This morning this from Reuters saying that “unidentified” investors have bought a €1.1 billion stake in BoI.
WhistleblowerIRL’s rumour is now confirmed.
Again from Reuters
Ireland says in talks over Bank of Ireland equity investment
DUBLIN, July 23 | Sat Jul 23, 2011 10:02am EDT
(Reuters) – The Irish government on Saturday said it was in talks with potential equity investors in Bank of Ireland (BKIR.I) as it struggles to keep its last major bank out of state control.They hid this one for as long as they could but once word got out they had no choice but to confirm, hence making a statement on a Saturday. They couldn’t let this be a rumour come Monday.
The article goes on to break the inevitable ‘shaft the tax payer’ news that,
If the lender cannot find an investor or persuade its largely retail shareholder base to participate in a 1.91 billion euro ($2.8 billion) rights issue then the state, which is underwriting the offer, could end up with a 70 percent stake.
Translation – the banks was indeed in New York on Friday trying to flog it and it’s not looking good. If it was the government wouldn’t have released this news at all. The big American Investors aren’t buying because they don’t think the bank is viable or solvent and worry that the Irish government and its EU pimp may not bail it sufficiently to make it profitable to buy in. That leaves asking Irish investors to be patriotic and give more of their money to the people who own the banks bonds. Fat chance.
So it’s a goner and guess who will pay? The tax payer of course.
Dublin has closed two of its six domestic lenders, merged another two state-controlled institutions and will soon take over a fifth as it seeks to draw a line under a banking crisis that forced the former Celtic Tiger economy into an EU-IMF bailout.
Seeks to draw a line? Let me rephrase that, “…as it seeks to draw the noose a little tighter round the necks of its own people for the profit of the few.”
See WhistleblowerIRL’s comment under the previous blog for the full article and his take on it.
Thanks for sharing this. Not unexpected from this corner, but will certainly be sobering, especially coupled with news of the Greek sovereign default.
Math is math is math is math, and stands above and apart from the political quarrels of the moment. Banks that behave like players at a casino, and governments that think they can borrow and spend into perpetuity without consequence go belly-up.
Hello OldSout,
Thank you for commenting. As you say, at bottom, beneath the lies and posturing, is the mathematics which will out in the end.
This is a slightly separate issue to the buy back of bonds at 10% of face value you mentioned in the previous post. In that case, bond holders are indeed taking most of the loss on the chin.
It's a mystery to me why the bank is too bothered about not being able to raise new share capital from outside – if nobody is interested, then all it has to do is keep buying back bonds at a discount or converting them into shares.
The whole thing only makes sense if you assume that politicians are indeed terminally stupid or corrupt.
'mathematics will out in the end'
Well, after near 4 years after the failure of economic & monetary systems, not to mention the ideology that propped up that system, I see no effort to examine these issues among mainstream economists.
A small number of economists, notably Michael Hudson associated with the MMT economists at University of Missouri Kansas City & Prof Steve Keen, University of New South Wales & others saw the failure coming. This wasn't lucky guessing, they have a robust (math based) accounting methodology which enabled them to estimate with some reasonable precision the size & timing of the crash.
The theorhetical basis of mainstream economic thinking ignored this methodology, in particular its accounting of the unsustainable flows into debt & the unproductive financial sector. Moreover it continues to do so.
One of the most important aspects of this practice is the utterly wrong conflation of household (or business) economics with that of a government (or grouping of governments, as in the eurozone) that is a currency issuer. That such governments choose to spend currency created as debt to private banks, rather than free of debt is a political/ideological decision. You might care to reflect on this issue in the light of the core problem being the creation of a debt bubble that no one in 'authority' wanted to aknowledge. You may also want to consider that only so-called solution being considered is the transfer (& even enlargement) of that privately created debt bubble on to governments as 'debt' to be serviced & repaid by taxpayers.
That is not to say that governments (of sovereign currencies) can be allowed to spend money created free of debt obligation to private banks irresponsibly. But the continuation of the myth that no money can be spent this way is highly convenient for the wealthy elites & the banking sector who have profited so enormously from this & continue to do so.
