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.

If these banks also curtail or dispose of their businesses outside Ireland all three will be seeking to service a non-government Irish credit market that is less than €150bn.

Given that foreseeable economic growth will be extremely modest, how can it be argued conclusively that Anglo can become a viable business bank in such extremely restricted circumstances? This proposition has the hallmarks of an entity looking for a purpose rather than a business responding to an identifiable need.

I hope those promoting it are not simply bluffing the public with little evidence or substance to sustain their argument or achieve this goal while they commit mind-boggling sums of taxpayers’ money.

Myles Duffy

Bellevue Ave

Glenageary

Co Dublin