By LAURA SLATTERY
SEPTEMBER 30th, 2008
€0–PROFIT
The Government guarantees €440 billion worth of bank debt, but Brian Lenihan says the guarantee is not a bailout and the State will be charging the banks for it. “It is time for action – swift and decisive,” he says. “We are not in the business here of bailing out banks.”
OCTOBER 2008
EARNINGS OF €2bn
Lenihan declares the bank guarantee “the cheapest bailout in the world so far”.
The Government says it plans to charge the banks €2 billion for the bank guarantee.
It has earned €1 billion of this, but the sum has been wiped out by the extra interest payment costs on Irish sovereign debt, which spiralled as a result of the guarantee.
DECEMBER 2008:
COST OF €1.5bn-PLUS
The State enters negotiations to take a majority stake in Anglo Irish Bank.
Three days before Christmas, it announces it will inject €1.5 billion into Anglo in exchange for a 75 per cent stake. It also says it will pump €2 billion into both AIB and Bank of Ireland and may underwrite a further €1 billion worth of new shares at each bank.
“The investment reflects our assessment of what is required to meet the challenges they face,” Lenihan says.
Department of Finance officials estimate the State could earn an annual return of €470 million from its investments in the banks.
JANUARY 2009
The Government does not proceed with its planned €1.5 billion injection into Anglo Irish Bank and nationalises it. It says the bank “will continue to trade normally as a going concern”. The €1.5 billion figure was “needed to command market confidence”, according to Lenihan, who adds that it is not possible to say how much funding Anglo now needs.
FEBRUARY 2009
€7bn INVESTMENT IN AIB/BANK OF IRELAND
+ UNKNOWN PROPERTY WRITEDOWN COSTS
The recapitalisation of AIB and Bank of Ireland goes ahead, but the figures have now increased to €3.5 billion for each bank in return for preference shares and a fixed dividend that will be payable in either cash or ordinary shares. Lenihan floats the idea of removing toxic bank assets through the creation of a bad bank, but says it will involve “a substantial exposure to the taxpayer”.
APRIL 2009
On the day of the emergency budget, the Government announces it is setting up the National Asset Management Agency (Nama). Lenihan says the State will pay “significantly less” than the face value of the assets and that the cost would be recovered from the sale of the assets “over time”.
Banking analysts suggest AIB and Bank of Ireland might need more State money. The Government admits AIB will need another €1.5 billion, which the bank says it will raise itself.
MAY 2009
€11bn
Lenihan tells the Dáil that Anglo Irish Bank will need more capital. Losses at the bank are “somewhat beyond expectation”, the Minister says. At the end of the month, it confirms it will inject up to €4 billion into Anglo, on top of the €7 billion already given to AIB and Bank of Ireland.
Fine Gael repeats its calls for a wind-down of Anglo, but the Taoiseach insists the bank is of “systemic” importance to the economy, while Lenihan says closing Anglo down would cost taxpayers €64 billion.
MARCH 2010
€22bn-PLUS
As the Government starts to quantify the “black holes” at the banks as part of the Nama process, it emerges that AIB will require €7.4 billion and Bank of Ireland €2.7 billion. Irish Nationwide is said to need €2.6 billion, with EBS requiring €875 million. Both building societies will end up in effective State control.
Anglo Irish Bank is said to need €8.3 billion on top of the €4 billion already earmarked. Lenihan says the recapitalisation plan for the banks will draw a line under the financial crisis “once and for all”.
Just a day later, Lenihan says Anglo may require an additional €10 billion of taxpayers’ money to meet future losses on Nama loans. This is on top of the €8.3 billion.
“At every hand’s turn, our worst fears have been surpassed,” says Lenihan of the banks’ property development lending.
APRIL/MAY 2010
Anglo chairman designate Alan Dukes says he cannot rule out the need for further State investment beyond the €22.3 billion bailout already either injected or earmarked for the bank.
“I’d love to say that would be the end of it, but I can’t with any confidence say that,” says Dukes.
“Ireland is not Argentina and we can’t go around repudiating our debts,” Lenihan says, as he resists pressure to wind Anglo down.
In May, the Government injects a further €2 billion into bank, part of the potential “additional” bailout of €10 billion.
AUGUST 2010:
€27.5bn-PLUS FOR ANGLO AND NATIONWIDE ALONE
It is now widely expected that Anglo will need more than the €14.3 billion that has already been pumped into the bank. The European Commission approves a third tranche of funding, of up to approximately €10 billion.
Central Bank governor Patrick Honohan puts the net cost to the Government of recapitalising Anglo Irish Bank at “about €22-25 billion” and says that the cost of propping up Irish Nationwide could rise from €2.7 billion to €3.2 billion.
“Our basic objective is to find a way out of this mess, whatever that way is, at least cost to the taxpayer,” Dukes says.
The Opposition demands a final figure on Anglo.
SEPTEMBER 2010
AT LEAST €34.7bn FOR ANGLO AND NATIONWIDE, WITH A TOTAL POSSIBLE BAILOUT OF JUST UNDER €50bn
Anglo Irish Bank chief Mike Aynsley says the total cost of the bank to the State will not exceed the latest estimate of €25 billion. “We’re not going to get to the €35 billion Standard Poor’s suggested. I’m not sure where that came from,” he says. The bank is now “effectively being closed”.
The Central Bank says Anglo will need €29.3 billion in capital, while a further €5 billion might be required “under a severe hypothetical stress scenario”.
Irish Nationwide is said to need a further €2.7 billion, bringing its total to €5.4 billion. The Central Bank also reveals that AIB needs to raise another €3 billion, which the State will underwrite.
Lenihan says the level of State support to the banking system “remains manageable” and that the figures represent the “rock bottom” of the financial crisis.