€17bn loss by Anglo is largest in history of Irish banks
Lender hit by more exceptional expenses and NAMA discounts
Published 09/02/2011 | 05:00
Anglo Irish Bank has unveiled the largest loss in the history of Irish banking -- €17.6bn -- after being hit by NAMA discounts and losses on other assets.
The Government has provided almost €30bn of capital to the bank and more is expected to follow as the country's once third-largest lender tries to meet capital requirements set by the Financial Regulator.
The bank, which is to be ultimately wound down, had to take a one-off charge of €7.8bn in 2010 and a loss of €11.5bn when it transferred assets to NAMA. The bank only provided a four-page guide to its 2010 results yesterday, but will release a full profit and loss account in March.
Anglo has set previous records for losses, but the latest is the largest produced by an Irish company in a single calendar year.
The way NAMA makes banks crystallise losses up front does impact on the figures, however.
The results also show a collapse in customer deposits at the bank, falling from €27.2bn to €11.1bn at year end. Anglo now has borrowings from the Central Bank standing at €45bn, up from €23.7bn in the previous year.
"Conditions in wholesale funding markets remain extremely difficult and the bank continues to rely on government and monetary authority support mechanisms,'' the bank said yesterday.
The bank actually turned in an operating profit of €1.8bn, one of the highest in recent years, although much of this came from bond buybacks, where the bank offers investors less than face value for subordinated debt held in the bank.
Interest income came to €700m, while total expenses came to €354m, up from €309m the previous year.
The increase was driven by exceptional expenses of €62m linked to restructuring, NAMA and what it called "legacy matters''.
Staff costs amounted to €130m in the year compared to €154m in 2009. The number of staff was 1,296, a 16pc drop on the year.
The bank is in a restructuring phase and looks set to merge with Irish Nationwide. Its deposit book and NAMA bonds will be offered for sale, with even private equity players entitled to make a bid for these assets and liabilities.
After all NAMA transfers have been completed, the bank will still have €35.8bn of loans on its books, with provisions put against these loans of €8.8bn. While this is a very high provision level, Anglo's loan book has massively underperformed in the last two years, easily wiping out provisions.
The bank was nationalised in January 2009 after its former chairman Sean FitzPatrick revealed he failed to disclose director's loans he held to shareholders.