EC delays decision on Anglo's business plan
Published 06/08/2010 | 05:00
ANGLO Irish Bank's business plan won't be given the all-clear from Brussels until September at the earliest, quashing management's hopes of getting the go-ahead before the summer recess.
Anglo chief executive Mike Aynsley confirmed the delay in an email to his management team yesterday, where he also admitted the so-called 'good bank' could end up with €10bn of loans and not the €15bn mooted.
The bank boss's wide-ranging management update also included a colourful tirade against the "carnage" wreaked by Anglo's former management, though he urged staff to "stop focusing on" the past.
The European Commission (EC) has spent months thinking over Anglo's plan to split itself into a 'good bank' that will act as an SME lender and a 'bad bank' that will wind down Anglo's troubled loans. Up to 800 people have left the bank but 200 have joined.
"We had hoped by now to be in a position to announce an 'in principle' agreement with the EC for the bank's split. However, summer is upon us and it will likely be September now before [that]," Mr Aynsley told management yesterday.
He went on to say that while the authorities were "in agreement" on the "need to split the bank", concerns had arisen around the detail of which loans would end up with the 'good bank' and which would go to the run-down vehicle.
"It is conceivable that by the time we get through this process the final transfer amount could be closer to €10bn rather than €15bn," Mr Aynsley said, stressing that it was "critical" that non-performing loans were not transferred.
Anglo has already begun a "Split Transformation Planning Project" on the logistics of the split, targeting "operation split" by December 31, 2010 and "fully physical split" a year later.
Mr Aynsley said Anglo was also busy on a number of fronts including "de-risking" the bank, and improving governance.
"It [de-risking] does not, and cannot be a practice of closing down and eliminating all risk that exists in the bank," Mr Aynsley said, stressing that the bank had to go through its book to identify "acceptable" risks.
Anglo has also created a "restructuring and recovery" unit to focus on loan recoveries like the Quinn Group and Arnotts, which Anglo and Ulster Bank are taking control of.
"If the Bank were simply to let these businesses deteriorate further without action, losses would be greater requiring even further taxpayer support," Mr Aynsley said, describing the activity as "only natural".
Mr Aynsley's diatribe against the bank's former management made up the first section of his dispatch, as he admitted he "could never have accurately foreseen the extent of the carnage wrought by the practices of previous management".
"Quite simply, no amount of justification can soften the reality that has been brought to bear on the bank, its staff, its clients, its previous shareholders and the current shareholders, the Irish taxpayer," Mr Aynsley said.
Former management bore "significant blame" on the €20bn plus that's been lost by Anglo, as did the regulatory system of the day.
"As difficult as it is, given the pain experienced by all, it's now time in my view to stop focusing on the carnage," he concluded.