Thursday 25 May 2017

Anglo says clarity on future may help stem loss of funds

Customer deposits fell by about €4bn to €23.1bn in the first half of the year, Anglo said last week. Photo: Bloomberg News
Customer deposits fell by about €4bn to €23.1bn in the first half of the year, Anglo said last week. Photo: Bloomberg News

Anglo Irish Bank said a government decision on its future due later today may help stem a decline in deposits.

The bank experienced “material” outflows in recent days because of concerns about its prospects, Chief Financial Officer Maarten van Eden said in an interview in Dublin today.

The situation should “stabilise when certainty is restored,” Chief Executive Officer Mike Aynsley said in the same interview.

The Cabinet is discussing options today for Anglo, which the Government took over last year.

The bank is selling loans to a state agency and executives propose splitting the remainder of the loan book into a so-called good bank which would keep lending and a bad bank managing the wind-down of the rest of the loans.

Customer deposits fell by about €4bn to €23.1bn in the first half of the year, Anglo said last week.

The bank’s reliance on short-term funding from the European Central Bank and the Central Bank has increased from €26.3bn at the end of June, Van Eden said, declining to disclose the current figure.

Van Eden also said that it would be a “disaster” if the Anglo was to default on its bonds.

Credit-default swaps on the bank soared 64.9 basis points to 780.81 today, data from Credit Market Analysis Ltd showed.

The premium investors charge to hold Irish 10-year debt over the German equivalent, Europe’s benchmark, has risen to a record in the past month after Standard & Poor’s cut the country’s credit rating to AA-, saying the state may have to inject as much as €35bn into Anglo “over time.”

Aynsley said the figure should be around €25bn, rising by about €4bn should the bank be wound down. Finance Minister Brian Lenihan said this week the bailout is “manageable” and won’t bankrupt the country.

Bloomberg

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