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Anglo Irish has 90pc of liabilities 'set to mature'

Almost 90pc of Anglo Irish Bank's liabilities mature within the next 12 months and retaining deposits is the key challenge facing the bank, Canada's largest ratings agency has claimed.

About €67bn of the bank's funding is maturing over the next year, representing 87pc of liabilities coming due. The liabilities come in the form of inter-bank deposits, customer deposits, bonds and subordinated debt, said a note to clients from Toronto-based agency DBRS.

It said the new Anglo funding bank would face "significant challenges in attracting and retaining deposits'' as this bank would not be offering any other banking services or products. The agency also speculated that the EU Commission might restrict the kind of interest Anglo can offer.

The Government here still regards Anglo as a "systemically important bank'', but not as critically important as before, said the company. The support of the Government would allow the bank time to split itself in two, into an asset recovery bank and a funding bank. The asset recovery bank would continue to depend on central bank funding and government support.

Anglo's franchise was "materially and permanently impaired'' the agency said, and the bank had limited earning power with no return to profit in the "near or medium term".

"DBRS sees Anglo Irish's earnings-generation ability as irrevocably damaged. The lack of new lending activity, a declining balance sheet and elevated funding costs will constrain the ability of the bank to generate income,'' the note said.

The Canadian company said that the quality of Anglo's non-NAMA loans was viewed as "extremely weak'' and the NAMA exercise itself would only remove 41pc of the bank's loans.

"Managing the impact of credit losses in the run-off non-NAMA portfolio is the primary challenge of Anglo Irish,'' it said.

"Given the proposed split of the bank and the uncertainty regarding the funding bank's ability to attract and gather deposits, DBRS sees Anglo Irish as remaining reliant on support from the Irish Government and central bank facilities for funding though the run-off of the asset recovery bank,'' the company said.

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