Wednesday 29 March 2017

Troubled Anglo made final bid to merge with Rabo

Emmet Oliver Deputy Business Editor

Anglo Irish Bank made a last-ditch attempt in the second half of 2008 to merge with Ireland's only AAA-rated bank, Rabo, but discussions with the Dutch lender were unsuccessful. It's a year ago this week since the bank was nationalised.

The Irish Independent understands the idea was floated that Anglo could reverse its Irish operations into Rabo Ireland but despite two meetings a deal never materialised. Anglo was nationalised in January 2009.

The talks were described as exploratory and never reached a stage where a public disclosure would have been necessary. The size of the Rabo balance sheet meant Anglo would have been taken over, but Anglo executives would have had a considerable influence over the combined entity. Last night, Rabo's spokesman declined to comment.

Rabo's chief niche in Ireland is as a deposit taker, but it does own ACC Bank, which has built up very large property exposures over recent years. If the balance sheet of Rabo's parent company was available to Anglo, it may not have had to be nationalised.

It is known that informal contacts were also taking place in the period before nationalisation between Anglo Irish and Irish Nationwide. These were publicly reported at the time. There have also been indications that Anglo executives approached Irish Life & Permanent about an alliance.

These approaches ultimately came to nothing, even though the Financial Regulator and the Government were aware of some of them. There was a move on in the second half of 2008 to find a "solution" to what was termed the 'Anglo problem'.

The attempt to get hold of Irish Nationwide was viewed at the time as an opportunistic move to secure the society's €2bn mortgage book, which Anglo could repo with the ECB. It was also looking for a liquidity pool to be set up by the Central Bank as it bedded in a deal.

Documents seen by this newspaper show that Anglo executives felt that any government "systemic" support would primarily go to AIB and Bank of Ireland, the two largest clearing banks in the country. The events surrounding the Anglo Irish nationalisation remain clouded.

UCD economist Morgan Kelly has suggested that the Government rejected civil service advise in September 2008 to nationalise Anglo, rather than waiting until January.

This has been denied by Finance Minister Brian Lenihan. The Government insists corporate governance issues at the bank -- like the Sean FitzPatrick loans -- caused a loss of confidence in the institution that forced its nationalisation.

Mr FitzPatrick resigned in December 2008, and was followed shortly afterwards by chief executive David Drumm.

Irish Independent

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