for 2011, a 48% fall on 2010 and implying a full year net interest margin of 1.13% including a cost of €425mn for the ELG scheme. Competition for deposits remains tough and with the current anemic lending volumes we see it as a difficult challenge to get margin increases through in H2 2011 but we expect a stabilization at the H1 2011 levels. Provisions and the time it takes for the provision cycle to peak is the most significant variable in the Bank of Ireland investment case. We expect Bank of Ireland will incur gross loan impairments from 2011 to 2013 of €8.7bn, excluding NAMA transfers and including any potential losses on deleveraging. The €28bn Irish residential mortgage book and the €13bn Irish non-property SME book are the cause of greatest concern. We expect the impairment charge for 2011 in the Irish residential mortgage book will increase by 59% to €548mn. At the 30th of June 2011 Bank of Ireland had €4bn of residential mortgages past due but not impaired and an additional €1.2bn of impaired loans against an existing impairment provision of €857mn. We currently estimate that the impairment charge will peak in 2012 at 2.3%, implying a 10% write off in the credit cycle to 2015. We have similar concerns regarding the non-property SME book, but we estimate that the loan loss charge will peak in 2011 at €400mn for the year. The loan to deposit ratio has fallen from 175% in 2010 and we expect a year end result in the region of 150% as Bank of Ireland continue to deleverage and compete for incremental deposits. We have a year-end target of €67bn in customer deposits and Bank of Ireland may well have exceeded this with a strong performance in the UK post office during 2011. We will get a full update on the wholesale funding picture but we don?t expect any surprises from what was reported in October. Funding and Capital have been the two big issues for the Irish banking system in recent years. We believe that Bank of Ireland has sufficient capital to reassure any capital concerns and the ECB, through the LTRO, has given the European banking system confidence in the medium term regarding funding. Conclusion & Action: We will not be getting too exercised over any individual trends we expect to see given that our estimates are based on a multi-year recovery. Investors need to have a level of comfort on the health of the loan books, the arrears trajectory and the adequacy of capital levels. We estimate Core Tier 1 will trough at 16% in 2014 and this includes the repayment of €1.8bn of Government preference shares. Ultimately Bank of Ireland will need to demonstrate an adequate return on equity. We estimate that 2012 will continue to be a very difficult operating environment, 2013 should see a return to breakeven and 2014 will be the first year of normal return in a domestically focused retail banking franchise operating in a market were a large amount of capacity has exited the market. We maintain our trough T/NAV of 24c and our Buy recommendation.
http://www.ncbresearch.com/PDFs/2012-02/021712.pdf#page=2
Conference call feby 20 2012:
http://www.media-server.com/m/p/gxpzg6a8
BKIR hit intra-day high of 0.12 p; IRE over $6.00.
ADR Report: Shares Climb As Greece Closes In On Debt Deal
4:28p ET January 23, 2012 (Dow Jones)
ADR Report: Shares Climb As Greece Closes In On Debt Deal
By Ian Thomson
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--International companies trading in New York closed higher Monday, outperforming the broader markets, as investors stayed optimistic that Greece and its creditors will agree on a deal to write down debt.
The Bank of New York Index of ADRs gained 0.7% to 127.31, aided by Europe's financial sector.
French banks rallied as Greece came closer to finalizing a deal with its private creditors that would avoid a disorderly default, and investors grew more confident that banks could swiftly increase their capital buffers. European banks are in the midst of major restructuring plans intended to reassure jittery investors by increasing their capital buffers.
Credit Agricole SA (CRARY, ACA.FR) shares rose 7.9% to $3.40, Societe Generale SA (SCGLY, GLE.FR) climbed 7.6% to $5.92, and BNP Paribas SA (BNPQY, BNP.FR) increased 2.1% to close at $23.59.
Elsewhere in Europe, Bank of Ireland (IRE, BIR.DB) shares soared 8.4% to $6.19 and National Bank of Greece SA (NBG, ETE.AT) jumped 6.3% to $2.70.
The European index climbed 0.7% to 116.92.
British and European Union officials have convinced some U.S. lawmakers to ensure that any new sanctions against Iran exempt a BP PLC (BP, BP.LN)-led natural-gas project in the Caspian Sea off Azerbaijan, as Western governments try to isolate Tehran without harming their own energy security. BP's shares rose 1.4% to $44.63.
Rio Tinto PLC (RIO, RIO.LN, RIO.AU) will either extend its share buyback program or increase its dividend in the near future, according to Canaccord Genuity. The firm estimates a dividend payout ratio of 15% in 2011, which is "very undemanding" and low compared to BHP Billiton Ltd. (BHP, BHP.AU) which is estimated at 21%. "With its conservative balance sheet and progressive dividend policy, we view it as an attractive investment for longer-term investors," the firm says. Rio Tinto's shares gained 1.7% to $58.31.
The Latin American index grew 0.8% to 369.30.
Brazil's state oil company Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, named Maria das Gracas Silva Foster to take over as chief executive, replacing Jose Sergio Gabrielli who is expected to move into mainstream politics. Foster has been the director for natural gas and energy at Petrobras since 2007 and is expected to stick closely to the government's strategy for developing huge oil reserves discovered off Brazil's southeast coast in recent years. Shares climbed 4.3% to $31.10.
Brazilian iron ore producer Vale SA (VALE, VALE5.BR) said it lifted the declaration of force majeure on some iron ore sales contracts due to improved weather in Minas Gerais state in southeastern Brazil. Shares gained 0.6% to $24.36.
The Asian index closed 0.6% higher at 123.69, and the emerging markets index rose 0.7% to 303.40.
Sony Corp. (SNE, 6758.TO) has proposed a capital and business alliance with Olympus Corp. (OCPNY, 7733.TO), offering to take a stake of up to 20%-30% in the maker of endoscopes and digital cameras, The Nikkei reported in its Tuesday morning editions. Sony is looking to expand the use of its imaging sensors in endoscopes and grow sales of products such as high-resolution monitors for medical use. With its mainstay consumer electronics business struggling, the electronics giant has identified health care as a growth area. Olympus shares jumped 8% to $17.15 and Sony rose 3.8% to $18.53.
South African miners posted modest gains as the weaker dollar drove gold and silver futures to six-week highs. Drdgold Ltd. (DROOY, DRD.JO) closed 1.7% higher at $6.15, Harmony Gold Mining Co. Ltd. (HMY, HAR.JO) rose 1.7% to $11.63, Gold Fields Ltd. (GFI, GFI.JO) increased 1.4% to $15.78, and AngloGold Ashanti Ltd. (AU, ANG.JO) gained 1.1% to $44.01.
-By Ian Thomson, Dow Jones Newswires; 212-416-2314; ian.thomson@dowjones.com
IRLBF $0.1339. BKIR 0.105 p. Shorties covering. half a million volume so far! Looking good: S&P removed F.KIR from its crical watch list and Ireland passed tough austerity measures test.
Ireland and UK have led the way in sorting out chronic banking problems
The Irish Times - Monday, January 9, 2012
TOM McALEESE
ANALYSIS: THE IRISH Government’s efforts to restructure the banking sector have been expensive and unpopular, but they have merit.
While it may offer little consolation to the Government, Ireland and the UK are the two countries that have led the way for the rest of Europe in sorting out chronic banking problems.
