Ireland’s Banks Take The First Step on Long Road to Recovery

In July, Ireland was reeling from a flare-up of the European debt crisis. A fresh bailout package for Greece had failed to calm markets, and investors were rushing to sell bonds of other debt-laden countries. Yields on Irish ten-year government bonds surged to 14.1 percent, or 1,145 basis points more than comparable German obligations. Moody’s Investors Service underscored the gloom by downgrading Ireland’s debt one notch, to Ba1, a sub-investment-grade, or junk, rating. In that climate would anyone risk putting money into Ireland?

对于爱尔兰银行，展望似乎是可怕的。被纾困的贷款人一直在努力从私人投资者筹集资金，几个月，成功很明显。Yet in late July the bank pulled off a coup, selling a 34.9 percent stake to a group of investors led by U.S. turnaround specialist Wilbur Ross Jr. and Canada’s Fairfax Financial Holdings for €1.12 billion ($1.6 billion), part of a broader, €4.8 billion capital-raising. It was a deal of huge moment: For the first time since the collapse of the country’s banking system in 2008, an Irish bank had been able to attract fresh private investment. The sale cut the state’s holding in Bank of Ireland from 36 percent to 15 percent.

One of two so-called pillar banks that the government is relying on to rebuild the banking sector and revive the economy, Bank of Ireland is now solidly in private hands and enjoying the best hopes of a turnaround in years. The bank narrowed its losses significantly in the first half of this year and is beginning to find funding from market sources rather than just the European Central Bank and other official bodies. It is carrying out a deleveraging plan and purging its balance sheet of bad real estate loans. Analysts believe the bank is on track to resume solid profitability in two years’ time.

“Bank of Ireland is stronger than the other Irish banks and has a powerful market position as one of the two pillar banks,” Ross tells Institutional Investor. “I’m not saying that this is the end of the problems facing the Irish banking system, but Bank of Ireland is recovering.”

As welcome as Ross’s vote of confidence was, Ireland and its banking system face a long and uncertain road to recovery. The country’s other pillar bank, Allied Irish Banks (AIB), remains in intensive care: The bank, 99.8 percent owned by the state, continues to suffer from mounting losses, loan-loss provisions and nonperforming loans. By its own admission, AIB can’t hope to raise private capital until 2012 at the earliest. The institution also has a leadership vacuum as it seeks to hire a new CEO.

这是行业的好处 - 这两家银行预计将来生存和蓬勃发展。大量的其他残骸遍布金融景观。英雄爱尔兰银行公司一旦爱尔兰第三大贷款人都会以巨大的成本萎缩，甚至在注射€29亿欧元的国家钱（见故事，右）后也无法制造它。房地产市场，大部分行业问题的来源，因为它占银行系统中的大部分有毒贷款，继续看到价格下跌。

恢复银行对健康至关重要，使爱尔兰经济和政府的财务恢复为重要。银行的鲁莽贷款将经济陷入金融危机。政府决定纾释出行业 - 保障银行负债的曲调为400亿欧元，或两倍于国家的国内生产总值，并注入了630亿欧元的资本 - 将欧洲最健康的公共部门资产负债表中的一个载入篮子案件。在20世纪90年代享有外国投资激增的妇女凯尔特，发现本身锁定了市场。？该强迫当时的总理Brian Cowen去年11月前往欧盟和国际货币基金组织百欧元的救助。

根据欧盟 - 国际货币基金组织计划维持财政纪律的同时修理银行业是一个艰难的壮举，特别是在经济增长缓慢的时间。该方案要求政府在今年的预计10％到2015年将其赤字削减到不到3％的GDP。为此，政府将今年减少40亿欧元，或增加收入和汽油税，增加20亿欧元。财政部长迈克尔·诺蒙斯警告说，2012年的削减可能比计划计划的计划36亿欧元更深。欧洲委员会，欧洲委员会和国际货币基金组织的专家们在七月访问都柏林进行审查进展情况，表示，政府正在追踪计划的目标。官员还赞扬了银行重组和可靠的方式。

总理恩娜肯尼，其精美的盖尔政府在2011年2月宣布宣传救助他称之为“对爱尔兰的不良交易”，当欧盟领导人同意降低利率和延长贷款的情况时，7月份得到了一些额外的帮助到爱尔兰和葡萄牙作为一个包装的一部分，包括希腊新的救助金钱。欧盟的新条款，将大约4000亿欧元的贷款减少到比以前6％的贷款约为3.5％，将挽救爱尔兰政府每年近10亿欧元的利息支付。“这是一种物质储蓄，”都柏林阿尔斯特银行爱尔兰的首席经济学家Simon Barry说。

