AN orderly wind-down of Anglo Irish Bank will be one of the issues Finance Minister Brian Lenihan will discuss with the European Commission today.
The Government is coming under increasing pressure to stop pouring taxpayers’ money into the bank which, according to a poll, three quarters of the public fear could bankrupt the country.
There are signs that Taoiseach Brian Cowen and Mr Lenihan are coming around to the idea of gradually shutting down Anglo rather than dividing it into a “good” and “bad” bank.
The EU has already warned the Government that it doubts Anglo Irish could ever stand on its own feet and as a result putting state money into it is against competition rules.
A spokesman for Competition Commissioner Joaquin Almunia said: “We are still investigating and there is no decision yet and no... date for when a final decision will be reached.”
The bank’s chief executive Mike Aynsley told yesterday’s Sunday Business Post that despite the commission wanting to wind down the nationalised bank, he believed a “good bank” portion of it could continue to operate.
He admitted that the bank, which mainly lent to the country’s big developers, having dropped €25 billion did not deserve to survive but added: “You have a dysfunctional banking system.”
The Green Party, pushing for closure, believes Anglo could be wound down in under 10 years but there are reports that Mr Lenihan would prefer 15 years.
A key player in its fate will be the European Central Bank as it is the biggest creditor. During the week ECB president Jean-Claude Trichet said that since Anglo was owned by the Government “it is the responsibility of the Government to take the appropriate decisions”.
European Commission sources said the essential issue will be to ensure any wind-down of Anglo Irish is orderly and does not make investors even more nervous about Ireland’s economy.
The Government deficit is running at 20%, the highest in the EU, and Ireland is paying more than any other EU country for its loans as a result of markets’ fears.
Mr Lenihan will also discuss extending the state guarantee for the banks past the end of the year. This could be a crucial issue for the country’s financial sector as Anglo, Allied Irish and Bank of Ireland have to find at least €25bn to refinance debts this month.
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