Lowering of interest rate expectations will have bigger effect on market sentiment towards Irish banks, with their higher reliance on interest income
AIB had also cut its non-performing loans from a peak of €31 billion in 2013 to €2.2 billion by the end of last year. Crucially, it has not – so far – seen an increase in problem loans in the current cost-of-living crisis.After more than doubling in value over the preceding 12 months, shares in AIB hit a four-year high of €4.27 – not far off its 2017 initial public offering price of €4.40 – when the results were unveiled on March 8th.
Catastrophically, at a time when better-run banks were upping insurance against rising rates ... SVB allowed virtually all its rate hedges to expire last year Catastrophically, at a time when better-run banks were upping insurance against rising rates – through so-called financial hedging contracts – SVB allowed virtually all its rate hedges to expire last year. A subsequent failed plan to sell shares to plug the capital gap and an all-out run by companies on deposits resulted in the biggest US banking collapse since the financial crisis.
Late on Thursday, a group of major US banks were forced to provide a $30 billion lifeline to San Francisco-based lender First Republic Bank, which was on the brink as concerns about unrealised losses in its bond portfolio saw it bleed deposits.also brought fresh focus to the unique basket case on this side of the Atlantic that is Credit Suisse
Unlike many smaller US banks now in focus, Irish banks did not participate in the so-called carry trade of using cheap excess deposits to buy higher-yielding bonds. Instead, they stored excess cash with the ECB. While they did incur losses when negative central bank rates prevailed, the €67 billion of surplus cash that the three surviving Irish lenders had on their balance sheets as of December is now hugely profitable.
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