Current developments Allied Irish Banks

1 current developments

1.1 2008 share price collapse
1.2 rescue package 2009
1.3 2010: nationalisation
1.4 2011 aib filed lawsuit
1.5 restructuring credit event

current developments

the bank involved in number of sale , leaseback deals properties. in 2005 sold extension ballsbridge bankcentre headquarters €367m. there plans sell remainder of building €275m, bank s branch network €421m.

in february 2006 bank announced record pre-tax profits of €1.7 billion, 23% rise on previous year , largest ever irish bank. majority of increase came republic of ireland operations, capital markets, northern ireland, great britain, poland , american divisions making significant contributions. led criticism newspapers, profit per customer 3 times of other european banks. former labour party leader pat rabbitte called more competition in irish banking sector. in august 2006 bank again announced record profits first half of 2006, making €1.2 billion before tax, equating €1.2 million per hour.

2008 share price collapse

the international credit crunch presented first challenge aib — namely dramatic fall-off in liquidity. aib depends significant extent on international financial markets liquidity due insufficient deposit base, has impacted bank severely. irish government stepped in guarantee granted triple rating on aib debt, freeing access finance.

the second , more serious problem, unacknowledged bank management, financial regulator , irish government, solvency. question concerning solvency has arisen due domestic problems in crashing irish property market. aib, irish financial institutions, has substantial exposure property developers in loan portfolio. these property developers suffering gross over-supply of property, still unsold, while demand has evaporated. massive immigration eastern europe had propped demand has reversed due rapidly rising unemployment in ireland. irish property developers own speculated billions of euros of overvalued land parcels such urban brownfield , greenfield sites, , agricultural land @ average value of €23,600 per acre (us$32,000 per acre or €60,000 per hectare) several multiples above value of equivalent land in other european countries.

aib correctly identify systematic risk of triggering more severe financial crisis in ireland if call in loans fall due. loans subject terms , conditions, referred covenants . although aib not 1 of banks listed waiving these covenants, confidence in irish banking system low result of other irish banks electing waive these financial safeguards in fear of provoking (inevitable) bankruptcy of many property developers , banks thought lending developers further cash pay interest bills, means not classified bad debts banks.

furthermore, aib s balance sheet indicated limited impairment (bad debt) provisions. 2008 1st half financial report accounts impairment provision of 0.21%. not appear consistent real negative changes taking place in property market fundamentals. central bank told oireachtas enterprise committee shareholders lost money in banking collapse blame fate , got coming them not keeping bank chiefs in check, did admit central bank had failed give sufficient warning reckless lending property developers.

in contrast, on 7 october 2008, danske bank wrote off substantial sum largely due property-related losses incurred irish subsidiary - national irish bank. write downs domestically owned irish banks beginning take place.

aib s subsidiary goodbody stockbrokers continually issued buy recommendations parent, notwithstanding worsening financial position, , used client discretionary mandates invest monies in allied irish banks @ start of post-2008 irish banking crisis in november 2008, generated adverse comment. when asked if had ever issued sell notice on aib, goodbody spokesman said don t know if keep records going far .

rescue package 2009

on 12 february 2009 irish government arranged €7 billion rescue plan aib , bank of ireland. bank s capital value had fallen €486 million, rather less 70% holding in bank zachodni in poland.

goodbody stockbrokers sold part of restructuring plan €24 million. financial times commented lowly price tag placed on ireland’s oldest stockbroker , one-time bastion of ireland’s protestant business elite measure of dramatic decline of irish economy. aib have had indemnify new owners of goodbody stockbrokers against legal action arising firm s boom-time trading.

2010: nationalisation

on 30 september 2010, irish government announced plans use national pensions reserve inject €3.7 billion of capital allied irish banks, becoming majority shareholder , nationalizing bank.

aib needed raise additional capital due increasing losses on bad loans incurred real estate bubble, , irish finance minister brian lenihan stated bank unable attract sufficient interest private investors. part of deal, chairman dan o connor agreed quit bank while managing director, colm doherty, announced leave before end of year after 13 months in job.

in december 2010, european commission approved plans, , government passed emergency legislation allow deal take place without requiring approval of existing shareholders. high court subsequently approved deal on 24 dec 2010, allowing irish government take 49.9% stake in bank, rising 92.8% following disposal of polish subsidiary banco santander.

aib became fourth of ireland s big 6 financial institutions nationalized, following anglo irish bank, irish nationwide building society, , ebs building society. aib delisted main market of irish stock exchange on 25 january 2011 , nyse on 26 august 2011.

2011 aib filed lawsuit

aib filed lawsuit against oracle financial services, india in january 2011, claiming breach of contract on flexcube implementation.

restructuring credit event

the isda determinations committee, consisting of 15 usa , european banks, decided restructuring credit event occurred respect allied irish banks on 9 june 2011.

on 12 june 2017, irish government announced ipo of allied irish banks take place later in month might result in bank value of $14.9 billion. ipo took place on 23 june 2017.