Thursday 17 August 2017

Anglo Irish Bank's bad loan losses expected to reach €14bn

Joe Brennan

Bad loan losses at Anglo Irish Bank are now set to come in around the €14bn level, as the nationalised bank and its auditors fine-tune figures ahead of publication next week.

It will be the largest loss ever unveiled by an Irish corporation.

It is understood that the nationalised group's overall pre-tax loss will still come in just below €12bn for the 15 months to the end of last December.

Yesterday was the second anniversary of the so-called St Patrick's Day Massacre, when then publicly quoted Anglo stock plunged as much as 22pc to lead a broad sell-off of Irish banking stocks. The stock ended the session off 15pc -- just days after the near-collapse of US investment bank Bear Stearns.

The episode prompted an investigation by the Financial Regulator into suspected "rumour-mongering". However, the probe concluded that Dublin stockbrokers broke no market rules.

Impairment

Anglo's figures are set to show that the group's massive impairment charge will be partially offset by a €1.8bn extraordinary gain from a large debt restructuring last summer, which took some of its subordinated bondholders out at a deeply discounted market price.

It is also believed that the group will post between €500m and €800m of operating profits, which will also absorb some of the bad loan losses.

Anglo is preparing to transfer up to €35bn of its loan book to NAMA over the coming months. The bad loan losses for the 15-month period will take into account most of the discounts faced on these loans.

It is expected that Anglo will require an additional €6bn to cushion the group's balance sheet, as it seeks to split itself into an internal 'good bank' and 'bad bank' under a huge state-aid restructuring plan being assessed by Brussels. The plan would be to run down assets that end up in the 'bad bank' over time.

Irish Independent

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