IL&P could face suits over Anglo scandal

By Niamh Hennessy

Wednesday, November 25, 2009

IRISH Life and Permanent could face lawsuits and fines stemming from its role in the Anglo Irish bank scandal as it plans a new structure.

The Financial Regulator is probing Irish Life after it said earlier this year that it had made "wrong" deposits with Anglo, which are being investigated.

In plans detailing the setting up of a new holding company, IL&P said that depending on the outcome of any investigations, enforcement authorities may seek to impose substantial fines and penalties.

An IL&P spokesman said: "In a prospectus, it’s prudent to include all risk factors, hypothetical or not.

"We are not speculating on whether fines will be imposed or how much they might be if they are imposed."

In September last year, the last day of Anglo Irish’s fiscal year, Irish Life deposited €4 billion overnight with Anglo. That transfer was made after Anglo deposited the same amount "as collateral" with Irish Life.

IL&P sent a document to shareholders yesterday outlining plans to create a new holding company which is expected to list on the stock exchange in the middle of January.

The bank said the current corporate structure of the group is a product of "historic legislative constraints".

It said the current structure is not best suited to serve the group and its members as the financial services sector in Ireland changes.

IL&P said that the main disadvantage of its current status is that it is both a holding company for life assurance and investment management as well as being a licensed bank.

"A more desirable structure would see a new listed holding company whose sole function would be to act as the group’s holding company," IL&P said.

"This proposed new structure will do that and offers the further opportunity, as appropriate, to restructure the life assurance, investment management and/or the banking businesses in a prompt and flexible manner in response to possible changes in the financial services environment," it added.

IL&P Group Holdings will have the same capital structure, board and management team as IL&P and there will be no changes to corporate governance and investor protection measures. The group will also have a dual primary listing on both the ISE and the London Stock Exchange.

The publication of the document and prospectus precedes an extraordinary general meeting (EGM) due to be held on December 17.

This story appeared in the printed version of the Irish Examiner Wednesday, November 25, 2009