BREAKING LEAK: EU STRESS TEST SHOWS IRISH BANKS NEED €32.5BILLION.

Portugal ‘down to last €5Billion in cash’

_______________________________

Van Rompuy insists ‘fundamentals are sound’

“Is there anyone up there….?”

 

Update: 16.42, RTE reports along with the Irish Times that the amount of capital required is ‘in fact’ €24 billion. It is a miracle, a sign of Divine intervention, either by St Trichet de Bankfurt or perhaps St Rompuy de Pumpy.

But mainly, it’s a lie. The real number is around €30-35 billion. I was told this by people in a position to (a) know and (b) add up with a reasonable degree of skill.

Lest we forget, there are markets to be encouraged here. It’s an old trick, and it won’t work.

 

The Slog has learned that the EU stress test will show Irish banks need a further €32.5 billion of capital injection to cover losses, and enable them to continue trading. Anglo Irish Bank in particular has reported a loss of €17.7 billion for 2010, the bank having recorded almost €8 billion in impairment charges, and lost some €11.5 billion on loans transferred to the National Asset Management Agency.

It is also reported that the Portuguese Government has slightly over €5 billion left in cash altogether, and needs to pay more than this in May alone to avoid default. A bailout there can thus now be considered a certainty. Portuguese two-year notes pushed yields to the highest since before the introduction of the euro – up four basis points to 8.07%, the most since 1996, as of 8:37 a.m. in London.

On his BBC blog earlier today, Robert Peston suggested that total loans by taxpayers (or institutions backed by them) around the eurozone to Irish banks now stand at €208bn. 6% of ALL Irish homeowners are more than three months behind on their mortgages. Dublin sources told The Slog that, in the light of these numbers, Irish Prime Minister Enda Kenny will have a stronger hand to play in renegotiating the bailout deal for his country. The same sources insist that Kenny will use the nuclear option – instructing the key banks to default – unless the ECB and Brussels move substantially away from the position they’re currently taking on loan costs.

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With all the endless cobbled together funds from the politicos and bureaucrats – stabilisation this and stability mechanism that – we’re all left wondering why things are still so, well, unstable. In fact over the last fortnight, all the major ratings agencies have emphatically stated that the sovereign debts of Greece, Ireland, Portugal or Spain are as near to junk bonds as damnit. The markets too have lost confidence in the eurozone’s ability to avoid debt restructuring on a grand scale. This is reflected in Greek two-year bond yields rising to 15% from 8.75%, and Irish bonds to 10.00% from 2.44% in the same 10 months….even though these have EU and IMF guarantees.

We EU citizens now have a European Financial Stabilization Mechanism, a European Financial Stability Facility, a forthcoming European Stability Mechanism….before the near  €80 billion of ECB money spent “stabilising” government bond markets is even counted in. Danny Kaye would’ve had a field day with it: “The stability facility is a recognition of the mechanism in the substantial financial in the fund of the Bund and the pond of the bond”. It’s all bollocks.

But to listen to the top brass, you’d think getting out of this hole was a cinch. EU Council President Herman Van Rompuy (remember him?) praised the “sound fundamentals” of the eurozone economies in Norway this morning, stressing the growth rate average in the eurozone of 2%. He summed the situation up as “high growth in the Euro-core, crisis in the periphery” – which is, I suppose, one way of describing a rotten apple.

Meanwhile, the FT has David Cameron writing to fellow EU leaders urging them to “unleash the forces of enterprise”.

Give me strength.

 

13 thoughts on “BREAKING LEAK: EU STRESS TEST SHOWS IRISH BANKS NEED €32.5BILLION.

  1. “This is reflected in Greek two-year bond yields rising to 15% from 8.75%, and Irish bonds to 10.00% from 2.44% in the same 10 months….”

    I do wonder: who is buying these bonds? What are they buying them with? If, as I suspect, they are being purchased with OPM are these Other People aware of what is being done on their behalf? And what is the UK’s total exposure whether through HMG finance (sic) or High St. banks using some of their imaginary money which we are supposed to guarantee?

    There will be tears before bedtime, methinks…

  2. “It is also reported that the Portuguese Government has slightly over €5 billion left in cash altogether, and needs to pay more than this in May alone to avoid default.”

    Bugger
    Oh well, it was nice knowing you all….

  3. …the FT has David Cameron writing to fellow EU leaders urging them to “unleash the forces of enterprise.

    I have never heard such toss in all my life. Almost there was his comment about the “enemies of enterprise” or whatever bollocks he was on about last week. Does this mean Cameron is going to take on the bunch of c**** that rule the City and all the non productive speculators and fraudsters?

    • Those City chaps? They are all Dave’s chums. Therefore, everything’s fine. As for the vapid tosh about unleashing the forces of enterprise, let’s not forget Dave’s experience in the business world was as a PR oppo for Carlton TV (yep, me neither). He got the overpaying job thanks to the good offices of his then girlfriend’s mummy, if this rather entertaining piece is to be trusted: http://www.guardian.co.uk/politics/2010/feb/20/david-cameron-the-pr-years.
      Cameron is a man out of his depth in the shallowest of shallow ends.

      • I can confirm the story is true, as I know the person given the unenviable task of being told what to do, ie – hire him. I think you’ll find, however, that Anne is a friend of his wife’s mum, not the mum herself. I understand the Green of Carlton was especially pissed off.

      • Having worked for a Carlton owned company before they even applied for an ITV franchise I can confirm that they were a really mad and weird lot. No wonder they did well for a while.

  4. The Irish Central bank’s press confernece on the results of the stress tests are being shown live on the Irish Times website at 4:30pm today (31/3/11) (www.irishtimes.com).

    It could be interesting.

  5. Irish banks?Peanuts,what about £240 billion of underwater UK property loans.QE may have given the privileged few the chance to rebuild their balance sheets at the taxpayers’expense,but house prices have another 20 percent to fall,and the pressure on sterling will necessitate base at 3 percent.Collapsing retail sales,VAT receipts through the floor,ditto income tax, a still unreformed welfare state, there will be an emergency budget in the UK before the year is out.

  6. “and the pressure on sterling will necessitate base at 3 percent”

    Arghh!!!!!
    Why does everyone still believe the government gives a flying fig leaf about sterling!

    Thatcher might have beaten the miners to death with her huge brass balls, Cameron would roll over in a heartbeat.

  7. While not arguing if the level of required additional capital is sufficient or not, I think that more generally Irish Bank Stress Test puts into question among others the Basel III counter cyclical capital buffer, “best practice” loan loss estimation methodologies and the sustainability of Loan to Deposit ratios of several other European banks. More about these concerns can be found from here: http://blog.logicoffinance.com/2011/04/implications-of-irish-bank-stress-test.html

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