Britain paid an extra £10BILLION to bail out Irish banks in back-door deal through RBS
British taxpayers have paid more than
£10bilion by the back door to bail out the Irish economy in an agreement
that was never approved by Parliament, it emerged today.
The figure is more than three times the £3.25billion pumped into Ireland by the British government and approved by Parliament as part of a wider European Union/International Monetary Fund backed bailout of the Irish economy in November 2010.
The additional funds were given to Ulster Bank, a subsidiary of the Royal Bank of Scotland which is 81 per cent owned by the taxpayer, after the Government rescued the over-stretched bank to the tune of £45billion five years ago.
New figures filed by the
Dublin-based lender at the Companies Registration Office show it has
received an injection of £14.3billion from RBS to cover loans which have
gone bad since the collapse of the Irish housing market in 2008 as well
as future losses.
Analysis by investment bank, Investec, has showed bad loans at Ulster Bank, which despite its name operates predominately in the Republic of Ireland, so far account for £12.7billion out of a total of £44.3billion in bad debts at RBS since the start of the financial crisis.
‘When RBS failed Ulster Bank accounted for only around 10 per cent of group loans yet cumulative Irish impairments since then have been around £12.7billion and over just the past three years Ireland has contributed around half of all RBS bad debts,’ Mr Gordon told the newspaper.
The figures come as MPs on the independent Banking Commission prepare to discuss the future of RBS and whether to split the bank into a good bank and a bad bank similar to the break-up of Northern Rock in order to allow RBS to be returned to private hands.
Despite the Chancellor George Osborne making it clear he will resist attempts to break up RBS, the Treasury is keen to sell its stake in the bank and Lloyds Banking Group, which is 39 per cent taxpayer owned, or at least to have started the process, by the time of the 2015 general election.
The
Treasury is far closer to achieving this aim with Lloyds, which last
month announced pre-tax profits had leapt to £2billion in the first
three months of this year, compared to £497million a year earlier.
Lloyds’ share price surged on the news and recently passed the Government’s break-even point of 61p per share, which would allow the Government to recoup the £37billion it gave the bank to save it from collapse. Lloyds’ shares were today trading at 62.2p.
Lloyds pumped €8billion (£6.81billion) of capital into its own Irish subsidiary between late 2008 and 2010, when it let its local banking licence lapse and took the loans into its own books.
‘The severe losses suffered by certain UK lenders in Ireland partly reflects the aggressive lending practices they employed here,” said Philip O’Sullivan, chief economist at Dublin-based NCB Stockbrokers.
Ulster Bank’s net loss narrowed
to £2.2billion from £2.8billionn in 2011, as loan impairment losses fell
37 per cent to £2.34billion. The capital injection from RBS last year
was the smallest since 2009, the bank said.
Ulster Bank has received a £2.93billion capital injection from RBS last year alone. The lender, which was bought by RBS in 2000, under Sir Fred Goodwins’ strategy of acquiring businesses to gain market share doubled its assets to £55billion in the four years before Ireland’s property bubble burst, according to a report published in 2011 by the Financial Services Authority.
The figure is more than three times the £3.25billion pumped into Ireland by the British government and approved by Parliament as part of a wider European Union/International Monetary Fund backed bailout of the Irish economy in November 2010.
The additional funds were given to Ulster Bank, a subsidiary of the Royal Bank of Scotland which is 81 per cent owned by the taxpayer, after the Government rescued the over-stretched bank to the tune of £45billion five years ago.
Under fire: Stephen
Hester announced last month that RBS had returned to profit for the
first time in 18 months. But the bank has bailed out its Irish
subsidiary by £14.3billion since 2008.
Analysis by investment bank, Investec, has showed bad loans at Ulster Bank, which despite its name operates predominately in the Republic of Ireland, so far account for £12.7billion out of a total of £44.3billion in bad debts at RBS since the start of the financial crisis.
Had
the taxpayer not bailed out RBS, the bank would not have been able to
support its Irish subsidiary. The consequences for the Irish economy
would have been severe and it is unlikely Ireland would have been able
to absorb the losses at the nation's third largest bank.
