Anglo stabilises UK operations with €1.4bn injection of capital
Published 28/04/2010 | 05:00
Anglo Irish has pumped almost €1.4bn (£1.2bn) into its UK operations, which are suffering from surging loan losses even as the UK property market shows signs of recovery.
The UK operation, Anglo Irish Asset Finance, has been "severely impacted'' by the crisis with the UK outlook remaining difficult, the bank said.
Anglo Irish, which was nationalised in January 2009, has signalled that asset sales in the UK are unlikely in the short term with the bank instead preferring to sit on assets until markets improve.
Accounts for Anglo Irish Asset Finance, signed off in April, reveal that, in the past year, it has received £1bn of capital from a company called CDB (UK) Ltd, its parent, which is owned by Anglo Irish Bank.
In addition Anglo Irish waived a £200m loan to Anglo Irish Asset Finance in December, allowing the UK company to effectively add that amount to shareholder's funds.
The UK firm also holds a letter of support from Anglo Irish in Dublin, which means that the nationalised lender will meet its liabilities right up until July 31, 2011. This is in addition to the capital injections.
The UK company relies totally on Anglo Irish Bank for "ongoing daily supply of liquidity''. Like its parent, a large amount of its lending is to retail and general property projects.
"The outlook remains difficult due to the current economic climate and the impact on our clients' businesses which are primarily involved in the property industry in the UK,'' according to the accounts.
The UK company's balance sheet shows large impairments on its assets for sale, amounting to £864m, which translates into 27.3pc of its closing loan book.
"There have been signs of economic improvement in the last three months,'' the accounts claim. But the directors are far more downbeat, stating: "No significant improvement has been assumed by the directors over the next number of years."