Although the two countries have taken markedly different approaches to resolving their respective banking crises, their actions share qualities that many other countries have lacked so far – decisiveness and willingness to take action. Ireland has come a long way. A banking system that was built around a core of six independent institutions – four heavyweight banks and two building societies – has been heavily restructured.
From the wreckage of this system, the Government has pulled one independent survivor, Bank of Ireland, and taken ownership of the rest.
The new banking system is dominated by the National Asset Management Agency, which will address the unwanted legacy of doomed property loans, and two so-called “pillars” – one, the merged AIB and EBS, in State control; the other, Bank of Ireland, in which the State retains a minority shareholding but which has also attracted precious private sector and foreign investment.
The system looks different. But it also acts differently, thanks to a sea-change in the approach to regulation and aggressive targets to shrink loan books and sell off non-core businesses.
These changes are painful – particularly for borrowers who want credit but cannot get it – but the pain is necessary to de-risk Ireland’s banks and build a banking system that will be fit for purpose.
The UK, meanwhile, has taken full or partial control of a number of banks, including Northern Rock, RBS and Lloyds. It complemented these interventions with an Asset Protection Scheme to address loan losses, and forced the sale of some banking assets to viable institutions.
The UK’s approach has been cleaner than Ireland’s – not least because the sheer scale of the problems here required more far-reaching measures – but it is too early to say which will ultimately be the more successful.
Where Ireland and the UK have acted, however, the rest of Europe has yet to see intervention of this scale. Some countries have yet to take the kind of action needed to convince markets that they can deal with the crisis.
The recent European Banking Authority stress tests have again highlighted the weaknesses in the banking system (namely in Greece, Portugal and Spain). But it should be remembered that these tests still did not take into account potential haircuts on banks’ holdings of sovereign debt. More proactive action will be required.
Greece and Portugal are now being subjected to the rigorous stress-testing that was carried out in Ireland last year. This will give clarity on loan losses, the additional capital required and the level of restructuring and consolidation needed in those markets.
In other countries, we are seeing that some second-round rescues are on the agenda. Some French and Spanish banks, for example, have needed a second round of recapitalisation by the authorities and some of Germany’s banks are currently exposed and are likely candidates for support measures.
With the crisis in its fourth year, inadequate capital and liquidity remain the key issues. We are likely to see European banks seeking more capital from governments; extensive deleveraging across the system; and wholesale bank consolidation and restructuring.
It is a sign of how much has changed over the last three years that the Lehman Brothers’ collapse, which most people consider triggered the financial crisis, has largely disappeared from public consciousness.
Few people even noticed that Lehman passed a huge milestone in early December, when the final scheme of arrangement of the failed banking giant was approved in a New York court.
It was a grim reminder of the scale of the Lehman catastrophe.
“This is the biggest, the most incredibly complex, the most impossibly challenging international bankruptcy that ever was,” said presiding judge James Peck. “This largest ever unplanned bankruptcy . . . started in chaos, accelerated the financial crisis and eroded confidence in the global financial system.”
There is still a lot of work to be done to resolve this crisis. It is to be hoped, however, that the decisive actions taken by the UK and Ireland can be used as a roadmap to greater stability and that the lessons from Lehman will be used to good effect.
Short ban lifted: confidence or stupidity?
http://www.businessweek.com/news/2012-01-03/irish-lifting-of-short-selling-ban-only-affects-bank-of-ireland.html
Malc;
I think it is good idea.
Thnx.
GL
Or you can just post them here, I dont care. I will add our jointly owned stocks to the main index.
Whatever you are comfortable with.
Thanks.
malc
Just post your holdings over on the progressive stocks board if you are comfortable with that. Then those guys will make sure none of our joint holdings are excluded from the main index.
Its a bit silly I suppose, but then again it does serve to inform others and also can give others investement ideas to take up the DD on their own if interested.
Thanks brother.
malc
Malc;
Can i post them here?
happy holidays to you too.
mlkr - would you consider PM'ing either Harley or Michael your holdings so we can make sure we get our Euro picks acurately represented in the new index those guys are working on? Or you could also PM me and I will just text them over to Harley - we are not only stock investing friends but close friends in reality who happen to currently live in different states.
Not that the PS index is of any real relevance but since they go thru the hassle to create this thing I think we should make it representative of the people who actually contribute over on PS, and I really appreciate your input there in keeping stills and I current on Euro news and developments, the three of us are serious about playing the contrarians in that arena.
Happy Holidays my friend.
malc
Bank of Ireland sufficiently capitalized:
http://www.4-traders.com/BANK-OF-IRELAND-1412362/news/BANK-OF-IRELAND-EBA-Capital-Exercise-incorporating-a-capital-buffer-against-sovereign-exposures-%5Bp-13926543/
Bank of Ireland Junior Debtors Escape as Capital Target Met
By Joe Brennan and Finbarr Flynn - Dec 2, 2011
Irish Finance Minister Michael Noonan dropped plans to wipe out Bank of Ireland Plc’s (BKIR) remaining subordinated bondholders as the lender said it is set to complete its recapitalization by raising 350 million euros ($471 million) from the buyback of mortgage-backed securities.
The bank is buying back 1.1 billion euros of securities for between 33 percent and 92 percent of face value, the Dublin- based lender said today in a statement. The Irish central bank ordered Bank of Ireland to raise 5.2 billion euros in capital in March as part of stress tests aimed at plugging the hole in the country’s banking system and reassuring investors.
Noonan said on Nov. 23 the government may use emergency laws to wipe out some junior debt in the bank and complete the recapitalization of the country’s biggest lender. His ministry said in a statement today that Noonan is “no longer considering” the use of these powers as Bank of Ireland has now met its year-end capital target.
“As a result of the bank’s announcement this morning that it has now raised approximately 350 million euros of core Tier 1 capital, through its tender offer and purchase of capital securities, the minister is no longer considering the use of the powers available” to inflict losses on subordinated bondholders “at this time,” the Finance Ministry said in a statement.
Shares Rise
Bank of Ireland rose 5.5 percent to 8.7 euro cents at 10:19 a.m. in Dublin trading after the announcement. On Nov. 21, the bank offered to buy back as much as 1 billion euros in mortgage- backed securities issued by Kildare Securities Ltd. and Brunel Residential Mortgage Securitisation No. 1 Plc.
“Bank of Ireland has been proactive in attempting to retain advantageous funding lines while cognizant of the need to minimize reputational damage to smooth future access to these markets,” Karl Goggin, an analyst with Dublin-based NCB Stockbrokers, said in a note. “The fact that they have been able to manufacture a solution that has also allowed them to address the potential capital shortfall is a delicate solution to a complex situation,” said Goggin, who has a “buy” recommendation on the stock.
The state has injected about 62 billion euros into the nation’s banks, including a net 3.9 billion euros into Bank of Ireland. The Irish government has raised about 15 billion euros by imposing losses on subordinated bank bondholders.
The government in October sold a 34.9 percent stake in the bank to five investors, including Toronto-based Fairfax Financial Holdings Ltd. (FFH) and WL Ross & Co., the New York-based investment firm, and now controls 15 percent of the lender.
