Lack of communication an utter disgrace

ONE of the many criticisms levelled at the Government in the aftermath of the election is their capacity to communicate coherently with citizens.

The nationalisation of Anglo Irish Bank and the liability to which the State is exposed is a specimen example of inadequate communication.

Anglo was nationalised last January when its assets amounted to €100 million. When its half-year results to 31 March were published on 29 May its assets were reduced to €88bn. It requires an immediate capital injection from the state of €4bn with the prospect of a further €3.5bn being required to meet identified losses before too long.

Anglo Irish Bank has made €175m available in loans to 10 former directors and €31m of this is classified as impaired following nationalisation. Is it not simply outrageous that a nationalised business is carrying any directors’ loans?

Is the coincidence of their impairment not an example of moral hazard that would not arise if the State had not been involved? The success of this nationalisation initiative depends on all liabilities being fully met. But if former directors of this bank are allowed to walk away from their obligations with impunity how will other creditors respond? These loans were granted against corresponding deposits of a mere €20m.

The cost of running this state controlled bank is exorbitant. The average salary attributable to 1,753 employees for the six months ending 31 March is over €48,000, equivalent to over €96,000 per annum and there was not an iota of additional lending to pay for this overhead since last September.

The citizens are awaiting the outcome of the investigations by the Garda Fraud Squad and the Office of the Director of Corporate Enforcement. It is simply not good enough for the minister to announce in a short press release that he intends to commit up to €7.5bn of state resource, leaving our national pension nest-egg exhausted and likely to achieve nothing in return.

Myles Duffy

Glenageary

Co Dublin