Monday 11 December 2017

Embattled bank makes history with €12.7bn loss

Joe Brennan

ANGLO Irish Bank revealed yesterday it clocked up €15.1bn of bad loan losses for the 15 months to the end of December -- sending the embattled bank into the biggest loss in Irish corporate history.

The €12.7bn net loss for the period is five-and-a-half times the loss posted by Allied Irish Banks for last year, which at that time marked a record for the country.

The dramatic losses were driven as Anglo put aside €10.1bn to cover a large part of the discounts expected on about €35.6bn of loans it is dumping in NAMA.

But based on the 50pc discount that the agency has applied to Anglo's first batch of toxic loans, it may end up having to write down a total of €17.1bn of these before all the assets are transferred.

The bank's new management team and its auditors Deloitte also carried out a thorough review of Anglo's remaining loans, resulting in an additional €5bn bad debt charge for the 15 months.

The dire figures wiped out the nationalised bank's coffers, forcing Finance Minister Brian Lenihan to pump €8.3bn of cash to keep it afloat. The European Commission yesterday approved the emergency 'rescue aid' for the bank, but it has been prompted to open an in-depth investigation into the total amount of state aid that has been injected. Anglo received an initial €4bn bailout last summer.

Anglo's new boss Mike Aynsley said yesterday that the dramatic increase in the bailout estimates was down to Anglo facing a deeper-than-expected 50pc discount on its first NAMA loans.

He added that demands from the new financial regulator that all banks hold much higher levels of capital to cushion themselves from economic shocks has also driven the bill higher.

Anglo's customer deposits have almost halved to €27.2bn since the fateful day of the Government guarantee scheme in September 2008.

The bank is now relying on a €23.7bn funding lifeline from central banks -- including €11.5bn from the Irish Central Bank -- to keep its doors open. This is up from €7.6bn 18 months' ago.

Mr Lenihan also told a shocked Dail on Tuesday that the State may have to provide an additional €10bn to Anglo in the future "to cover future losses and accomplish the restructuring of the bank and its balance sheet".


This would bring the total bill for rescuing Anglo to €22.3bn.

While the disastrous results reignited calls from the opposition and public for the scandal-ridden bank to be shut down, Mr Aysley and his chief financial officer, Maarten van Eden, warned that a liquidation would lead to a massive funding problem for the State.

Mr van Eden, a Dutch banker, said Ireland could be facing "dire consequences" if it tried to default on either Anglo's senior or riskier bonds.

Meanwhile, Senator Feargal Quinn pointed out yesterday that he does not hold shares in Anglo Irish Bank. The independent senator does hold shares in Taurus, a retail property fund.

The fund, listed as Anglo Taurus Retail Geared Property Fund, has an address at Anglo Irish Bank, Head Office, Stephen Court, 18/21 St Stephen's Green, Dublin 2.

Irish Independent

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