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Thread: Daily Market Watch

  1. #501
    trippingthespeculatingpos is offline
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    good news for aib and ire might get a decent pop tommorow

    http://business.timesonline.co.uk/to...cle5627412.ece

    February 1, 2009

    €7bn to be pumped into Irish banks

    AIB and Bank of Ireland will also be insured by the state against €24bn in bad loans
    Frank Fitzgibbon and Iain Dey

    THE Irish government is to invest €7 billion (6 billion) in Ireland’s two biggest banks and insure them against more than €24 billion in bad loans as part of a recapitalisation scheme to be put in place this week.

    Allied Irish Banks (AIB) and Bank of Ireland will each receive €3.5 billion in new state investment in the form of preference shares. In addition, a scheme will be put in place that will transfer the risk attaching to 80% of the value of property-related loans on the banks’ books to the taxpayers.

    The Irish bailout comes just two weeks after Gordon Brown unveiled Britain’s revised bank-support deal, which led to British taxpayers increasing their stake in Royal Bank of Scotland to 70% alongside hundreds of billions of pounds of additional support for the banking sector.

    The Irish banking bailout is expected to offer better terms to the banks than the UK scheme.

    The Irish preference shares will carry an interest rate of 8%, representing an annual payment to the state of €560m.

    The scheme has been radically overhauled since it was unveiled late last year.

    Under the original deal, the Irish government intended to invest €2 billion each into AIB and Bank of Ireland. It also promised to underwrite a €1 billion share issue by each of the banks.

    The collapse in share prices since then has made it impossible for the banks to raise money from investors. The state is not only picking up the shortfall but is also increasing its initial commitment to the two banks from €6 billion to €7 billion.

    By investing in the banks in the form of preference shares the shareholdings of existing investors will be preserved.

    The insurance scheme will cover outstanding loans on development land and on part-completed construction projects that are now considered to have an uncertain future.

    AIB and Bank of Ireland, which sells financial products through the Post Office, are believed to have more than €37 billion in speculative property loans on their books. International risk consultants have identified the portion of those loans that are considered “most distressed” and these will be written off by the banks themselves in the first instance.

    The risk on the balance of the speculative loans, approximately 80% of the total, will then be transferred to taxpayers, with the state in effect providing insurance on loans that subsequently have to be written off as bad. The banks will pay an upfront insurance premium to the government representing 2.5% of the value of the assets transferred.

    This will give the government an immediate cash injection of more than €750m.

    The scheme is to last until 2014, which will give the banks five years to “work out” their most problematic loans.

    In Britain, details of the loan-insurance scheme being extended to UK banks are still being hammered out. RBS is expected to place up to 100 billion of loans into the scheme, which is designed to protect the bank from further losses.

    RBS is also poised to receive a further 1.2 billion of taxpayers’ money when it unveils losses of up to 28 billion this month. The bank is in line for a rebate of all the corporation tax it paid last year. The rebate comes amid mounting concerns over the true cost of the bank bailout. The Institute for Fiscal Studies has warned that the credit crunch would cost the Exchequer 50 billion in lost tax revenues – about 3.5% of national income.

    The institute said the government would need to find an extra 20 billion a year in tax increases and spending cuts by the end of the next parliament to repair the holes in the public finances.

    Financial-sector profits accounted for 27% of the 50 billion in corporation tax the government received last year.

    Analysts estimate RBS will be able to avoid paying tax in its UK business until 2013.

  2. #502
    trippingthespeculatingpos is offline
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    i havnt followed aig enough honestly, which part did you not understand?

  3. #503
    billhart22 is offline
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    Ya, I read that today...my order is going in for AIB. Really good and encouraging news.
    Last edited by billhart22; 02-02-2009 at 12:43 AM.

  4. #504
    Sworntwofun is offline
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    ok Bill...I am gonna make a few trades pre market off the cuff....basically AIG 300x and Im gonna try a few lvlt 300x and ABK 300x....then go to the gym and be back around 10:30am my time.....Im also gonna set some limit sells on citi or bac aib 1 dollar over in case some unforscene pops. Talk to you then...
    Good night!!

  5. #505
    billhart22 is offline
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    Aig

    AIG is now downgraded, because the market is headed in a negative direction. This is one of those stocks that the price is going down on, but the business performance is too crumby to even consider the company viable at this time. I would say that it is not a good stock to buy until it can get its business model squared away and running.
    Last edited by billhart22; 02-02-2009 at 12:45 AM.

  6. #506
    Sworntwofun is offline
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    got it....I will hold off then.... I might as well wait untill I return and see whats really going on...then buying on a educated guess...

    see you then....ps i will still check pre market and report back....so check it out first thing...

  7. #507
    billhart22 is offline
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    Quote Originally Posted by Sworntwofun View Post
    got it....I will hold off then.... I might as well wait untill I return and see whats really going on...then buying on a educated guess...

    see you then....ps i will still check pre market and report back....so check it out first thing...
    Roger Dodger and 10/4 good buddy...will keep my ears on.

  8. #508
    billhart22 is offline
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    Aib

    AIB is now rated "Greatly Undervalued"

  9. #509
    trippingthespeculatingpos is offline
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    heh yeah i saw that, that might be one of the few sites ill pay for, maybe :O

  10. #510
    billhart22 is offline
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    Lvlt

    LVLT is rated "Undervalued"

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