Ireland’s bloated banking sector needs fewer, smaller lenders. A sovereign bailout should provide breathing space to perform a radical restructuring. But a fire sale of Irish banking assets is not the only way to cut the banks down to size.
The combined liabilities of Ireland’s domestic lenders, both private and state owned, exceed 500 billion euros, or four times Irish GDP. The country’s likely 90 billion euro bailout will deliver resources to recapitalize the banks and guarantee wholesale funding for several years. In that time, the sector could be redrawn.
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
An Irish bank rescue could cost over 100 billion euros. That’s the rough amount needed to fund Allied Irish Banks, Bank of Ireland and Anglo Irish Bank for three years, while recapitalising them to a point where they might regain the confidence of the markets. But the euro zone may not actually have to shell out anything like that much.
Warren Buffett may struggle to repeat his Swiss Re exit. The legendary investor bailed out three big beasts during the financial crisis: the Swiss insurer, GE and Goldman Sachs. The Sage of Omaha has allowed Swiss Re to buy back its expensive convertible stock early. He may have less scope to be as generous with the other two.
Of the three deals, Buffett’s $3.1 billion investment in Swiss Re convertible shares had the most strings attached. Negotiated at the depths of the market slump, the stock paid a 12 percent annual coupon until March 2012, when it would convert into ordinary shares at a price of 25 Swiss francs.
LONDON, Oct 14 (Reuters) – Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) is working on a
new capital instrument that would allow it to meet regulators’
capital demands without issuing equity, a person familiar with
the situation has told Reuters Breakingviews.
The UK bank is examining a debt instrument that has been
dubbed a “step down, step up” bond. If the bank’s core Tier 1
ratio fell below 7 percent, holders would suffer a haircut of as
much as 30 percent.
WILMINGTON, Delaware (Reuters) – Tribune Co said on Tuesday it reached agreement with more parties to its bankruptcy as it tries to bring its publishing and broadcasting business out of Chapter 11.
JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) and unsecured creditors joined a settlement the company previously reached with two hedge funds that hold a large part of it senior loans.
WILMINGTON, Delaware (Reuters) – Four attorneys from Texas, Louisiana and Florida were appointed on Friday to a committee to lead the hundreds of oil spill-related lawsuits against BP Plc and its partners, according to court documents.
The committee will coordinate the activities of the 15-member plaintiffs’ steering committee that was also appointed on Friday by Judge Carl Barbier.
NEW YORK (Reuters) – Companies that are restructuring are struggling to get revolving loans from lenders, and they often have to strike deals that allow banks to earn other fees, restructuring advisers said on Thursday.
“Getting banks to commit to revolvers without lots and lots of other fee opportunities tied to it? Very hard,” William Derrough, a managing director at Moelis & Co, told the Reuters Restructuring Summit in New York.
NEW YORK (Reuters) – Cities and local governments that are struggling with gaping budget holes and piles of debt will likely raise taxes and cut services rather than resort to bankruptcy, restructuring experts said on Wednesday.
The city of Vallejo in California and a toll road operator in South Carolina are among the few to file for bankruptcy under Chapter 9, the part of the bankruptcy code for government entities.
, Oct 4 (Reuters) – Air Products &
Chemicals Inc (APD.N: Quote, Profile, Research, Stock Buzz) took its $5.5 billion hostile bid for
smaller rival Airgas Inc (ARG.N: Quote, Profile, Research, Stock Buzz) to court on Monday, arguing
that the takeover target was ignoring the will of its
shareholders by refusing to negotiate.
The companies have filed lawsuits against each other, and a
third lawsuit brought by Airgas shareholders against the
company’s board also is being heard in a week-long trial.
LONDON/NEW YORK (Reuters) – Two years after Lehman Brothers imploded and sparked trillions of dollars in bailouts, restructuring experts face a situation few dared predict: a glut of cash and less pressure on companies to restructure.
The number of companies unable to make debt payments has tumbled and vulture funds that seek out bargains in the corporate scrap heap are finding thin pickings. Some restructuring executives have more leisure time than they might have wished for.