Wednesday 22 November 2017

Anglo gets fresh €2bn to boost restructuring bid

Latest State cash injection to ailing lender labelled 'dead money' by Opposition

Anglo chief
Mike Aynsley says the
plan to split
the bank
would be the
least costly
for taxpayers. Photo: Bloomberg News
Anglo chief executive Mike Aynsley says the plan to split the bank would be the least costly for taxpayers. Photo: Bloomberg News
Anglo chief executive Mike Aynsley
Incoming Anglo chairman Alan Dukes says the split option would cost between €13bn and €22bn, which includes the €14.3bn already injected into the nationalised lender.

Joe Brennan and Fionnan Sheahan

Anglo Irish Bank received a fresh €2bn injection from the State to bolster its reserves as its revised state-aid restructuring plan made its way to Brussels yesterday.

The latest Anglo injection brings to €14.3bn the amount taxpayers have pumped into the nationalised bank in the space of 12 months -- with a further €8bn committed.

But opposition parties said the €2bn into Anglo was "dead money which only adds to Ireland's indebtedness".

Anglo's chief executive Mike Aynsley insisted yesterday the group's central plan to split into an internal 'good bank' and 'bad bank' was the least costly for taxpayers -- but would still see over 80pc of the embattled lender being run down over time.

While the plan for the bank was formally submitted by the Department of Finance to the EU, a spokesman would only say the Government "broadly supports a long-term option for Anglo, which is in the best interests of taxpayers."

He said the department and the bank would enter discussions with the European Commission over the next few months over the detail of the plan.

But speaking to the Irish Independent, Mr Aynsley said: "The only upside for the taxpayer is in splitting the bank -- all other options only have downsides to them."

He added: "When it gets to the final call as to what goes into the asset management company ('bad bank') and the new bank, we have to go through a very detailed and careful process so you don't end up in a situation where you transfer assets that will get you into trouble further down the road."

NAMA is set to take over €36.5bn of Anglo's loans -- or half its portfolio. Anglo's new management team is hoping to dump about €20bn of risky loans into an internal 'bad bank', with about €15bn earmarked for a totally rebranded 'good bank'. The total size of the balance sheet of the new bank would be in the region of €30bn to €40bn, including liquidity assets.


Fine Gael finance spokesman Richard Bruton said putting the €2bn into Anglo would confirm the worst fears of taxpayers bracing themselves for €3bn of tax hikes and cutbacks this year.

Labour Party finance spokesperson Joan Burton called the €2bn an instalment into a "failed bank", which would shock taxpayers.

Mr Aynsley recently told staff the new bank would "concentrate on building a successful franchise as a mid-sized corporation and commercial bank."

Anglo engaged a host of advisers, including consultants Bain & Co, KPMG and JP Morgan, to fine-tune the revised plan, as its original scheme, filed last November, led to 101 questions from Brussels.

Anglo's incoming chairman Alan Dukes confirmed recently that a 10-year wind down would require government capital of between €19bn and €30bn, while the split option would cost €13bn to €22bn.

This includes the €14.3bn of emergency aid that has already been injected into the nationalised lender.

They were also directed by the EU to investigate a 20-year run-down of Anglo, in line with one of the scenarios that was looked into for British bank Northern Rock. But a source familiar with this option said "this, too, is loss all the way".

The department has been advised by investment bank NM Rothschild, the Central Bank, the Financial Regulator and the National Treasury Management Agency.

None of the scenarios outlined in the plan envisages the State recovering all the money.

Irish Independent

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