Negotiations to find fresh capital for Anglo Irish intensify
Patrick Neary, chief executive of the Irish Financial Services Regulatory Authority (Financial Regulator), at a briefing.
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Saturday December 20 2008
GOVERNMENT-led talks on the recapitalisation of Anglo Irish Bank intensified yesterday in the wake of the dramatic resignations of the group's chairman, chief executive and a non-executive director within the past two days.
Sources said a deal to inject fresh capital into the group, whose stock has plunged 59pc within the past three weeks, could be announced as early as this weekend. The Government has not ruled out fully nationalising the bank as it redoubles its efforts to shore up its balance sheet reserves in the face of mounting bad loan losses in a weakening economy.
Finance Minister Brian Lenihan remained committed to "underwrite the capital needs of Anglo Irish Bank on appropriate terms and to ensure its long-term strength and viability as a bank of systemic importance in Ireland".
Senior executives at the other main banks covered by the State guarantee are also set to continue negotiations with the Department of Finance and officials from the National Treasury Management Agency (NTMA) over the weekend regarding their recapitalisation efforts.
The minister said last Sunday, as he unveiled a pool of up to €10bn for investment in the sector, that the banks would be asked to submit proposals by early January. However, it is understood that so-called "agreements in principal" could be reached regarding individual institutions' capital needs before Christmas.
The €10bn pot will be made up of resources of the National Pensions Reserve Fund, run by the NTMA, as well as funds from existing shareholders and private investors.
Fine Gael deputy finance spokesman Kieran O'Donnell last night called on the Government to take immediate control of Anglo Irish Bank.
Urgent
Mr O'Donnell said there was an urgent need for recapitalisation of the Irish banking sector, given the damage done to its reputation by the revelation that former chairman Sean Fitzpatrick had concealed loans from the bank from shareholders over the course of eight years.
"If legislation is needed to take control of Anglo, the Dail should be recalled. Fine Gael has already said it would support such a move," said Mr O'Donnell.
"The Financial Regulator chief executive must also come forward and explain his actions. Vital information has been withheld from Anglo shareholders and from taxpayers who have given the banks a [€440bn] guarantee," Mr O'Donnell added.
The financial watchdog had known of Mr Fitzpatrick's practice since last January, but the Department of Finance only became aware of it this week.
- Joe Brennan
