Anglo Irish clarifies media comments

ANGLO IRISH Bank has clarified media comments made by its finance director on Wednesday about a €500 million charge against future loan losses in the full-year results, saying it did not wish to convey that the bank's policies were "not in accordance" with international reporting standards.

The comments were made by Willie McAteer, Anglo's finance director, in a report on the Financial Times website on Wednesday in relation to the €500 million that the bank had set aside in a "collective provision" - a type of reserve to cover future losses on loans that are not currently in arrears.

"It's a provision that's there to absorb any future losses that may arise," Mr McAteer told FT.com.

"We always used to make a 1 per cent general provision on new lending but then, under IFRS you're not allowed to make general provisions, but in the exceptional times we're in now we persuaded the auditors that it was the appropriate thing to do."

Anglo said in a clarification on its website that the comments were "designed" to explain "in layman's terms" technical accounting policies about international financial reporting standards.

"In no way did we wish to convey that the bank's policies were not in accordance with IFRS or that the bank sought to agree non-IFRS compliant policies with its auditors."

Anglo said it regretted any confusion that may have been caused.

Accountancy firm Ernst Young are auditors to the bank.

An Anglo spokesman said the comments had "caused some confusion" and had led to calls from investors.

The bank decided to set aside €500 million against potential future losses, in addition to a €224 million charge on specific bad debts, in a sign of caution about higher projected losses due to the changes in the financial markets.

On Wednesday Anglo announced a 37 per cent drop in pretax profits and an almost ninefold increase in bad debt provision in the bank's audited results for the year to September 30th, 2008.

Anglo's share price rose four cent, or 8 per cent, to 52 cent yesterday, but was still down 39 per cent over the last week.

The closing share price valued the bank at €387 million.This compares with a valuation of €8.3 billion at the start of the year.

The stake of almost 15 per cent held by Sean Quinn and his family - the largest shareholders - is worth €58 million, down from €715 million in August.