Lenihan Open to Wind-Down of Anglo

Brian Lenihan has told the Dail that he is now open to the idea of winding down Anglo. This is perhaps speculative but Matt Cooper from Today FM has reported that he is hearing from sources that the European Commission is not happy with the restucturing plan for Anglo that has been provided. If true, then these two events are perhaps linked.

75 thoughts on “Lenihan Open to Wind-Down of Anglo”

  1. @ Karl

    Perhaps, in interviews etc that he has been criticised for, his aim has been to play for time. If so, it may be forgivable considering the stakes?

  2. @Al
    That is certainly how it would be spun. “I never said…”, twinkle, twinkle. Anglo gone and we’ve ONLY had to put 12 billion in….Still, it would be an end to The Great Satan. I wonder what would then happen to The Little Satan (Nationwide)? And there’s still the bank that likes to take gigantic risks, AIB.

  3. @All

    I’ll believe it when I see it. But would welcome the not so invisible hand of a Commission that sees sense.

    I’d keep the derelict neu-HQ – coat it in polyshawneen, and let it stand as a reminder to the future generations of what they are paying for.

  4. To be honest, I’ve been thinking for some months now that that was the plan, but they didn’t want to say so publicly – perhaps waiting for the guarantee to expire. Maybe he feels he can say it now if the EU is getting snippy.

  5. zombie banker blues

    Lenihan looks like the guy with the chain around his neck who the furriners are trying to dry out.

  6. It would make perfect sense for the EU to reject the Anglo re-cap.

    If the money earmarked for Anglo is going to have to be accounted from current expenditure this year then Ireland will have a deficit of over 20% of GDP for 2010.

    Given the current state of turmoil in the markets it would be close to reckless for the Eu to allow such a situation to develop, when they can nip it in the bud, so to speak.

    Of course, this is all based on an unconfirmed rumour and the presumption that the EU isn’t reckless.

  7. @LorcanRK
    Unfortunately that money will have to be spent anyway. An orderly wind-down is what will happen and that will take some years. I agree with Sarah Carey that this was what has been in train for some time. Again I will say it, Eurostat let the cat out of the bag. If the first 4 bn isn’t going to be returned (is not an investment) then it is either state aid or wind-down assistance. State aid is not permitted as it would create a market distortion, therefore it is wind-down assistance. Wind-down assistance will appears as debt, not investment, as it is not recoverable.

    There are two huge questions beyond Anglo:
    1. Where does that leave the other ‘investments’ in the other banks? We’ve already seen the state take a paper loss on the BoI shares it bought at 1.80 and then diluted. Will we have to account for this annually?
    2. Where does this leave NAMA and the presumption that it will be paid back? Karl Whelan and others have already addressed the shaky repayment assumptions.

  8. Then wind it down and get on with it Mr. Lenihan getting rid of this bank will improve our standing enormously. It is the mill stone around our necks. Well we have two of them but that’s another story for later on.

  9. @Yogan,

    Yes, you are right. I guess the only real difference is between having to fill a very deep hole (in a wind down) and a bottomless one..

  10. @Robert Browne
    Lots of figures will be discussed! Let’s hope the government conducts this debate much more openly. That’s if it’s true. If it is, did the government really want this? I always suspected that the Government wanted Anglo shareholders to get something and that that was part of their rationale for keeping the bank going. Also, as one backbencher speculated, it might have become a small business bank & property lender. As the Chinese curse says, we are living through interesting times.

  11. @Oliver

    exactly my thoughts in relation to the conundrum of sovereign debt and senior debt with regards to Anglo, will we ever really know why Anglo was nationalised?? I would still love to see their list of bondholders!!

  12. Have Lenihan and Aynsley not been talking about winding down Anglo (or part thereof) for a few weeks now? What changed yesterday other than Matt Cooper’s report of rumblings in Europe? Is there any suggestion that a rapid wind-down is on the cards? Either way, I’d say the market for Anglo subordinated debt is fairly thin.

  13. “Have Lenihan and Aynsley not been talking about winding down Anglo (or part thereof) for a few weeks now? ”

    Eastasia has always been at war with oceania….

