European Commission clears Anglo and INBS closures

THE European Commission has cleared the winding down and eventual closure of Anglo Irish Bank and Irish Nationwide Building Society which between them have received close to €35 billion of taxpayers’ money.

The two institutions, which are now state owned, will be merged shortly and wound down over the next decade. Anglo was pivotal to the near collapse of the Irish banking sector which had to be rescued by the state and resulted in EU/IMF bailouts.

The Commission says that their closure and exit from the market will deal with the distortions of competition caused by the massive state support they have received over the past three years.

Competition Commissioner Joaquin Almunia, announced the decision, said: “Today the state aid chapter on Anglo Irish Bank and the INBS has been finally closed.

“Today’s decision allows us and the Irish government to focus on the future of the Irish banking system”.

As well as receiving massive state money, both institutions also received guarantees and had their bad loans hived off.

Their downfall was due mainly to the amount of high-risk commercial loans they gave out and the subsequent drop in prices together with the crisis on financial markets.

The Commission advised winding them up several times but the government submitted requests for four injections of capital and one for the INBS.

In total, Anglo received €29.3bn and INBS €5.4bn. Finally the government agreed to hive off the assets and create a bad bank for the rest and begin the process of liquidating both institutions.

The final plan, now cleared by the Commission, sets out in detail how the two institutions’ loan books will be resolved over the ten year period while neither can engage in any banking practices.