Plan to divide Anglo Irish into 'good' and ''bad' bank
Published 02/05/2010 | 05:00
THE division of Anglo Irish Bank into a 'good' and 'bad' bank has emerged as the preferred option of the bank's management and independent external advisers, the Sunday Independent has learned.
The move -- should it receive the approval of the EU Commission -- would effectively see upwards of 80 percent of Anglo's existing business being closed down over a period of up to 10 years, with the remaining 20 per cent of profitable assets retained for the creation of a 'good bank', which management believes will ultimately prove to be the least costly solution for the taxpayer.
"We've looked at every scenario in depth. The one that represents the lowest cost to the taxpayer is setting up the new bank and closing down 80 per cent of the old bank.
"We're coming at it from the perspective of lowering the cost to the taxpayer.
"If the lowest cost was to come from closing the whole thing, then that is what we would do," a source said.
Reports in recent days that the EU Commission had criticised Anglo's proposals for the creation of a 'good' and 'bad' bank were last night described by informed sources as a "misinterpretation" of the current consultation process on the bank's future.
They confirmed, however, that EU officials had raised questions on the proposal-- and that Anglo had been asked to provide detailed costings for a wind-down of its operations over a 20-year period.
News of the EU's request for an estimate of a 20-year wind-down have been widely interpreted by opposition politicians as flying in the face of Finance Minister Brian Lenihan's assertion last March that he "could not countenance" the closure of Anglo's operations.
Last Wednesday, Mr Lenihan was accused in the Dail of directly contradicting himself when, in response to questions on the future of the bank, he said that he was "open to suggestions from all parties" on the matter.
While Fine Gael and the Labour Party seized on Mr Lenihan's words as an indication that the Government's plan for Anglo was now coming apart, Tanaiste Mary Coughlan told the Dail the following day that nothing had changed.
Last night, Anglo chief executive Mike Aynsley appealed to all the parties to set aside their differences on plans for the future of the troubled bank in the interests of the nation.
Speaking exclusively to the Sunday Independent, Mr Aynsley said it was time to "leave the Anglo-beating stick in the cupboard".
"I think it's very harmful. Everyone should be aware that this is not a joke. The nation is in a lot of trouble. Everyone needs to stand together and ask what's best for the nation, and what's best for the taxpayer. It's time that all political parties support the solution that is in the best interests of the taxpayer," Mr Aynsley said.
Separately, the Sunday Independent understands that the proposal for a 20-year wind-down of Anglo was broached by EU officials in the context of the wind-down of Northern Rock in the UK.
Informed sources insisted there had been no suggestion that this was the EU's preferred approach but merely part of the consultative process. The 20-year wind-down and a range of other "straightforward" and "complex structural" queries were raised in the context of 101 questions Anglo had received from the EU by the end of 2009. Anglo is expected to submit its final responses to the commission when it delivers the second phase of its restructuring proposals at the end of this month.