    Dail, 30 March 2010
    “Winding up the bank is not and has never been a viable option. As the bank’s new management and board have estimated, an immediate wind up would lead to a fire sale of assets resulting in a permanent additional and unnecessary loss of upwards of €30 billion. In addition, the State would have to provide, immediately and up-front, the large sum of €70 billion to meet the deposits, bondholders and liabilities due to the Eurosystem.”
    Who said that now?

    Eastasia has always been at war with oceania….

  14. I dont mind the change of mind as i think winding down is the right thing to do but whats happened in the last few weeks to change government policy on this.

    http://www.rte.ie/business/2010/0401/banks.html

    On April 1 Lenihan said “All parties would like to see the back of Anglo but that is not possible”

    Have the government not now adopted Richard Brutons position ?

    Or have the EU told them that long term Anglo isnt a runner ?

  15. “Winding up the bank is not and has never been a viable option.”

    I think you’ll find the Minister was referring to a legal “winding up”, a.k.a. the appointment of a liquidator, which may be equated with a rapid wind down but not with an orderly wind down. 🙂 🙂

  16. @Brian Lucey,

    In teh Dail yesterday what the Minister actually said was: “On the restructuring plan, I made clear in the Statements on Banking in the week prior to Easter that I do not see the prospect of an immediate wind-up, which is earnestly desired by large segments of the population, as being of benefit the taxpayer.

    …However, I do accept that a longer-term work out is an option that must be examined. The question raised by the chairman-designate of the bank in regard to the possibility of exposure to the taxpayer being further reduced by carving a good bank, from which further profit can be made, out of the loan book of the bank will also have to be examined.”

    The complete exchange between Lenihan and Richard Bruton on Anglo Irish are available at: http://debates.oireachtas.ie/DDebate.aspx?F=DAL20100428.xml&Node=H10-5#H10-5

    It’s quite celear from the full Q&A between the two and subsequent exchanges on later questions raised by Deputies that what happens in the end will depend on the EU’s ultimate judgement of the Anglo plan. Matt Cooper is entitled to his itnerpretation, but it sounds more like Lenihan was kicking to touch pending a final EU decision on the Anglo plan while taking care to leave all options – bar an immediate wind up – open.

  17. @ Zhou

    http://www.irishtimes.com/newspaper/frontpage/2010/0325/1224267014555.html

    “THE GOVERNMENT will have to invest up to €9 billion in additional capital to keep State-owned Anglo Irish Bank afloat and reinvent the bank as a business lender under its plans, according to the bank’s chief executive Mike Aynsley.

    In his first interview since joining Anglo last year, Mr Aynsley told The Irish Times that the costs of either liquidating the bank immediately or running it down over time were at least twice as expensive.

    A liquidation would cost the State between €27 billion and €35 billion, he said, while running it down over 10 years would cost between €18 billion and €22 billion.”

  18. Oops! Sorry for the typoes, which I hate and find as annoying as everyone else. Now, I really must find my glasses….

  19. @Zhou
    Can you point to an serious commentator that has ever called for an immediate wind down of Anglo

  20. @BL

    I note that Lenihan did say on 30 March that a longer term wind down was not good either. He talked about salvaging a good bank. The quote provided by Veronica seems to suggest his position, which may be a holding position, remains the same, i.e. a work-out and a good bank salvaged. This is what I understood the position to be previously. IS there another quote?

    Obviously everything may change depending on what the Commission says and Eurostat’s recent actions have also changed things. I can imagine why the Minister might want to subtly change his position.

  21. So, Zhou and Veronica
    All that talk about anglo being of systemic importance, costing billions (100 of them according to our Leader, an ex minister for finance), plagues of locusts etc if it were to be closed, that was all blather? As in they didnt know if the EU would go y/n? In which case, why not say “we have to keep it open UNTIL the EU rules, then depending on what they say we can come back to have a debate”. That would have been honest. But no….Lets charge on regardless.

    Eastasia has always been at war with Oceania, hasnt it?

