Bank’s €8.3bn losses record for Irish company

ANGLO Irish Bank has reported major losses for the first six months after setting aside €8.3 billion to deal with loan losses.

The before-tax losses of €8.2bn were much higher than previous estimates of between €4bn to €5bn for the six months to June 20.

For the same period last year the bank’s losses were significantly lower at just over €4.1bn.

The figures also represent the worst six months trading results ever by an Irish company. They also offer strong support to the claim by rating agency Standard & Poor’s last week that the total cost to the taxpayer for Anglo would be close to €35bn, Fine Gael’s spokesman on finance, Michael Noonan, said.

The results contain a loss of €3.5bn for loans transferred to NAMA, while nearly half of the remaining €4.8bn involves other property loans also set to go across to NAMA in the months ahead.

Due to the mounting losses the state has now pledged close to €23bn in funding to the bank.

Anglo’s chief executive, Mike Aynsley, denied the €35bn cost claim for the Anglo bailout, saying it will be capped at close to the €25bn mark, adding that further cash to keep the bank afloat might be needed down the line.

On the S&P estimates Mr Aynsley said: “We can’t work out where that number comes from.”

The bank’s chairman, Alan Dukes, also said the capital needs of the bank should be contained at about €24bn, based on the first six months for this year.

“Looking at what’s happened in the first six months, and projecting as far as we can for the remainder of this year, it would seem to us that we can stay within the figure of €24bn,” Dukes told RTÉ radio.

This latest loss follows pre-tax losses of €12.7bn in the 15 months to end December 2009, the worst full year results ever by an Irish company.

Finance Minister Brian Lenihan, said he is involved in top-level talks with the European Union in an effort to bring finality to the Anglo crisis which is impacting on the cost of borrowing by the state on international markets.

The cost of 10 years’ bonds went out to a record 5.95% last Friday as investors fear for the future stability of the Irish economy.

At this point the state has pledged financial support amounting to just under €23bn as the bank’s mounting bad debts eat deeper into the state’s coffers.

The results also show that the bank has borrowed €26.3bn from central banks. Anglo said that, after transfers to NAMA are completed, it would have around €38bn of loans on its books.

That money would form the funding for the good bank/bad bank proposal it has sent to Brussels.

Having looked at all options it insists this is the least costly way forward for the taxpayer.

The bank is awaiting a final decision from the European Commission on its restructuring plan which is expected in weeks.

Brian Lenihan said his department sent a final submission to Brussels yesterday on the bank’s plan to split itself into a good bank and bad bank.

He would not comment on the contents of the latter, but signs are emerging that the Government might well opt to wind down the bank.

Mr Lenihan said on Monday such a wind-down would be done in the most cost effective manner to protect taxpayers’ interests.


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