Business Irish

Thursday 8 December 2016

Anglo could be wound up within 'three or four years'

Published 29/08/2011 | 05:00

Anglo is due to be wound down over a 10-year period, but management now believe that the final phase of Anglo's life could be significantly shorter. Photo: Getty Images
Anglo is due to be wound down over a 10-year period, but management now believe that the final phase of Anglo's life could be significantly shorter. Photo: Getty Images

ANGLO Irish Bank's management believe the nationalised lender could be wound up in as little as three or four years, the Irish Independent has learnt.

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The news comes days after its chief executive, Mike Aynsley, revealed that up to €4bn in capital could be handed back to the State when Anglo pulls the shutters down for the final time.

The collapsed lender is due to be wound down over a 10-year period, but management now believe that the final phase of Anglo's life could be significantly shorter.

Successful bidders have been identified for Anglo's $9.5bn (€6.5bn) US loan book and newswire Bloomberg reports that Wells Fargo, JP Morgan and Lone Star Funds will buy the loans for 80pc of their face value by the end of October.

That will leave Anglo with just €16bn of its own loans, plus about €2bn of loans from Irish Nationwide, meaning the bank is no longer "systemically important".

Last week, Anglo bosses confirmed that they had already been fielding enquiries about both the Irish and UK loan books, adding that the recent €1bn investment in Bank of Ireland would make it easier for Anglo to attract bidders for its Irish loan book.

Management stressed that the environment remained difficult in Ireland and that there would be "no fire-sales" since any sales would have to be "capital friendly".

It is now believed, however, that the sales process could be significantly swifter than originally anticipated -- barring any major market calamities.

A faster wind-down means the State gets back any surplus capital sooner.

It would also have profound implications for the 1,100 staff employed by Anglo, though some of them will keep their jobs if the businesses they're working in are sold intact.

Anglo last week confirmed that it continued to invest in staff training, with a view to preparing employees for getting jobs when the bank is finally shut. Some 350 redundancies are already being pursued.

The Central Bank and the European Central Bank would welcome a faster wind-down, since an emergency liquidity assistance (ELA) programme could be wound down sooner.

The programme once had more than €70bn of cash out to Irish banks, all covered by an explicit guarantee from the Government, but Anglo is expected to be the only bank using that funding by the end of the year.

The bank had €38.4bn of ELA in the second half of the year. Anglo finance boss Jim Bradley last week said the bank's "working assumption" was that it would never return to financial markets and would be solely funded by government-supported methods.

Irish Independent

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