Bank deposits to be auctioned as Anglo expects €17.6bn loss

The High Court today directed that the deposits and assets of Anglo Irish Bank and Irish Nationwide Building Society (INBS) can be auctioned immediately, the first step in the winding down of the two institutions.

The move follows an application by Finance Minister Brian Lenihan to the court under the terms of the Credit Institutions (Stabilisation) Act 2010.

“These orders facilitate the Minister’s plan to restructure the two institutions which is in accordance with the provisions of the EU/IMF Programme of Financial Support for Ireland,” the NTMA said in a statement.

The NTMA will immediately commence an auction process to invite “interested, fully-licensed financial institutions” to tender for Anglo and INBS deposits.

“It is intended that this process will conclude as quickly as possible,” the statement said.

The NTMA said deposits will be transferred “in a seamless manner” and no action is required by depositors.

“It should be noted that the position of depositors in Anglo and INBS remains fully secure and that any transfer will take place, and be accepted by another credit institution, on the basis of the existing terms and conditions,” the statement added.

“Depositors will also continue to have full access to their funds both during and after the auction process.”

The agency said the position of employees in the business areas of Anglo and INBS that will be affected by the transfer of deposits will be safeguarded under the relevant employment legislation.

The NTMA will also take the initial steps to implement the restructuring plan for Anglo and INBS, as submitted to the European Commission for approval at the end of January this year.

The restructuring plan will involve the amalgamation of Anglo and INBS into a merged entity regulated by the Central Bank of Ireland.

"Today’s High Court Direction Order is the first step taken by the Minister for Finance in relation to the restructuring of our bank," said Anglo Irish Bank CEO Mike Aynsley.

"It is a necessary step in enabling the possibility of a wider restructure of the banking sector to happen.

"The Board and I welcome today’s Direction Order which brings further clarity about the future of the Bank.

"We acknowledge the continued support of the State and will comply fully with the Direction Order."

IBNS Chief Executive Gerry McGinn also said Nationwide would fully comply with the Court's direction.

"Customer deposits remain fully secure, our branch network remains open and customers should continue to transact as normal," Mr McGinn added.

Meanwhile Anglo Irish Bank today said it expected to post a loss for the 2010 financial year of €17.6bn following what it called “another exceptionally difficult twelve month period for both the Bank and the Irish economy”.

The beleaguered bank today presented unaudited financial information for the year to December 31.

Anglo said its results for 2010 were expected to include a €17.6bn loss, which includes impairment charges of €7.8bn and a loss of €11.5bn on disposal of eligible assets to NAMA.

Customer deposits during the period fell from €27.2bn to €11.1bn.

The result would top the €12.9bn loss Anglo recorded in 2009, itself the biggest loss of any Irish company.

Anglo said total State support received by the bank now amounted to €29.3bn.

The bank employs just under 1,300 staff, down 16% in the year.