[quote=âbraz83â]Thereâs nothing hidden. Everybody recognises that the banks need more capital. There will be an injection of capital, almost certainly from the State, in the near future.
I agree with your general point that banks free of Government interference are in the long-term interest of the country. I think most people other than the hard Left agree with that. Government interference has nothing to do with NAMA though, itâs to do with the amount of shareholding the State holds and the bank guarantee (PTSB are covered by the guarantee). In the case of the two major banks (or at least AIB) the State shareholding will be over 50% after recapitalisation. There will presumably be a âthird forceâ, mainly PTSB merged with the remainder of EBS and Irish Nationwide, that will also have significant State shareholding. Thatâs a temporary necessity, and I would argue that at least AIB should probably be temporarily nationalised (or in an ideal world, turned over the bondholders). I donât believe there is any residual value in AIB shares. I think the Government is currently of a mindset that it will try to divest itself of those shareholdings as soon as it can, but that will probably take a few years. However, once politicians have that kind of control, thereâs a danger they wonât want to give it up.
In the meantime, the Govt is in a quandry, because whatâs good for the Stateâs stake in the banks (not lending more money to floundering SMEs, much of which would never be repaid) is not good for the economy. There are no easy choices here.[/QUOTE]
If there is nothing hidden why are even media outlets that I would respect - Cooper etc recommending that an inquiry would be devastating for future confidence in the banks?( Not a view I share I must say - Since the taxpayer has put 4bn into Anglo and also saved Irish Nationwide, AIB, BOI etc then we have an obligation to know where that money goes)
I think you have misinterpreted my point. The main aim of private enterprises (inc banks) should be to make money for their shareholders within the constraints of regulation. The main aim of government should be to look after the best interests of the State. While there is certainly overlap where the spin offs from private enterprise benefit the State (taxes, jobs etc) there is also a distinction between the two aims. The recent collapse of our banks with the knock on detriment to our society at large only emphasises that there needs to always be a clear difference between what is best for private enterprise and good government. Sometimes having a patsy as financial regulator can be disastrous not just for banks but also our society as a whole.
AIB is a disgraceful institution - Rusnack, DIRT, Sheedyâs antics last year etc. I would argue it should be merged with BOI and both significantly downgraded. Hopefully Banco Santander will come in to the Irish market. Bought Abbey, Bradford and Bingley - cant remember the third in the UK? (Company I worked with won the contract to streamline their IT system)
Yes you are correct, if the State has over 50% control in any business its bound to have a significant say over future policy etc. While some would say the State could not possibly run it any worse than what has transpired, it should take the form of proper regulation of the entire banking system with the aim of creating a competitive but fair playing field. Always the danger like Aer Lingus of political appointments, unnecessary red tape that will add to the banks operating costs and further decrease their ability to lend, strengthen balance sheet and compete when the next upturn occurs.
True there is no easy choices but strategic decisions for this countryâs future need to be taken. If this means another two years of pain so be it. Seeing Lenihanâs handiwork and lack of foresight fills me with dread quite honestly.