Anglo set for Govt boost after losses
Anglo Irish Bank is to receive a government cash injection after it reported massive losses of €4.1bn for the six months to the end of March.
Finance Minister Brian Lenihan, who nationalised the troubled lender in January after a string of scandals, said the results were extremely disappointing but its problems are being addressed.
Executive chairman Donal O’Connor blamed lending blunders for the losses and said the past six months were very difficult for the bank.
Top executives at the banks resigned after a multi-billion-euro loans fiasco was revealed in December. Garda fraud officers later raided the head offices and the lender is now being investigated by white-collar crime watchdogs.
Mr O’Connor said: “Clearly the bank made mistakes in some of the lending decisions taken in recent years, particularly in relation to property development in Ireland.
“Our rate of growth and risk appetite at the top of the economic cycle was imprudent and the stark evidence of this is seen in the figures announced today.”
Mr Lenihan said the Irish government has decided, subject to EU approval, to provide up to €4bn of capital to Anglo.
A spokesman added: “The minister recognises that the results are extremely disappointing and reflect a marked deterioration in asset quality at the bank since it was nationalised.
“However, the minister is satisfied that the full and frank disclosure of the problems faced by the bank is an important step in allowing the difficulties to be addressed in an orderly fashion.”
Anglo said the €4.1bn losses were primarily driven by specific and collective lending impairment charges of €3.7bn and €0.4bn respectively.
Mr O’Connor said the bank was very grateful to the government for its support.
“The bank is very conscious of its responsibility to the taxpayer.
“The minister’s decisions place the bank on a sound financial footing and we are determined to repay the taxpayer by creating a viable, efficient and respected bank.”
Mr Lenihan added that the bank can generate further capital of its own by buying back loans from bondholders at a significant discount.
The minister said: “It is important to remember that this is the first time we have put money into Anglo Irish Bank although we signalled our readiness to do so last December before the bank was nationalised.”
Mr Lenihan said the main priority of the Government was to protect the €64bn of customer and interbank deposits in Anglo and "to prevent the bank becoming a systemic threat to the financial system''.
Anglo said total losses are likely to reach a total of €7.5bn.
Mr O’Connor also explained that former directors owe €31m in loans to the lender.
“I assure you that, as with all borrower facilities, we will be seeking full repayment of these loans,” he added.
Mr O’Connor said a new chief executive would be recruited soon from outside the bank as well as a chief risk officer.
Mr Lenihan is also likely to appoint more non-executive directors to the board.
