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Allied Irish Bank Bondholders To Sue Irish Government

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8182703/Allied-Irish-Bank-bondholders-to-sue-Irish-government.html

The investors, who include some of the world's largest fixed-income pension and insurance funds, held talks on Friday about taking the Irish government to court if it forces a second round of "haircuts" on the value of subordinated debt issued by Allied Irish.

Anglo Irish Bank and Irish Nationwide have already been the subject of legal action from subordinated debt investors, but so far without success.

What makes the latest bondholder group's action particularly significant is that it is dominated by "long-only" investors and not so-called "speculators" like hedge funds. Investors' anger may prompt fears of a "buyers' strike" when Ireland, and other indebted euro area countries, come to the market next year to refinance hundreds of billions of euros of maturing sovereign debt.

"These are the pension funds, insurers and main fixed-income funds that are the backbone of the bond market," said one source. "Many of these funds are not going to want to touch Irish paper for a long-time. I hope governments realise they are angering precisely the people they are going to need to convince to buy new bonds."

Law firm Bingham McCutchen is understood to be organising the group and hosted a conference call on Friday for Allied Irish investors that wish to take legal action. Bingham also advised Irish Nationwide subordinated bondholders.

In June 2009, holders of Tier 1 and Tier 2 bonds in Allied Irish accepted a new issue of lower Tier 2 debt as part of an exchange offer that saw investors lose 33pc to 50pc of the face value of their investment. The latest threat of "haircuts" has enraged holders, given the repeated assurances from Irish and European authorities over the financial strength of Allied Irish.

Unlike Anglo Irish and Irish Nationwide, Allied Irish was subject to the European bank stress tests. Allied Irish passed, but after last month's €85bn (£72bn) bailout, it is expected to be almost completely nationalised, with creditors set to take more of the pain.

"These investors are not bad guys, they are people that have already accepted substantial reductions in their investments. The simple fact is the risk return equation for many investors has now turned in favour of legal action," said the source.

More fun and games looming for the Irish state. To be honest the bond holders should have been wiped out originally and the bank allowed to go bust. Instead the Irish govt decided to play fairy god mother and underwrite the entire bank with lovely taxpayer cash. If the Irish govt get sued the Irish taxpayer should sue the govt ministers for taking the original decision in the first place, they must have known the true state of affairs and tried to blag it rather than admit the bank was bankrupt.

If this legal action does get off the ground it's going to be a fascinating case to watch, the implications will be immense especially if it ends up in the European courts.

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Blooleaks reveals the Euro stress tess key question.

A: are vous paying a bonus zis Cvistmas?

Note: suggester vous answer Yah to zis or ve vill ne passer pas your Stress.

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I think the situation will truly be driven home to the masses when the bondholders take huge losses; and all of those who have contributed, are contributing, and will be automatically enrolled into contributing for a pension soon, get those end of year statements with:

"Sorry, money all gone, balance £000.00"

on them.

The prospect of taxes being dribbled slowly upwards doesn't engender the same outrage.

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8182703/Allied-Irish-Bank-bondholders-to-sue-Irish-government.html

More fun and games looming for the Irish state. To be honest the bond holders should have been wiped out originally and the bank allowed to go bust. Instead the Irish govt decided to play fairy god mother and underwrite the entire bank with lovely taxpayer cash. If the Irish govt get sued the Irish taxpayer should sue the govt ministers for taking the original decision in the first place, they must have known the true state of affairs and tried to blag it rather than admit the bank was bankrupt.

If this legal action does get off the ground it's going to be a fascinating case to watch, the implications will be immense especially if it ends up in the European courts.

Private corporate bond holders taking the piss must be this years Christmas trend.

As the Irish state is itself effectively bankrupt this threat of legal action really smacks of desperation since outside of the wider EU bail out there is no money to be had.

The Irish government was stupid to offer even short term guarantees to bondholders of private bank debt in 2008 since this was not a sovereign liability. However, I can not see how bond holders have any right to have this extended ad infinitum. Still the lawyers at least will get rich so someone will be having a happy Christmas.

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I think the situation will truly be driven home to the masses when the bondholders take huge losses; and all of those who have contributed, are contributing, and will be automatically enrolled into contributing for a pension soon, get those end of year statements with:

"Sorry, money all gone, balance £000.00"

Yes it's hard to see the bankers retaining their current levels of public esteem once people realise that they have been screwed both ends- the bonus's will have to be given out as secret santa payments or something to avoid the headlines.

Bondholders sueing the government that bails them out just shows how out of touch with reality these people now are; reminds me of a joke about a mother whose child gets swept off the beach by a wave; 'God, God, please save my son' she cries- and another wave then carries the boy back to the safety of the beach. The woman looks at her son, then up at the sky and says 'God- he had a hat."

Does the decision of the irish government to bail these people out constitute a legal contract? One that can be enforced in a court?

Somehow I doubt it.

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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