Thursday, December 03, 2009
THERE will be substantial management changes at the nationalised Anglo Irish Bank, according to Finance Minister Brian Lenihan.
Speaking after discussions with Anglo’s new chief executive, Mike Aynsley, Mr Lenihan also hinted at the creation of a ‘good bank’ from whatever can be salvaged from the institution following restructuring.
Mr Lenihan, in Brussels for a meeting of EU finance ministers, said there would be a substantial management clean-out at the bank at executive level.
He said all impaired loans owed by executives and former executives had been identified and assessed and legal proceedings would be taken against any who fail to repay loans.
"I am satisfied that the new chief executive is taking a very vigorous approach towards the necessary repossessions of loans and repossession of property that will be required where these persons have sums due and owing and not being repaid to the bank," he said.
Outstanding loans were estimated at €179 million at the bank’s annual general meeting earlier this year. Court proceedings have begun against former chief executive David Drumm over an €8m loan and to overturn the transfer of his Malahide home to his wife.
Anglo’s restructuring plan was submitted to the European Commission earlier this week as required under state aid rules.
Mr Lenihan said that the State wanted to ensure Anglo did not become a threat to the stability of the Irish economy and banking sector.
He said it wanted to salvage everything possible from the bank in terms of a viable operation but refused to confirm that this means the creation of a good bank.
With regard to Allied Irish Bank, Mr Lenihan said he favoured it being allowed to raise private capital, as this would allow adequate remuneration for the Government’s shareholding.
AIB’s restructuring plan is with the European Commission. As a result dividend payments on preferential shares have been suspended until the discussions are completed.
Mr Lenihan did not rule out the state taking a larger share in the bank. "I have made it clear at all stages that the Irish state is willing to commit capital to the banking system if capital is required," he said, adding NAMA and the Central Bank would determine the level of capital required.
"The banks have expressed an interest in raising funding in the private markets. They are entitled to that, and the State has made it clear that if necessary it will inject the necessary capital too," he said. But he refused to comment on whether there would be an AIB rights issue next year.
© Examiner Publications (Cork) Limited, City Quarter, Lapps Quay, Cork. Registered in Ireland: 73385.
