Anglo Irish Bank to be nationalised
The Government is to take over the troubled Anglo Irish Bank, it was announced tonight.
The State had moved to plough €1.5bn into the bank, which has lost four top executives over a secret loans fiasco.
But the Department of Finance said recapitalisation was not the way to secure its future.
It said its funding position had been weakened and unacceptable practices - including the €87m loans controversy – had caused serious damage to its reputation.
“The funding position of the bank has weakened and unacceptable practices that took place within it have caused serious reputational damage to the bank at a time when overall market sentiment towards it was negative,” a statement said.
“Accordingly, the Government believes that the recapitalisation is not now the appropriate and effective means to secure its continued viability.
“Therefore the Government must move to the final and decisive step of public ownership.”
Anglo Irish said its board met this evening after the Government's decision not to proceed with the recapitalisation of the bank.
It said the Government advised that it would be taken into public ownership.
In a statement, Anglo Irish said the board would work fully with the Government to ensure the long-term commercial viability of the bank.
“Anglo Irish Bank will continue to trade normally as a going concern and accordingly customers and providers of funding can be fully assured of the safety of their deposits and investments, which remain State-guaranteed,” the statement said.
“The board and management are committed to driving the business forward on an independent and commercial basis.”
Anglo Irish was due to hold an EGM of shareholders in Dublin’s Mansion House tomorrow to approve the Government’s €1.5bn recapitalisation plan to rescue the institution.
However, the bank said the purpose of the EGM no longer existed, and the meeting would be opened and adjourned.
Fine Gael said it had been calling for the nationalisation plan.
Finance spokesman Richard Bruton accused the Government of being at sea in its attempts to handle the economy.
“Tonight the Government have finally been forced into recognising their mistaken approach to this bank,” Mr Bruton said.
“This latest of U-turns, while the correct decision that will help protect the viability of the remaining banks, does not bode well for the steady and assured management of the economy in the future.”
The Labour Party said the announcement left the Government’s banking policy in ruins.
Finance spokeswoman Joan Burton said: “An unknown quantity of bad debt, running to billions of euro, has now effectively been taken on by the Exchequer.
“This has the obvious potential to further increase the cost of Irish Government borrowing.”
Labour said it had consistently challenged the Government’s approach and had called for an inspector to be appointed to Anglo Irish.
Ms Burton said enormous damage had been done to Ireland’s reputation on international markets.
She also questioned plans to determine compensation for shareholders and said details must be fleshed out without delay.
Sinn Féin described the Government’s decision as the right move but the wrong bank.
Finance spokesman Arthur Morgan said there were “too many don’t knows” in relation to Anglo Irish.
“Sinn Féin would support the establishment of a state bank and would see it in the context of a critical piece of infrastructure which could be directed to support small and medium-sized enterprises.
“However there are too many don’t knows in respect of Anglo Irish Bank,” he said.
“For example, we don’t know the condition of their loan book and we don’t know what changes will be made at board level or at senior management level.”
