Anglo is no northern rock...completely different like chalk and cheese.
Northern Rock was nationalised after the british goverment had pumped
25 Billion pounds into her to keep her a float. The Bank was effectively
insolvent.
With regard Anglo, the minister for finance , the financial regulater ,and
the central bank have stated for record that the bank is solvent when
nationalised, and the tax payer has not given anglo a single cent.
The Bank has 4.1 Billion in shareholder equity, 2 Billion in core capital, and
1 billion set aside for future loan impairments. Also on its 70 Billion loan
Book it earns 2 billion core profit.
Dec 2008 reported 1.3 Billion profit and set aside 500million for future losses. All loans are cross collateralised for further security.
People dont realise that anglo only reported loan losses of 270million for
2008....30/40 basis points.
It has factored in 80-120 basis points for next three years 2-3 billion in loan impairments, and expects still to be profitable.
PWC has been all over its loan book on goverment instructions prior to
state nationalistion, and confer the above.
Its commercial /development book is only 17 billion, with half of its 5000
residential portfolio already sold.
Factoring all the facts above The bank is easily worth 10 Billion, but
Due to funding /credit rating issues ,market sentiment, and recent
director loan scandal bank was nationalised and expect the state to pay only 2-3 Billion.
(Remember state was putting in 1.5 billion for 75% stake)
The minister for finance lenihan and anglo chairman have stated they
will seek fair and reasonable compensation.This Process could take 6 to 12
months, but interest on payments will be made.
Income from anglo will help pay off the states hefty debt over the coming
years, hence a good buy.