Anglo bailout will cost €3k per citizen

THE European Commission are to begin an “in-depth investigation” into the Anglo Irish Bank bailout after it emerged the bank will require an additional €9 billion in state funding – bringing the total cost of the rescue to more than €3,000 for each man, woman and child in Ireland.

Speaking in Brussels yesterday, Taoiseach Brian Cowen indicated his government was open to giving the extra money to the state-owned bank, several of whose former directors are at present being investigated for fraud.

Mr Cowen, in Brussels for the EU spring summit, said his government was trying to devise “the least worst option” for the Irish economy and embark on a strategy that would be in the best interests of taxpayers.

According to sources within the European Commission, an in-depth investigation into the bailing out of the bank will be announced next week.

The investigation will involve asking third parties, who may feel they are being faced with unfair competition from such large state support for a bank, to comment.

The EU is, however, expected to approve the additional €9bn in funding as a temporary measure.

They are also expected to rubber stamp the emergency €4bn in aid given to Anglo last year, which is considered as state aid by the EU.

Mr Cowen defended plans to increase funding to Anglo – revealed by the bank’s new chief executive, Mike Aynsley, yesterday – and said the extra €9bn would cost less than liquidating or running down the bank.

Earlier this week, Mr Aynsley suggested that liquidating Anglo would cost between €27bn to €35bn, while running it down over 10 years would cost €18bn to €22bn.

Mr Cowen went on: “Withdrawing support now would expose the taxpayer to even greater exposure than trying to work out a strategy that is the least worst option in the context we find ourselves in.”

The Taoiseach also suggested the collapse or closure of Anglo would have wider ramifications for the economy. “The Government is working here with difficult options, trying to find the least worst.”

The overall context, he suggested, was the job of devising a strategy to restructure the banking sector generally and ensure it played a role in the recovery of the country.

He added that having banks declare their losses up front would improve their standing with international investors.

The Taoiseach said the Government will make a comprehensive statement next week in relation to Irish banks.

The European Commission is due to issue its decision next Wednesday on the state aid and restructuring plans of both Anglo Irish Bank and Irish Nationwide.

They are expected to approve the funding for Irish Nationwide and the initial €4bn for Anglo, give emergency approval for the new sum, and open an in depth investigation into the Anglo bailout.

Aid to Bank of Ireland and Allied Irish Bank is also being studied by the commission and a decision is expected in the next few weeks.