Where’s the logic in trying to re-capitalise AIB to the tune of €1 Billion when it currently has a market capitalisation of less that €500 million? The €1billion in private funds is simply not going to happen, no way. So the Irish government is going to end up owning a majority stake in AIB (€1b vers >€500m of stock) or let it go to the wall.
Stop beating around the bush, just nationalise it. That way you don’t have to pump in the potential black hole in cash, you can just assume ultimate responsibility for the debts and allow the bank to operate as if it never had toxic assets, that is, making loans to those who are worthwhile. Then you can allow those debts that are assumed to be toxic to either unwind themselves over time without the bank going to the wall or you can shift them into a holding bank/ company.
Nationalising removes the legal obligation of the bank to the shareholders that would remain if the government attempted to “insure” the bad debts (as though the government can afford to do that at the moment). €340 million? Just buy the damn thing Lenihan, it would be in the best interests of bank customers and the taxpayers. This goes for BoI too.
Or that’s how I see it.