呼吸空间支持爱尔兰的机会avoiding a second bailout in 2013 or 2014 — something that seemed almost certain only a few months ago — but doesn’t remove that prospect entirely. The EU and IMF loans are projected to cover the government’s needs through the end of 2013. Ireland is scheduled to dip into the debt markets next year as a trial run before resuming borrowing on a bigger scale in 2013. That’s not a sure thing. In August the yield on Irish ten-year bonds stood at about 9.5 percent, well below the high of 14 percent a few weeks earlier but still a long way from a sustainable level that would enable the government to tap the markets. “The spread will have to come down a long way” before Ireland can start raising money in the debt markets again, Patrick Honohan, governor of the Central Bank of Ireland, tells Institutional Investor.

The crunch point will come in January 2014, when Ireland is scheduled to repay €12 billion of debt and the national debt is projected to peak at more than €200 billion, or about 120 percent of GDP — a far cry from 2007, when debt was a mere 25 percent of GDP. The government will need to raise a total of €33 billion in 2014 and 2015 to cover its deficit and debt repayments. If the state can’t access the markets, it will have to turn again to the EU and IMF.

Although Moody’s cast doubt on Ireland’s ability to meet its targets, Standard & Poor’s in August reaffirmed Ireland’s investment-grade rating of BBB+ and said it believed the government would be able to return to the debt markets in 2013.

The economy, meanwhile, shows only a glimmer of recovery. Output, which plunged by 7 percent in 2009 and dipped a further 1 percent in 2010, has turned slightly positive. The central bank forecasts growth of 0.8 percent this year, rising to 2.2 percent by 2014. Unemployment stood at 14.3 percent at the end of July, off slightly from a December 2010 peak of 14.7 percent but well above the 4.5 percent that prevailed in July 2007, just before the outbreak of the financial crisis.

今天爱尔兰危机的深度是该国房地产热潮的过度镜像。2002年至2008年间，银行在今年早些时候通过由彼得·尼伯（Peter Nyberg）是前芬兰监管机构的政府指定的委员会的一份报告，将其资产增加到400亿欧元，从1500亿欧元增加到150亿欧元。。抵押贷款占新贷款的一半以上;其余的大块是商业财产。所有钱都将价格推向不可持续的水平。1995年至2007年间，实际商业财产价值升高了200％，住宅价值攀升了180％。

当然，爱尔兰的房地产气泡不是独一无二的，但问题的规模越过了其他国家的规模。2008年底，爱尔兰物业贷款占GDP的147％，而U.K的106％在U.K.银行借出的是，这项金额倒出了该国。有礼貌的都柏林社会令人惊叹的清洁剂能够在西班牙和土耳其购买第二家。当泡沫爆裂时，它用复仇了。根据房地产公司Jones Lang Lasalle的说法，在今年年半年，商业房地产价格从2007年的高峰水平下降了63％，并且住宅价格下跌了41％。

The crash effectively brought down all six domestic banks. To keep them afloat, the Irish central bank and the ECB provided massive liquidity: The amount peaked at €187 billion in February and declined to €155 billion in July. The government has financed five major recapitalizations, each one purportedly the last, since 2009. It also created a so-called bad bank, the National Asset Management Agency, which has taken €71 billion of the worst assets off the banks’ books. Even so, at least three of the six banks are being wound down or consolidated.

未来取决于爱尔兰银行和铝青铜,which the authorities consider too important to fail because they control 60 percent of the domestic retail market. “The Anglo Irish brand and customer relationships were irreparably damaged, whereas, despite the difficulties they’ve had, Bank of Ireland and AIB are the backbone of the economy and a majority of the population of Ireland has dealings with them,” says central banker Honohan. “They have to work through their financial restructurings, but I think their health will improve now that they have been recapitalized and as further deleveraging takes place.”

爱尔兰银行是第一个重新获得私人资本的机构令人惊讶的是。该银行并没有扩大其竞争对手的财产贷款，其竞争对手造成的竞争对手遭受了较少的贷款损失，并要求较少的政府支持。在售价1.67亿欧元的收益率和22％的贷款减记下降，银行的潜在税前损失从今年同期从13.2亿欧元的上半年下降到7.23亿欧元。

The state has injected €3.5 billion into the bank since January 2009 in exchange for a 36 percent stake. The €4.8 billion raising in July reduced that stake to 15 percent.

One key reason Bank of Ireland was able to attract outside investors is its diversification. At the end of June, fully 46 percent of its €112 billion loan book was in the U.K., compared with 48 percent in Ireland. “We see this as positive because the U.K. economy is in better shape” than Ireland’s, says investor Ross. The bank had taken write-downs on only 0.5 percent of its €30 billion in U.K. residential mortgages at the end of June, compared with 3.8 percent of its €28 billion Irish mortgage book.

