AIB will be nationalised

AIB

2010 June total loan book €127 billion

Impaired Loans estimated at €20 billion – 50% in NAMA

Impaired plus criticised loans – €42 billion – 33% in NAMA

Equity base €5 billion

If half the criticised loans had to be written off, AIB would be insolvent.

Financial Regulator Matthew Elderfield told AIB in March to raise €7 billion in equity by end of 2010.

If AIB sells its US, UK, Polish and NI operations plus Goodbody’s Stockbrokers, this will bridge most of the €7 and reduce the loan book to about 478 billion when the NAME loans are included.

Excluding the divisions for sale, AIB has a trading loss of €332 million.

In June the bad debt provision was €2.3 billion.

On 6th April, the 1st NAMA tranche of €3.3 billion was underprovided for by €963 million.

In July, the 2nd tranche of NAMA loans of €2.7 billion was signed over for €1.35 billion leaving a bad debt of 50%. AIB had provided €830 million for this leaving an underprovision of €517 million.

Post June 2010, there were €20 billion NAME loans to be transferred and it is reasonable to assume a 50%discount leaving a provision of €10 billion for AIB.  But only €4.5 billion has been provided leaving €5.5 for the rest of 1020 if the NAMA transfers go ahead as scheduled by November.

On the non-NAMA loans side, it has €10 billion of impaired loans with provision of €4 billion provided.  That leaves a potential hole of €6 billion here.

Total loan underprovision is about €11.5 billion – Way over the €7.5 Elderfield requirement of March last.

There is also a pension shortfall of €750 million and a US CDO and subprime of €1 billion.

To reach Elderfield’s minimum 7% equity / solvency ratio, AIB will need to raise €12.5 billion.

IRELAND INC will need to put another 10 billion into AIB.

Ireland’s soverign debt is now €80 billion and if NAMA is added, it is €120 billion.

We are in trouble!!!!!