So hows Ireland been coping? Something like the same roller coaster effect, with bank shares recovering as in London after a similar move against short sellers and a likely similar Irish casualty to HBos. While Ireland doesnt have the same exposure, John Murray Brown who has the Irish beat for the Financial Times explains the Irish bind
Ireland’s banks are caught in a bind. The property developers they lent to cannot service their loans as they are unable to sell enough houses. And those customers who want to buy a home are finding the banks’ mortgage departments reluctant to lend in the credit crunch.
No one currently foresees that Irish banks will have to go to shareholders for fresh equity to bolster their balance sheets. They have minimal exposure to the collateralised debt obligations and other assets linked to the US mortgage crisis. The Irish economy has been growing so strongly in recent years that banks did not need to search out the higher re-turns promised by such products.
Yet international investors, who now own 70 per cent of Irish equities, have lost confidence in what the banks are telling them.
Will there be a reaction against the property tycoons? In Britain, recriminations are well under way and theres a big Scottish angle from the Times in its little England rant against alleged favouritism for Scottish staff in the Lloyd’s-HBos takeover. I’d be sceptical about that. Think of the huge dent in Scottish pride as that proud Bank of Scotland headquarters up on the Mound is relegated to a branch office!. Another ill wind that ‘s a political gift to Alex Salmond.
PS. Required reading is the blog of the man who keeps getting the scoops, Robert Peston of the BBC. Extracts:
” (The last US $180 billion bale-out) treats only a symptom, not the cause….
(US Treasury Sec is now planning ) the mother of all bailouts. It would certainly involve the deployment of hundreds of billions of US taxpayers’ money, possibly more than a trillion dollars……..surely it would be more rational for the Chinese to own the American financial system itself.”