Yes thank you for all the info. I took my profit b4 nama. Despite the trading money to be made, too much speculation, many unknowns, poor fundamentals etc. And reading all the info, glad i did. Cheers,
I agree that there are lots of unknowns, however because of the huge difference between market cap (currently about 1.1 billion EUR) and capital required (maybe 4 billion EUR, we'll find out in less than 6 hours), I think the stock *can* still go a lot lower. Time will tell.
nama- http://www.rte.ie/business/2010/0330/nama2.html What is NAMA? Tuesday, 30 March 2010 13:35 The National Asset Management Agency, first signalled by the Finance Minister in April last year, is aimed at cleaning up the banking system by taking property-linked loans off their balance sheets. NAMA covers five banks: AIB, Bank of Ireland, Anglo Irish Bank, EBS and Irish Nationwide. Figures given in the NAMA business plan estimated the paper value of the loans to be taken from banks at â¬77 billion, for which NAMA will pay around â¬54 billion. But the exact figures will not be known until the process of taking over the loans is completed some time this year. Advertisement Each loan will be valued separately, taking into account the quality of the collateral and the likelihood of getting a return. Over time, NAMA hopes to manage and then sell off the property to get its money back. The NAMA legislation gives the agency extensive powers, and limits the opportunities to legally challenge its work. The Government is keen to stress that the developers who borrowed the money in the first place will still be liable for the full cost of the original loan, and will be pursued by NAMA if they default. NAMA will pay the banks in Government bonds, but the debts linked to this will be recorded outside the State's national accounts. To receive EU approval for this, NAMA will set up a 'Master SPV (special purpose vehicle)', which will be 51% owned by private investors and 49% by NAMA. This will be responsible for buying, managing and selling off the loans identified by NAMA. It will have capital of â¬100m and private investors will be represented on its board. Read the key NAMA numbers here
Just to recap: NAMA announcement at 4.30pm (11.30am New York) Brian Lenihan speech at 5.30pm (12.30pm New York)
NAMA details http://www.rte.ie/business/2010/0330/banks.html "NAMA said it would apply an average discount of 47% on the first loans, well ahead of an average figure of 30% estimated by the Government last year. The first batch of loans, originally worth â¬16 billion, will be bought for â¬8.5 billion"
Brian Lenihan: AIB required to raise 7 billion EUR. Must submit recapitalisation plan before end of April. No specifics given on just how much of the company the govt will own, because it is contigent on AIB's ability to raise capital from non-govt sources *** My comment (yet again): With a market cap of less than 1.5 billion EUR, just how can the company raise 7 billion without massive dilution?
More detail on capital requirements here: http://www.centralbank.ie/frame_main.asp?pg=nws_article.asp?id=505&nv=nws_nav.asp and PDF link from that page: http://www.centralbank.ie/data/NewsFiles/FINAL PCAR info - single doc.pdf and from that PDF file: The capital requirements resulting from the PCAR exercise are: Allied Irish Banks plc (âAIBâ): (1) An additional â¬7.396 bn of equity capital to meet the base case target of 7% equity, before taking account of projected asset disposals, and (2) â¬4.865 bn of Core Tier 1 capital, less any equity generated under paragraph 1 excluding conversion of preference shares held by the Government, to meet the base case target of 8% Core Tier 1. This additional Core Tier 1 capital will also satisfy AIBâs stress case target of 4% Core Tier 1.
Hopefully more and more AIB "investors" will wake up and realise that significant dilution is coming. Or maybe some journalists will do the sums and compare the capital required to the market cap of the company. Amazing intraday range today, incredible short squeeze from 3.50 to 3.87, then back below 3.55 as I type now. I'm interested to hear the opinions of people who disagree with my "massive dilution is coming" thesis. Because I find it hard to believe that this stock can go much higher from here given the required capital raising.