AIB heading inevitably into the arms of the state

NAMA will buy AIB €24 billion to leave AIB with €7.3 billion bad debt.

AIB have only provided €2.3 billion to cover this as of June 2009.

AIB equity base in June 2009 was €8 billion leaving €3 billion left after NAMA and a Tier 1 ratio <3%, except that the National Pension Reserve Fund’s €3.5 billion of preference shares which leave the tier 1 ratio at 6.1%.

Post NAMA, AIB has a €103 billion loan book

AIB also has €3.7 billion of developer loans under the NAMA cut-off of €5 million.
Most of this will also have to be written down to at least 50% and maybe 70% which is between €1.85 and €2.5 billion.

AIB also has €29 billion to property investor sector which at 25% bad debt would write off €7.3 billion.

AIB has €33 billion lent on domestic mortgages – maybe 10% bad debt = €3.3 billion.

AIB also has €37 billion for the rest – at 10% write off = 3.7 billion.

These bad debts will range in total about €16.15 to €16.8 billion.

AIB has only set aside €2.2 billion for this leaving a hole of around €14 billion.

Up to June 2009, AIB impaired loans of €11 billion but had underprovided by
€6.5 billion.

Their criticised loans to June were up to €33 billion which accounts for 25% of its total loan book.

The government will buy over 95% of AIB and then NAMA will be rendered largely irrelevant.