Having read various news reports and this thread I am surprised that there is still little detail about bank restructuring. Some posters have commented that the only logical way out of the situation is to allow peripheral countries to devalue, unfortunately I read an article last week on FT alphaville (can't find it today) that if the peripheral countries devalued by 30% all the European banks would be insolvent, so I don't think thats an option.

If Ireland is going to have to pay circa 6% on yet more borrowing and the economy doesn't start growing soon won't they reach a point of no return on their ability to pay it back? It has been openly reported that most think a Greek default is a matter of when, not if. However if all the countries in trouble were to follow a similar path we would have the above situation. Can't help but think that the politicans are the rabbit stuck in the headlights. Option 1 is bailout countries and hope somehow they can recover without having to default, which seems unlikely. Option 2 force them out of the Euro and make your banks insolvent. Option 3 fire up the printing press and monetize some of the debt of the most vulnerable countries. Option 3 would obviously be unacceptable to Germany and probably France, but perhaps they should of thought of that years ago as inbalances grew before we get to this situation.

I think option 3 done earlier this year (could have been smaller scale) with properly enforced EU wide fiscal rules going forward so it doesn't happen again, would have been the best solution.

With regard to BKIR I wonder if this is refering to a future LME:

The Bank intends to seek to generate the required capital through a combination of internal capital management initiatives, support from existing shareholders and other capital markets sources.

BKIR doesn't have to do a AIB forced 80-95% haircut, if they have €8 billion sub debt outstanding ( have emailed IR for info) then a 75% offer would provide sufficent extra capital, at the end of last week some of the sub debt was trading at 45-50% of face. Not all of the €2.2 billion needs to come from sub debt. If BKIR can put together a good case of last man standing they might just pull off a combined debt tender and rights issue, avoiding massive dilution and majority Irish gov shareholding.

Still haven't bought yet.


Unwize.