€22bn State bailout cash is gone, says Anglo chief
Bank bosses reveal €550m of its NAMA loans have been written down to zero
Published 17/06/2010 | 05:00
THE "lion's share" of the €22bn being pumped into state-owned Anglo Irish Bank will "never be seen again", the bank's chief executive Mike Aynsley admitted yesterday.
The statement came during a high-octane Oireachtas committee meeting, at which Anglo's top brass also revealed that €550m of the loans they have transferred to the National Assets Management Agency (NAMA) had been written down "to zero".
Other highlights of the meeting included predictions of further "horrendous" losses at Anglo this year, as another €9.5bn is written off NAMA-bound and the bank's €35bn non-NAMA loan book takes an additional hit.
Anglo chairman Alan Dukes, chief executive Mike Aynsley and chief financial officer Marteen Van Eden all made presentations to the meeting of the Oireachtas finance committee.
Responding to questions on the taxpayers' likely €22bn commitment to the embattled bank, Mr Aynsley stressed that the "lion's share" of that money would "never be seen again".
Anglo has already sent €9.3bn in loans in its first tranche transfer to NAMA and will send another €26.3bn before the end of the year. A discount of 50pc is expected across the whole debt pile.
"That money is not recoverable," Mr Aynsley said, adding: "That money is gone."
The Anglo trio also insisted that shutting down the bank early would not reduce the scale of losses. Mr Van Eden said winding up the embattled bank in a year could cost €42bn, plus "funding" costs.
Anglo's preferred option -- separating the bank into an 'Asset Co' or 'bad bank' that will be wound down and a trading 'Bank Co' or 'good bank' that will lend to SMEs -- is the "least worst option", they argued.
"There is no conceivable timeframe in which it (Bank Co) can undo those (€22bn) losses ... but it does give us an entity at the end that can produce value," Mr Dukes stressed.
The Bank Co/Asset Co plan should also see the taxpayers' liability capped at close to €22bn, as against the €42bn black hole that would be triggered by an immediate wind-down, the Anglo men argued.
The three men gave further details of the bruising impact NAMA was having. Anglo's 2009 write-downs envisaged haircuts of 28pc on the €36.5bn going to Nama.
Following the first tranche transfers, however, those haircuts have now been revised to "between 50pc and 55pc".
The €9.3bn transferred so far includes "some valuations at par" and about €550m written down to "zero", Mr Van Eden said. He described the "general picture" as "fairly shocking".
The higher-than-expected haircuts mean that Anglo will have to write down its NAMA debt pile by another €9.5bn in 2010, a loan loss described as "horrendous" by Mr Van Eden.
Anglo's €35bn of non-NAMA debt is also expected to suffer further write-downs.
"We would like to think the pain has been taken, but that's simply not possible," said Mr Van Eden, adding: "Impairments are still materialising in loans."
The Anglo bosses also hinted at the possibility of further liability management moves, with Mr Van Eden saying the level of subordinate debt outstanding had "not escaped us".
Anglo redeemed €2.4bn worth of debt at a profit of €1.8bn last year, reflecting the heavy discount at which the instruments were trading.