Saturday 16 December 2017

Anglo/Nationwide plan on hold as EC awaits fresh losses

Laura Noonan

THE European Commission won't deliver a verdict on Anglo Irish Bank and Irish Nationwide's business plan until June at the earliest, in case the latest review of the banks' loan books shows up fresh losses.

The news means the announcement of the new name for Anglo/Nationwide and the legal merger of the two entities is likely to be delayed until later in the summer.

The EC has been mulling over the new business plan since January 31 and was initially expected to have a verdict on the plan within a relatively short period of time.

Sources this week confirmed, however, that the Commission has now decided not to make a decision on Anglo/Nationwide until after it gets a new BlackRock report into loan losses at the two institutions.

Brussels competition officials are understood to be conscious that the BlackRock assessment could throw up further capital demands for the merged entity, so the amount of state aid involved could rise.

The BlackRock reports are due for publication by the end of May. The Commission is expected to spend several weeks going through them so a decision on the business plans won't be made until "June at the earliest".

BlackRock reports

Drafts of the BlackRock reports have already been submitted to the Central Bank. The findings are believed to show no new capital demand for Anglo, but may show some additional losses for Nationwide.

A spokeswoman for the Central Bank declined to comment last night.

The State has already committed €29.3bn to Anglo and €5.4bn to Nationwide.

In an annex to the March stress tests, BlackRock played down the likelihood of Anglo needing more cash, but said Nationwide's losses could be €195m worse than expected under the "adverse" case.

This "relatively small" demand will "likely not be realised until after 2015", BlackRock said. "The Central Bank estimates that by this time, the surplus capital of the new merged entity. . . would be more than adequate to absorb such additional losses," BlackRock added.

Since then, BlackRock has carried out a more thorough assessment of both institutions' loan losses, mirroring some of the methods employed in the stress tests of AIB, Bank of Ireland, EBS and Permanent TBS.

While Anglo and Nationwide could theoretically announce their new name and proceed with a legal merger before the European Commission approval, this is understood to be "unlikely".

Sources stressed, however, that the process of integrating Anglo and Nationwide was already "well underway" with regular meetings between management of both sides.

Irish Independent

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