AIB & BOI - Summary of bail out terms

D8Lady

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Summary of terms, from RTE

Government to appoint 1 in 4 directors.
Banks to receive 3.5 billion each.
Banks will pay interest rate of 8%.

There will be 30% increase in mortgages to First Time Buyers.
10% increase in loans to SMEs.
Hold off home repossessions for 12 months.

33% reduction in senior executive pay.
Salaries to be frozen.
No performance bonuses this year.
Non-exec directors fees cut by 25%

Reactions?
 
Summary of terms, from RTE

Government to appoint 1 in 4 directors.
Banks to receive 3.5 billion each.
Banks will pay interest rate of 8%.

There will be 30% increase in mortgages to First Time Buyers.
10% increase in loans to SMEs.
Hold off home repossessions for 12 months.

33% reduction in senior executive pay.
Salaries to be frozen.
No performance bonuses this year.
Non-exec directors fees cut by 25%

Reactions?

Government to appoint 1 in 4 directors. What good will this do?
Banks to receive 3.5 billion each. When and how?
Banks will pay interest rate of 8%. When and How is this paid?

There will be 30% increase in mortgages to First Time Buyers. Are there any? If Not how can this be enforced?
10% increase in loans to SMEs.
Hold off home repossessions for 12 months.

33% reduction in senior executive pay. Good Start
Salaries to be frozen. All or just senior?
No performance bonuses this year. Or until we the public have been paid back in full. They should be traeted as public servants now no bonuses.
Non-exec directors fees cut by 25% Good Start

These are genuine questions if anyone has anserws or links to answers
 
appointing directors should mean government has voting rights 25% at meetings and should at the least get a better understanding of what's going on at the banks

assume money will be paid over once shareholders of banks agree

8% interest to be paid annually

agree not sure anyone wants the cash available and no way I can think of how it would be enforced - this could backfire if money is lent to people on terms it should n't be... could see 100% mortgages here or money being lent were it should n't

other big point of the plan is that government gets warrants on 25% of the shares at current price or something close so the taxpayer gets a return if the share price recovers from here

first step - can't think why it took so long
 
There will be 30% increase in mortgages to First Time Buyers.
Where's the provios that borrowers can only borrow 80% of the mortgage with repayments capped at a % of their salary? Did we not learn anything from this housing bubble?
 
Government to appoint 1 in 4 directors. What good will this do? One of the main issues with the banks at the minute is transparency or rather the lack of it. Having a govt appointed director should at least make it more apparent to the Govt as to what is going on in each bank. It needs however to be accompanied by a serious overhall of the regualtory bodies as well (in my view)
Banks to receive 3.5 billion each. When and how? My understanding is that it will come from the pension reserve fund
Banks will pay interest rate of 8%. When and How is this paid? Govt is in effect taking preference shares in the bank and the sum will be paid as a dividend, in effect, the exchequer should get €560m pa from both banks until they buy back the preference shares

There will be 30% increase in mortgages to First Time Buyers. Are there any? If Not how can this be enforced? I believe they are looking to increase the overall sum available to FTBs and not just the amount an individual can borrow
10% increase in loans to SMEs.
Hold off home repossessions for 12 months.

33% reduction in senior executive pay. Good Start
Salaries to be frozen. All or just senior?
No performance bonuses this year. Or until we the public have been paid back in full. They should be traeted as public servants now no bonuses.
Non-exec directors fees cut by 25% Good Start

These are genuine questions if anyone has anserws or links to answers
 
There's nothing technically difficult to negotiate in the above. How could it take so long??
I would have liked to see more lending to businesses (10%), especially innovative start-ups and indigenous SMEs, and no increase in lending to FTB's (30%).
Its enterprise that needs our money and not houses. Mortgage lending is fine as it is, thanks very much.

“A dwelling-house, as such, contributes nothing to the revenue of its inhabitant” Adams, Wealth of Nations
 
Is it a coincidence that BOI have issued a statement this morning that they will have to write of €6 billion (twice as much as previously stated), the morning after the bailout was approved?
 
