ANGLO IRISH Bank may require a further €18.3 billion in taxpayer support, Minister for Finance Brian Lenihan told the Dáil.
The now nationalised bank has already received €4 billion in State support, meaning the latest estimate for the total amount the bank will require is €22.3 billion. The bank has a loan book of €72 billion.
While Mr Lenihan’s statement that €8.3 billion was being provided to assist it with its losses to date was expected, his further statement concerning an additional €10 billion in exchequer support came as a great surprise.
“I must point out that the bank will need further capital to cover future losses and accomplish the restructuring of the bank and its balance sheet,” he said. “The current estimate is that this could be of the order of a further €10 billion.”
He said there were still significant uncertainties, including the size of the discount on all its loans being transferred to Nama, the scale of future losses on its loans that are not transferred to Nama, and the exact nature and scope of any split of the bank under its plans. Nama announced yesterday that it expected to buy loans with a book value of €10 billion from Anglo, in exchange for securities with a value of €5 billion, over the coming weeks. The loans belong to the 10 largest borrowers in the State and further loans will be transferred at a later date. Mr Lenihan said finding a long-term solution for Anglo Irish Bank was by far the biggest challenge in resolving the banking crisis. He said the capital support for the bank was being provided in a way that spreads the cash requirements over an extended period.
The capital is being injected this week in the form of a promissory note, payable over a number of years. This means the amount will be paid over 10-15 years, thereby reducing the impact on the exchequer this year.
Mr Lenihan said the bank had identified in terms of minimising the future cost to the taxpayer, carving out a smaller and stronger bank, leaving the remainder in the form of an asset management and recovery company.
“The new going concern entity would be prepared for sale in due course,” Mr Lenihan said.