Ireland Hikes Insolvent Bank Funding, To Acquire Another €12 Billion In Bank Loans, Brings Total Discount On Loans To 58%

Tyler Durden's picture

Remember when in December, to much fanfare, the Irish bail out was announced, which included a package of €85 billion financed by everyone, up to an including the country's Pension fund (the NPRF)? Well, less than two months later, it has become clear that the funded component is woefully low as the true extent of losses is starting to be appreciated. According to the Irish National Asset Management Agency, the country's two key insolvent banks will need a fresh infusion of €12 billion. What this means is that as a result of current estimate of full pay outs by NAMA, the property loans underwritten by the banks, are now being discounted by a ridiculous 58%! For the captcha challenged, this means a more than half write down on loans. And Ireland is solvent how again? At least the country's pension funds are being depleted to fund a good cause: banker (read senior bondholder) well-being...

From Reuters:

Ireland's National Asset Management Agency (NAMA) will acquire additional loans with a nominal value of 12 billion euros from Allied Irish Banks (ALBK.I) and Bank of Ireland (BKIR.I), the state-run group said on Wednesday.

Under an EU/IMF bailout deal, Ireland agreed to extend its purge of risky commercial property loans from lenders to include land and development loans valued at under 20 million euros from its two main banks.

The government had previously said the nominal value of such loans would be under 16 billion euros.

NAMA said on Wednesday that at the end of its purchase programme it will have spent 37 billion euros acquiring loans with a nominal value of 88 billion euros, meaning that it discounted the loans, written during a disastrous property bubble, by 58 percent