As the Irish economy reaches an unemployment level of close to 15% and a contraction in its economy of 1.5%, Ireland now faces a crucial point during the countries economic crisis.
Today the country will announce the eagerly awaited bank stress tests. Banking stocks in Ireland and ADRs in American have been halted today ahead of the results.
As the market awaits the result of the stress tests the ten-year government bond yields on Irish debt has surged above 10%. This reflects the fact that the Ireland and Portugal have been unable to finance their short to long term debt in any meaningful for around 12 months.
Upon the release on the stress tests, Ireland will is also expected to announce a 'credible' plan to restructure is economy which is teetering on the brink of a double-dip recession.
To highlight to severity of the Irish banking crisis, Irish Life and Permanent that saw its share price plummet yesterday 45% has a market cap of just over 100m euros but has a staggering 39bn euros of liabilities and loans on its balance sheet and deposits of 19bn euros. This represent a potential shortfall in funding of around 20bn euros
The release of the bank stress test are one of the conditions imposed on the Ireland as a result of the 85bn euro bailout agreed with the EU and IMF last November.
Brokers are expecting a shorfall of between 15-20bn euros, 10bn euros more then originally earmarked by the EU and IMF, but less than the 35bn euros set aside in the bailout package.
Jennifer Hughes, Senior Market Analyst at the Financial Times Short
View presentation on this > http://video.ft.com/v/870121760001/Periphery-Stress