AIB'S RESPONSE TO THE MINISTER FOR FINANCE'S STATEMENT
(Thomson Reuters ONE) - Allied Irish Banks, p.l.c. ("AIB") [NYSE: AIB] is issuing thisannouncement following today's statement made by the Minister forFinance in relation to the potential effects of the National AssetManagement Agency (NAMA) and Government funding guarantee.At the outset, the board and management of AIB acknowledge thecrucial leadership role of the Government to ensure a properlyfunctioning banking system that fulfils its vital role of supportingthe economy. We recognise the challenges posed by the currentenvironment and note the measures proposed by the Minister. Wereiterate our acknowledgement of and apology for the part we playedin contributing to this challenging environment.The Minister has now indicated c. ?24bn (gross) of AIB loans inrespect of which the economic interest could be transferred to NAMA.We understand the transfer will take place on a phased basisbeginning in November this year with completion targeted for mid2010. Taking account of the variation in asset quality and mix, thecapital implications for AIB and other banks can only be known whenthe loans are individually valued on a case by case basis over thecoming year. Acknowledging this, the Minister estimated an averageindustry wide discount of 30% for the NAMA eligible loans and alsostressed the variability between banks. AIB together with leadinginternational risk experts is conducting an extensive review of itsNAMA eligible loans using appropriate economic valuation techniquesto determine valuation outcomes. Based on the work to date, whichcovers around half the value of our NAMA eligible loans, AIB expectsthe discount will be less than the estimated industry wide average of30%. The following key factors underpin that expectation:* Our top 25 connections account for c. ?8bn or 33% of our NAMA eligible loans and have c. 80% of their collateral by value concentrated in Dublin.* Based on eligible loans of c. ?24bn, c. ?17bn are land and development loans and c. ?7bn are associated loans and of this ?7bn over 90% are performing, underpinned by independent cashflows.Based on the Minister's estimated average industry wide discount of30% (which as we have already stated is expected to exceed theestimated maximum for AIB) and allowing for our estimated 2009 yearend provisions of c. ?3.5bn in respect of NAMA eligible loans, thenet write down for AIB would be c. ?3.7bn before tax. Our expectationof a lower discount for AIB than the average industry wide discountwould have a material positive effect on the write down; for every 1%reduction in the discount, the write down is reduced by c. ?240m.The actual net write down will have a phased effect on our capitalposition over the next twelve months. As at 30 June 2009 our coretier 1 capital ratio was 8.5%, having absorbed a bad debt charge ofalmost ?2.4bn and we expect our capital ratios to remain resilient.The Minister has said that he expects banks to rebuild over timetheir regulatory equity capital / risk weighted assets ratios. Inanticipation of various capital requirement scenarios and in additionto the normal capital formation from operations, we have available tous a range of sources of capital. We are confident that one or moreof these sources will increase our capital to a level that willsatisfy stakeholders through the trough of this economic cycle and inthis regard it is now our intention to generate in the region of ?2bnof capital which we expect to complete over the next 12 - 18 months.The potential sources of capital include:* The equity market Investors have previously signalled strong interest in participating in a recapitalisation when some key terms of NAMA are clarified. We believe that we are now moving towards sufficient clarity to enable existing and potential shareholders to consider an investment proposition. Underpinning the investment proposition is a diverse business with a strong and resilient earnings capability.* A strategic investment On 14th August we announced that we had received interest from a third party with a potential interest in taking a minority stake in AIB. In the previous announcement we noted in particular the need for greater clarity in respect of NAMA before discussions between us could more meaningfully progress. Following the Minister's statement we will continue to explore strategic options including potential investments in the bank. There remains no certainty that these discussions will lead to proposals.* Asset sales / business disposals AIB has a range of assets which extends across geographies and business lines in respect of which we believe there is strong third party interest. AIB maintains an ongoing review of its businesses and the decision to retain or dispose of certain assets will be based on a number of criteria including strategic rationale, likely sales proceeds, capital impact, funding and earning effects.We acknowledge the Government's intent to assist and supportpotential capital raising measures and its appreciation that suchmeasures should be taken over a reasonable timeframe.The commitment to adjust and modify the Government guarantee todepositors and other suppliers of funding provides certainty andsecurity to them. We are informed that the cost of both the existingand modified guarantees will increase significantly above the c.?110m per annum currently being incurred. The current figurerepresents a charge factor of 9.5 basis points of covered liabilitiesunder the guarantee. For the remaining one year period of thisguarantee to September 2010, the charge factor will increase to 22.7basis points. The effect of this is to increase the charge to c.?140m for 2009 and c. ?170m for the remaining period to September2010. On issuance of the new modified guarantee (ELG), a further yetto be defined increase is expected to apply in line with EUguidelines.Further updates to the initiatives outlined in this announcement willbe made in due course. -ENDS-For further information please contact:Alan Kelly Catherine BurkeGeneral Manager, Group Finance Head of Corporate RelationsAIB Group AIB GroupDublin 4 Dublin 4Tel: +353-1-6600311 ext. 12162 Tel: +353-1-6600311 ext. 13894This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 16.09.2009 - 19:34 Uhr
Sprache: Deutsch
News-ID 5885
Anzahl Zeichen: 0
contact information:
Town:
London
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 158 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"AIB'S RESPONSE TO THE MINISTER FOR FINANCE'S STATEMENT"
steht unter der journalistisch-redaktionellen Verantwortung von
Allied Irish Banks, p.l.c. (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