那些U.K.抵押贷款也在帮助银行获得资金。6月，爱尔兰银行筹集了29亿欧元的短期贷款，由其U.K.来自两个未认出的国际银行的抵押贷款。这笔钱不便宜：银行支付了2.65个百分点，超过三个月的欧元欧元的资金，平均成熟度略有两年以上。尽管如此，银行在爱尔兰政府尚未重新进入资本市场的时候，银行设法脱掉交易。“You wouldn’t normally expect one of the banks to return to the markets before the sovereign, and it’s still unlikely that Bank of Ireland will be able to do anything more than these secured trades for some time to come,” says Stephen Lyons, a credit analyst at Davy Stockbrokers in Dublin. The bank says it plans to seek further secured loans later this year.

Bank of Ireland is also making good progress on deleveraging and expects to exceed its targets under a restructuring plan agreed upon by the EU, IMF and Irish authorities in March. The loan book had declined to €112 billion at the end of June from €119 billion at the end of 2010, while the loans-to-deposits ratio fell to 164 percent from 175 percent. In August the bank sold a €1.4 billion portfolio of U.S. commercial real estate loans to Wells Fargo & Co. It plans to dispose of an additional €10 billion by the end of 2013 to reduce its loans-to-deposits ratio to 122.5 percent or lower, as required. The bank has pledged to cut its loan book to €90 billion or less and reduce its loans-to-deposits ratio to less than 120 percent by the end of 2014.

Those improving trends set the stage for the bank’s recent capital-raising. The central bank and Department of Finance had ordered the bank to raise at least €4 billion in capital by the end of July, following a stress test carried out earlier this year by BlackRock Solutions and endorsed by EU and IMF officials in March. For months it was unclear whether Bank of Ireland would succeed; if it hadn’t, the government would have been forced to pony up capital. But with just a few days left before the deadline, the bank announced a three-part deal to raise a total of €4.2 billion and lift its core tier-1 ratio to 15 percent of risk-weighted assets, double the minimum level set by the new Basel III accord.

根据该交易，爱尔兰银行总共筹集了38亿欧元，通过10美分的18美元，股份为10美分，交换额为119亿欧元的股权抵销10至20美分欧元。更重要的是，银行安排了由罗斯和费尔法克斯领导的一组外国投资者持有的一部分国家的销售，达到1112亿欧元。WL Ross＆Co.，亿万富翁投资者的纽约私募股权公司，以及多伦多的Fairfax每人都花了9.9％的股份。其他着名投资者参与了这笔交易包括互联网巨头富达投资和资本集团COS。，肯尼迪威尔逊控股，贝弗利山庄，加利福尼亚州的加利福尼亚州的房地产投资公司。

The participation of such blue-chip investors provided a much-needed boost for the industry’s rebuilding efforts, and for Ireland’s economic prospects. “We shouldn’t underestimate the significance of hard private sector cash,” says Ulster Bank’s Barry. “It shows a willingness to reengage with the Irish story.”

政府和银行一直在放弃将国际银行作为收购方征收国际银行之后，至少一年举行私募股权球员。包括Carlyle Group和Blackstone Group在内的公司已经表现出一些兴趣，但只有附着的大条件。“私募股权公司希望复杂的结构包括下行保障，与爱尔兰政府的相当程度的风险分享，”都柏林IBI公司财政部长的董事Mark Spain表示，他向该交易提供了建议，并自2008年以来与该银行合作。“This wasn’t acceptable to the government.”

The participation of Ross and others had a positive effect on Bank of Ireland’s rights issue. Advisers had been projecting that as few as 20 percent of existing holders would exercise their rights and buy new shares, but a late surge of interest among retail investors boosted the final take-up rate to 60 percent. The participants included Harris Associates, a Chicago-based activist investor that now has a stake of about 4 percent in the bank.

在都柏林的Goodbody Stockbrokers银行分析师Acamonn Hughes以及爱尔兰银行的一贯熊，欢迎锻炼的结果。“这是银行和爱尔兰信心的迹象，”他说。尽管如此，休斯仍在努力，维持2012年银行股价8.5美分的目标，低于投资者集团支付的10美分的价格。股份最近在9美分和11美分之间交易。“在银行的前景真正改善之前，经济前景必须改进，”他说。

爱尔兰银行有足够的工作要做，以证明其新投资者的乐观主义。首先，它必须增加存款，以稳定其资金基础。2010年末，存款跌至650亿欧元，从一年同期的850亿欧元，今年上半年仍然持平。如果希望减少对爱尔兰流动设施的欧洲央行和中央银行的依赖，银行需要提高存款。6月底，爱尔兰银行从6月底，从这些官方来源绘制了额外的官方来源，从2010年底只有20亿欧元。

