Following the  European Central Bank’s increase to 1.25% of  their  base lending rate -  AIB has  confirmed similar  increases to its lending and deposit rates effective from close of business on 19th April.

Allied Irish Bank ECB Tracker  mortgages and all deposit rates will increase in line with the ECB rate change.
The rates on AIB’s Standard Variable Rate and Loan to Value variable rate mortgages remain under review.

Other AIB  lending rates will be increasing by 0.25%  – these include  loan and overdraft rates for personal customers and certain  loan and overdraft rates for business customers.

Other lenders in Ireland already announced mortgage rate rises

Irisdh Minister for Finance – Michael Noonan has announced the banking system will be restructured with two new strong banks. He said AIB and EBS will be merged as one of these ‘pillars’. He said Bank of Ireland will be the other ‘pillar’.

AIB and EBS are already closely linked because  AIB operates all cash transmission services, including ATM services for EBS.

Irish Life and Permanent is  to be restructured, with the State likely to take a majority stake. Irish Life and Permanent is to sell its Irish Life business.

Today – after a “stress test” on Irish banks – it was announced that the following Irish banks may  need further injections of €24 Billion capital to help them cope with potential losses – this is after the billions that have already been pumped in.

Allied Irish Banks   €13.3bn
Bank of Ireland  €5.2bn
EBS  €1.5bn
Irish Life and Permanent  €4bn

The stress tests were based on estimates that, in a worst-case scenario, the four banks could lose almost €9.5 billion from residential mortgage loans over the next three years.

The Govenor of the Central Bank – Mr Honohan – said the aim was to create a sustainable Irish banking system through a combination of recapitalisation, deleveraging and reorganisation.

The total given to the banks before this announcement was  €46 billion – with €34.7 billion of that  going Anglo Irish Bank and Irish Nationwide.

The Government will take  €17.5 billion more from the NPRF. (  €7.2 billion and €3.5 billion has already been taken out for the earlier bailouts of Allied Irish Banks and Bank of Ireland, respectively.)

Anything over the €17.5 billion for the banks will be borrowed at an average interest rate of 5.8 per cent. Most of this  capital  will come from the €35 billion set aside in the €85 billion EU-IMF bailout for the banks.

Today – 24th Feb 2011 – it was announced that €8.6 Billion of  deposits at Anglo Irish Bank will be transferred to Allied Irish Bank.
The Minister for Finance – probably in his last day in the job , announced the immediate transfer of the majority of the Irish and UK deposits and certain NAMA bonds  from Anglo Irish Bank Corporation Limited ) to Allied Irish Banks p.l.c.

The Central Bank say that  “No action is required by depositors as a result of this transfer. There will not be any immediate change in how depositors deal with their accounts. Deposits can be accessed as normal through the relevant institutions and depositors can continue to do business as normal with Anglo Irish Bank”

Allied Irish Banks PLC will also receive senior National Asset Management Agency bonds with a nominal value of approximately EUR12.2 billion,

AIB, which was effectively nationalised late last year will transfer 3.5 billion euros to Anglo and purchase Anglo’s Isle of Man unit for 200 million euros.

Anglo Irish deposits introduced through branches in Vienna, Dusseldorf and Jersey are not affected by this  Transfer Order .

Any queries can be directed at  Anglo’s relationship team: +353 1 616 2618 (Monday to Friday, 9am – 5pm)

In a related transfer – all Irish Nationwide Building Society deposits will be transferred to  Irish Life and Permanent (PTSB) .

With many Irish lenders announcing increases to variable rate mortgages – lots of homeowners will be looking at trying to get a fixed rate .

The latest increases by PTSB , EBS, Ulster Bank and KBC are probably going to be followed soon by AIB abd BOI.  It is also likely that ECB rates could rise before the end of 2011 .

