Is the Anglo bailout just a bluffing exercise?

THE argument for justifying the €22bn bailout of Anglo Irish Bank is that it has a future as a business bank of some sort. Irish residents currently borrow in the region of €377bn – over twice the amount of the country’s gross domestic product – which is an extremely high level of indebtedness by international standards.

But 62% of this is in residential mortgages, construction, property development and the hotel and restaurant industry, all of which are severely depressed and likely to remain so.

AIB and Bank of Ireland will also have to adjust their lending profile away from these deeply depressed sectors.