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
AI
Market Data 
Markets 
