THE new chairman of Irish Life & Permanent (IL&P) has said that up to €2.5 billion of the group’s €4 billion post-stress test capital requirements will have to come from the Government, but has told shareholders that the business is not on the brink of bankruptcy.
Addressing shareholders at the group’s — at times, volatile — annual general meeting, yesterday, Alan Cook said that the onus is on IL&P to try to raise as much of the €4bn as possible, by its own means.
A large part of that seems likely to be via the sale of its profitable life and pensions business; a move currently being advised upon by Deutsche Bank.
That process, however, is only likely to raise around €1.5bn in capital, but will only be passed after an extraordinary general meeting of shareholders.
Mr Cook said that while the rise in IL&P’s capital requirements from €243m to €4bn in less than a year is “an amazing conundrum”, the group’s financial conditions have not materially changed in the past 12 months. He said there is “no alternative” to adhering to the stress test requirements.
“The business is not on the brink of insolvency, but there is a requirement for us to guard against a much greater and stringent set of conditions; even though it is unlikely that such conditions will apply in the future,” he said.
Angry shareholders called for an adjournment of yesterday’s meeting until a future date, while legal advice could be taken by the board as to how to avoid having to accept the stringency of the new capital requirements and how to stop the sales process of the life business.
However, despite a 30 minute break in proceedings and the walk-out of a small proportion of the near 300 strong crowd in Dublin’s RDS, the meeting proceeded.
Mr Cook said the new capital requirements for the banks will help put Ireland back on track, but admitted the stress test results seemed “profoundly unfair” on IL&P shareholders, as the bank had been the only part of the country’s financial network not to previously tap the Government for bailout funds.
He added that while the entire IL&P board supported the bailout need, it didn’t mean they liked it.
Mr Cook also told shareholders that he is fully committed to working for their best interests.
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