bnbg - looking to the future..., page-25

And now dogby, some accounting advice as well. You also say:

"BNB is broke. They have negative equity.

Negative = less than 0.

They are close to bankruptcy but they wont die, they will "survive" because they will be kept alive on life support,, long enough to have anything left of value stripped out by the banks."

When you say BNB has negative equity at 31 Dec 08, well that is technically correct, but the question is why do they have this negative equity at this time?

The reason for this is that there is a new set of international accounting rules now in operation called IFRS (International Financial Reporting Standards). Under these new rules, all company assets that are for sale have to be reclassified into a different note in the accounts and may need to be written to a more realistic sale price.

THIS IS WHAT IS CAUSING THE NEGATIVE EQUITY POSITION. BNB is virtually having to reclassify its total assets under these rules, and while from a technical accounting viewpoint this is actually the case, it is a pretty harsh measure all the same. Very harsh. Maybe too harsh.

I am not saying you are wrong Dogby, but I am saying we need to understand is that if these writedowns prove to be too harsh and BNB effectively sells assets over time at higher than the written down book values, well a possiblity does exist that some value may eventually get through to beleaguered bondholders by the business making some profits on sales and while the new bank preference holders want priority to this money, there could be a trickle down at some point.

Now Dogby says that is 0% chance and others say it is much higher than that. The market is sitting at 4%. Fair enough, people will have differing views on this, but instead of sl@gging one another off, can we at least have some debate on that issue?