Commission to probe Anglo recapitalisation

The European Commission this morning approved further financial support by the State for Anglo Irish Bank and Irish Nationwide Building Society and said it was opening an in-depth investigation into the recapitalisation of Anglo.

The European Commission this morning approved further financial support by the State for Anglo Irish Bank and Irish Nationwide Building Society and said it was opening an in-depth investigation into the recapitalisation of Anglo.

"The European Commission has authorised under EU state aid rules an emergency recapitalisation worth up to € 10.44bn in favour of Anglo Irish Bank and €2.7 bn in favour of the Irish Nationwide Building Society (INBS) for reasons of financial stability," the Commission said in a statement.

"At the same time, the Commission opened an in-depth investigation into the total aid received so far by the Anglo Irish Bank and its accompanying restructuring plan."

The bank will have to submit a revised restructuring plan taking into account the increased aid amount before end May 2010.

Anglo Irish Bank is expected to announce later today the biggest corporate losses in Irish history of about €12bn.

The taxpayer has already footed the bill for a total €4bn cash injection into Anglo in three tranches last year.

Further recapitalisation of €8bn was announced yesterday, with Finance Minister Brian Lenihan saying Anglo may yet need another €10bn of taxpayers' money.

It was also revealed yesterday NAMA will take €10bn of loans from Anglo in April paying 50% of the book value.

The Government has also sought approval for a €2.7bn capital injection into INBS.

Commission Vice-President for Competition Joaquin Almunia said: "There is no doubt that both Anglo Irish Bank and INBS need a significant recapitalisation to meet their obligations. The measures are also necessary to preserve financial stability in Ireland.

"However, INBS needs to establish a viable restructuring plan and Anglo Irish Bank has to restructure profoundly in a way that effectively tackles the weaknesses of the past business model and ensures a sustainable future without continued State support."

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