ANGLO IRISH Bank faces the possibility of recovering nothing on a €15 million investment in a bond sold by a failed Icelandic bank due to a clerical error at the State-owned bank.

Anglo failed to register a claim as a creditor of Kaupthing bank, which collapsed at the height of the financial crisis in October 2008, over a “process error”.

The nationalised bank is appealing in a bid to reinstate its claim as a creditor, arguing that the claims process was unclear.

A small percentage of the original investment may be recovered by Anglo if the appeal is successful but most of the original sum has been lost due to Kaupthing’s bankruptcy. Anglo has applied a book value of €600,000 to the bond.

The bank wrote off €27 million on investments relating to the failed Icelandic bank in its ill-fated September 2008 annual results published just weeks before the bank was nationalised.

Those results have been largely discredited due to the low levels of loan provisions to cover bad debts.

The potential full loss on the Icelandic bond emerges on top of substantial losses on both Nama and non-Nama loans to be announced when the bank reports its half-year results over the coming days.

Anglo is planning to publish the interim results for the six months to the end of June next Tuesday.

The bank is expected to require a further Government capital injection – on top of the €14.3 billion already pledged or injected – to cover the reported losses.

It emerged earlier this month that the capital bill facing the State at Anglo could rise to €25 billion – up from the Government’s estimate of €22 billion last March.

Nama applied a higher discount of 62 per cent to €6.75 billion of Anglo loans transferred in the second tranche this month.