That mainstream economics continues to be party to this myth & refuses to examine the basis of its role in an economic system that inherently creates bubbles & busts is intellectual bankruptcy of the highest order.
I'm calling this 'vatican syndrome'. (As in reference to systemic clerical abuse of children.) And the economics mainstream, in private & public sector is still in denial. That politics & media continues to allow this is beyond contempt in my opinion.
Great scoop fellas, another interesting week ahead I imagine. Seems to me that events are accelerating further, as is the farce that is our glorius leaders attempts to push their fingers into holes in a huge dyke while the cracks get wider & wider. I hope it drowns the lot of them, but it probably wont.
@Mikehall, checked out Steve Keen, in particular his article on Austalian house prices, I have a lot of relatives there who judging from their facebook comments etc are still living the dream.
Mark Wadsworth,
I agree there has to be a deeper logic being worked out here. I wonder if there is not something BAD at the heart of NAMA which has gone toxic explosive. Any thoughts?
Well done, Golem and Whistleblower!! Cocks of the dung heap!
Mike Hall.You are correct about truth but you assume the others behind this are as ignorant as they try to appear. This is planned. NWO. Europe will federalize as a last gasp once bond rates are colossal, then watch bonds drop!
NAMA is social welfare for rentiers and trying to keep assets up. Pointless exercise and doomed at massive cost to you and me!
Here is the Reuters update (the link worked this morning but is now returning an error message).
WhistleblowerIRL
———————————————-
UPDATE 1-Ireland sells 1.1 bln eur stake in Bank of Ireland
Mon Jul 25, 2011 2:55am EDT
* Sale will keep country's largest lender out of state control
* Bank says major vote of confidence in Irish economy
* Deal will reduce state's recapitalisation bill by 1.1 bln (Writes through, adds background)
DUBLIN, July 25 – Ireland sold a 1.1 billion euro stake in Bank of Ireland to a group of unidentified investors in a deal that will keep the country's largest bank out of state control, the government said on Monday.
The government had been widely expected to take control of Bank of Ireland, the last domestic lender outside of state ownership, after it agreed to underwrite a rights issues, whose results are due on Tuesday.
After the sale and rights issue, the government will own a maximum of 32 percent in the bank, the finance ministry said.
"The bank is very pleased to see this major endorsement … and the confidence which these investors share with the bank in the future for the Irish economy," Bank of Ireland said in a statement.
Under the deal the investors will initially purchase 241 million euros worth of the state's shareholding. They will then purchase the remainder of up to 882 million euros after regulatory approvals. In all they will purchase 4.2 billion ordinary shares.
The government said the sale would not involve any additional risk sharing for the government.
Depending on the results of the rights issue, Ireland will end up with between 15 and 32 percent of the bank. Existing shareholders will hold between 31 and 71 percent and the new investors will hold between 14 percent and 37 percent.
The sale will reduce the size of a state capital injection into the lender required under a IMF/EU bailout deal by 1.1 billion euros to a total of 2.4 billion euros.
The government will thus be able to recapitalise the bank without recourse to EU/IMF funds, the finance ministry said.
Dublin has closed two of its six domestic lenders, merged another two state-controlled institutions and will soon take over a fifth as it seeks to draw a line under a banking crisis that forced the former Celtic Tiger economy into an EU-IMF bailout. (Editing by David Holmes)
http://www.reuters.com/article/2011/07/25/bankofireland-brief-idUSL3E7IP16420110725
Is it just me, or is it generally noticed, the MSM in any format always report on the skim of spin in relation to banks, investor confidence and the necessities of IMFs ECBs EUs and credit rating agencies pontifications. Never on the effects these will have on the ordinary people who eventually, one way or many, will pay for it all.
Is it not time for the people to say enough! We are the force you must fear because we refuse to fall by the measure of your failures.
After all's said and done, it's not cruel to flog a dead horse, just certifiably stupid.