Ireland Ministry of Finance on September 8 announced plans to troubled state-owned Anglo – Irish Bank split into two banks, namely, a savings bank and a bank asset recovery. Despite the lull in the breakup of the market’s concerns, but because the Irish economy still faces many uncertainties and the huge cost of government bailouts banking industry, investors are still worried about the Irish financial system “fever” is difficult to subside.

Problem banks into two

Ireland Ministry of Finance 8, said plans to the state-owned Anglo – Irish Bank split into two banks, namely, a savings bank and a bank asset recovery. After the split, the size of bank asset recovery will gradually be reduced, and eventually sold.

Ireland Ministry of Finance 8, said in a statement, savings bank will become an independent bank, only the Anglo – Irish bank depositors with savings services, not participate in any new business, and will be directly under the Ministry of Finance; recovery of bank assets There will be a business license of the bank, whose main business is the recovery of the Anglo – Irish banks remaining mortgage default property. Irish Finance Minister Lenihan said: “at the right time, asset recovery bank will be sold in whole or in part, or gradually over time to reduce the bank’s assets.”

Ireland also said the Ministry of Finance will be announced in October the Anglo – Irish bank restructuring costs.

Anglo – Irish Bank chief executive Ansley said the government plans a clear split of the line will help curb the trend of decline in their deposits. Challenged as operating conditions, first half of 2010, Anglo – Irish Bank customer deposits have dropped by 4 to 23.1 billion euros. The bank said Chief Financial Officer Fan Aideng present, the European Central Bank and Bank of Ireland to the line to provide short-term funds have been more in June of 26.3 billion euros has increased, but he declined to give specific figures.

8 European Commission welcomed the Irish government for the Anglo – Irish Bank separation plan, “which will better respond to the Irish banking competition distortion.”

Analysts generally agreed that the split only in the short term plan to fill the Anglo – Irish Bank’s capital deficit to win the time, but a palliative.

Irish stockbroker Merrion Stockbrokers analyst said the spin-off scheme can not alleviate the market’s Anglo – Irish banks a huge black hole of capital concerns. Ireland’s largest independent stockbrokers Bloxham Stockbrokers chief economist McQuade believes that the Irish government ultimately how much to save the bank to pay the cost, this is the concern of the market. Another Irish broker Goodbody Stockbrokers chief economist orari further pointed out that Ireland’s problems are not limited to banking. Ireland’s economy relies heavily on exports, exports in its GDP share in the contribution of more than 50%, if the second half of a significant slowdown in global economic recovery, the United States and the decline in import demand in Germany, Ireland, the damage to the economy may be beyond the other European countries.

Standard & Poor’s Ratings Services had expected, the Irish government may have “in the long run” to the Anglo – Irish bank injected up to 35 billion euros (about 45 billion U.S. dollars) in aid.

Finance costs

Treasury Board on the 9th of Ireland, announced the successful auction of 400 million euros worth of 6-month and 8-month short-term bonds, with up to auction limit turnover 1.5 billion euros.

Fitch rating agency will issue the latest report of 9 expected, from 2011 to 2012, the Irish government’s financing needs will exceed 30% of the country’s GDP. Recently, the Irish government guaranteed bond defaults rise in prices, 8 closed, the first time the Irish government bond interest rate of 6%, second only to Greece, the highest since the country joined the euro zone the highest level. Data, 8, 5-year sovereign bonds of Ireland credit default swaps (CDS) rates rose to a record high of 400 basis points.

Morgan Stanley fixed income strategist Ron said: “The main current investors worried that the Irish banking sector will face a huge government bailout costs and risks.”

Anglo – Irish bank debt split plan and the successful sale of the Irish exchange rate against the euro some support, but Citigroup analyst said: “The euro in the short term is about to enter another round of losses.” The euro fell below 1.2558 against the dollar if the important support, it is likely to drop to 1.2200 level.

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