Friday 24 November 2017

Cabinet in favour of gradual wind-down at Anglo

'Good/bad bank' plan loses support

Emmet Oliver and Maeve Dineen

The Government now favours a gradual wind-down of Anglo Irish Bank, rather than the so-called "good bank/bad bank" model proposed by the bank's management, the Irish Independent understands.

Discussions involving the Department of Finance are now focusing on the gradual wind-down of the bank.

The Government has cooled on the idea of splitting the bank in two and putting 20pc of its assets into a new entity, but no final decision has been made by the EU Commission.

However, the Government remains totally opposed to any short-term closure of the bank and is determined to honour all obligations to depositors and bondholders, senior sources have said.

A total wind-down of the entire loan book now looks to be on the cards, which would rule out the possibility of establishing a new business bank from the wreckage of Anglo.

At present, Anglo chief executive and chairman Alan Dukes wants to put 20pc of the bank's assets into a new entity, with the rest of the loans being run down over time.

Meanwhile, it has emerged that government departments and state agencies have placed deposits of €645m with Anglo, up from €436m at the end of last year -- a rise of 48pc

There were also loans outstanding between Anglo and state agencies, but these have been eliminated since the Dublin Docklands Development Authority (DDDA) moved its Irish Glass Bottle site loan into NAMA.

The bank is also taking a tougher approach with customers and its results this week disclose that interest roll-ups, where the bank adds outstanding interest to the back of the loan, are being reduced.

"The bank's credit policy was revised in 2009 to restrict the approval of new or extended interest roll-up facilities,'' said the half-year results published on Tuesday.

These results also revealed that of the top 20 customer, one particular customer accounts for 6pc of total loans.

This is believed to be the loans held by Sean Quinn and his family. In addition, a further two customers have borrowings in excess of €500m.

In total, there are 21 customers with borrowings in excess of €250m.

The bank, meanwhile, has a €9m deficit in its defined-benefit pension scheme, which is very small compared with the deficits at other Irish banks.

Within government circles, there is a growing acceptance Anglo Irish Bank will be gradually closed down over a shorter period than previously envisaged. Ministers have insisted there is no difference between Fianna Fail and the Greens on the future of Anglo.

Irish Independent

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