To contact the reporters on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net; Finbarr Flynn in Dublin at fflynn3@bloomberg.net
2.9 m volume day... Range $0.117 - 0.15. last two trades; 1 m shrs @ $0.117 vs 9900 shrs @ $ 0.15.
Go figure these out!
Need to raise 350 m euro by the end of year.. May screw junior bondholders. This why shorties pressuring SP down by overselling besides german bond sale at slightly higher prices. http://www.rte.ie/news/2011/1123/boi-business.html
Ireland doing better than other PIIGS according to S&P:
http://www.rte.ie/news/2011/1122/rating-business.html
Stock to Watch: Bank of Ireland
By Edmond Jackson | Tue, 22/11/2011 - 00:00
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Amid the focus on multi-billionaire Wilbur Ross's backing Virgin Money to buy Northern Rock, it is interesting to note how this turnaround financier and a few others bought into Bank of Ireland (BKIR) last July.
An 11 November interim management statement was as resilient as can be expected in the circumstances and it looks worth following this potential recovery share.
Not everything Ross touches can turn to gold, that is why he diversifies, but it is worth bearing in mind how the proverbial "rescue rights issue" (or share placing) is often a key step for recovery.
Obviously the risks for the banking sector remain high, especially while it looks like the eurozone is disintegrating into chaos - you can't predict what damage will emerge. Bank of Ireland is a high risk/reward play that in no way can be defined as an "investment", more a gamble currently, yet over time its risk/reward profile should improve.
For more on investing in financial shares, read: Analysing... Banks.
It is exactly a year since Ireland was forced to call in the International Monetary Fund, resulting in a €90 billion rescue package for its crippled banking system - largely the result of reckless lending to property developers.
Such a profile is apparent from Bank of Ireland's 14 October announcement about divesting €5 billion of non-core loan portfolios, within a wider goal to divest €10 billion of non-core loans by end-2013. The details involved US and UK commercial property loans, UK mortgage loans, project finance and corporate banking. Proceeds are being applied to reduce funding from the monetary authorities.
Although Bank of Ireland reports in euros, it is possible to deal in its shares in sterling: currently a price of 7.0p is offered to buy via an online broker, versus €0.08 you may see quoted on information systems. Bank of Ireland is the only listed Irish bank that has not had its equity diluted right down after rescue by the Irish government, which owns 15% compared with 99% of Allied Irish Bank and Irish Life & Permanent. So arithmetically there is far more upside potential for outsiders investing in Bank of Ireland than the other banks.
The price struck last July, for a €1.1 billion share placing, was €0.10, so the market price is currently down 20% on this amid the wider financial turmoil. Besides Wilbur Ross, other American investors who came in were Fairfax Financial Holdings, Capital Group, Fidelity Investments and Kennedy Wilson.
In a snapshot, the shares are bumping along a chart bottom after lending losses should now have been provided for and the bank is recapitalised. Sentiment is weak because of the wider economic woes in Europe and deposit outflows that have affected Irish banks. Bank of Ireland has reduced this negative effect by selling some of its loan book, albeit at discounts up to 20% of book value, and there is scope for further sales until depositor confidence returns.
In the first six months of 2011, like-for-like operating profit slumped from €479 million to €163 million while impairment charges on loans and assets reduced by over 30% - but were still a chunky €885 million total. Despite interest margins under pressure, the cost of wholesale funding being high, and an intensely competitive environment for deposits, the chief executive asserted "good progress" against targets. Costs are being very tightly managed, credit quality is being closely monitored and asset deleveraging is on track. In terms of capitalisation the bank is now "in a strong position to deliver on our financial and strategic objectives..."
I cannot detail Bank of Ireland's investment credentials because frankly they don't exist.
What I can relay however is a gut feel that when you look at key issues, Bank of Ireland shows signs of being an attractive, early-stage recovery speculation. It is the strongest of the surviving Irish lenders, one of just two main "pillar" banks left (also Allied Irish Bank) after the sector's restructuring. It is not immune to fallout from the eurozone disintegrating, but this is more a timing issue than identifying broad recovery potential.
The latest interim management statement cited national accounts showing the Irish economy in recovery with annualised real GDP growth of 2.3% in the second quarter of 2011 and real GNP increasing by 1.1%. Asset quality is broadly in line with expectations, albeit that relatively improved performances in unsecured consumer, UK mortgage and corporate banking has been offset by some deterioration in the Irish mortgage book. Irish business customers continue to face difficult conditions, which are impacting on their credit profiles, however Bank of Ireland re-asserts that it believes total impairment charges have peaked.
Dividends were suspended after 2008 and although losses are on a declining trend it is going to be a while before forecasting becomes realistic. With a share like this you are required to take a long-term punt on recovery and defer specifics maybe for two years. It really depends how deep and long might be the recession that may soon follow the eurozone woes.
The disciplined investor inside me is cautious to bide time lest the eurozone debacle leads to credit controls and a confidence shock. Yet my nose for recovery situations smells the early stages of turnaround, already backed by some leading American investors.
The next trading update will likely be mid-February, then prelims in April, 2012. If the European economy can avoid a shock then Bank of Ireland rates a long-term speculative buy right now, but in the circumstances I'd put them on the list and see how messy this political-economic crisis gets.
So the real difficulty here is timing, but at some point Bank of Ireland should prove a rewarding recovery play, like the Americans sense.
For more information see www.bankofireland.com.
http://www.iii.co.uk/articles/21223/stock-watch-bank-ireland
Reported its mid-year management report already on nov 12, 2011 a bit earlier than its scheduled one...
Go tru posts here and progressive stocks board...
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=68899797
GL
mlkr
When any reports coming out??
Ross defends BoI rate decision irishtimes.com - Last Updated: Tuesday, November 15, 2011, 09:49
Bank of Ireland has failed to pass on a quarter per cent interest rate cut to customers, drawing criticism from consumers.Bank of Ireland has failed to pass on a quarter per cent interest rate cut to customers, drawing criticism from consumers.
Related
* US firm buys BoI investment unit | 01/06/2011
* Central Bank does not want powers to enforce rate cuts | 14/11/2011
* Bank of Ireland and Ulster Bank refuse to reverse rate decision | 12/11/2011
* Minister to tell Dail of response to regulator's position on interest rates | 15/11/2011
* Government cannot have it every which way with banks | 14/11/2011
External
* Bank of Ireland
* More in Financial Services
The Irish Times takes no responsibility for the content
or availability of other websites
A more "normalised" funding environment is needed for Bank of Ireland to pass on European Central Bank interest rate cuts to customers on variable rate mortgages, US billionaire and shareholder in the bank, Wilbur Ross, has said.
Bank of Ireland's refusal to pass on the ECB's recent quarter of a per cent rate cut has put chief executive Richie Boucher on a collision course with Taoiseach Enda Kenny and the Central Bank.
Mr Ross, who owns 9 per cent of Bank of Ireland, said late yesterday that the lender's high funding costs made it difficult to pass on the ECB rate cut.
"I can assure you that Richie Boucher is well aware of the need for responsible pricing of loans and also is aware that lower rates make it easier for borrowers to remain current in their payments," US-based Ross said in response to questions emailed by Reuters.
"High funding costs are hopefully a temporary phenomenon.
