Economics 20/8/10: BOSI lessons

Some impressive numbers from BOSI withdrawal from the Irish market are:

• BOSI holds a €32bn loan book in the Irish market (total Irish market is ca €350bn)
• BOSI holds a just over 9% market share of total Irish loans market
  
• BOSI withdrawal of working capital facilities in Ireland will have immediate impact on 12,000 business customers
  
• BOSI also holds €10bn mortgage book, or 7% of all Irish mortgages
  
• BOSI holds 5,000 current accounts
  
• Amazingly, 44% of the bank’s book was impaired as per H1 2010 generating a write-off of €4bn in loans
• Per Bloxham stockbrokers: "the move is likely to have a negative impact in the economy where liquidity is still scarce and the closing off of business lines will force some businesses to wall" (sic).

Now, unless we are willing to assume that Irish banks (with such flagships of prudential lending as AIB, Anglo, INBS etc) are massively more brilliant than BOSI in writing loans, we simply cannot avoid translating BOSI impairment rate to their books as well. Which, of course, makes my estimate of 40% across the books losses for the banking system as a whole, peak to trough, rather safe.