April 6, 2009
Shares in the 2 main Irish Banks are split A & B.
The A shares represent a good bank. The B shares represent a bad bank or property asset management company. Shares would be traded as a single entity. A and B would carry separate non transferable values and could never be worth less than zero.
Valuation of the “toxic assets” would be ascertained by taking a basket of average monthly valuations over a minimum period of (say) 5 years benchmarked against banks closing share price at a particular date.
The banks would pay a fee for the facility of managing the property company to the Government.
After the minimum period (say 5 years) the net worth of the property company / bad bank would be split at an appropriate rate (say 50:50) between Government and Shareholdings B. Upon completion of this process the shares A & B would be restored to a single entity.
There is a case for amalgamating both main banks to make this an easier process — with the new dynamic Regulatory Body (see Celtic Comeback — Irish Financial Regulation) monitoring unfair competition practise.
Having attended the recent Bank of Ireland EGM — I am persuaded there has to be at the very least substantial changes in the personnel in charge of the banks.
Nationalisation of the Banks far from being a panacea to current economic plight (as being championed by some economic commentators) would in reality mean double the trouble we are already in. What we need is Irish Banks kept in a majority of Irish ownership with as many private individuals as possible being encouraged to take up shareholdings in a well run; safe banking system — (See Celtic Comeback — Irish Pensions).