"In a more normalised environment it would become easier to synchronise interest rate spreads with changes in rates charged by ECB."
The Government has spent nearly €63 billion propping up its banks after a disastrous binge on property and Bank of Ireland's refusal to pass on the rate cut has angered taxpayers and the political establishment.
Mr Boucher has more room to resist such pressure given that Bank of Ireland, unlike the rest of its domestic peers, is not under state control.
Mr Ross and other North American investors spent €1.1 billion on Bank of Ireland over the summer giving them a combined stake of 35 per cent and capping the state's shareholding at 15 per cent.
The investment also shored up the position of Mr Boucher, who was previously seen as a prime target for government plans to purge banks' boards of members appointed before the financial crisis struck in September 2008.
Despite a huge infusion of capital on the back of an European Union/International Monetary Fund bailout, the banks' return to profitability is hampered by sky-high funding costs. Lenders have been increasing rates on standard variable mortgages to compensate for losses on tracker mortgages that automatically follow changes in the ECB rate.
Bank of Ireland warned last week that a prolonged period of low interest rates could hamper any further improvement in its profit margins.
Reuters
Bank of Ireland Says Net Interest Margin Faces ‘Headwinds’
By Joe Brennan - Nov 11, 2011 7:51 AM ET Bloomberg
Bank of Ireland Plc, the country’s biggest lender by assets, said that while it expects its net interest margin to stabilize in the second half of the year, it faces “some headwinds” in a period of low rates.
There was a “significant reduction” in its reliance on central bank funding since June as deposits rose by 2 billion euros ($2.7 billion) to 67 billion euros in the four months through October, the Dublin-based company said in a statement today. The bank’s loan-to-deposit ratio fell to 153 percent from 164 percent in June, helped by loan sales.
Bank of Ireland stands out among the country’s six largest lenders in escaping state control after the government last month sold a 34.9 percent stake to five investors, including Toronto-based Fairfax Financial Holdings Ltd. and WL Ross & Co., a New York-based investment firm. The bank was ordered to raise 5.2 billion euros of capital after stress tests in March.
Bank of Ireland Chief Financial Officer John O’Donovan said on Aug. 10 that the lender’s net interest margin, the difference between its funding costs and its lending rate, to “trough” this year, after narrowing to 1.33 percentage points in the first half from 1.41 percent in the year-earlier period.
While the lender said June 8 it plans to rebuild its net interest margin to “in excess of 200 basis points” by the end of 2014, it said today “further margin recovery will face some headwinds in a more prolonged period of low interest rates.”
ECB Reliance Falls
Irish banks are under government pressure to pass on a 25 basis point cut in the European Central Bank’s benchmark rate last week.
Bank of Ireland’s decreased monetary authority funding reliance reflected a trend from the Dublin-based central bank figures published today. While Irish-based lenders’ ECB borrowings rose to 100.9 billion euros on Oct. 28 from 100.4 billion at the end of the previous month, their drawings on Irish central bank emergency funding may have fallen as much as 5.6 billion euros to 47.7 billion.
Asset quality remains “broadly in line with our expectations” as “some deterioration” in Irish home loan arrears in August and September were offset by improvement the bank’s unsecured consumer, U.K. mortgage and corporate banking books, the company said.
“It continues to be our expectation that our total impairment charges have peaked and will reduce, however, the pace of reduction will be particularly dependent on the future performance of our Irish residential mortgage book and commercial real-estate markets,” it said.
Bank of Ireland rose 4.7 percent to 9 euro cents at 12:50 p.m. in Dublin trading.
To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net
Added.
More on mid-year mgnt report;
Bank Of Ireland Maintained Strong, Disciplined Focus On Priorities
Last update: 11/11/2011 6:17:48 AM
LONDON (Dow Jones)--The Governor and Company of the Bank of Ireland, the only Irish lender to escape effective nationalization amid the nation's deep debt crisis, said Friday it has maintained a strong and disciplined focus on its key priorities and is at an advanced stage of negotiations with potential purchasers on certain other non-core portfolios.
MAIN FACTS:
-Redemptions and repayments in non-core businesses remain on target and Bank has achieved deposit growth in Irish and U.K. Businesses.
-Expects Group's net interest margin to have stabilized in the second half of 2011 versus the first half of 2011.
-Further margin recovery will face some headwinds in a more prolonged period of low interest rates.
-Other income in second half of 2011 is expected to be positively impacted versus the first half of 2011 by the substantial reversal of two discrete items that adversely impacted operating income in the first half of 2011.
-Reversal is expected to be partially offset by the impact of volatile market conditions on certain hedging instruments in global markets business and negative consequence of the deterioration in equity markets since June on the investment variance in the Life business.
-Continued to reduce cost base whilst making judicious investments in the infrastructure of the core businesses.
-Asset quality remains broadly in line with Bank expectations with relatively improved performances in unsecured consumer, U.K. Mortgage and Corporate Banking books being offset by some deterioration in the arrears profile in Irish Mortgage book in August and September.
-Continued progress with non-core loan book disposals, together with loan redemptions and repayments has resulted in a reduction of 3% in loans and advances to customers at Oct. 31 compared with June 30.
-Customer deposits at Oct. 31 were EUR67 billion; loan to deposit ratio was 153%, with 164% at June; expects further improvements in the Group's loan to deposit ratio by year end.
-Bank is strongly capitalized and currently has a Core Tier 1 capital ratio in excess of 15%.
-Shares at 1115 GMT up 2.3% at 8.8 cents valuing the Bank at EUR2.59 billion.
-By Ian Walker, Dow Jones Newswires; 44-20-7842-9296; ian.walker@dowjones.com
(END) Dow Jones Newswires
November 11, 2011 06:17 ET (11:17 GMT)
BKIR reported earlier it seems..
http://moneyam.uk-wire.com/cgi-bin/articles/201111111105129447R.html?epic=BKIR
.....
"DAVY's interpretion:
Bank of Ireland
BKIR ID
Publishes a solid trading update
11 November 2011
Emer Lang
Closing Price: 9c Rating: Outperform Issued: 04/11/11 Previous: Neutral Issued: 07/09/10
FACTS: In the midst of heightened macro uncertainty and speculation around Irish mortgage arrears/pricing, Bank of Ireland (BKIR) has published its IMS ahead of schedule.
ANALYSIS: The bank expects its net interest margin in the second half to have stabilised versus the first half (1.33% before guarantee fees) as higher funding costs have been offset by some recovery in lending margins and the interest income benefits of lower subordinated debt and increased capital. However, it cautions that further margin recovery will face some headwinds in a more prolonged period of low interest rates. Deposits have grown to €67bn from €65bn at both December and June, a strong performance given that the bank lost €3bn of temporary NTMA deposits in July. With redemptions and book run-off on schedule and the recent €5bn loan disposals, the key LTD ratio has fallen from 164% at June to 153%. The deleveraging is reflected in a circa 10% reduction in wholesale funding, from €61bn at June 2011, including a significant reduction in drawings from Monetary Authorities (the Central Bank has revealed its ELA facility to Irish banks stood at €47.7bn at end-October, down from €53.3bn at end-September).
Other income in H2 is expected to recover from H1 (when two once-off items cost €110m), but it will be impacted by hedge volatility and an investment variance, reflecting market volatility.
