Irish Banks May Need More Than Planned 6,000 Job Cuts, IMF Says

Ireland’s three surviving domestic banks may need to cut more than 6,000 jobs already planned as they struggle to return to profit, the International Monetary Fund said.

Allied Irish Banks Plc, Bank of Ireland Plc and Permanent TSB Group Holdings (IPM) Plc, based in Dublin, are lowering staff numbers after a real estate bubble burst in 2008. The lenders are aiming to reduce the 2011 combined job workforce of 30,000 by a fifth, the Washington-based fund said in a report on the nation’s bailout program yesterday.

Current plans “may still be insufficient,” the IMF said, adding costs for the banks are challenging. Ireland was forced to seek an international rescue in 2010, as its financial system came close to collapse. As the government seeks to exit the bailout program at the end of 2013, it’s pushing European leaders to deliver on pledges to improve the sustainability of its program.

“Given Ireland’s high public and private debt levels and uncertain growth prospects, inadequate or delayed delivery on these commitments pose a significant risk that recently started market access could be curtailed,” the IMF said. That could hinder “an exit from official financing at the end of 2013.” Read more >>

Bank of Ireland Wants Another Bailout

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And people DO nothing...

The BBC reports that the Bank of Ireland has announced losses of almost 1bn euros (£895m) for the six months to the end of September.

The bank has said that the total value of loans that it thinks might not be repaid will be 6.9bn euros (£6.1bn) for the period to April 2011. It has warned the Irish government that it may require another infusion of taxpayers' capital.

The bank has 44 branches in Northern Ireland and runs a financial services joint venture with the UK Post Office. It said the past six months had been "difficult" and gave a very cautious appraisal of future economic prospects, saying there were "some indications of a slow-down in the pace of economic decline in the UK and to some extent in Ireland."

The bank's UK division posted a operating profit of £163m but that became a £203m loss when impaired loan charges were taken into account. The bank said it remained committed to the UK market and will continue its partnership with the Post Office.

Uncertainties

In September, Ireland's Minister for Finance Brian Lenihan said around 16bn euros worth of Bank of Ireland loans would be transferred into Nama, the country's "bad bank" which is intended to remove toxic property loans from lenders' balance sheets.

However the bank said on Wednesday that significant uncertainties exist surrounding the specific amount of loans being transferred, when they will be transferred and the price that will be paid for those loans.

In a rescue plan for its economy, the Irish government has already pumped seven billion euros into its top two lenders, with Allied Irish Bank and Bank of Ireland each getting 3.5bn euros in state cash.

Ireland's banking sector has been badly hit by the international financial turmoil, the collapse of a domestic property bubble and a deep recession in the former "Celtic Tiger" economy.

FDIC Propping up Foreign Banks

From The New York Times:
Guaranty Bank, a deeply troubled Texas lender, was sold on Friday to Banco Bilbao Vizcaya Argentaria of Spain in one of the largest government-assisted deals offered to a foreign firm. Federal regulators seized Guaranty Bank and simultaneously brokered the sale of its branches as well as most of the deposits and assets to BBVA Compass, the Spanish bank’s American subsidiary. The government, however, agreed to absorb most of the losses on $9.7 billion, or more than 80 percent, of the Guaranty assets included in the deal.

The failure is the fourth-largest since the financial crisis began, and the Federal Deposit Insurance Corporation projects that it will cost its deposit insurance fund about $3 billion. Stockholders in Guaranty Bank will be wiped out, but the deal ensures that its depositors will not suffer losses. Although BBVA did not take control of the failed bank’s $344 million of brokered deposits, the F.D.I.C. said that it would reimburse brokers directly for those funds.

The government also agreed to shoulder the bulk of the losses on all of Guaranty’s loans — a deal sweetener that the government has rarely extended to overseas buyers. BBVA agreed to buy $12 billion of the $13 billion assets left at Guaranty Bank, which it will ultimately sell to private investors. The F.D.I.C. agreed to take on the remaining $1 billion of assets, as well as cover losses on the $9.7 billion pool of risky loans that BBVA bought. The agreement calls for the government to take on about 80 percent of the first $2.3 billion of losses, and 95 percent of the losses above that threshold.

Loss-sharing agreements have become a standard part of the F.D.I.C.’s toolkit for resolving troubled banks, but rarely have they covered such a big portion of a failed bank’s assets. And seldom are they offered to foreign buyers. Indeed, it appears the last time that an overseas bank received federal assistance in a failed bank deal was when the Bank of Ireland scooped up four New Hampshire banks in September 1991.