  22. Brian Lenihan (30 March 2010): “Similarly, a longer term wind down is not in the taxpayers’ interest. The new management has provided me with figures, assessed by independent financial advisers, indicating that in addition to the capital losses that would be sustained, a long-term wind down of the bank over ten years could expose the State to funding obligations approaching €30 billion.”

    This appears to be close to the €27bn referred to in Aynsley’s comments referred to in the IT linked by Karl Whelan above.

    There therefore appears to be three options:
    1. Rapid immediate winding down / winding up.
    2. Long term winding down.
    3. Long term work-out with good bank split.

    Lenihan ruled out no.1, thumbed his nose at no. 2 and said no. 3 was our best option as it gave the taxpayers the chance of getting something back. Martin and Cowen both referred to the chance of some money coming back to the taxpayer if a good bank could eventually be carved out.

    @BL

    Anglo is not what it was at the time of the guarantee. As Matthew Elderfield said, it was systemic at that time.

    The ultimate cost associated with Anglo’s demise depends on the manner of its wind-down and the extent to which the sovereign can afford to carry out its plans.

  23. @dreaded_estate

    I believe Brian Lucey called for an immediate wind-down of Anglo costing circa €20bn on the Frontline. Brian Lucey might want to clear that up though.

  24. I didn’t mean to be sarky there. I am genuinely recalling BL’s comments off the top of my head and I may not be accurate.

  25. Zhou
    Id be fierce interested to see that clip. Do let me know if theres anything else I said that I have forgotten.
    AFAIR the Frontline discussion was on NAMA, with a brief digression to AIB. Anglo, bless its little cotton socks, didnt rear its head on the programme. Except in so far as when the government rep suggested that we would get great returns from the bank “investments” we had put in and I and the audience suggested that it was not an investment but was worthless. But hey, maybe there were subliminal messages.

  26. @Zhou
    “Anglo is not what it was at the time of the guarantee. As Matthew Elderfield said, it was systemic at that time.”

    Just because he said it doesn’t make it right. Contrary to popular reports, he isn’t the Pope (yet). Plenty of us believed and said at the time that Anglo never has been systemic, according to the proper definition of the term.

  27. @Brian Lucey
    My apologies for any mischaracterisation of what you said.

    @simpleton
    There are limits to all our knowledge.

  28. The key question in terms of Anglo would seem to be which, if any, of its liabilities can the taxpayer avoid having to meet.
    The attraction of a wind-down, after the blanket guarantee expires in September, is that it would appear to open up the possibility of the State not having to meet all those liabilities.
    The question then arises as to which of those liabilities can be avoided in a post guarantee wind-down.
    There is universal agreement that all depositors should get their money back in the event of a wind-down, anounting to something like €27 billion.
    The bulk of deposits from banks are deposits from the Irish Central bank and the ECB. (Some people seem to think that one could treat these two liabilities differently, but surely in this case the Irish Central Bank was simply operating as a branch of the ECB, and acting with its authorisation? Otherwise it would be carrying out independent money-supply operations, impossible in a single currency?) David McWilliams seems to think that one can default on these debts (amounting to somehting like €20 billion, as far as I remember), but this is not a commonly held view. (Richard Bruton recently clarified on radio his view that the Irish taxpayer is ‘on the hook’ for this money.)
    The next chunk of debt is the ‘senior bondholders’, whom Fine Gael and a number of other commentators believe should have to ‘take a hit’. Leaving aside all the talk of reputational damage, it would seem to be a certainty that such a default would cause the cost of this debt for the Irish banking system would have to rise enormously, if it were available at all. It would be illogical if it were otherwise. As I understand it, this market is the normal source of large amounts of working capital for any banjking system. Nevertheless, the savings would be considerable, (something like €15 billion, I think, but I’m open to correction on this) and might well be seen as worth the risk
    So one is left with the approximately €2 billion in subordinated debt. As Alan Dukes has pointed out, if the bank continues in operation, it will be possible to buy back this debt at a large discount, reducing the liability to €1 billion (probably a bit less). So total default in a post-guarantee wind-down situation would seem to save about €1 billion in sub-ordinated debt liabilities, as against what one would have to pay out to sub debt-holders in a continue-to-operate scenario.
    The only certain saving in a post-guarantee orderly wind-down would seem to be that €1 billion. This is not a small amount of money, the total savings from the public service pay cut was about €1 billion, and if it’s there to be saved, it should be saved. But it doesn’t seem to dramatically change the overall picture, given the scale of the problem.
    In summary: it’s impossible and undesirable to default on depositors, it may be impossible and would surely be very unwise to default on central banks, it’s possible, but would seem very risky, to default on senior bondholders, and we could save €1 billion on subordinated bondholders.
    I’m sure it would be an immense pleasure for Irish taxpayers to walk past a boarded-up Anglo Irish Bank on St. Stephen’s Green – and we certainly could use the €1 billion – but anybody suggesting that closure will solve the Anglo problem has to say which of its debts we should default on.