EBS have withdrawn fixed rate mortgages “temporarily” from Feb 16th – and PTSB increased fixed rates for existing customers who may be coming off existing fixed rates or discounted mortgages. With the choices reducing – where can borrowers get a decent fixed rate before they all go up?

The best 3 year fixed rate mortgage available at the moment is 3.19% from AIB (Max LTV 92%).  See current lowest 3 year fixed rate mortgages.

The AIB  5 year fixed rate is  4.39% -  also available  on an LTV of  92% .

PTSB are still adertising a rate of 3.7% fixed for 5 years if your LTV is under 50% (new customers only)
See lowest 5 year fixed rate mortgages here.

Fixing your mortgage now for 3 or 5 years, hoping that this will cushion you against future variable rate rises – is a gamble. It might pay off or it might not.  Fixing will give you  the certainty of knowing what your payments will be for the next 3 or 5 years – which can be a good thing in itself.
Switching lenders to get a fixed rate will also incur legal and valuation costs which could well exceed any savings you might make.

As expected – following rate increases from EBS and PTSB – the 2 “main” banks in Ireland have jumped on the bandwagon and increased variable mortgage rates.

Bank of Ireland increased their rate  by 0.45 % to 3.49 %.
ICS (BOI broker arm) has increased its rate by 0.6 % to 3.64 %

AIB has increased variable mortgage rates by 0.5% (SVR rises from 2.75 % to 3.25 %
That equates to an increase of  18%

These increases follow similar rises by EBS – who increased its rate by 0.6 %, up from 3.23 % to 3.83 %.  Permanent TSB  also rose rates  this month by 0.5 per cent to 4.19 %

See all the lowest mortgage rates in Ireland here.

Tracker Mortgages are not affected.

All of our Best Buy mortgage tables have been updated today with all the new rates from BOI, ICS, EBS and Haven. More rate rises to follow from EBS and KBC on May 1st.
Irish Nationwide have not yet announced increases.
See all the  lowest mortgage rates available currently.

Most of the general public in Ireland probably think that NAMA is fully owned by the Irish Government .  (Probably – most of the general public in Ireland don’t really care.)
If the bad debts turn out to be OK – then NAMA could make a profit – so that could be good for the taxpayer?

But – there is a small catch – PRIVATE INVESTORS  actually own 51% of  Nama’s (National Asset Management Agency) property loans.
17% is owned by Irish Life which is part of Permanent TSB
17% is owned by New Ireland – which is part of the Bank of Ireland Group
17% is owned by “major pension and institutional clients”  of AIB Investment Managers
They paid €51 Million for a 51% share in NAMA.

The government has set up an SPV  – special purpose vehicle  – to buy and manage the debts. This is a way of keeping the NAMA debts off the Irish State’s balance books -  and off the national debt. This was  done to get around   EU rules about state borrowing limits

The “SPV”  is  a separate entity to Nama and will have its own board, although this will include representatives of the asset management agency. Nama will supposedly have a veto over all of the SPV board’s decisions.

If the property loans can be managed profitably, then Nama and the private backers will be paid a yearly dividend, tied to returns from Irish Government bonds. Once the entire operation is finished, the SPV will be wound up. The Government says that the investors, that is Nama and the private backers, will only be repaid their €100 million if the resources are there.

If the loans are ultimately profitable, they will be repaid their capital plus 10 per cent – (€1.7  million for each private investor)  – once the SPV is wound up.
This means that the private backers will be repaid their €51 million, plus €5.1 million, plus any dividends they will have received along the way. Any further profits over and above these amounts will be returned to the exchequer.

However, if the property loans are not profitable, Nama and the private investors will lose their €100 million.
(In the scheme of things – the €49 million NAMA investment is a small drop in the ocean of the NAMA €80 Billion debts)

So it appears that the Irish taxpayers will have paid around €80 billion to buy overpriced property and bail out the banks. But -  51% of the debt is sold back to some of those banks – for just €51 Million !!
It’s a crazy world ….. run by bankers it seems.