State to sell final stake in Bank of Ireland

[joe sod]

Great that the state is finally exiting its stake in some of the banks, bank of Ireland was the best of the banks financially and the state looks like it will profit from its stake. Bank of Ireland was the best of the banks which explains why private investors like Wilbur Ross were prepared to finance the bank during the dark days of the financial crisis. He has since exited the bank maybe he will come back to buy the government's stake. It seems peculiar that the government are choosing to sell now when the financial environment seems to be finally moving in favour of banks and the financials now that the ultra long trend of lower and lower interest rates is finally ending.

 

[DublinHead54]

Great that the state is finally exiting its stake in some of the banks, bank of Ireland was the best of the banks financially and the state looks like it will profit from its stake. Bank of Ireland was the best of the banks which explains why private investors like Wilbur Ross were prepared to finance the bank during the dark days of the financial crisis. He has since exited the bank maybe he will come back to buy the government's stake. It seems peculiar that the government are choosing to sell now when the financial environment seems to be finally moving in favour of banks and the financials now that the ultra long trend of lower and lower interest rates is finally ending.

I don't think the outlook of profitability is great for BoI or Banks in general, more so for the Irish Banks that don't have large trading divisions. This move seems to be motivated by the fact the share price has rebounded from Covid and is above levels from 2018. It seems sensible now to sell regaining 6bln vs the 4bln invested is a very good return for 10 years in my opinion.

 

[joe sod]

@Dublinbay12 maybe the fact that their stake is in profit is a bit of an illusion because didn't they strip out a lot of loans at 70% discount to put into Nama, there is no way Nama made back all that back in fact they sold some of their best assets like battersea power station at rock bottom price. So the surpluses that Nama claimed they made and the profit on BOI in no way make up for that. Nama was a particularly bad organization in making back money

 

[NoRegretsCoyote]

So the surpluses that Nama claimed they made and the profit on BOI in no way make up for that.

BoI (including the Nama portfolio) will be profitable for the state.

BoI were always the most conservative and had the best underwriting standards. They really were brought under by the credit crunch and were tainted by the disaster that was the rest of the Irish banks.

 

[joe sod]

@NoRegretsCoyote so bank of Ireland were victims of the lack of regulation of financial services or "self regulation" , they were forced into competing with the cowboys like Anglo and Irish nationwide.

Is the mica scandal, (although little information still forthcoming) another example of lack of regulation in Ireland, a lot of cowboys operating in the quarry industry, illegal quarries opened and the state took so long to close them down despite the massive local environmental impacts and complaints. Are the financial crash in Ireland and the mica scandal one and the same thing . The lack of appetite by Irish authorities to take action in time. Surely mica is not a uniquely Irish phenomenon surely stuff like this has been found all over the world but usually there is a state authority to prevent sub standard products making it to market.

 

[NoRegretsCoyote]

bank of Ireland were victims of the lack of regulation of financial services or "self regulation"

I think BoI were not without fault but AFAIK their loan quality was the least worst of the lot.

They did okay given the poor standards the competition were applying and the lack of effort by the supervisor.

No one saw the freezing up of the interbank market and house prices falling 50%.

 

[MrEarl]

...No one saw the freezing up of the interbank market and house prices falling 50%.

Correct - so much for stress testing!

Now, we've a Central Bank so focused on ensuring that we don't run into that scenario again, that they are being overly cautious - with the result being to kill off competition!

It's a shame that the Central Bank wouldn't put a bit more focus on some of the other potential risks, and their impacts on our Banks, or more importantly, the consumers.

Getting back to the sale of the Government's holding in BoI - it is a good thing, and probably long overdue.

If I were a betting man, I'd bet that some, if not all, of the sale proceds from the BoI shares, will go into PTSB, to help it fund its intended deal for part of Ulster Bank.