Monday 23 October 2017

Anglo may be able to give back €4bn of its capital

Bank reveals dramatic improvement in 2011 losses and loan impairments

At the Anglo Irish Bank Corporation press briefing in Dublin yesterday were group chief executive Mike Aynsley (right) and
interim chief financial officer Jim Bradley
At the Anglo Irish Bank Corporation press briefing in Dublin yesterday were group chief executive Mike Aynsley (right) and interim chief financial officer Jim Bradley
Laura Noonan

Laura Noonan

ANGLO Irish Bank expects to hand back as much as €4bn of surplus capital to the State at the end of its wind-down, chief executive Mike Aynsley revealed yesterday.

The comments came as the bank revealed losses of just €101m for the first half of the year, dramatically better than the record €8.2bn lost in the first six months of 2010.

The figures were buoyed by a €600m refund from NAMA after due diligence revealed the toxic loans agency applied too harsh a discount on some loans transferred over in bulk late last year.

The 2011 period also saw a dramatic improvement in Anglo's loan impairments, with a hit of just €778m booked against the €4.8bn taken in the first half of 2010.

"I'm cautiously confident that it (the cost of the full wind-down) is going to be a better result than we expected," Mr Aynsley told reporters yesterday, predicting the final cost would be "at the lower end" of a €25bn to €28bn range.

The State has capitalised Anglo to deal with losses of €29bn, implying there will be €4bn of cash to hand back if the bank contains losses to the level suggested by its chief executive.

"We're happy with where we've got to," he said, adding that Anglo was no longer considered a "systemic" threat to Ireland's financial system.

The price achieved for asset sales will be the most important factor determining Anglo's wind-down costs, since the bank has already heavily provided for losses against a loan book that will stand at just €16bn by the end of the year.

The biggest ticket item on the market is a $9.5bn US loan book. Mr Aynsley confirmed that the bank had identified "successful" bidders and was in the process of "advising winners and losers".

"These are the critical moments," Mr Aynsley said. "It's best not to give too much away."

Anglo "keeps our hopes high" that the sale will be for more than the portfolio's €5.6bn ($8.1bn) book value, added Tom Hunerson, the Anglo executive handling the US process.

Wealth division

Anglo has also been exploring the sale of its wealth management division for several months.

Mr Aynsley said the bank still "hasn't made a decision" on whether to sell the 50-person unit or wind it down.

The bank's other assets at the half-year included a €15.4bn Irish loan book and €9.5bn worth of UK loans. Since then, Anglo has also taken over Irish Nationwide's €2bn portfolio.

"It's going to be a longer, harder road in Ireland in particular," Mr Hunerson said, adding that while there were "bottom feeders" making enquiries about specific assets, Anglo had to do deals on a "capital friendly" basis.

Work on asset sales was partially responsible for a significant rise in Anglo's professional fees costs, which contributed to a €60m jump in the bank's "non-staff costs" for the 2011 half year.

Anglo spent another €29m on "exceptional" professional fees "associated with the bank's restructuring, the NAMA process and the ongoing investigations into legacy matters", according to an interim statement from chairman Alan Dukes.

"Because of the nature (of the work) there's an inevitability about the cost," said Mr Aynsley.

Other exceptional costs for the 2011 period included a €214m loss on the transfer of Anglo's deposits to AIB. Meanwhile, Anglo finance boss Jim Bradley confirmed that the bank lent less than €500m to existing customers in the first half of 2011.

Irish Independent

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