EXPERT EXPECTS AIB TO UP DEBT FIGURE AGAIN - The banks are in focus this week as AIB's EGM to approve its recapitalisation and the bank's AGM take place tomorrow, and Irish Life & Permanent's is on Friday.
Ahead of all that AIB moved the goalposts again - saying its bad debt charge will be worse than its previous worst-case scenario, and will reach €4.3 billion this year.
And today, shareholders or members of Irish Nationwide Building Society will tackle the board on the recent poor performance of the society and its property and development loan writedowns; Michael Fingleton's pension; who will run the business and the issue of loan warehousing over eight years for Anglo's chairman Sean Fitzpatrick.
Brian Lucey, professor of finance at the business school in Trinity College Dublin, says the evidence from the current crisis is that the banks usually make low estimates of bad debts and are then forced to increase them.
He said that the AIB charge figure represents around 3.5% of total loans. But he says that, typically during international crises, 7-8% of the loan book is 'compromised', and he is expecting a further 'significant' upward revision to AIB's figure in the next few months.
Professor Lucey said new blood from outside was needed in the Irish banking system, at board as well as chief executive level. He also added that the €500,000 limit sought by the Government was a 'perfectly adequate' salary, given the size of the Irish banks.
Professor Lucey said he did not think Irish Nationwide had a future, as most of its loans were linked to property and would be transferred to NAMA. He said it had a future only as a small mortgage player.
He said the main task for Irish banks and financial services was to rebuild confidence among depositors and investors, adding that their 'reputational capital' among international investors had gone.
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NEWS IN BRIEF - Drinks group C&C has reported profits for the year to the end of February which are broadly in line with expectations. Revenue for the year fell by 11% to €514.4m, while there was a trading loss of €59m.
ECB chief Jean Claude Trichet was speaking last night about a recovery in the world economy. He said he was 'cautiously optimistic' that many countries had seen the worst of the recession, and that he was seeing a slowing down in the decrease in gross domestic product. The OECD has also signalled a pause in the slowdown in the UK, France, India and China.
