Removing the logo may have been cathartic but the bank and its loans won’t be so easily erased.
AN OLD internal document at Anglo Irish Bank described its “arrowhead” logo as symbolising “security and progression” and the brand as being for “the long haul”.
The logo lasted just over a decade. On Wednesday, the bank wiped the Anglo name and logos from over its doors, removing the signs from the bank’s offices and branches around the State .
In a carefully stage-managed event, Anglo’s new management, led by chief executive Mike Aynsley, sought to break from the bank’s calamitous past and set out an as yet unnamed stall to maximise loan recovery and recoup as much as possible for the State.
Motorists beeped as they drove past Anglo’s former head office on St Stephen’s Green in Dublin city centre as the signs were removed.
The move was symbolic and may prove cathartic for some members of the public but the bank and its loans will be here for some time to come, just in another guise.
Anglo will be renamed once the Irish Nationwide Building Society is merged, which is likely to take place during the summer. The enlarged “recovery” bank will then be set on course to run down loans over a period of up to 10 years.
Anglo is a far different animal to what it was in 2008 when the bank was at its peak. Aynsley said it had moved from being “a high-octane property lender to a dedicated asset-recovery bank working in the public interest”.
The board and top management team have changed. While some long-standing staff in Anglo’s lower and middle ranks remain in place, Aynsley is happy with his team.
“I am very proud of the people that we have got here – I think they are fit for purpose to support the recovery for the taxpayer.”
Staff numbers have been reduced by 28 per cent from 1,864 in September 2008 to 1,296 at the end of last year. Some 800 staff have left the bank over that time, while Anglo has hired 200 new employees to fill gaps.
Further voluntary redundancies would be necessary, said Aynsley.
Some 250 staff will move to Anglo from Irish Nationwide but overall staff numbers will drop to about 900 by the end of this year.
This will include about 130 employees at Anglo and about 50 at Irish Nationwide who oversee the day-to-day management of loans owned by the National Asset Management Agency (Nama).
The bank will have transferred about €35 billion in loans to Nama, while Irish Nationwide has about €9 billion with the agency.
The plan is for the merged Nama units of both to be run out of Heritage House, the Georgian building a few doors up from Anglo’s Stephen’s Green offices.
Overall staff numbers will eventually drop to zero by 2020.
Aynsley said that about 90 staff at the bank worked in risk management, a section of the bank that has been overhauled due to the many information gaps on loans.
Costs is one area where the figures have increased rather than declined. Total operating expenses at the bank were €353 million in 2010 compared with €328 million in 2008.
Last year’s expenses, however, include €89 million in one-off costs, comprising €27 million for the staff redundancies and €62 million in relation to the bank’s restructuring plans, the Nama process and the legacy matters dealing with old Anglo problems.
The €62 million has been paid to consultants and professionals.
Staff costs declined to €130 million last year from €206 million in 2008, reflecting the sharp reduction in the workforce’s size.
The bank has €35 billion in loans following the Nama transfers and a further €500 million in commercial property loans and €2 billion in residential mortgages will be moved from Irish Nationwide in the merger of the lenders.
Under the restructuring plan, still to be approved, the €2 billion residential mortgage book will be run down or sold within five years.
The remaining loans at the nationalised bank are spread across three countries – €16.2 billion in Ireland, €10.9 billion in Britain and €7.6 billion in the US.
A potential sale of the US loan book has been considered, although the bank’s preference is to hold the book to secure a better value over time. There is massive interest among potential buyers, although most are bargain-hunters looking to bag a deal at a fire sale price.
Net of provisions taken against losses on the total post-Nama book, Anglo’s loans stand at €24 billion. This matches the size of the loan book in September 2004 before the bank’s lending surged during the three peak years of the property boom. In many ways, the bank is broadly reverting to its pre-bubble size.
Of the remaining loans, with a face value of €35 billion, some €16.6 billion are impaired, against which Anglo has already set aside about €10 billion in provisions to cover potential bad debts.
Like most lenders, Anglo will work with co-operative borrowers but even these clients will be subject to foreclosure actions if their debts far exceed the value of their underlying security, particularly among the property investors who didn’t move to Nama.
Aynsley said that in these cases, the bank would have to cut its losses as it must cut the losses to the State which had injected €29.3 billion into the bank. It would seize control of an underlying asset and sell it to recoup some cash, he said.
“No matter what happens, in some cases a situation is not going to get any better. In those cases, the bank just has to move to foreclose; no amount of forbearance is going to help.”
The bank is likely to draw on outside consultants to work on specialised loan work-outs such as the bank’s involvement in the Quinn Group and proposed share of Quinn Insurance to try to recover some of the €2.88 billion debt owing by Seán Quinn and family.
The bank would judge debt restructuring on a case-by-case basis, said Aynsley – for example, where the term of the loan would be extended or some debt was forgiven if the bank had a better chance of recovering more money.
“I think you will do things that are commercially sensitive at this stage,” Aynsley said. “You try to stay away from draconian measures but on the other hand you have got to be tough because you will put the market in a space where it expects debt forgiveness.
“Each situation is different. We won’t want to be in a situation where we are making blanket decisions.”
As for the bank’s new name, Aynsley said it was irrelevant given Anglo’s changed role in the resolution of Ireland’s worst bank.
“For a bank looking to attract customers, a brand can suck them in,” he said. “It is not that important for a bank in wind-down.”
BOOM TO BUST: THREE YEARS AT ANGLO IRISH BANK
2008
STATUS: publicly quoted
PROFIT: €784 million (Sept)
CAPITAL RESERVES: €4bn
GOVERNMENT BAILOUT: zero
LOANS: €73 billion
DEPOSITS: €51.5 billion
COSTS: €328 million
STAFF: 1,864
BRANCHES/OFFICES: 19
LOCATIONS: Dublin, Cork, Galway, Limerick, Belfast, London, Birmingham, Edinburgh, Glasgow, Leeds, Manchester, Newcastle, Isle of Man, Jersey, Dusseldorf, Vienna, Boston, Chicago, New York
2011
STATUS: nationalised – in wind-down
LOSS: €17.7bn (Dec 2010)
CAPITAL RESERVES: €4.6bn
GOVERNMENT BAILOUT: €29.3bn
LOANS: €35 billion
DEPOSITS: about €1 billion
COSTS: €353 million
STAFF: 1,320 (including 250 to come from Irish Nationwide and 180 on Anglo-INBS Nama team) BRANCHES/OFFICES: 9
LOCATIONS: Dublin, Cork, Galway, Limerick, Waterford, London, Boston, New York. (Belfast and Manchester to close in the medium term)
