Bailed-out Anglo needs €5.7bn cash but EC eyes wind-down
NATIONALISED Anglo Irish Bank, which has already received €4bn from government funds has now told the Department of Finance that it needs an additional €5.7bn if it is to remain viable and resume lending, it emerged yesterday.
But the bank is far from certain to secure additional funds in light of the stand being taken by the European Commission, and it is Europe which could ultimately decide the fate of the bank.
Finance Minister Brian Lenihan said on November 13 that a second capital injection into Anglo Irish won't exceed the €4bn the Government put in earlier this year.
The Sunday Tribune reported yesterday that the bank said it needed the money to restore capital levels to international norms and to have a sufficient capital buffer against losses which can come from lending to the SME business sector.
A spokesman for the Department of Finance said last night he could not comment on the report. A debate is now taking place between the bank and department officials over the cost of re-capitalising the bank, compared to a wind-down of the lender.
The wind-down option is believed to have found considerable support within the department.
However, the cost is likely to run to well beyond the €5.7bn the bank is seeking.
Out of its €67.3bn loan book, €29bn was in difficulty or in danger of deterioration, according to its half-year report.
And it is also thought likely that much of the €64bn in deposits held by the bank would disappear in the event of a wind-down being announced, leaving the State with an even bigger financial headache.
The half-year figures paint a disturbing picture, with figures showing the bank's deposit base down by a third, or €17bn, as business customers went elsewhere. Also inter-bank deposits have halved to less than €10bn.
But despite the dire costs involved, the European Commission may order a wind-down as it has strict rules on state aid to firms and banks.