  29. @ Zhou,

    Maybe you were thinking of Brian Lucey’s ‘Anglo Must Die’ article in the Irish Indo of April 1st, which suggested the sale of Anglo’s 428bn deposit book as a solution, and subsequent interviews on Newstalk, Morning Ireland etc. advancing this solution?

  30. @zhou
    “I am genuinely recalling BL’s comments off the top of my head and I may not be accurate.”

    Now if BL meant Brian Lenihan, your comment would be ironic.
    Because our brilliant Oxbridge educated Mof has an airy disregard for accuracy. Not for him the dry logic of classical rhetoric building on a foundation of indisputable facts working to an inevitable conclusion.

    Like his father before him, also a very intelligent man, a confident array of half-truths and non-sequitors are deployed to defuse any problem.
    The technique is remarkably effective in an age when people couldn’t be bothered giving time to reasoned argument- it confounds his critics and reassures his listeners – and will presumably be carried on (going forward) by a third generation of Lenihans in due course.

  31. @Zhou

    To be precise Elderfield didn’t say Anglo was systemic “at the time of the guarantee” he said

    “It was certainly of systemic importance when the guarantee was introduced.”

    The difference may be only semantics but it could also be that Anglo wouldn’t have been of systemic importance if it hadn’t been guaranteed.

  32. @Donagh Diamond
    Surely the ECB advances are secured on qualifying securities.

    The debt to our own Central Bank is of course a different matter.

  33. BL
    You are doing an excellent job of squeezing the truth out of Zhou and Lie!
    Keep it up!

    Sadly the Orwellian is all that they have left. Like the Wizard of Oz, once we get a glimpse behind the curtain, we see all the pomp and ceremony was to protect a very flimsy paper tiger. The EU are sovereign. Let us save money and gut the national parliament.

    Fortunately, we are Irish. Never forget, never forgive, never give up! Once we look these imposters in the eye, without their garda chauffeur, they get remarkably humble.

    There are enormous amounts of mineral weatlh in the state. Divide that by the few million living there. Just got to get going! Drill boyos, drill! But settle the land issue first.

  34. There are two sorts of monies from central banks in Anglo. Some are repos, secured on “assets” ; some are plain deposits.
    Looking at Note 37 of the annual report, deposits from banks, the sums are

    Sale and Repos from Central Banks 23.680b
    Sale and Repos from other banks 7.238
    Other deposits 1.694
    and some 300b demand deposits
    the note goes on to say

    “Sale and repurchase agreements with central banks include €12.2bn (30 September 2008: €7.6bn) borrowed under open
    market operations from central banks and €11.5bn (30 September 2008: €nil) borrowed under a Master Loan Repurchase Agreement (‘MLRA’) with the Central Bank and Financial Services Authority of Ireland.”
    Now- the MLRA is one area that needs serious investigation.

  35. @Zhou
    I’ll take that as an apology. I think you probably however suffer there from false memory syndrome, where you “remember” something that didnt happen (but somehow “should have” ). So less a mischaracterisation, more a total invention.

    @DE
    Bang on. Lets not forget that B The Other L is a oxbridge trained barrister – albeit one with a history of false inference of logical chains.

  36. @Veronica

    I declined to criticise B Lu’s point about selling the deposit book because I thought I had been too fractious toward B Lu previously. It’s really paying off.

