Tuesday 12 December 2017

Anglo set to unveil country's biggest loss at €17.6bn

Emmet Oliver

Anglo Irish will today unveil the biggest loss in Irish corporate history at €17.6bn -- and will warn that it may need additional capital to strengthen its balance sheet.

An update on a merger with Irish Natiowide will also be provided. Anglo has also appointed consultants to value its US loan book, and is continuing to pursue former chairman Sean FitzPatrick through bankruptcy proceedings.

The bank will update in an annual report what former directors of the bank continue to owe the lender, including Lar Bradshaw, David Drumm and William McAteer.

An update on the bank's proposed investment in Quinn Insurance is not expected, as this still needs clearance from the Government.

Anglo is partnering with Liberty Global, a US insurer, but its proposal involves the Insurance Compensation Fund being used to pay legacy claims.

The lender, nationalised in January 2009, has so far received promises of state assistance totalling €29.3bn, but up to €34bn may yet be needed. Chief executive Mike Aynsley will spell out the bank's future capital position in a statement to be issued this morning.

The bank will disclose a net loss of €17.6bn, including impairment charges of €7.8bn and a loss caused by NAMA transfers of €11.5bn. However, thanks to forcing losses on junior bondholders, the bank will actually report an operating profit of €1.8bn.

Anglo has over core tier one capital of 10.8pc at present, which is above regulatory minimums, but with further impairments to be taken in 2011, the bank could need additional capital depending on the performance of its non-NAMA loan book.

The bank's need for capital may be impacted by the expiry of certain derogation that allowed it to carry less capital than other banks. These derogation from the Financial Regulator expired in August and may mean Anglo has to call on more promissory notes from the State at some stage in 2011 or 2012.

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