There's nothing technically difficult to negotiate in the above. How could it take so long??
I would have liked to see more lending to businesses (10%), especially innovative start-ups and indigenous SMEs, and no increase in lending to FTB's (30%).
Its enterprise that needs our money and not houses. Mortgage lending is fine as it is, thanks very much.

“A dwelling-house, as such, contributes nothing to the revenue of its inhabitant” Adams, Wealth of Nations

Why negotiate in the first place?, why not do what they did in the UK?, call the banks in, tell them they are doing it, end of story.
 
Is it a coincidence that BOI have issued a statement this morning that they will have to write of €6 billion (twice as much as previously stated), the morning after the bailout was approved?

Isn't this what the concept of the "bad bank" was supposed to be about? Sweep all toxic debts into one place and then recapitalise the good bank.
 
Why negotiate in the first place?, why not do what they did in the UK?, call the banks in, tell them they are doing it, end of story.

Yeh I would love to hear the reasons why this wasnt done.

Were I a cynic I would say that the government dont have the stones to do it, but to be honest I imagine its a little bit more complicated then that.

I know it would of been nice to see the banks get some rough love from our Taoiseach . . .
 
Where's the provios that borrowers can only borrow 80% of the mortgage with repayments capped at a % of their salary? Did we not learn anything from this housing bubble?

Evidently not. Perhaps this is in there to get the housing market moving again?
I know several set of couples who are at the having baby / settling down stage who have good jobs (still) and a fair bit saved for a deposit.
None of them are going to buy a house for at least 18 months, waiting for the bottom of the market.
 
With the mortgage rate around 5% and the banks paying 8% interest to the government for the bailout money - how will they not become bankrupt very quickly?
 
looks like these banks are the only ones who arnt at risk from losing their jobs.
A pay freeze is hardly penal.
 
With the mortgage rate around 5% and the banks paying 8% interest to the government for the bailout money - how will they not become bankrupt very quickly?

Indeed. Except business overdrafts will be set more than the 8% which means business will not get the benefit of lower interest rates.

It doesent make sense. If the banks could not beat a rate of 8% from their creditor banks then how can they ever get back on track ???
 
I was dissappointed with this.

The Government should have come up with a package of measures/conditions to go with the bailout money. This package should have included things like the sacking of the majority of the senior management, proper financial reporting and controls and cost cutting measures such as cut in salaries of all bank employees etc.

This should have been presented to the bank shareholders at an EGM called for the purpose with the message that if the package is not accepted in full, the Government will let the bank go under and the shareholders will lose everything. Government should also have decided that it was only going to help 4 out of the 6 banks, so only the first 4 shareholders who come back with a positive decision would get the money - this eliminates procrastination and shareholders trying to open up negotiations.

My guess is that the shareholders would have no option but to accept and would have no problem wielding the axe to their managements in order to stay in business.
 
looks like these banks are the only ones who arnt at risk from losing their jobs.
A pay freeze is hardly penal.

Ulster Bank(which I accept is not covered under this) is axing 10% of it's staff. It's parent group, the RBS in the UK is laying off over 2000 in what if the rumours are correct, is the first of many

NIB(again not covered under this) have said they are reviewing their branch structure

Irish independent reported at the end of jan that BOI were looking to lay off 1200 staff
 
My guess is that the shareholders would have no option but to accept and would have no problem wielding the axe to their managements in order to stay in business.

My understanding is that AIB directors resign at each AGM and then are put forward for re-election. I might be cynical but perhaps the government didn't want to take shares as they don't have the balls to vote against the existing directors.

It is down to the ordinary shareholder now to voice their disapproval of the directors....and then lose the vote because the institutions will return them anyway.
 
It is down to the ordinary shareholder now to voice their disapproval of the directors....and then lose the vote because the institutions will return them anyway.
If the shareholders don't fire their whole board after what has happened to their investment then they deserve those incompetents.
 
Ulster Bank(which I accept is not covered under this) is axing 10% of it's staff. It's parent group, the RBS in the UK is laying off over 2000 in what if the rumours are correct, is the first of many

NIB(again not covered under this) have said they are reviewing their branch structure

Irish independent reported at the end of jan that BOI were looking to lay off 1200 staff

I choose the word ' these' carefully to mean only Anglo, BofI and AIB. So far no job losses.
 
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