Bloomberg News

Former Anglo Irish Bank Loss Widens as Loans Worsens

August 24, 2012

Irish Bank Resolution Corp.’s first- half loss widened as the bank that helped push Ireland into an international bailout raised provisions for bad loans.

The loss at the former Anglo Irish Bank Corp. increased to 724 million euros ($907 million) from 105 million euros in the year-earlier period, the bank said in a statement today. It made provisions of 1.09 billion euros during the period, up from 778 million euros a year earlier as the Dublin-based company said 87 percent of loans are classified as “at risk.”

“The prevailing uncertainty in Europe, a lack of bank funding and weak commercial and residential property markets in Ireland and the U.K. all mean that the market environment in which the bank operates will be very challenging,” Chairman Alan Dukes said in the statement.

The Irish government pledged about 30 billion euros to the former Anglo Irish after the country’s property bubble collapsed in 2008, saddling the bank with bad loans. Chief Executive Officer Mike Aynsley said in an interview today with Dublin- based broadcaster RTE that he doesn’t expect a need for additional capital.

Aynsley said the bank expects to meet its 2020 wind-down target and may see a “far better result.” There is an increased risk of one or more countries leaving the euro currency union or even of a complete breakup as spreads on Spanish and Italian bonds neared unsustainable levels, the lender said today. The bank said that could put further pressure on its loans even as asset quality is already worsening.

Executives Charged

Three former bank officials including ex-chairman Sean Fitzpatrick were charged last month with breeches of company law following a fraud investigation into the failed lender, which was nationalized in January 2009.

The Irish government is negotiating with European Union officials to lower the cost of financing loans used to rescue the bank. Anglo Irish and Irish Nationwide Building Society merged last year to form IBRC.

Total assets, excluding government funds used to bail out the bank and Irish state bonds, stood at 21.9 billion euros at the end of June, down from 25.3 billion euros at the end of last year. Total funding from central banks and monetary authorities was 42.3 billion euros, accounting for 89 percent of funding.

To contact the reporter on this story: Finbarr Flynn in Dublin at fflynn3@bloomberg.net

To contact the editor responsible for this story: Douglas Lytle at dlytle@bloomberg.net


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