Publication of Anglo Irish Bank Accounts for the Six Months to

31^st March 2009

Statement of the Minister for Finance, Brian Lenihan TD

The Minister for Finance, Mr Brian Lenihan TD, today noted the publication of Anglo Irish Bank’s financial results for the six months to 31 March 2009. 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. 

Capital Injection

The Minister has asked the Board of the bank to finalise as a matter of urgency a business plan which will provide a detailed framework within which the bank, with Government support, will work through its current problems. In keeping with the decision of 21 December 2008 and following the advice of the Central Bank, the Financial Regulator, the NTMA and legal and financial advisors, the Government has decided, subject to EU approval, to provide up to €4 billion of capital to Anglo. The bank is also in a position to generate further capital of its own by buying back certain outstanding subordinated loans from bondholders at a significant discount to par value. This exercise will generate profit and additional capital for the bank.

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”.

Reason for Support

The Minister stated that

“The overriding concern of the Government has been:

• to protect the economy from the wider losses that would occur in the event of the failure of the bank;
• to protect the €64 billion of customer and interbank deposits in the bank; and
• to prevent the bank becoming a systemic threat to the financial system.

The full implementation of the National Asset Management Agency will assist in securing the future stability of the institution and the new business plan will address the need for the bank to reduce costs and restructure. The Government has asked that leadership and expertise in Anglo should be underpinned by the appointment of new management including an external Chief Executive Officer and Chief Risk Officer and I welcome the Board’s initiative in this regard.”

The extent of the loan impairments reported in the accounts result from a detailed and critical assessment of the loan book by the bank itself. This internal assessment was subsequently reviewed independently by PWC.

The Minister noted that additional capital has already been provided to both Bank of Ireland and Allied Irish Bank.  The capital amounts decided upon for these institutions followed a detailed and recent due diligence exercise. The results in the case of Anglo Irish Bank do not give rise to any reconsideration in relation to these institutions.

Strategy

The Minister welcomed the Board’s ongoing development of its Business Plan, which is now nearing completion. It will focus on:

·        rebuilding confidence in the bank,

·        the need to restructure the bank,

·        the need for the bank to reduce costs, and

·        operating on a “funding led” basis and the scaling down of the balance sheet.

The strategic Plan for the bank will be submitted to the EU Commission for approval.

The Minister noted the emphasis on reducing the cost base and maximising the recoverability of loans. The Minister added: “We are determined that all borrowers will be pursued for the repayment of their loans.”

It is important to reiterate that depositors and holders of certain debt liabilities in Anglo Irish Bank remain fully protected by the Irish Deposit Protection Scheme and the bank guarantee Scheme and the Government will continue to ensure that these monies are protected.  

29 May, 2009