View more on these topics

State aid for ‘black hole’ Anglo Irish Bank to top 24bn euros

It’s been called a black hole, a bottomless pit, a zombie bank, and its former chairman has just been declared bankrupt — but keeping Anglo Irish Bank alive is set to cost the Irish taxpayer over 24bn euros.

That’s the amount – just 10bn euros short of a year’s tax take – the Irish government has committed to the bail out of a bank that once typified the Republic’s booming economy, and which many blame for sinking it through reckless lending. The final bill may even be higher, given that the discount on the bad loans the bank is transferring to NAMA, the state rescue agency, has still to be decided.

Some of the state aid is to be used to restructure the now nationalised Anglo Irish into a small business lender, a plan still to be approved by Brussels. But most of the money, as Anglo’s new chief executive, Mike Aynsley, admitted with typical Australian candour, “will never be seen again and will end up in a black hole”.

However, he argues that the cost of closure, even over a period of years, would be much higher. Finance Minister Brian Lenihan takes a similar view, warning of the damage a default would do to Ireland’s reputation and its impact on state borrowing costs and on banking confidence. Opposition parties and a sceptical public, hard hit by Lenihan’s austerity measures, are not convinced.

Increasingly they are asking: how much is too much to save Anglo? It is a question the minister may eventually have to answer as the bail out bill keeps rising.
Meanwhile, Sean FitzPatrick, the man who built Anglo Irish into a 13bn euros bank in the heady days of the Celtic Tiger boom, has been declared bankrupt, at his own request. He took the action unilaterally when the bank he once headed as chief executive, and later chairman, refused to agree a settlement deal on his overall debts of 150m euros.

The Irish High Court was told that the bank is owed 110m euros. In a hearing that lasted just 12 minutes, it appointed a court officer to take charge of the affairs and assets of the former multi-millionaire. As a bankrupt, under Irish law, he will be unable to act as a company director or manager for 12 years and be unable to take out a loan for more than 650 euros without declaring his bankruptcy.

He told creditors, at a meeting before the court hearing, that he accepted “full responsibility for my own ruin.”




Check the potential of landlord business

The rental property market is thriving despite or partly because of the economic slowdown. From individuals who rent out second homes through to entrepreneurs, activity is buoyant. That said, overall the market is subdued, with lending flat over the past five quarters. With a market of over 1.2 million buy-to-let mortgages there is an enormous […]


In my opinion

KPMG’s recent Fraud Barometer has confirmed the long-held view that a manager is a greater threat to a business than an employee, so firms need to get serious about tackling this menace


Guidance is needed not scaremongering

I am sure I was not alone in being shocked by headlines in The Sunday Telegraph recently suggesting interest rates could hit 8% in two years. In much smaller print it was pointed out that this was radical new research and could only happen if a number of key factors were to collide. They were […]


News and expert analysis straight to your inbox

Sign up