THE WIND-DOWN of nationalised Anglo Irish Bank and Irish Nationwide Building Society has begun as the High Court approved the transfer of €12 billion in deposits out of the two lenders.
In the first major reshaping of the Irish banking system, €8.6 billion in deposits will transfer from Anglo to AIB, while €3.6 billion will move from Irish Nationwide to Irish Life and Permanent.
About 120,000 customers at Anglo and about 160,000 at Irish Nationwide will be affected by the moves, which start the wind-down of the lenders, a key condition of the bailout by the European Union and International Monetary Fund.
The deposits continue to be protected by Government guarantees and no action needs to be taken by depositors. The same interest rates and duration on deposits will still apply and depositors can access their money as normal.
The transfers will improve the finances of AIB, which is 92.8 per cent owned by the State, and Irish Life and Permanent, which has received no Government capital, helping to make up for the loss of deposits over recent months due to the country’s debt crisis.
The future of the 447 staff to be moved from Anglo and Irish Nationwide is in doubt as their roles are likely to be duplicated at AIB and Irish Life and Permanent.
Some 237 staff at 50 Irish Nationwide branches will move to Irish Life and Permanent’s banking division, Permanent TSB, while 210 Anglo staff will move to AIB. This will leave 1,084 staff at Anglo and 240 at Nationwide.
The building society said the branches were not included in the deal and would operate as normal as the transfers are completed.
Larry Broderick, general secretary of the Irish Bank Officials Association, said the new government would need a strategy to protect bank jobs and deposits before the EU summit next month.
The deposits were sold after an auction which attracted offers from eight domestic and international financial institutions.
Some €1 billion in deposits will remain at Anglo as they are secured against loans at the bank.
Transferring with the deposits are State-backed bonds issued by the National Asset Management Agency. AIB will receive bonds with a face value of €12.2 billion from Anglo. Irish Life and Permanent will receive Nama and other bonds with a face value of about €3.7 billion from Nationwide.
AIB is transferring €3.5 billion in cash back to Anglo due to the difference between the €8.6 billion in deposits and €12.2 billion in matching assets being transferred in the other direction. The effect is to neutralise the transaction. Irish Life and Permanent will transfer €2.3 million to Nationwide.
The Anglo deposits moving to AIB include about €5.2 billion in Ireland, about €1.9 billion in the UK and about €1.5 billion in the Isle of Man. AIB is buying Anglo’s Isle of Man unit for €200 million.
Anglo’s UK corporate deposits will move to AIB’s British unit.
Anglo’s deposits at its branches in Vienna, Dusseldorf and Jersey will remain there as the bank submits plans by the end of next month to close those branches.
Nationwide is selling €2.7 billion retail and €500 million corporate deposits, and €400 million in the Isle of Man. Irish Life and Permanent is buying its Isle of Man subsidiary for €100 million.
The court sanctioned the transfers under the Government’s sweeping bank reform legislation, passed last December.
A reporting ban on the case was set until close of business at 5.01pm to avoid “a predator” possibly triggering an event of default before the court orders, counsel for the Minister for Finance said.
Cian Ferriter, appearing for The Irish Times, said these were matters of "vital public interest" but the newspaper accepted the reasons for the delayed publication.
Yesterday’s application was a follow-on from an application by the Minister on February 8th for the auction of deposits and matching assets in Nationwide and Anglo as part of their wind-down.
