Wednesday 7 December 2016

Anglo may need another €18.3bn of capital

Chief executive: Mike Aynsley
Loans going to NAMA: €35.6bn
Capital required: up to €8.3bn this year, with up to a further €10bn in future
Discount on first NAMA loans: 50pc

Emmet Oliver and Joe Brennan

Published 31/03/2010 | 05:00

Anglo is transferring loans worth €35.6bn to NAMA. Photo: Bloomberg News
Anglo is transferring loans worth €35.6bn to NAMA. Photo: Bloomberg News

NATIONALISED lender Anglo Irish Bank could need as much as €18.3bn of fresh capital from the taxpayer, in addition to the €4bn it has already received, the Minister for Finance revealed yesterday.

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Fixing Anglo is the "biggest challenge in resolving the banking crisis" the minister admitted and many people wanted to "obliterate" it from the banking system. But instead the Government was being forced to put additional money into the institution, he admitted.

"Winding-up the bank is not and was never a viable option," the minister announced. An immediate wind-up would lead to a fire sale of assets resulting in additional losses of €30bn.

He said a long-term wind-down of the bank over ten years could expose the State to funding obligations approaching €30bn.

"I understand why many want us to close this bank. I understand the impulse to obliterate it from the system. But I cannot, as Minister for Finance, countenance such a course of action."

Previous media reports had suggested that Anglo would only need €9bn, but the speech included a surprise revelation that it could need €10bn more on top of that.

"The realisation of the costs involved and the wider disruption to the financial system would generate enormous instability for the State with unforeseeable but potentially long-lasting damage to the overall economy," said Mr Lenihan.

Funding

Mr Lenihan said the €10bn of extra funding was simply the "current estimate". "It is because of the heavy loan losses already incurred on a loan book of €72bn and those in prospect that the injection of resources in this bank is so large," he explained.

Mike Aynsley, Anglo chief executive, last night told the Irish Independent that "the figures are really soul-destroying -- not only for the people who are trying to work though this mess, but also for the taxpayer and the general public."

"We're dealing with a commercial property market which has collapsed 50pc in value," said Mr Aynsley. "You've just got to work through the process as diligently as possible."

Irish Independent

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