Lenihan asks EU to allow slow wind-up of Anglo Irish
Published 06/09/2010 | 05:00
FINANCE Minister Brian Lenihan will plead today with Brussels to allow the gradual closure of Anglo Irish Bank over 10 years.
The Irish Independent can reveal the minister's plans for a wind-up of its operations will include a guarantee for all deposits held with the bank, regardless of their size.
Amid spiralling worries about its impact on the economy, the Government has decided on a 10-year wind-down period.
EU finance ministers will converge in Brussels today for talks on the financial crisis.
European Competition Commissioner Joaquin Almunia, who will have the final say on Anglo's fate, will meet Mr Lenihan on the future of the bank which has already cost taxpayers €25bn.
Sources were unable to put an estimate on the cost of a 10-year wind-down, saying it depended on numerous factors such as interest rates and the state of the property market.
The 10-year plan, which is some way shorter than had been expected, will form the centrepiece of the Government's plans after Anglo bosses appeared to throw in the towel over staying open.
Anglo chief executive Mike Aynsley said at the weekend: "The European Commission is saying 'This bank has dropped €25bn and it doesn't deserve to survive', and they're right." He added that the 'good bank/bad bank' split "doesn't look like it is going to happen".
The Brussels meeting will mark the culmination of weeks of intensive talks between bank bosses, the Department of Finance and the European Commission.
Both the European Commission and the European Central Bank (ECB) will have a significant say on the future of Anglo and the minister may also discuss the issue with ECB chief Jean-Claude Trichet at the two-day Ecofin meeting of finance ministers.
In his meetings with Mr Almunia, Mr Lenihan is expected to press for an early decision from the European Commission on the Government's Anglo plans. Sources said it was hoped there would be some "finality" and "closure" within the next two weeks.
The package of proposals suggested by Mr Lenihan will come as a major blow to Mr Aynsley, who argued a good bank/bad bank was the best solution for the institution.
But the Government pulled away from that option over the past week after the European Commission became increasingly sceptical of the 'good bank' proposals.
It has been testing the Government's claims that keeping the bank open would incur the lowest cost to taxpayers since an original submission was made in May.
At the weekend, Mr Almunia said the commission was "dealing with serious problems" affecting the Irish banking industry.
The Government's decision to opt for a 10-year wind-down was last night described as "one of the most historical U-turns in the history of the country" by Labour's finance spokeswoman Joan Burton.
"The minister needs to be in damage limitation mode now ... this bank risks dragging everything down," she said.
"This is what is killing Ireland. This is the biggest bank failure, proportionately, on the planet in terms of the amount of GNP it is taking."
Fine Gael's deputy finance spokesman Kieran O'Donnell last night urged Mr Lenihan to make a public statement clarifying the future of Anglo Irish Bank. He claimed that the Government had procrastinated over the "dead bank" for two years.
Only last week, Anglo posted losses of €8.2bn for the first half of 2010, claiming it was still battling through an exceptionally difficult period.
The Government and Anglo have repeatedly insisted the bailout will cost taxpayers €25bn, but serious doubts were cast over this estimate two weeks ago when credit-rating agency Standard & Poor's (S&P) put the figure at €35bn.
Since then, Anglo Irish Bank has been the subject of major commentary abroad with the 'Financial Times' claiming it is "still the rotting corpse in the disaster zone of Irish banking".