Was It Just The Common Folk, I Mean Equity Investors Who Got Hosed By The Bank of Ireland

Wednesday, 24 April 2013 17:20

Was It Just The Common Folk, I Mean Equity Investors Who Got Hosed By The Bank of Ireland - Preferred Stock, & I Mean It! ^Featured

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Last week I shocked many with several revelations in the post What Should The US Do If One Of The Biggest Banks In Ireland Blatantly Defrauded US Investors? Well, there's more to the Bank of Ireland story than evades the eye.

In relation to BoI; the CEO Richie Boucher in the Irish High Court on 5th of October 2012 swore on affidavit that BoI had assets of €155 billion.

His statement appears to ignore the existence of the charges that were clearly delineated and illustrated in my previous post - What Should The US Do If One Of The Biggest Banks In Ireland Blatantly Defrauded US Investors?
Below is a sworn copy of the affidavit for Richie Boucher, the CEO of Bank of Ireland. This relates to reducing the Banks Regulatory capital by almost 4 Billion Euro which was shared amongst its preferential shareholders – at the expense of the common shareholders.

You will see he states that the bank has assets of almost 155 Billion Euro. The bank reported losses of 2.1 Billion euro last week.

BoI Boucher2

Although he states that the bank has assets of almost 155 Billion Euro, it recently reported losses of 2.1 Billion euro, which of course materially reduces capital. This loss had to be visible from within the bank for Citibank (amongst other analysts) had bearish views on the company. I doubt Citi knew something that the bank management didn't!

This bid to raise capital for dividend distribution in the face of apparent and expected losses (Citibank had a bearish outlook on the bank’s operations, as did the CEO himself) appears to fly in the face of prudent operation designed to keep the bank as an ongoing concern. Further investigation supports reason to question this action.

Citi analyst on BoI-144

The institutional bank investor Wilbur Ross bought preferred shares of BoI, and benefitted from a windfall payout as BoI successfully petitioned to reduce its regulatory share capital amongst current and impending losses that it was confident it would be taking.

Wibur ross butphoto-145

Wilbur Ross, et. al. made off like bandits, with the Bank of Ireland common people shareholders left holding the bag with millions in losses. We calculate Mr. Ross pocketed over $600 million dollars for this 5 month or so trade - and with relatively very little out of pocket expense or risk. He still owns the preference shares, after all - and still got the cash as well! Touche' mister Ross, Touche'. As for the common shareholders nursing that 2.1 billion euro (roughly 4.5B dollar) losse, I say the same to you that the big US bankers said to their clients during the 2008 debacle - Muppets! See Goldman's take on Muppetology to get a firmer grasp on what I mean and how the US banks consider nearly all taxpayers muppets.

I calculate the Bank of Ireland taking even more aggressive losses in the future. Why? Failure to mark to market means Irish banks are carrying loans whose true saleable value are roughly 27% of book value. This literally means insolvency for many – and that’s without the recognition of the various charge issues illustrated within. I have documentation to back this up as well and will delve into it in a future post. In the meantime, review my previous posts on the topic or subscribe to download some of the speficic charge documents contained in the posts herein.

Other hard hitting pieces on the resurgent EU banking crisis