Asset quality remains broadly in line with the bank’s expectations; relatively improved performances in its unsecured consumer, UK Mortgage and Corporate Banking books are being offset by some deterioration in Irish mortgage arrears in August/September 2011. The bank cites the considerable public speculation about potential policy measures regarding customers in arrears as a possible factor driving the arrears trend; this echoes comments from KBC, which blames such speculation for a change in customer behaviour.
DAVY VIEW: Against the background of uncertainty, this is a solid statement showing that BKIR is making good progress in restructuring its balance sheet through deleveraging while growing customer deposits. We expected a cautious margin outlook on the basis of a flatter interest rate trajectory; we recently cut our 2014 margin from 1.8% to 1.68% to reflect this. That the trend in Irish mortgages has deteriorated comes as little surprise. News that asset quality overall remains broadly in line with expectations is encouraging, although the bank cautions that its Irish residential mortgage book and commercial real estate markets are issues. All in all, we don’t anticipate any significant changes to our forecasts arising from the statement. "
Malc. Thnx.
I loaded LYG i recent lows .
GL
mlkr.
Got the link that time. Very interesting as I had not been following AIB at all lately - It is a zombie bank in the sense that they are around 95% govt owned last I checked, I wonder if something there has changed but how could it?
I honestly dont know why investors would flock back into AIB as compared to IRE, this must be trader-fueled movement? Who knows?
I'm not about to put the effort into trying to figure AIB out.
Quite happy with IRE and LYG, would way rather own some STD or BCS or BBVA or countless others than try to gain profit fooling with AIB.
I assume that AIBYY is now the pinksheet traded AIB for US investors. Obviously an excellent trade recently for some, but I prefer to focus on LT investments although I do go for aggressive trade moves occasionaly. Won't touch anything after a run though.... and this seems to be asking for a hard correction.
In your next PS post, mention that you are big on LYG, and then we will get that indexed. Our stocks are going to overperform in this next year.
malc
Malc;
I am a subscriber to FT.. Link was to AIB.ise quote..It disapeared in my message. Let me se it will work this time..
http://markets.ft.com/research/Markets/Tearsheets/Summary?s=AIB:ISE
Allied Irish Bank moved from0.06 euro to 0.098 euro recently. AIBYY here jumped from $0.50 to $1.38. I cant explain this PPS movement. I thought AIB was a zombie bank ...delisted in London and its ADR delisted in NY too. I posted about it in AIB board here too.
I will post more frequently in PS board..
No i didnt get back in IRE after correction.
I couldnt sell some IRLBF on friday. but did sell a small size not so long ago. and bought back again.. i am holding some..
tia
GL
mlkr
mlkr - What I am supposed to be checking out? I think you might have forgotten a link.
Thanks alot for the breakdowns on core capital requirements for the euro banks, I wish you would post them on progressive stocks for all of our peeps. We have some other euro bank players there.
And if you dont mind, I would like it if you would post the euro banks you currently hold over there as well, when 2 or more of us own a stock we index it and I really think our common holdings are going to outperform.
And I'm also still wondering if you got back into good ole IRE now that the correction has occured?
OK, since I am on a roll one more Q. Did any of your IRLBF sell when you put it on the block? I fear that my main fear regarding IRLBF is true, us small retailers are going to have as much difficulty unloading our shares as we did buying them. Too many games here I dont understand on this pinksheet version. Too illiquid for my tastes.
malc
IRE will need NO mo capital
Bloomberg
EBA Says EU Banks Need $147 Billion of Capital (Table - Lenders)
By Zoe Schneeweiss - Oct 28, 2011 5:27 AM ET
Enlarge image EBA Says Europe’s Banks Require EU106 Billion in Capital
EBA Says Europe’s Banks Require EU106 Billion in Capital
EBA Says Europe’s Banks Require EU106 Billion in Capital
Alessia Pierdomenico/Bloomberg
Europe’s banks will need to increase capital by 106 billion euros ($150 billion) under tougher rules being introduced in response to the euro area’s sovereign debt crisis, according to the European Banking Authority.
Europe’s banks will need to increase capital by 106 billion euros ($150 billion) under tougher rules being introduced in response to the euro area’s sovereign debt crisis, according to the European Banking Authority. Photographer: Alessia Pierdomenico/Bloomberg
Europe’s banks will need to increase capital by 106 billion euros ($147 billion) under tougher rules being introduced in response to the euro area’s sovereign debt crisis, according to the European Banking Authority.
The EBA examined 70 banks, of which 30 had no additional capital requirements. Thirty banks have published their gap, while 10 have yet to announce whether they require funds.
Following is a table showing the breakdown by individual banks of the estimated target capital buffers. Amounts are in millions of euros:
================================================================
Bank Estimated Country
Capital requirement
================================================================
UniCredit 7,380 Italy
BBVA 7,087 Spain
Santander 6,474 Spain
Dexia 3,900 (1) Belgium
================================================================
Bank Estimated Country
capital requirement
================================================================
BPCE 3,400 France
Societe Generale 3,300 France
Banca Monte Dei Paschi di Siena 3,100 Italy
Commerzbank 2,938 Germany
Banco Popolare 2,820 Italy
Banco Popular Espanol 2,362 Spain
Caixa Geral de Depositos 2,239 Portugal
Marfin Popular Bank Pcl 2,100 Cyprus
BNP Paribas 2,100 France
Raiffeisen Zentralbank 1,907 Austria
BCP 1,750 Portugal
Banco BPI 1,717 Portugal
Ubi Banca 1,480 Italy
Bank of Cyprus 1,470 Cyprus
DnB NOR Bank 1,312 (2) Norway
BFA 1,140 Spain
Svenska Handelsbanken SEK 9.7 bln/EU1,100 mln Sweden
================================================================
Bank Estimated Country
capital requirement
================================================================
Oesterreichische Volksbanken 972 Austria
Banco Espirito Santo 687 Portugal
Norddeutsche Landesbank 660 Germany
La Caixa 602 Spain
Landesbank Baden-Wuerttemberg 364 Germany
Swedbank SEK 2.9 bln/EU320 mln Sweden
Nova Ljubljanska Banka 297 Slovenia
Erste Group Bank 59 Austria
Nykredit 47 Denmark
Deutsche Bank - (3) Germany
Landesbank Berlin not announced Germany
WestLB n.a. Germany
WGZ Bank n.a. Germany
Agricultural Bank of Greece n.a. Greece
Alpha Bank n.a. Greece
EFG Eurobank Ergasias n.a. Greece
Hellenic Postbank n.a. Greece
================================================================
Bank Estimated Country
capital requirement
================================================================
National Bank of Greece n.a. Greece
Piraeus Bank n.a. Greece
================================================================
NOTES:
(1) Dexia SA said the sale of Dexia Bank Belgium to the
country’s government on Oct. 20 reduced its deficit to reach a
core Tier 1 ratio of 9 percent after markdowns of sovereign debt
holdings by 2.2 billion euros to 1.7 billion euros from a 3.9
billion-euro estimate by the EBA.
(2) EBA comment: “As an EFTA state of the EEA, any requirement
and supervisory action pertaining to capital needs in Norwegian
banks is within the competence of Norwegian authorities.”
