Taxpayers will face e30bn bill if Anglo wound down early

Claire Murphy

Taxpayers could face a €30bn bill if Anglo Irish Bank is wound down over five or 10 years.

Sources familiar with the costing of various options for the bank have said that the new management at Anglo preferred the option of splitting the group into two 'banks'.

The establishment of a 'good bank' and a 'bad bank' would require a further capital injection of €4bn to €6bn.

It is one year ago today that the Government moved to nationalise the bank and there has already been €4bn pumped into Anglo, following €4.1bn of bad loan losses for the six months to last March virtually wiping out its equity reserves.

The new capital is expected to bring total support of up to €10bn.

Sources briefed on the costing scenarios say a wind-down over five to 10 years would set back the Exchequer by up to €30bn, between capital injections and soaring funding costs.

Consultants KPMG and a host of major international investment banks were involved in costing options before the "viability plan" was submitted to the European Commission at the end of November.

Fine Gael leader Enda Kenny said that if his party took power, it would wind down Anglo over a period of seven to 10 years.

He said he could save the taxpayer about €3bn in the process.

The party has published the terms of reference for an inquiry into the banking crisis.

The FG proposal does not contain measures similar to those called for by the Labour Party. In its proposal Labour has called for a change in the law to compel witnesses to appear and to allow the inquiry to come to findings about individuals.


However, Fine Gael has indicated that given the current climate, bankers would have no choice but to co-operate with an inquiry, and said the law does not therefore have to be changed to facilitate it.

It is understood that the Government's plan includes selling a rebranded 'good Anglo' in five years, in the hope of further clawing back the billions it has pumped into it.

The split would see most of the group's remaining €44bn loan book after the NAMA process being put into an 'asset management company', which would be required to hold much lower capital ratios than the regulated 'good bank' arm.