Anglo Irish Bank could be refloated into the private sector in the future, the bank’s chairman designate Alan Dukes said today.
Mr Dukes said closing the bank down immediately would hit tax payers to a much larger extent than keeping the bank in operation and potentially producing a viable business bank.
“Closing down the bank at this point would crystalise losses that can otherwise be spread over a period of years and would not allow us then to build on this more viable commercial bank end,” he said.
He said closing the bank would result in losses of more than €20 billion.
“That’s not something that would be wise to do now,” he said. “Keeping the bank afloat, it will require capital assistance from the Government. It would be much less than that [€20 billion].”
Mr Dukes, who will take over as chairman when Donal O’Connor steps down later this year, said it would be more rational to allow the bank to develop as a more viable entity that could be floated in the future with a potential net benefit to the taxpayer than the “unthinking, close-it-down attitude”.
However, he admitted there would be cases where the bank would not be able to recover all the money it is owed from outstanding loans. He also told RTÉ radio that the bank was in the process of downsizing its balance sheet to reduce the need for funding, and said the recapitalisation would put in a "far better position" to go to the market for the funding it required for ongoing operations.
It was announced today that Mr O'Connor has notified the Minister for Finance Brian Lenihan to step down in June. He joined as a non-executive director in 2008, and was asked to take on the role of chairman six months later.
"With the scale of the bank about to be significantly reduced though the transfer of assets to Nama, with a major cost reduction program well advanced, with the restructuring plan having been submitted to the EU, and, most importantly, with a new senior management team in place (including six external appointments), the bank is now in a position that allows me to move on," Mr O'Connor said.
The Minister said Mr O’Connor had "worked tirelessly to help stabilise the bank and introduce a new management team".
The departure of Mr O’Connor from Anglo will leave only Government-appointed directors on the board of the State-owned bank.
The board currently comprises Mr O’Connor, Mr Dukes, former Bank of Ireland chief executive Maurice Keane and Anglo’s chief executive Mike Aynsley.
Mr Dukes, a former Fine Gael leader and finance minister, was appointed to the board of Anglo in December 2009 as a public interest director under the Government bank guarantee scheme.
Mr Dukes, who has other business interests, told The Irish Times he expected the role of chairman to consume about "two days a week" of his time.
Mr Lenihan is expected announce the appointment of a number of non-executive directors to Anglo's board in the coming weeks. Today, he thanked Mr O'Connor for his work with the bank.
“Mr O’Connor has worked tirelessly to help stabilise the bank and introduce a new management team to lead it in the future. He also instigated the restructuring plan that was submitted to the EU Commission last year," he said today.
"I greatly appreciate his dedication to his work at the bank and his steadfast support of the Government’s efforts to stabilise the banking system. I know how onerous and demanding his role was over the last year and I am greatly indebted to him for his important contribution."
Mr O’Connor’s decision to leave the bank comes in advance of the publication of a report into corporate governance at the Dublin Docklands Development Authority, the State agency where Mr O’Connor was chairman and Mr FitzPatrick was a board member while both men were on the board of Anglo.