BANK WIND UP:ANGLO IRISH Bank will cease to exist in name over the coming weeks, and a plan to close the bank over "a multi-year period" will be drawn up by the end of January, the Central Bank has said.
Central Bank’s governor Prof Patrick Honohan said the Anglo nameplate would be removed within weeks, and the bank closed “as quickly as we can do it”. Asked on RTÉ’s News At One when Anglo would disappear, he said: “We are talking weeks.”
The Central Bank later said in a statement that any wind-down of Anglo’s loan book would be over “a multi-year period” and a revised restructuring plan for the bank would be submitted to the EU for approval by the end of January.
The plan aimed to design “an orderly resolution” of Anglo which complied with EU law.
The bank’s chief executive, Mike Aynsley, said erasing Anglo’s name would be further evidence that old Anglo ceased to exist.
Prof Honohan said the Government’s current plan to split Anglo into an asset recovery bank and a funding bank would be shelved and a new plan submitted.
The funding bank was an “artificial construct” to retain deposits and Central Bank funding while the loans were wound down. This would be shelved and Anglo’s wind-down would now be pushed “out to finality”.
He said Anglo’s deposits and Irish Nationwide’s €4 billion of deposits would be moved as part of the downsizing of the banks under the €85 billion rescue plan.
Depositors would find “comfortable homes”, and they would remain “fully guaranteed”.
Anglo’s chairman Alan Dukes said the new entity created from the bank would be rebranded, and that the previous plan to split the bank was no longer relevant.
Prof Honohan’s comments panicked Anglo staff who had earlier been reassured by Mr Aynsley that they had no need to worry about the measures in the €35 billion bank bailout unveiled on Sunday.
Mr Aynsley told staff in an e-mail sent in response to the governor’s comments that “no decision to close the bank had been made”.
Any decision to close Anglo or to pursue another option must be agreed and approved by the “multiple parties”, including the European Commission.
His preference would be to restructure Anglo – “possibly in combination with Irish Nationwide Building Society” – into “a restructuring and recovery bank” capable of managing “a range of varying quality assets and loans”.
This option would involve downsizing the bank’s loan books in Ireland, the UK and the US, he said.
Prof Honohan told RTÉ that he was “very reluctant” for a further €10 billion to be pumped into the banks but was persuaded to do so by “our partners in Europe”.
He had instead wanted Europe to insure the banks against potential losses, for which the Government could have paid a fee. This would have been a better option but it wasn’t available from Europe or the IMF.
The Central Bank’s view of the banks’ capital needs had “dribbled out in a way that I would rather not have happened”, and Europe wanted a more intensive and accelerated banking plan. This was “not a change in direction” but “just faster and deeper” .
He would be “very disappointed” and “very surprised” if further losses were so bad as to force the banks to draw on the €25 billion contingency fund set up under the €85 billion plan.
Prof Honohan said he went public 10 days ago on his belief that Ireland would request a EU-IMF bailout – contradicting the Government’s view – as he was “concerned that there was uncertainty about financial stability”.
