AIB losing €11.5m every day in Ireland

AIB bank lost a total of €2.65 billion, or more than €8.7 million a day, overall for 2009 and €3.5bn in Ireland, the equivalent of €11.5m for each working day.

This was the first full year loss in the group’s history. And the figures raise serious doubts about its ability to stand alone without the Government taking a substantial majority stake.

Losses in the bank’s home market hit a massive €3.5bn, which were offset by the gains in the group’s more profitable arms, including its Polish subsidiary and its US associate M&T.

Those Irish losses were the result of the bank setting aside €4.5bn of its Irish property and land deals, while across the group the total write-down for bad debts came to €5.38bn.

The group’s recently appointed chief executive, Colm Doherty, briefing the media at the bank’s Ballsbridge headquarters in Dublin, described what he said was the “stark contrast between high performing international businesses and (the) property focused, principally Irish, businesses”.

In the short term, Mr Doherty said a priority is to get the issues surrounding NAMA out of the way.

The bank is due to transfer over €23bn in bad and other loans to NAMA, about €1bn less than originally projected.

The first transfer is due to start shortly, with the remainder moving across as NAMA agrees terms.

The bank is expected to raise several billion more euro to shore up its balance sheet.

Mr Doherty refused to specify the amount, but a figure of €4bn has been speculated.

Last night Finance Minister Brian Lenihan said if the banks cannot manage to raise funding in the markets, Irish taxpayers will step in and take majority stakes in struggling banks.

The AIB chief said one of the major priorities is to address the sale of such key assets as the Polish subsidiary and its US associate.

Several suitors have shown interest in aspects of the bank’s operations, but the bank would not say what deals or arrangements can be made to protect the bank’s capital base.

“Further clarity” was needed about NAMA, Mr Doherty said, and the full extent of the discount that it may suffer of the loans transferring which could be as high as 35% or more.

Overall, Mr Doherty warned the outlook and environment remain extremely challenging for the bank.