    @BLu

    That was an apology (for something which I had qualified in the first instance as not necessarily being accurate and in relation to which I invited clarification from you). I note your psychological analysis.

    As a matter of idle interest, what do you think should be done with Anglo?

  37. @ Brian Lucey

    Tell us again how you sell a deposit book and get in €28 billion?

    Remember this? I have yet to hear you clarify your position.

    Anglo can be wound up cheaply — here’s how. Sell the €28bn deposit book.

    This is a regular event in banking, and even if it has to take a discount of 25pc that would yield €21bn. Sell the bonds and withdraw deposits in other banks. This gives a further €14bn, a total of €35bn, that is sufficient to cover the senior bondholders (€13bn) and the interbank deposits with NAMA (€16bn), with €6bn left over.

  38. @D_E

    Perhaps Elderfield did mean something else. I think that is unlikley though.

    People have been going around in circles about whether Anglo was systemic for some time now. I don’t think there will ever be a public forensic analysis of Anglo’s books that will satisfy either side as to whether Anglo was systemic or not.

    In the meantime I trust those who lean towards saying it was correct to treat Anglo as systemic at the time. I include Lenihan, Honohan, Dukes and Elderfield in that group.

  39. @Zhou
    I think it should be closed. ASAP. If that can be shown to be 1 day, 1 week, 1 year or 10 years, i dont care. What I do care is that we have seen zippo about these putative reports (three ?) that various accountant groups have carried out that say closing anglo will cost . Pardon me for thinking that theres a non-zero probability that these don’t exist, or that we are not being told the full truth about their contents.

    Given that it is to all intents and purposes a dead duck as it comes to new lending, we who are propping it up NEED to see these figures. Its simply not good enough to be asked to take these things on trust. Even if the present government had a massive resevoir of trust on which to draw, it wouldn’t be enough. Trust, but verify

    I would like to see an independent team of bank inspectors, from the FDIC say, come in, with one task – to investigate and publish the costs of a closedown over specified periods. Some of these costs would be estimates, so we would need to see the spreadsheets and sensitivities also. Full, complete, public disclosure doesn’t mean the names and phone numbers of every single customer.

    If then its clear that its cheaper to keep it afloat , so be it.
    The majority of the people who criticise Anglo come from scientific disciplines. If I am reviewing a paper for a journal then I have the right to ask the authors to prove their analyses are justified. Indeed, that’s my job. If that involves them giving me their code and data to rerun the analyses, so be it. Some journals require that one provide same to the readers via the journal website. This encourages replication and reinvestigation. Sometimes that results in a previous finding being overturned. Again, so be it.

    As for selling deposits – I note that those that pick at this never comment on Mr Dukes agreement with me on Newstalk that this was possible and indeed had been investigated. We can argue about the amount realisable but if I am 1000% wrong so too he is he. And hes running a bank.

  40. Gavin S
    No, I wrote that. I didnt say on Frontline that we could close anglo for 20b. Different thing. Do read the thread in full…

  41. @Maurice O’Leary
    Yes, Maurice, as I understand it, they are, which was why I suggested it might be “impossible” to default on them. I don’t, however, know the quality of the assets they are secured on: was this, as has been suggested to me, a ‘cash-for-trash’ operation, of the type that has has been carried out by the ECB, the Fed, and the Bank of England?
    Accepting entirely Brian’s point in relation to the different types of deposits, I remain to be convinced that there is any real difference in the source of the deposits between the ECB and the Irish Central Bank. Depositing money in the crippled Irish banking system by the central banks was an action to increase the money supply. As such, I would have thought that the Irish Central Bank could only have been acting as the local branch office of the ECB in this case. Otherwise, the implication is that central banks of eurozone countries are able to engage in independent money supply operations in their own countries, which makes no sense in a currency union. If, on the other hand, the deposits from the Irish Central Bank were made at the instruction, or with the authorisation, of the ECB (as I would have thought they would have to be) then all these deposits are effectively ECB deposits and, in terms of their source, suggesting that we could treat them differently would seem to be misleading. (If they are different types of deposits, that’s quite a different matter)
    Of course, there is also the question of whether defaulting on debts to the ECB would be unwise. I would have thought that adopting a cavalier attitude to debts to the ECB, particularly in the current environment, would be most unwise. Not to say that it is any indication that I am right, but it would seem that the two largest political parties (and, I suspect, Labour, but i’m not sure) think the same.
    So the question remains: exactly what liabilities of Anglo would we be able to avoid in a post-guarantee wind-down situation?