(3) Deutsche Bank referred questions to EBA.
================================================================
Banks without capital needs (according to individual statements)
================================================================
KBC Groep Belgium
Bayerische Landesbank Germany
DekaBank Deutsche Girozentrale Germany
DZ Bank Germany
HSH Nordbank Germany
Hypo Real Estate Holding Germany
Landesbank Hessen-Thueringen Germany
Danske Bank Denmark
Jyske Bank Denmark
Sydbank Denmark
Credit Agricole France
Intesa Sanpaolo Italy
Nordea Bank Sweden
Skandinaviska Enskilda Banken Sweden
Nova Kreditna Banka Maribor Slovenia
================================================================
Banks of countries with no capital needs according to EBA
================================================================
OP-Pohjola Group Finland
OTP Bank Hungary
Allied Irish Banks Ireland
Bank of Ireland Ireland
Irish Life & Permanent Group Ireland
Banque et Caisse d’Epargne de L’Etat Luxembourg
Bank of Valletta Malta
ING Bank Netherlands
Rabobank Groep Netherlands
ABN Amro Bank Netherlands
SNS Bank Netherlands
Royal Bank of Scotland U.K.
HSBC U.K.
Barclays U.K.
Lloyds Banking Group U.K.
================================================================
Source: Banks, National Regulators, EBA
To contact the reporter on this story: Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net
To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net
Banks of countries with no capital needs according to EBA
================================================================
OP-Pohjola Group Finland
OTP Bank Hungary
Allied Irish Banks Ireland
Bank of Ireland Ireland
Irish Life & Permanent Group Ireland
Banque et Caisse d’Epargne de L’Etat Luxembourg
Bank of Valletta Malta
ING Bank Netherlands
Rabobank Groep Netherlands
ABN Amro Bank Netherlands
SNS Bank Netherlands
Royal Bank of Scotland U.K.
HSBC U.K.
Barclays U.K.
Lloyds Banking Group U.K.
================================================================
Source: Banks, National Regulators, EBA
To contact the reporter on this story: Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net
EU will implement Greece's rescue plan with deeper hair cut-50 percent and doesnt tighten banks' capitalization requirements after adjusting for new bond market prices.. Banks higher! So is BKIR.L 0.108-0.11 euro. IRLBF had a 200k shares trade @$0.155.
Germany, France come closer to EFSF leveraging deal: officials
ReutersReuters – Sun, Oct 23, 2011 3:57 PM EDT
By Andreas Rinke and Julien Toyer
BRUSSELS (Reuters) - France and Germany are close to a deal to leverage the euro zone bailout fund through first loss insurance for the primary bond market and a special purpose vehicle with an EFSF subordinated loan for the secondary market, euro zone officials said.
There is also wide support for a declaration from euro zone leaders which would welcome continued European Central Bank bond purchases on the secondary bond market, the officials said. The ECB has said it would prefer to take a back seat once the European Financial Stability Facility (EFSF) is fully functional with new powers.
"There is broad backing for a declaration of euro zone leaders supporting continued ECB bond purchases," one euro zone official said.
"France backed down on its demand to leverage the EFSF with the ECB, but insisted the ECB should still be somehow involved through its bond buying programme on the secondary market," a second euro zone official said.
"The ECB would make very clear it will stay on the market," the second official said.
Separately, the 440 billion euro EFSF will seek to get more bang for its buck on the primary and secondary markets to turn investor sentiment back in favor of Italian and Spanish paper.
This, policymakers hope, would prevent the third and fourth largest euro zone economies from running into financing problems that could prove too big for the euro zone to handle.
"There are only two models which are getting more detailed now. The first is the insurance scheme, the second is an SPV of the EFSF, into which third parties could pay in," a third euro zone source said.
"In the end, a mixture of the two models could be decided on. Additionally the EU should talk with the IMF about further cooperation," the third official said.
The second official explained that the EFSF would guarantee the first 20-30 percent of losses investors might suffer if they bought the bonds of Italy or Spain at a primary auction and the sovereigns later defaulted.
To support the secondary market, the EFSF would create a special purpose vehicle (SPV) with private investors, sovereign wealth funds or other institutions, perhaps the International Monetary Fund, who would contribute paid-in capital.
With the twin measures, a two-tier bond market with primary issuance insured, and existing bonds not, would be avoided.
The EFSF would also commit to pay capital to the SPV through a subordinated loan.
Against this capital the new SPV would then borrow money on the market and use the cash to buy bonds of Italy or Spain on the secondary market.
In case of a default of one of the pair, the EFSF would be the first liable to cover the losses.
Euro zone officials cautioned however, that details of the scheme were still under discussion and could yet change -- for instance whether the EFSF should guarantee the SPV borrowing or the subordination of the loan was enough.
(Additional reporting by Jan Strupczewski and Ilona Wissenbach; writing by Jan Strupczewski, editing by Mike Peacock)
"Kennedy Wilson and its institutional partners agreed to acquire a loan portfolio from Bank of Ireland for $1.8 bln (KW) 11.25 : Co announces that it and its institutional partners agreed to acquire a loan portfolio from Bank of Ireland for $1.8 bln. A majority of the loan portfolio assets are secured by high quality, London-based office, multifamily and retail properties. The purchase will close in two phases, with $1.4 bln completed on Friday, October 21 and an additional $400 mln expected to close at the end of November. With the two closings, it will increase the estimated value of the assets under the company's management to $12 bln. " source: Briefing.com
BoI may need further €2.4bn in new capital
23 October 2011 By Jon Ihle Markets Correspondent
Bank of Ireland may need up to €2.4 billion of additional capital under potential stress scenarios being tested by the European Banking Authority as part of the resolution to the European sovereign debt crisis, according to Goldman Sachs.
In a report to clients,Goldman Sachs estimated BOI would have to raise between €1.5 billion and €2.4 billion in fresh funds to meet minimum core capital standards likely to be set by the super-regulator when officials test European banks for their capacity to withstand a sovereign shock. The investment bank priced in mark-downs on sovereign debt holdings at a 60 per cent level for Greek bonds and 40 per cent on Irish and Portuguese bonds, based on ‘mark to market’ levels.
Under this scenario, Bank of Ireland came up €2.4 billion shortof the 10 per cent core capital ratio to be required of banks in bailed-out countries. The report comes after finance minister Michael Noonan admitted last week that Irish banks might need more capital to pass tougher EBA stress tests after easily passing the last round in July. Government sources say that the details of the new rules will be vital, including whether banks will be allowed to count future tax losses as capital.
The government has put €16.6 billion into the banks already this year as part of the Central Bank’s financial measures programme. Deteriorating conditions in the eurozone have made investors very wary of banks’ holdings of peripheral sovereign debt. Irish banks are among the biggest holders of Irish debt,which is likely to be marked down in the EBA exercise, the point of which is to capitalise banks to an unassailable level. Banks weren’t tested for sovereign exposure in July.Any increase in capital requirements will come as a shock to Bank of Ireland’s newest investors,a groupled by Canadian insurer Fairfax, and including American billionaire Wilbur Ross and property asset managerKennedy Wilson.
