Anglo Irish chief wants bank scheme extended

ANGLO Irish Bank wants the Government’s bank guarantee scheme to be extended beyond its current deadline of December to allow for the full stabilisation of the economy.

Last month Central Bank Governor Patrick Honohan indicated that the scheme may overrun into next year, but would be wound down sooner rather than later.

Anglo’s chief executive Mike Aynsley made the call for the extension of the programme in an interview with RTÉ. He also touched upon the proposed effective takeover of iconic Dublin department store Arnotts by Anglo and Ulster Bank, which are owed a combined €260 million by the retailer.

Mr Aynsley said the latter idea, which is to be investigated this week by the European Commission (due to a state-owned body, Anglo, being involved) was to put the shop back on an even financial footing and ultimately to sell it to a third party.

Anglo, which is due to start transferring the second tranche of its loans to NAMA this weekend, is also likely to transfer between €10 billion and €15bn of performing loans into its planned new ‘good bank’ division.

The split and re-organisation of the company is pending formal approval from the European Commission. Anglo’s management now believes that approval isn’t likely until next month at the earliest – a view expressed to the bank’s staff in an internal management presentation by Mr Aynsley earlier this week.

In that memo to staff, Mr Aynsley said management of the bank in the past “leaves a lot to be desired” but that the bank shouldn’t be wound down as it holds an international funding platform of around €50bn that wouldn’t shift to an asset recovery company.

The cost of winding down Anglo over a 12-month period would be at least €40bn, the bank’s new management team recently told a Dáil committee.

Management has looked at that and other options but is awaiting EU clearance for its preferred option of splitting the business into an asset management division and a small new bank under a different name.