THE INCOMING chairman of Anglo Irish Bank, Alan Dukes, has strongly defended the option of splitting the nationalised bank into a good and bad bank, refuting suggestions that there had been a shift in policy as regards the future of the bank.
But a spokesperson for the Department of Finance said yesterday that the Government’s stance that it has no “preferred approach” remained unchanged.
Earlier this week, Minister for Finance Brian Lenihan told the Dáil: “I do not have a preferred approach to the future of Anglo Irish Bank.” He was responding to questions from Fine Gael’s Richard Bruton.
Last month the Financial Regulator Matthew Elderfield told an Oireachtas committee that splitting Anglo into a good bank and bad bank was the cheapest option and a “reasonable” way to proceed.
A rapid wind-up of State-owned Anglo Irish Bank would be “prohibitively expensive”, he said.
Speaking at the Irish Small and Medium Enterprises Association (Isme) annual lunch yesterday, Mr Dukes said four options were being put to the European Commission – immediate liquidation, a wind-up over 10 years, closing the bank over a 20-year period, and splitting it into a new bank and an asset management company.
Mr Dukes strongly rejected the notion of a 20-year wind-up. “There is very little sense in the commission’s proposal that we should look at a 20-year wind-down for the bank.
“The moment you announce that a bank is being wound down, it doesn’t really much matter whether you say are going to do it over 10 years or 20 years,” he said. “The bondholders and depositors will dictate the pace.”
Splitting the bank into two entities was the best option for tax-payers, he said. Stressing that “the public interest dimension is foremost in our minds” he said closing the bank would be more costly than splitting it in two.
“Winding the bank down is loss all the way. Having a bank still in operation is loss on one side and gain on the other.” The gap between closing Anglo down and keeping it open would remain even if market conditions deteriorated or improved, he added, while the option of maintaining Anglo as an operating bank would potentially benefit from improvement in the market environment.
Mr Dukes also confirmed yesterday that the bank will finalise the second version of its restructuring plan, which is to be submitted to the European Commission by the end of next week.
The bank submitted its initial plan to the commission on Nove- mber 30th last. The commission responded with 101 questions which the bank has been working on. The notion that the commission had rejected the plan was a misrepresentation, Mr Dukes said, stressing that the process of approval was a consultative one.
Mr Dukes said he envisaged that his preferred option of a good and bad bank would be implemented over the course of the next year, once the Nama process was completed.
He criticised the two Opposition finance spokespersons’ views on Anglo, which he said “seem to be part of the national psychosis”.
