ANGLO Irish Bank chairman Alan Dukes has warned the final cost of bailing out the troubled bank is now likely to be more than the €25 billion estimate he gave for the bail out just a few weeks ago.
Mr Dukes said the original estimate was based on the good bank and bad bank strategy getting the support from the European Commission.
He suggested now the original plan had been rejected, Anglo would have to go back and reassess the costs facing the state under the wind down option it has to implement.
Mr Dukes said that process would take a few weeks to achieve and he was not in a position to put a final figure on the bail out.
Asked if it could be more than the original €25bn he said: “Potentially it could.”
Mr Dukes said what the bank had to do is to define what the “boundaries” of what the extra cost might be. To give certainty to the market Mr Dukes said the bank will have to “err” on the high side when putting its final figure on the table.
The Anglo chairman went on to say that giving total certainty on the final cost was hard to do as some losses cannot be recorded in Anglo’s accounts because the bad loans have yet to be transferred to NAMA.
He said that under company law, those losses, even though the bank knows they are coming, will have to be included in the accounts in the period they occur.
Speaking on the Pat Kenny Today programme Mr Dukes strongly rejected a Standard & Poor's& suggestion the final cost of the wind down would be €35bn.
He said the rating agency had no basis for the figure and the original €25bn projected cost followed “very detailed” analysis of what the bank could have achieved if allowed to trade into the future.
Mr Dukes said because the ground rules had changed it was not possible to come up with a final figure. Mr Dukes concluded that once Anglo management puts a final cost figure into the market place within the next few weeks, the move would ease investor fears and result in significant savings to the state and Irish taxpayers’ overall.
He suggested those savings would more than offset the extra cost of winding Anglo down.
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