The group put €1.1 billion into the bank in July, taking a 34 per cent stake and reducing the government to a minority position of 15 per cent. European officials have said recapitalisation should come from shareholders and private sources first,which means this group of investorswould be expected to supply about €800 million in new investment if the highest Goldman’s estimate is correct. If private investment cannot be sourced, banks are supposed to turn to their home governments or the European Financial StabilityFund, although such details have not been finalised. Analysts expect European banks to raise more than €200 billion in capital, although the EBA has pencilled in an estimate of less than €100 billion.
http://www.sbpost.ie/themarket/boi-may-need-further-24bn-in-new-capital-59202.html
Checked that out. I am no chartist by any means, but of course I consult them when doing fundamental analysis - This summary is just a summary and like anything else in technical analysis, too much of a black and white explanation when in actuality everything in the markets are in a constant flux of grey.
For instance, a 70 RSI constitutes a likely move south on an overbought condition? Hmmm, in many of the stocks I have owned I am happy to see an RSI moving from 50 towards 70 and even above, it can also be an indicator that the market in general is realizing that your holding is undervalued to begin with and buying pressure is increasing gradually pushing it towards a proper valuation.
It seems apparent to me that the author of such dictionary explanation is coming from it from a pure T/A traders perspective, not a contrarian or value/growth orientated investor.
In regards to IRE though, he definetly got the part right that it was in a severly oversold position after the R/S.
Thank you Sheep.
malc
Good source for BKIR.L UK-listed shares trades.. It doesnt round prices...
http://www.shareprice.co.uk/BKIR/BANK-OF-IRELAND%28GOVERNORCO-OF%29
Malc; Check this one out! Interesting techno view on IRE.. Just laughing for such easy conclusions from RSI..
http://stocks.investopedia.com/stock-analysis/2011/5-Oversold-Stocks-To-Watch-CNS-MX-CO-IRE-ENG1020.aspx?partner=YahooSA#axzz1bRm3ph8r
UPDATE 1-Bank of Ireland divests 5 bln euros of loans
* CORRECTED-UPDATE 2-Ireland warns on euro zone banks 'dumping' assets
DUBLIN | Fri Oct 14, 2011 2:57pm EDT
DUBLIN Oct 14 (Reuters) - Bank of Ireland said it has sold or accepted repayment of 5 billion euros ($6.94 billion) of loans in the United States, Britain, Europe and the Middle East at a discount of around 9 percent, putting it on track meet its targets under an EU-IMF bailout.
Ireland's government pledged to radically shrink its domestic banking sector after a disastrous binge on property loans, and Bank of Ireland, the country's largest lender, is to sell 10 billion euros in loans and accept repayment of another 20 billion euros worth by the end of 2013.
Bank of Ireland, the only domestic lender to avoid falling into state control, said it had raised 4.54 billion euros from the sale of the loan books, a higher price than expected, meaning there was no impact on its core tier one ratio.
Bank of Ireland had a pro forma core tier one ratio, a key measure of financial strength, of 15.4 percent at the end of June.
Ireland's banks need to shrink their loan books to reduce their dependence on emergency funding from the European Central Bank and the Irish central bank, which at the end of September stood at 153.6 billion euros.
Bank of Ireland needs to dispose of another 5 billion euros worth of loans by the end of 2013, and it said it was making good progress.
It said it was in advanced talks with potential purchasers of project finance loans.
The loans already sold include a U.S. commercial real estate portfolio valued at $1.13 billion, some 1.33 billion pounds of UK commercial property loans sold to Kennedy Wilson and institutional partners for 1.07 billion pounds, and 1.23 billion pounds of British residential mortgages sold to a unit of Britain's Nationwide Building Society for 1.13 billion pounds.
Bank of Ireland also sold a portfolio of project finance loans with total commitments of 670 million euros to GE Energy Financial Services . The loans relate to a portfolio of energy assets across North America, the UK, continental Europe and the Middle East.
The group also accepted repayment of some 700 million euros of loans at or close to par in its UK corporate banking division.
Malc; Yep! Very good observation!
mlkr
BKIR at .093
Intrinsic value of IRLBF - .13 - currently trading at premium.
Intrinsic value of IRE - 5.20 - still trading at a premium despite the large drop after the R/S
malc
European stocks off as debt plan takes shape
Stocks off in Europe as investors await more detail on plan to handle debt crisis;
David Mchugh, AP Business Writer, On Thursday October 13, 2011, 7:19 am EDT
FRANKFURT, Germany (AP) -- Stocks in Europe fell Thursday as investors await more details over exactly how European Union officials plan to tackle their debt crisis and Chinese trade figures stoked concerns over the outlook for the world's second-largest economy.
Stocks have been buoyed this week as eurozone officials finally indicated they are willing to take decisive action such as larger write-downs on Greek debt and a push to make banks strengthen their capital against resulting losses.
New steps to quell the debt crisis are seen as positive for stocks because a disorderly default by Greece and resulting losses to banks on its government bonds could cause a wider banking crisis, choking off credit to the wider economy and causing a recession.
But key details are lacking as officials rush to put their plans together ahead of a European summit 10 days from now and a Group of 20 summit of rich and developing countries in early November.
"The period of good feelings may well be drawing to a close," said Stephen Lewis at Monument Securities in London. "This is because the tight timetable that the November G20 meeting imposes will leave little more time to settle intractable problems. Devising a 'roadmap', that is, an analysis of what needs to be done, is the easy part. To come up with viable measures will be more difficult."
Adding to pressure on stocks was news that China's trade surplus narrowed for a second straight month in September, suggesting further cooling in the Chinese and global economies. The country's trade surplus fell to $17.8 billion in August, well below July's 30-month high of $31.5 billion, largely on the back of lower export growth -- a sign that the stalling global economic recovery is could weigh on China's elevated economic growth.
In Europe, Britain's FTSE 100 fell 0.9 percent to 5,398, while Germany's DAX slipped 1.5 percent to 5907. France's CAC 40 was 0.8 percent lower at 5,398.
The euro has also suffered a reverse after enjoying big gains recently on the back of hopes of a comprehensive solution to Europe's debt crisis -- it was trading 0.4 percent lower at $1.3731.
Wall Street was set to ease at the open with Dow futures up down 0.3 percent at 11,388 and the broader Standard & Poor's pointing 0.5 percent lower at 1,193.
Attention later will also be centered on the next batch of earnings due. Those earmarked to report include Google Inc. and JP Morgan Chase & Co. So far, the earnings released, from the likes of Alcoa Inc. and PepsiCo. Inc. have presented investors with mixed news about the world's largest economy.
News of the European proposals sketched out by European Commission president Jose Manuel Barroso on Wednesday helped Asian shares overnight. Japan's Nikkei 225 index climbed 1 percent to 8,823.25. Hong Kong's Hang Seng jumped 2.3 percent to 18,757.81 and South Korea's Kospi index rose 0.8 percent to 1,823.10.
Australia's S&P/ASX 200 gained 1 percent to 4,244.50. The Shanghai Composite Index advanced 0.8 percent to 2,438.79.
On Wednesday, Barroso called for European banks to raise billions in new capital and for a stricter accounting of their exposure to sovereign debt. Barroso also called for a permanent bailout fund to come into force by mid-2012, one year ahead of schedule.
