Wednesday 24 January 2018

Anglo losses on bad loans expected to hit €13bn

Joe Brennan

Anglo Irish Bank is expected to reveal over €13bn of losses on bad loans when it publishes figures in the coming weeks.

The results, for the 15 months to the end of last year, will take into account most of the discounts Anglo faces on €33bn of property loans it is sending to NAMA.

The group's new management team has also taken a trawl through its €40bn of non-NAMA loans. It hopes to dump most of these in an internal 'bad bank' under a massive restructuring plan.

The loan losses mark a significant deterioration from when Anglo reported €4bn of loan losses for the first six months of the year.

However, the 15-month net loss is expected to come in below €12bn, as a large debt restructuring last summer delivered a profit of €1.8bn.

Still, the figures are likely to revive calls for the Government to refuse to put any more taxpayers' money into Anglo and wind it down with immediate effect.

Sources familiar with the restructuring plan say the bank would need an additional €6bn on top of the €4bn pumped into it last summer.


They say splitting the group into an internal 'good bank' and 'bad bank' is the cheapest way to sort out the mess, and will force riskier bondholders to absorb some of those losses.

Moody's, the credit ratings agency, warned this week that a wind-down of Anglo would have a negative impact on Irish Government bonds and "severe consequences for NAMA".

Alan Dukes, a public interest director on the board, highlighted this week the possibility of Anglo becoming part a 'third force' in Irish banking to rival the two main players in the market.

"We are going to need financial operators who can handle the sort of restructuring and repackaging of all that property debt that's going to be out there," Mr Dukes said.

The European Commission is expected to deliver a ruling on Anglo's restructuring plan by the end of June. The group faces a difficult task proving how it can repay the Government's bailout money over the course of five years, as required by state-aid rules.

Irish Independent

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