Anglo facing 'horrendous' €14bn losses
Bank breaks own record as loans move to NAMA
EMBATTLED Anglo Irish Bank is on course to lose at least €14bn this year, shattering its own record for the biggest annual loss ever recorded by an Irish business.
The spectre of the losses, dubbed "horrendous" by Anglo boss Mike Aynsley, came as the bank revealed losses of €8.2bn for the first half of the year.
In an interview with the Irish Independent, Mr Aynsley said Anglo was likely to lose at least another €6bn over the rest of the year as it transfers the rest of its toxic loan pile to Nama.
Yesterday's results included a €3.5bn loss on the €10.1bn of loans Anglo transferred over to Nama before June, as the discount applied by the State's bad bank came in drastically worse than Anglo's predictions.
Another €2.3bn of the first half's losses stemmed from write-downs made to the €26bn worth of toxic loans ear-marked to move to Nama before the end of the year.
Mr Aynsley admitted that this €26bn loan pile is set to be written down even further.
The €5.9bn transferred over in August triggered a fresh €1.6bn loss, while losses on the remaining €20bn could come in at "between €4.5bn and €5.5bn", Mr Aynsley said.
The figures imply further losses of at least €6bn on Nama-bound loans over the rest of 2010, bringing full-year losses to more than €14bn against last year's €12bn record.
The half-year results also included hefty write-downs to Anglo's non-Nama portfolio, that is loans outside the development sector, where the bank slashed €2.5bn from the value of the loans,
Mr Aynsley said the bank had now marked down the value of its non-Nama loans by 54pc. "That should be reasonable, unless we see another significant downturn," he said last night.
Yesterday's figures also showed Anglo's coffers are now bolstered by €26.3bn of cheap Central Bank money, up from €23.7bn at the end of December.
The higher reliance on Central Bank funding came as €5.5bn of deposits flowed out of Anglo.
Mr Aynsley linked the flight of deposits to the expiry of some elements of the government guarantee scheme in September and warned that another €12bn of deposits could disappear if the guarantee isn't extended.
"That's not going to be the death knell for us, though, we obviously have contingency plans in place," he added.
But despite the massive 2010 losses and the prospect of €12bn in deposits flooding out over the coming months, Mr Aynsley said a radical jump in the amount needed to bail out Anglo was not inevitable.
"I think we're on top of the numbers enough to know that in the absence of a major downturn in the market we've pretty much estimated what the hit could be," he said, pointing to a figure in the €24bn range.
On the trading front, Anglo said new lending remained "low" over the first half of the year, while the bank's interest receivable collapsed from €2.6bn in the first half of 2009 to just under €1.1bn.
Staff costs at the bank fell by 17pc on a like-for-like basis as the headcount dropped from an average of 1,753 to 1,360. Total operating expenses, meanwhile, fell from €151m to €133m reflecting the slimmed down Anglo.
In its annual report, Anglo stressed that while the losses were "disappointing from a taxpayer's perspective", they were driven by "decisions taken some time ago".