银行的长期需要完成其取消计划并恢复盈利能力，以重新获得批发资金市场。大多数分析师，如都柏林NCB股票中的卡尔Goggin，相信银行甚至最早直到2013年才会破坏。上个月，苏格兰皇家银行的分析师Asheefa Sarangi预测，2016年之前的股东将有“最小值。”

爱尔兰银行的挑战苍白地旁边的其他支柱银行，盟军爱尔兰人。曾经是最大的爱尔兰贷款人，拥有超过200亿欧元的市场资本化，EAIB现在已有99.8％的国家自2009年以来注射了€250亿欧元的公共资金。仍然，银行的业绩继续恶化。爱尔兰商业和住宅房地产贷款贷款增加了860亿欧元的资产。银行在2011年上半年的贷款上占据了26亿欧元的损害或缩减，从一年前的20亿欧元。贷款损失条款同比上涨至22.6亿欧元。完全34％的银行总贷款的完全不良，从2010年底为29％。因此，该银行发布了一个潜在的损失，不包括在上半年的支付及其债券回购的收入损失。

分析师摧毁银行的领导真空。在危机期间首席执行官的Eugene Sheehy曾在2009年4月辞职后辞职，被迫发出股权 - 他说的是他宁愿死于。他的继任者，前代理总经理科尔姆多赫蒂在2010年9月被政府推出，在他未能取得银行的资本需求之后，政府推出。行政主席David Hodgkinson，英国人和汇丰控股的前COO，该银行正在被领导。他表示希望AIB明年可能会吸引私人投资者。

Following AIB’s stress test earlier this year, authorities ordered the bank to raise €14 billion in capital, but in contrast to Bank of Ireland, there was no participation by private investors beyond an obligatory, €1.6 billion debt-for-equity exchange with junior bondholders. The government underwrote the rest of the funds, with the National Pensions Reserve Fund buying €5 billion worth of shares priced at 1 cent each and the Department of Finance buying €1.6 billion of contingent capital notes. The department injected an additional €6 billion of capital for no equity consideration. The exercise boosted the bank’s core tier-1 capital ratio to 9.9 percent.

AIB在今年上半年将其资产减少了83亿欧元，主要是通过还款，销售美国和欧洲的15亿欧元的贷款。这些举措有助于将其贷款与沉积物的贷款率降至165％的143％。作为其重组的一部分，银行计划在2013年底之前将其资产基础缩小190亿欧元，或22％，并将其贷款与储存率削减至122.5％或更低。虽然大多数银行的贷款都在爱尔兰，但AIB正在寻求处置15亿欧元的美国房地产贷款。尽管有那些努力，但何时可以恢复盈利能力并吸引私人投资者仍然不清楚。

由于两家银行继续恢复漫长的途径，爱尔兰的银行监管机构正在筹集危机的教训，并在竞标中重组自己以防止未来的灾难。

The Nyberg report criticized the Financial Services Regulatory Authority, the former banking supervisory body, for failing to force banks to improve risk management and tighten lending practices despite overwhelming evidence of the need for action as early as 2004. The report also said the central bank had failed to properly oversee the supervisory authority. To address those problems, the government has moved banking supervision inside the central bank, placing it under the direction of a financial regulator who reports directly to governor Honohan. The government last year appointed Matthew Elderfield, an Englishman who formerly headed the Bermuda Monetary Authority, as the regulator. “Now everyone is communicating with each other, and we are constantly improving and expanding the system,” says Honohan. “We didn’t have enough people before the crisis, but we’re recruiting an extra 200 people at the central bank this year.”

As part of the restructuring plan — and to help revive the economy — the government has ordered the banks to provide €30 billion of new lending to the domestic market over the next three years. The Department of Finance believes this should be enough to ensure that growth is in line with forecasts. John Bruton, the former prime minister who is now chairman of Dublin’s International Financial Services Centre, says: “I don’t think there is a problem with the availability of finance. If there is a problem, it’s a lack of demand.”

消费者和商业信心的复兴sses would do wonders to stimulate demand. In that respect, the capital-raising by Bank of Ireland and the faith of its new investors provide the best news the country has had in some time.

“I’m keen on Ireland as a long-term investment,” says an enthusiastic Wilbur Ross. “It doesn’t need structural reform like the ‘Club Med’ countries of southern Europe because it had been functioning well until the banks got out of control. The government is determined to cut back on spending.”

爱尔兰人只能希望罗斯的乐观态度证明传染性。•