European officials are also talking about reopening a July 21 deal in which banks agreed to take 21 percent losses on Greek debt by getting longer-dated bonds with lower interest rates. Officials have indicated a revised deal could impose larger losses.
Oil prices meanwhile tracked European equities lower -- benchmark oil for November delivery was down $1.48 to $84.09 per barrel in electronic trading on the New York Mercantile Exchange.
AP Business Writer Pamela Sampson in Bangkok contributed.
Bloomberg's news item too: Looks like no mo rights issuance to screw investors ; of course, if you believe in politicians, technos and bankers.
http://www.bloomberg.com/news/2011-10-12/ireland-may-warehouse-mortgages-to-ease-repayment-burden.html
"Irish Banks wont need mo capital" Finance minister said:
http://www.irishtimes.com/newspaper/finance/2011/1013/1224305705282.html
do u have the OS on this one ?
thankx
Nice little stock pick. Too bad the spread is huge. Would trade better.
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Irish Banks and BKIR's situation
Department of Finance issues progress report and DAVY's notes:
11 October 2011
Emer Lang
FACTS: The Department of Finance has published its six-monthly review of the bank sector, 'Irish banking landscape — moving forward'.
ANALYSIS: The banks have established non-core de-leveraging units although the update notes that c.€11bn of the total €70bn de-leveraging will come from core book redemptions, mainly at IPM and AIB's EBS unit. It puts core and non-core de-leveraging at approximately €13bn to date, noting that some €18bn non-core will remain after 2013. Disposals account for €34bn of the €70bn and it expects some 46% of disposals (implies €15.6bn) to be accomplished during 2011. An update on disposal progress notes that the sale of a $1.1bn US commercial property loan portfolio by BKIR is "being completed" while negotiations on the sale of its UK commercial and residential property portfolios are still taking place. It confirms that preferred bidders — believed to be Lone Star, Wells Fargo, JP Morgan — have been identified for Anglo's $9.2bn US commercial loan portfolio and that advisors have been appointed to sell IPM's UK mortgage portfolio, CHL. A geographic split of earmarked de-leveraging puts 60% in the UK (commercial and residential property and corporate loans), 18% in Ireland (commercial and residential property), 14% in the US (commercial property and loans), 7% in Europe (infrastructure and project finance) and 1% in the rest of the world. In relation to funding, a chart on deposit flows reveals some positive momentum since the mid-year stage; with corporate outflows of c.€0.5bn more than offset by retail inflows of c.€1.5bn. The update identifies the "next steps" as examining wholesale funding opportunities in Irish mortgage asset covered securities and notes that other forms of capital market instruments are also being explored by the banks in order to continue the process of normalised funding.
DAVY VIEW: The update charts the progress made in the recapitalisation and de-leveraging of the Irish banking system while acknowledging the key challenges: international market conditions (for de-leveraging); weak domestic demand; maintaining increases in retail deposits; and weakening global growth. Media reports this morning (October 11th) suggest that IPM has added sub-prime lender Springboard (€500m loans) to its disposal schedule, while a report in The Irish Independent suggests that the expert report on mortgage arrears will "merely recommend a small level of debt forgiveness in extremely limited circumstances", predictably shying away from any mass debt forgiveness scheme
EU unveils plan to boost health of banks
EU raises stakes in fight against debt crisis, setting out plans for banks, bailout fund..
European Comission President Jose Manuel Barroso answers questions to reporters during a press conference in The Hague, Netherlands, Tuesday, Oct. 11, 2011. (AP Photo/Peter Dejong)
On Wednesday October 12, 2011, 10:58 am
BRUSSELS (AP) -- Banks in Europe should temporarily raise their capital reserves to better withstand market turmoil over the continent's debt, the president of the European Commission said Wednesday as he presented a broad new crisis plan.
Jose-Manuel Barroso also said key European banks should not be allowed to pay out dividends or bonuses until they have raised their capital buffers to the new standards.
The fear gripping the financial sector now is that banks could take big losses on bonds they own from governments with shaky finances, like Greece. That uncertainty is stifling lending -- both between banks and to the wider economy -- which threatens to throw the 17-nation eurozone into a new recession.
Barroso did not give a specific figure for the new capital buffers, but the full proposals, published on his website after his speech, suggested his proposal could require an accelerated implementation of new international rules on bank capital, the so-called Basel III rules.
Those rules increased the amount of low-risk assets that banks had to hold to back up their lending and investments, in order to decrease the chances that banks could fail in turbulent times.
A spokesman for Barroso said it will be up to the national banking supervisors, together with the European Banking Authority, to define when the higher capital ratios have be attained, how long they have to remain elevated and set the precise ratio.
To assess banks' capital needs, their exposure to all sovereign debt should be taken into account "in a transparent way," Barroso said.
The Commission also asked for a "prudent valuation of all sovereign debt, whether in the banking book or the trading book" of banks. The international body that sets accounting standards recently complained that many banks were not taking adequate writedowns on bonds that they plan to hold until they mature.
Barroso said if banks can't raise the capital on the market, they should get help from governments, who in turn can ask for money from the eurozone bailout fund.
He also called for a permanent bailout fund, the European Stability Mechanism, to come into force in mid-2012, one year ahead of schedule. The stability mechanism, in contrast to the current bailout fund, requires private investors to take losses on government bonds if a nation needs to write off some of its debt load.
He also lobbied for bigger powers for the EU's monetary affairs commissioner, which would give him more influence over national budgets.
IRLBF now trading at a premium to BKIR. And IRE is falling back towards parity with BKIR.
Still scratching my head at how both of these have traded since I've been following.
Moody's downgrades Bank of Ireland UK
Related News
* UPDATE 3-Dexia agrees to Franco-Belgian rescue deal
Mon, Oct 10 2011
* Germany, France split on bank aid before summit
Fri, Oct 7 2011
* Banks downgraded as EU squabbles over next bailout
Fri, Oct 7 2011
* UPDATE 3-Moody's cuts UK banks as capital worries simmer
Fri, Oct 7 2011
* Moody's cuts credit ratings on UK banks RBS and Lloyds
Fri, Oct 7 2011
Analysis & Opinion
* Too many questions, no convincing answers
* Explaining the ECB’s latest program
Related Topics
* Financials »
DUBLIN | Tue Oct 11, 2011 7:27am EDT
DUBLIN Oct 11 (Reuters) - Credit agency Moody's on Tuesday cut the deposit rating on Bank of Ireland's UK operations on falling expectations that the British government would provide support if it encountered trouble.
Bank of Ireland has a British mortgage book of 30 billion euros ($41 billion), compared with 28 billion euros in Ireland. Its large exposure to the UK, where property valuations have not fallen as steeply as in Ireland, has been seen as an advantage over domestic rivals.
Moody's cut to Ba1/Not-Prime with a negative outlook from Baa3/Prime-3 follows the agency's decision on Friday to cut its ratings on British banks and its assertion that the government might allow smaller institutions to fail.
"Moody's has lowered to 0 from 2 the notches of systemic support it incorporates into BoI UK's long-term deposit rating," Moody's said in a statement.
Moody's added one notch of support from the Bank of Ireland UK's Irish parent due to its increased importance to the group as a source of retail funding.
"We believe that there is an increased likelihood that the Irish government would provide support to BoI (UK) through BoI," Moody's said.
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