Markets to give reaction to Anglo plan

Markets to give reaction to Anglo plan

The financial markets will this morning give their reaction to the Government's decision to split Anglo-Irish Bank.

Yesterday, Finance Minister Brian Lenihan announced that Anglo will be broken up into a Funding Bank and an Asset Recovery Bank.

The decision on Anglo followed months of discussions and proposals with European Commission chiefs and options put forward by Anglo management. The last two days, Mr Lenihan spent discussing the future of Anglo with Competition Commissioner Joaquin Almunia and European counterparts.

Mr Almunia said: “I view this new option positively as it would deal better with the distortions of competition.”

But he warned a number of important aspects around the proposal need to be clarified before the Commission will sign off on it.

The bank last week announced losses of €8.2bn and is forecast to need a bail-out of at least €25bn.

Under the Government’s plan, to be authorised by the EC, the two new banks will be rebranded – one as a so-called Funding Bank holding customer deposits of €23.2bn and the second an Assets Recovery Bank tasked with managing €38.4bn of loans.

Money lending will be outlawed, the Department of Finance said.

The Government said the new savings bank would be completely separate from the loan assets and people who left money in the bank would be totally insulated from the performance of the second wing of the bank.

“The Government’s primary objective in dealing with Anglo-Irish Bank has been to minimise the cost of this distressed bank to the Irish taxpayer,” the Department of Finance said.

“It will be a stand-alone, regulated bank, completely separated from Anglo’s loan assets and it will be owned directly by the minister for finance.”

Anglo, which said it would work to implement the plan, has not expanded its loan book since 2009 and the Government insisted it would stay that way.

A full report on the plan was expected to be handed to the European Commission chiefs in Brussels next month for them to authorise.

More on this topic

Major setback for Seann Quinn's children in €410m liability caseMajor setback for Seann Quinn's children in €410m liability case

Official who shredded key papers to explain decisionOfficial who shredded key papers to explain decision

'Is it more of the roll-over over Leo?' - SF reacts to €270m Anglo payout to junior bondholders'Is it more of the roll-over over Leo?' - SF reacts to €270m Anglo payout to junior bondholders

Irish Banking Resolution Corporation still party to 138 legal actionsIrish Banking Resolution Corporation still party to 138 legal actions


More in this Section

Gardaí appeal for help in locating 18-year-old missing from DublinGardaí appeal for help in locating 18-year-old missing from Dublin

Cork man who requires 24-hour care after traffic accident settles action for €10mCork man who requires 24-hour care after traffic accident settles action for €10m

Personal archive of Ireland’s 'golden-voiced soprano' donated to Cork archivesPersonal archive of Ireland’s 'golden-voiced soprano' donated to Cork archives

Schoolboy left with 'blemish' on his cheek after Aer Lingus incident settles for €15kSchoolboy left with 'blemish' on his cheek after Aer Lingus incident settles for €15k


Lifestyle

Well first and foremost, it depends what type of cold you have, as Prudence Wade discovers.Should you exercise when you’ve got a cold?

Make like a Masterchef contestant with this sophisticated dessert.How to make Marcus Wareing’s milk chocolate, raspberry and thyme tart

Waste not, want not – this one’s all about using things up.How to make Marcus Wareing’s panzanella

With fresh produce in abundance, this Balkan state is becoming a top destination for foodies. Jonjo Maudsley gets stuck in.Get beyond Belgrade to taste the authentic side of Serbia

More From The Irish Examiner