Business Irish

Thursday 30 March 2017

Anglo finalising its plan to win all-clear from Brussels

Joe Brennan

ANGLO Irish Bank's new management is set for a busy week of meetings with its board, advisers and state officials as it finalises plans for a vastly re-worked state-aid restructuring plan for Brussels.

Incoming chairman Alan Dukes has been actively defending the group's central plan in recent weeks to split itself into an internal "good bank" and "bad bank". But the group also has had to cost a wind down of over 10 and 20 years to satisfy the European Commission.

Sources said that the restructuring plan was on track to be submitted by the end of the month. But there are still a number of discussions that will have to take place over the coming week within the bank, with the board, National Treasury Management Agency, Financial Regulator, Central Bank and Department of Finance.

"The most important thing from the perspective of the board and the Government is that any plan for the future of the bank should be in the best interest of the taxpayer," said one source close to the process.

Anglo, which has received more than €12bn from the State with up to a further €10bn promised, will transfer half of its €72bn loan book to the National Asset Management Agency (NAMA) this year. Sources said that even under the good bank/bad bank split, over 80 per cent of the original group will be wound down over time. The bank's main strategy adviser is Bain & Co. Writing in this newspaper last week, Mr Dukes said: "Our latest estimates are that a 10-year wind down of the bank would require government capital of between €19bn and €30bn, whereas the split option would require a total of €13bn to €22bn (including the funds already injected)."

None of the scenarios envisage Anglo being able to pay back all of the bailout money.

Anglo, headed since last September by Australian chief executive Mike Aynsley, filed its original restructuring plan last November, but has been working since January on answering 101 questions posed by Brussels.

Sources said the injection of €8.3bn of emergency rescue aid into the group in March triggered an automatic review of Anglo's case, even as the second version of the plan was only being drafted.

Review

The review resulted in Brussels criticising a number of elements of the original bank split plan. These are likely to be made public in the coming weeks, even though the process has moved on.

It is understood that the notion of costing a 20-year wind down came from the EU case team which worked on Northern Rock's plan. In the event, Brussels approved a splitting up of the stricken UK mortgage lender.

The EU also told Anglo it could not avail of state aid to drastically reshape and reposition itself as a business lender.

However, it is believed the updated plan will emphasise that 14pc of its old business was already in the area of corporate banking and that it had substantial exposure in syndication.

Proponents of the plan believe this could benefit NAMA as its own assets make their way back into private hands over the next decade or so.

Irish Independent

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