Pain for banks exposed to dwindling assets

Yesterday morning Allied Irish, Bank of Scotland (Ireland), Ulster Bank and KBC had good reason to believe that they would be able to delay or prevent the day they would have to crystallise their losses on loans to Mr Carroll.

This morning, they will have to return to the courts to begin the process of untangling part of Mr Carroll's byzantine property empire and dividing up the losses.

That process will unsettle shareholders who no doubt will be wondering what it means for them.

The markets closed long before yesterday's decision so it was too late to watch any change in the banks' share prices but it seems unlikely that investors will see the setback as anything but negative for the banks.

After all, the decision goes against the listed banks' stated wishes.

Not everybody will be downcast of course.

Money

ACC Bank, the former farmers' bank now owned by Dutch banking giant RaboBank, has got what it wanted; a decision that will allow it to extract some money from the Irish market quickly.

The Dutch bank, which is not covered by the government guarantee scheme or the National Asset Management Agency, made it clear yesterday that it believed NAMA was against its interests, without explaining why.

One explanation must be that NAMA will delay ACC's chances of quickly recouping any of the significant losses that the bank has experienced since so many of its borrowers stopped repaying loans or interest.

ACC has never publicly explained why it is breaking ranks with the other banks but it looks likely that the bank is preparing to withdraw from Ireland and is extracting as much money as possible from the country before it does so. In the case of Zoe Developments, ACC gave another partial explanation yesterday, noting that if Zoe Developments were allowed to continue borrowing but then went bust at a later date, then ACC's share of the proceeds would have been smaller than it is today.

While the high street banks look less secure today than yesterday, it is unlikely that there will be any firesale of Mr Carroll's half-built offices and apartments.

After all, there is hardly a county in Ireland where a receiver is not trying to sell off a hotel at present.

But there are simply no takers for these hotels and subsequently little discernible effect on the value of hotels. In many cases, the hotels have been on the markets for months, and sometimes years. It does not seem a far stretch to expect the same pattern to emerge when the receivers begin to sell off Mr Carroll's property.

In this scenario, it could well be that NAMA may yet end up taking control of the property, when and if it finally gets going in the new year.