IRISH GOVERNMENT TAKES OVER THE BANKS..
Monday, December 22, 2008 at 09:17AM I see that unsurprisingly shares in the three largest Irish banks - Allied Irish Banks, Bank of Ireland and Anglo Irish Bank – have risen in early trading following the Government’s decision to inject up to €7.5 billion to recapitalise them.
At 8.51am shares in Bank of Ireland rose by over 37per cent to 93 cent, AIB by 20 per cent to €1.98while Anglo Irish Bank stock added8 per cent to36 cent. The Government is effectively taking over Anglo Irish with an investment of €1.5 billion for a 75 per cent control of the bank and is investing €2 billion each in AIB and Bank of Ireland (BoI). Speaking on RTE radio this morning the Minister for Finance Brian Lenihan said he hoped the move would restore confidence in the Irish banking system. He said other countries had made mistakes with regard to their own recapitalisation plans and said he had decided to deal with the three largest banks first. In return for its investments in AIB and BoI, the Government will have a 25 per cent say in "key issues" at the banks, including the power to appoint two more directors to their boards in addition to the two board members appointed under the bank guarantee scheme.
So, in essence, the government will now directly control a substantial chunk of Irish banking in exchange for this massive injection of capital. But, here is my question, to what benefit? How will this make these banks better? After all, poor lending practises combined with an over-heated property market combined with the economic downturn have lead to this crisis and I am unsure how this is going to be changed by what the Government is proposing? It is also my experience that the appointment of government nominees to commercial institutions has rarely had any benefit, save to those who land such lucrative posts! What say you? Is this a good deal?
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Reader Comments (12)
Oh great. Looks like some other idiots have jumped on the 'Let us follow Gordon's plan even though it will bury this country in debt for decades and not help our recovery' bandwagon.
*roll eyes*
"The world is in a state of chasis"
Sean O'Casey
Irish cultural policy = React to a problem. Never Proact!
Government's cultural traits mirror those of the citizens.
AND
At the end of the day the "Cute Hoors" use the knowledge of this peculuar trait to fill their pockets.
Anglo Irish shares have dropped despite fresh input of capital. This bank should be wound up something similar to Northern Rock.
But I disagree wtih not helping BOI and AIB. They should be protected. The logic otherwise would be to let all banks fail, including the UK and US banks etc. That would have left us in a pretty pickle.
In reality the Government are not going to let any of the Big Four Collapse. Most Economic System are based on one thing and one thing only and that is confidence. It wouldn't instill a lot of confidence if any of the Big Four in the Republic were to collapse.
SMcGiff,,
Yes, I agree with what you say. Allied Irish is a basket case beyond saving. Would no other institution buy it?
David, SMcGiff said that Anglo Irish was not worth saving, not Allied Irish. After the loans scandal who would want to by Anglo Irish.
Are people pulling their money out of the banks in case they collapse?
Seamus,
Sorry, my typo. Kloot has it right - we live in times o' chasis.
David,
As always it's the ANGLO Irish that's causing the problem! :-)
LOL - those Brits again!
Dont know enough about it. Most people are welcoming it. If its neccessary then it has to be done. The survival of our banks are paramount. I think fianna fail will be hammered in the next election. They never made the banks accountable , the bank watchdog still has his job ( pretty amazingly ) , and they never took measures to control property expansion. Ireland was never America , we did not have the population to sustain such growth. They are their too long