The Winners

Property developers

The alarming exposure of Irish banks to property lending has arguably been the chief cause of downward pressure on Irish bank shares since January, even if the government claims liquidity is the more pressing issue. Even the least exposed Irish bank has 41% of its asset portfolio in property, said BNP Paribas last week. It is estimated by some economists that there is €110bn on loan to property developers.

While small property developers have slipped under, so far Ireland has not seen one of the top 10 developers go to the wall. Interest roll-ups, equity stakes and work-outs have been order of the day. With a State guarantee from Brian Lenihan the normal financial disciplines that should exert themselves on Irish banks will be lost or eroded, providing an easing of the pressure on developers.

There is an opposite argument. Now that the state has provided a guarantee, banks may be more willing to squeeze heavily-leveraged developers and lance the boil, as one source put it last week. Some developers must be breaching their bank covenants and the granting of a guarantee may spur the banks into action on this front by foreclosing on the developers. But the domino theory – that large-scale foreclosures could dent the market further – remains a concern for banks which are so heavily tied up in the property game themselves.

Michael Fingleton

The long-serving chief executive of Irish Nationwide is without doubt last week's biggest winner. Having been with the building society for over 30 years, Fingleton had to deny an erroneous report only three weeks ago that his institution was effectively insolvent. Nationwide was also reported to be the subject of a takeover bid by Anglo Irish Bank, which would probably have ended his involvement with the firm forever.

Irish Nationwide was also recently hit by two damaging downgrades by international rating agencies and was facing huge challenges to refinance itself in a hostile bond market. But with one bound, Fingleton seems free, at least for the short term.

The chances of selling the institution look slim, even with a state guarantee and even at a knockdown price. But despite this, Fingleton and his members get to fight another day. Fingleton is no longer even on the board of the company and, at 70, he is still collecting (according to last year's annual report) a handsome €2.3m pay packet.

David Drumm/Sean Fitzpatrick

It's been a hellish six months for two pivotal figures at Anglo Irish Bank, CEO David Drumm and Sean Fitzpatrick, the chairman. Concern has been raised about the bank's exposure to the property market and last week it lost a staggering 45% of its value in one day, leading to questions about its future. But its shares have since recovered and both men are likely to continue in their jobs. While a takeover by an Irish rival is possible, a takeover by a foreign entity for the next two years is highly unlikely because of the state guarantee. Short-sellers earlier this year had a field day with its shares, but last week will have gladdened both men.

Bond-holders

Institutions all over the world warmly greeted the state guarantee last week, and why wouldn't they? While it was predictable enough that the Irish government would guarantee covered bonds and senior debt, it was a pleasant surprise for these institutions that subordinated dated debt was also covered. This is higher-risk and in some other banking bail-outs these bond-holders have been wiped out. This debt is generally unsecured, so in one sense these bond-holders now have far more security than they did last week.

The cheers of bond-holders could be heard around the world, with even Maple bond issuers in Canada celebrating news of the government's intervention. Those who issue subordinated debt get paid a premium because of its unsecured status, so these bond-holders have already had a risk premium paid to them; now they get the extra protection – for free – of a government guarantee from a eurozone economy.

Stockbrokers

Hammered by CFD losses and hurt by a near-collapse in merger and acquisition activity, it's been a brutal year for stockbrokers, some of whom have laid people off. Last week virtually every broker who issues recommendations welcomed the government's intervention, with some immediately upgrading their price targets for the main banks. Stockbrokers told the Sunday Tribune they were seeing the first signs of new retail investors coming into the Irish market to snap up shares and pay them commissions.

The links between Ireland's banks and stockbrokers are long established. For example, Seán Quinn holds approximately 25% of NCB and is also a substantial shareholder in Anglo Irish Bank, along with family members. Up to until last year Bank of Ireland owned Davy and until recently there was talk of Irish Life and Permanent taking a share in Dolmen Stockbrokers.

