“Our worst fears have been surpassed,” Finance Minister Brian Lenihan said in the parliament in Dublin yesterday. “Irish banking made appalling lending decisions that will cost the taxpayer dearly for years to come.”
The agency aims to cleanse banks of toxic loans, the legacy of plunging real-estate prices and the country’s deepest ever recession. In all, it will buy loans with a book value of 80 billion euros ($107 billion), about half the size of the economy.
“The information that has emerged from the banks in the course of the NAMA process is truly shocking,” Lenihan said.
Dublin-based Allied Irish needs to raise 7.4 billion euros to meet the capital targets, while cross-town rival Bank of Ireland will need 2.66 billion euros. Anglo Irish Bank Corp., nationalized last year, may need as much 18.3 billion euros. Customer-owned lenders Irish Nationwide and EBS will need 2.6 billion euros and 875 million euros, respectively.
NPL Concerns and New Bank IPOs Drive 600 Billion Yuan Financing Rush
The piling up of bad loans is driving the state-owned banks' refinancing rush. So far the major state-owned banks' capital adequacy ratio is not bad: for ICBC it's 12.36%, China Construction Bank (CCB) 11.7%, and BoC 11.4%. Analysts say the banks are able to replenish capital with internal resources due to recent handsome profits.
...To avoid excessive draining of the A-share market, the bank refinancing push is scheduled to finish 3 to 6 months before ABC launches its gigantic IPO at the end of the year.
The possible busting of the A-share market by the 600 billion yuan in refinancing plans is a cause of great concern for investors. At present the Shanghai Stock Composite Index is lingering in the neighborhood of 3000. Many small banks lining up for IPOs have become pessimistic over selling shares in 2010.