Commentary: Irish Black Hole Remains a Mystery


The Irish are a chatty bunch.

I mean that in the nicest possible way. From the finance minister to the taxi driver from the airport, everyone wants to tell me about everything from the state of farming to the poor summer weather.

Dublin, Ireland
Firecrest Picture | Robert Harding | Getty Images

The one thing they won’t tell me, or more accurately can't tell me is the one thing I came to Dublin to find out: just how big is the Irish banking black hole?

For all the apparent newly-found clarity on the government's intentions toward Anglo Irish Bank and the rest of the sector, we still don't have the answer to the one thing that will crystalize and then stabilize the Irish bond markets.

In the past 24 hours the incredibly affable Finance Minister Brian Lenihan has unveiled his master plan for Anglo, the most troubled of Ireland’s banks. It will be split into two and seems certain to be wound down over the next few years.

I am grateful to Lenihan for the time he gave me and CNBC in explaining the plan and yet even he couldn't give me the number I was looking for.

I was equally thankful that another man at the center of the Anglo storm, the bank's beleaguered CEO Mike Aynsley, who invited me into his office to talk about the latest developments.

But he too could only hint at an approximate figure for the cost to the taxpayer of the government support of his bank.

When I asked Aynsley if the underlying problem, the value of property loans and real estate, could be quantified, he replied that they were "in the process of bottoming out."

If we’re only in "the process" then I’m not sure he has a clean number for me either.

I kept up my pursuit with similar questioning to the National Treasury Management Agency (which, via its National Asset Management Agency subsidiary, holds all the bank bad apples for the government), the Labour Opposition, the Irish Times and a prominent local stockbroker.

All to no avail.

Only ratings agency S&P has had a stab at a figure. Late last month it penciled in a worst-case figure of 90 billion euros ($114.3 billion) for support for the whole banking sector, much to a chorus of boos from the Irish.

The government has promised a hoped-for much lower number within a few weeks, in early October to be exact, and yet will we actually believe it when we see it?

Markets to Determine Stabilization of Anglo Irish

Click to watch the full interview with Anglo Irish Ceo Mike Aynsley

The truth is the government may think it has a total cost number for Anglo's support, but until the assets are actually off-loaded by the state, a process which could take over a decade, we will have no idea as to the true cost of the bursting of the Celtic Tiger real-estate collapse and its subsequent effect on the banks and the economy.

Now that's plenty of time for the goldfish on the international bond markets to take fright again and again and again and again…