Monday 22 January 2018

EU asked to approve massive rescue aid package for Anglo

Ailing bank preparing to reveal loan loss charges of €14bn

Joe Brennan

The Government has appealed to the EU to give the go-ahead for multi-billion euro emergency rescue packages to keep Anglo Irish Bank and Irish Nationwide afloat as they prepare to unveil massive loan losses.

Sources in Brussels said yesterday that the European Commission will deliver its verdict on the 'rescue-aid' request next Wednesday.

The development partly explains why the release of Anglo Irish Banks' figures, originally expected two weeks' ago, has been delayed.

The Department of Finance declined to comment.

The Irish Independent has already reported that the nationalised bank is preparing to reveal loan loss charges in the region of €14bn for the 15 months to the end of December. The figure is being driven as Anglo accounts for the majority of the discounts faced on about €35bn of loans it is transferring to NAMA.

The management team, led by Mike Aynsley, has also conducted a thorough review of impairments in Anglo's non-NAMA portfolio. It is understood the impairment charge will drive an almost €12bn pre-tax loss for Anglo for the reporting period -- the largest in Irish corporate history.

Irish Nationwide has already indicated it will need up to a €2bn a state bailout as a hole is blown in its balance sheet by writedowns associated with its transfer of over €8bn of loans -- or 80pc of its portfolio -- to NAMA. The society, run for almost four decades until last year by Michael Fingleton, is expected to publish its figures next month.

It is believed Nationwide's recapitalisation figure will ultimately be higher than originally outlined, as the new head of financial regulation, Matthew Elderfield, insists the country's lenders hold higher levels of equity reserves.

The EU has sanctioned a number of rescue-aid measures by governments across the trading block since the global financial crisis erupted in August 2007.


The first such case was the UK's bailout in October that year of stricken lender Northern Rock, through the provision of emergency liquidity assistance.

More recently, Brussels approved a rescue-aid recapitalisation package by the Dutch government in favour of ABN Amro and Fortis Bank Nederland.

Rescue aid can last six months -- after which it either must end or be reconsidered under restructuring state-aid rules.

The European Commission is now in the middle of a review of a massive restructuring from Anglo, which hopes to split itself into an internal good and bad bank, with the good part being turned into a viable business bank.

Anglo has signalled it will need a further €6bn of capital -- in addition to a €4bn bailout last summer -- to achieve this.

Anglo filed the restructuring plan last November. The bank, Department of Finance and a coterie of advisers are working closely with the EU on an updated version of the plan, which answers scores of questions from Brussels. This is expected to be filed at the end of next month.

Irish Nationwide, meanwhile, has only begun work on its restructuring plan in recent weeks.

Up until recently, the society had thought it could submit a plan jointly with EBS, with which it is in merger talks.

Irish Independent

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