The Iseq rose strongly last week after the state guarantee was announced, helping some of the brokers' customers to repair the damage to their CFD positions, but it's going to be a long, long way back.

The Losers

Shareholders

Despite the state intervention last Tuesday, most shareholders in Irish banks are still sitting on huge paper losses and their position could erode further. Even after last week's intervention the share prices of the biggest two banks were still down over 50% in the year to date.

Several banks are likely to have to recapitalise next year, via rights issues, and that will dilute the position of existing shareholders. On top of this, the dividends of Irish banks are not sustainable as the EU forces banks to put more of their money into reserves, rather than paying out to shareholders. Another threat to shareholders from last week's intervention is that the government may acquire equity stakes in the banks, also diluting existing shareholding.

The final negative for shareholders is a more philosophical one. With a state guarantee, the banks may now be in danger of behaving irresponsibly – the so-called moral hazard argument – and not write off bad debts with sufficient vigour. This would obviously not be in the interests of shareholders in the long term.

citizens of ireland

While cash is not being pumped into the banks directly, a huge amount of risk has been transferred from Irish banks to Irish taxpayers. The credit profile of Ireland has also deteriorated (credit default swaps are a good indicator of this, regardless of ratings reports).

Last Tuesday's deal has implications for future borrowing by the exchequer. Even NCB Stockbrokers, which supported the intervention, admitted that investment by government in other alternatives could be "crowded out".

It is estimated that every citizen would owe about €95,000 per person if the guarantee was triggered in full. While this is almost impossible, any increase in Ireland's debt-to-GDP ratio clearly has implication for future borrowings.

As one financial source commented last week: "If you end up borrowing for one eventuality, ultimately it makes it harder or more expensive to borrow for another eventuality".

foreign banks

Last week's intervention seriously hurt foreign banks operating here. They admitted their customers were worried after Tuesday's announcement and it is possible that a significant amount of money left the likes of NIB, Bank of Scotland (Ireland) and Ulster Bank, both in retail savings and corporate deposits.

The government is now including these banks in the guarantee scheme, but will the money that was moved come back?

These banks also suffer in another way. Their parent companies do not have any state guarantees to fall back on, so are these banks ultimately going to be raising money at a disadvantage to AIB, Bank of Ireland, Anglo Irish and Irish Life & Permanent (IL&P)?

In addition, banks in Northern Ireland are going to be decimated in the border regions, because only a few miles away a state guarantee of up €100,000 is available, plus a wider guarantee of bank solvency generally.

pensioners

The state guarantee fails to tackle the under-performance of Irish pension funds, which many believe are significantly overweight in Irish stocks. Year-to-date Irish pension fund performance has plunged by 22%, according to figures released last week by Hewitt Associates.

By throwing a lifeline to the banking sector, the worrying exposure of Irish pension funds to Irish equities will continue. The Iseq is simply too dependent on financial and construction stocks. Rescuing every single listed Irish bank means that pension fund managers are likely to stick with their current options in the hope of clawing back the losses in the long term. The other alternative – moving away from domestic stocks – is thus unlikely to be called upon.

consumers

It's back to boring banking and less attractive deals for Irish customers. The guarantee is likely to usher in tighter regulation of Irish banks and tougher credit terms for borrowers. In terms of the national economy this is welcome, but it does mean mortgage deals and credit generally in Ireland will not be available like they were in the heady days of the late 1990s and the early part of this decade.

The recent problems in some respects consolidate the dominance of the Irish banking market by AIB and Bank of Ireland,the so-called Big Two. For example, foreign banks are unlikely to come here in future, what with tighter credit rules and a declining housing market. Why would they? Margins are not going be as attractive. HSBC, for instance, has told the Sunday Tribune that some day the bank might open a retail operation here, but with the new tighter regulatory environment, this is unlikely for many years.

The guarantee lapses in the event of a foreign takeover, finance minister Brian Lenihan said last week. So once again this means foreign takeovers of Irish banks are unlikely and that means inter-bank competition is likely to stay where it is, or even reduce.