AIB has this morning unveiled its results for full-year 2010 with the full annual accounts available here. The headlines are that the company, which is now 92.8% owned by the State following the conversion last week of the Convertible Non Voting shares to ordinary shares, reports a full year loss before tax of €12.1bn, of which €7bn is attributable to losses on loans transferred to NAMA. After a tax credit of €1.7bn, courtesy of the Irish state mostly, the bank reports a net loss after tax of €10.4bn. The bank, in its announcement, appears to have given up on transferring sub-€20m loan exposures to NAMA and now merely says that it has a further €2bn of loans to transfer to the agency which presumably represent Paddy McKillen and some other objector developer exposures – its full accounts however provide a glossary definition for NAMA 2 as “other loans that may transfer to NAMA in 2011”. The bank has also announced at least 2,000 job losses. Customer deposits fell from €84bn in 2009 to €63bn in 2010, a 25% drop. There will be further analysis here later today.
As noted on here a couple of weeks ago, AIB is now in the same league as Anglo yet seems to have escaped much of the opprobrium heaped on that bank and its former chiefs, Sean Fitzpatrick, David Drumm and Willie McAteer. And whereas Anglo will be remembered for being the zombiest of zombie banks, AIB is to be a “pillar”. Which is practically as wondrous as the notion that preserving AIB will somehow deliver a competitive banking sector, when the AIB/Bank of Ireland duopoly failed to do any such thing between 1921 and the late 1990s.
NAMA Wine Lake 
Now namawinelake I hope you are not doubting the righteous ones who have preached to us of recapitalisation and bailouts time and time again? Remember Lot’s wife and what happened to her?
That’s right! turned into a “pillar of salt” so she did. Mr. Noonan will tell us THAT is what will happen to AIB and BoI if we do not sing from the same hymn sheet.
I must admit that the title of this post did make me chuckle at first.
Then I realised that you were thinking of ‘pillar’ in the sense of supporting a bank that would be of benefit to Society into the future, but not as the reality seems to be.
Seemingly Society is supporting the bank for the benefit of the bank. It’s akin to having a second civil service to wet nurse & nourish.
AIB are proof positive that “moral hazard”, often decried as an unsympathetic theory, is very real. Very real indeed. If AIB was not bailed out by the State (a FG government I think) in the 1980’s then these losses would simply not exist. This is moral hazard – with a lot of zeros.
Lost 25% of deposits, that certainly is sustainable. Noteworthy of this crisis is that the good times were overly hyped and the crash spectacularly under estimated with a great deal more to come.
I was going to wait for your more detailed analysis NWL but can you explain the definition of deposits and loans when used to calculate the Loan-To-Deposit Ratio?
AIB say theres is 165%: The only way to get this is to use divide their total customer loans of 86bn by their total customer deposits of 52bn.
Basically, they say their total loanbook is 94bn in the headline results but only customer loans are used to calculate the ratio?