Investec’s
banking analyst Ian Gordon told The Times that losses at Ulster Bank
represent roughly a quarter of RBS’ losses to date.‘When RBS failed Ulster Bank accounted for only around 10 per cent of group loans yet cumulative Irish impairments since then have been around £12.7billion and over just the past three years Ireland has contributed around half of all RBS bad debts,’ Mr Gordon told the newspaper.
The figures come as MPs on the independent Banking Commission prepare to discuss the future of RBS and whether to split the bank into a good bank and a bad bank similar to the break-up of Northern Rock in order to allow RBS to be returned to private hands.
Despite the Chancellor George Osborne making it clear he will resist attempts to break up RBS, the Treasury is keen to sell its stake in the bank and Lloyds Banking Group, which is 39 per cent taxpayer owned, or at least to have started the process, by the time of the 2015 general election.
Irish bailout: Ulster bank which is a subsidiary
of RBS has received more than £10billion from its parent to cover bad
loads since 2008.
Lloyds’ share price surged on the news and recently passed the Government’s break-even point of 61p per share, which would allow the Government to recoup the £37billion it gave the bank to save it from collapse. Lloyds’ shares were today trading at 62.2p.
Lloyds pumped €8billion (£6.81billion) of capital into its own Irish subsidiary between late 2008 and 2010, when it let its local banking licence lapse and took the loans into its own books.
‘The severe losses suffered by certain UK lenders in Ireland partly reflects the aggressive lending practices they employed here,” said Philip O’Sullivan, chief economist at Dublin-based NCB Stockbrokers.
Cheap shares: the public could be offered the
chance to buy shares in state-backed LLoyds and RBS under one plan being
considered by the Government.
Ulster Bank has received a £2.93billion capital injection from RBS last year alone. The lender, which was bought by RBS in 2000, under Sir Fred Goodwins’ strategy of acquiring businesses to gain market share doubled its assets to £55billion in the four years before Ireland’s property bubble burst, according to a report published in 2011 by the Financial Services Authority.
Taxpayers could be offered chance to buy cheap shares in RBS and LLoyds
Private
investors could be given the chance to buy into Lloyds at a discounted
price before the end of this year, as the Chancellor looks to takes
advantage of the bank's share price rocketing over the past year.
Rumours of a shares sale have emerged suggesting the Chancellor is getting ready to use his Mansion House speech on June 19 time to announce such a move.
But that idea could be derailed by a rival plan floated by think tank the Policy Exchange today, which has delivered a fresh call for taxpayers to be given free shares in Lloyds and RBS worth about £1,500.
Policy Exchange first suggested this idea in 2011 and it is known to have support from a number of Liberal Democrat Cabinet members, including, it is believed Deputy Prime Minister Nick Clegg.
Last month, RBS announced first quarter pre-profits of £826million compared with a £1.5billion loss in the same period last year.
It is likely to use such figures as evidence that it is in a stronger position that a year ago at its annual general meeting in Edinburgh today and make a case for a return to private hands next year.
But its current share price values it at only around £25billion, £20billion short of the money given to it by the taxpayer in 2008.
Rumours of a shares sale have emerged suggesting the Chancellor is getting ready to use his Mansion House speech on June 19 time to announce such a move.
But that idea could be derailed by a rival plan floated by think tank the Policy Exchange today, which has delivered a fresh call for taxpayers to be given free shares in Lloyds and RBS worth about £1,500.
Policy Exchange first suggested this idea in 2011 and it is known to have support from a number of Liberal Democrat Cabinet members, including, it is believed Deputy Prime Minister Nick Clegg.
Last month, RBS announced first quarter pre-profits of £826million compared with a £1.5billion loss in the same period last year.
It is likely to use such figures as evidence that it is in a stronger position that a year ago at its annual general meeting in Edinburgh today and make a case for a return to private hands next year.
But its current share price values it at only around £25billion, £20billion short of the money given to it by the taxpayer in 2008.
No comments:
Post a Comment