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E-mailLosses at nationalised building society EBS could more than double by the end of the year due to the bigger than expected discount being applied by Nama to its loans as the agency accelerates its acquisition programme. The revision could complicate the sales process for the mutual, as the four potential buyers submitted their bids before the new information came to light. Irish Life & Permanent and three private equity groups are competing to buy EBS.
Last week the Central Bank told EBS it would have to take account of a higher discount of up to 60%, up from the previous average of 38%. It is understood Nama will acquire about €900m in bad loans from EBS for €400m.
EBS has €658m of loans awaiting transfer to Nama against which it has taken impairment charges of just under €105m, or about 15%. At a 60% discount, provisions will have to approach €400m, leading to huge losses. EBS had a pretax loss of €250m for the first half of the year.
The Central Bank has said EBS will not have to raise additional capital, but any acquirer will have to absorb the hit.
A source at one of the bidders for EBS said the new information would not fundamentally alter the case for buying the building society, but could alter the internal dynamic of the business by accelerating cost cutting and interest rate increases.
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NAMA should never, ever have been set up. It should belatedly stop acquiring loans at any discount and the bank guarantees should never have been given.
History will recall these mad decisions as probably corruptly passed by accomplices in the Dail, called TDs, who probably personally benefitted directly and indirectly from the bail out decisions.
Until these decisions are reversed, public service pensions below 30,000 a year should be tax exempt and all salaries and pensions combined, especially for those benefitting from bail-outs, should be taxed at penal rates and personal assets acquired from gambling, later supported by bail-outs, should be taxed at 95% of value, BEFORE any cuts or added taxes hit lower pensions of public sector workers.
By the way, financial services con-men who sell derivatives or toxic products should be taxed at similar penal levels and be personally liable for client's losses, before any further hair-shirts are handed out to the poorer members of our society.
Agreed?