Anglo losses set to double to €14bn
Last May, the bank’s interim statement said bad debt writeoffs of €7.5bn were on the cards after posting more than €4bn first half losses.
The latest unconfirmed figures for the 15 months to end December 2009 suggest that the Government may have to pump significantly more than the €6bn in additional funding into Anglo to prevent it going under.
Goodbody stockbrokers said if the current forecasts prove true, they will make the initial €7.5bn bad debt figure look “hopelessly inadequate”.
Anglo got an initial capital injection from the state at the end of May 2009, after it published its first half losses.
The bank, once the third largest after AIB and Bank of Ireland, was nationalised in January 2009 to prevent a run on its €64bn deposit base. Anglo is now expected to report a pre-tax loss of €12bn for the period, driven by a €14bn credit charge.
Last week, the bank announced that Donal O’Connor would step down as executive chairman at the end of June and be replaced by former finance minister Alan Dukes, currently a non-executive director of the bank.
Mr Dukes, who is also a past leader of Fine Gael, said keeping the bank open was the least expensive option for the state.
Closing down Anglo would cost the taxpayer up to €20bn, well in excess of what it would ultimately cost the state to keep the bank going, he said. In time, Anglo Irish could become a viable business bank, which could be re-floated into the private sector with a net gain for the taxpayer.
Mr Dukes added that there would be a need for further redundancies at the bank later this year.
Unlike AIB and Bank of Ireland, Anglo’s capital needs must be met by the taxpayer, as it is now 100% state owned.
Anglo is now finalising plans to pass about €35bn of loans into Nama, up from an earlier estimated €28bn.
News of the worsening earnings and bad debt outlook yesterday came as gardaí arrested former chairman Sean FitzPatrick at his home in Greystones.
Mr FitzPatrick was interviewed for 12 hours about allegations of false accounting under the Theft and Fraud Offences Act.
He stepped down as chairman of Anglo Irish Bank in December 2008, as the crisis surrounding the bank deepened.