  42. @ Brian Lucey

    Oh I did…Glad you didn’t make a fool of yourself on tv.

    I look forward to reading your retraction piece in the Independent one of these days. I don’t understand how you are comfortable criticising Lenihan for saying it could cost €70 billion when you claim it could be done ‘cheaply’. How is one worse than the other?

  43. @ Brian Lucey

    As for selling deposits – I note that those that pick at this never comment on Mr Dukes agreement with me on Newstalk that this was possible and indeed had been investigated. We can argue about the amount realisable but if I am 1000% wrong so too he is he. And hes running a bank

    You are still at it….There is NOTHING realisable. It’s a liability. If Anglo was to ‘sell’ the deposit book, they would have to hand over the actual cash. Therefore the taxpayer would have to find €28 billion to hand over to another financial institution to take over Anglo’s liability. Why on earth do you think there is a’profit’ to be made?

  44. @GavinS
    I never said I didnt make a fool of myself….:)
    I amnt , if you take the time to read carefully, criticising a figure per se. I am criticising ex cathedra pronouncements. Who knows what it would cost until we see the data. At least however those of us who arent worshipping at the shrine are willing to engage, not to pontificate.

  45. @Zhou,

    I agree with you that it’s a bit futile being harsh on others and not very nice either. Everybody gets it wrong sometimes and as long as they acknowledge that and are not contemptuously dismissive in turn of those whose views they disagree with, whether they’re right or wrong, that’s fair enough in my book.

    As a non-financaal person, I get the impression (and certainly the Minister has stated as much directly on numerous occassions in the Dail and outside it) that it would be preferable if Anglo could be shut down immediately. The argument is about the least costly way of dealing with the Anglo problem from an exchequer, and ultimately the taxpayers, point of view. The Opposition have their own political agenda to pursue on this and quite honestly there’s been a lot of silly populist conspiracy theories in some of the positions adopted by certain spokespersons, but that’s what Oppositions do these days. If they were in government, I’d lay a bet that they’d be playing much the same game on this issue as the current mob.

  46. @Gavin S
    “You are still at it….There is NOTHING realisable. It’s a liability. If Anglo was to ’sell’ the deposit book, they would have to hand over the actual cash. Therefore the taxpayer would have to find €28 billion to hand over to another financial institution to take over Anglo’s liability.”

    You could also hand over a 20 year bond to back up the deposits instead of cash

  47. @Dreaded Estate

    Why would I accept a 20 year bond as an asset when the laibility you are giving me are demand or short fixed term deposits? Unless you made it very very attractive!

  48. @Donogh Diamond

    “The next chunk of debt is the ’senior bondholders’, whom Fine Gael and a number of other commentators believe should have to ‘take a hit’. Leaving aside all the talk of reputational damage, it would seem to be a certainty that such a default would cause the cost of this debt for the Irish banking system would have to rise enormously, if it were available at all.”

    There is a much more basic reason why the 15bn in senior debt cannot be hit in a post-guarantee wind-down. Most of it won’t be there after this September. 2bn is short-term paper, 7-8bn are medium terms notes issued over the past 18 months that mature before September. This money might roll over into a new bond covered under the extended-guarentee scheme. Alternatively, the money doesn’t roll and gets paid back as the bonds mature over coming months. Either way, there will probably be only a few billion in senior bonds in play after September. Can’t see the point in Lenihan making a decision about what to do with them until September. Maybe Greece will be sorted by then!!!

  49. @Zhou

    The opinion of Alan Dukes is hardly of much value.

    After all, with all the bank data available to him, he and Mr. Aynsley blithely assumed that the NAMA discount would be about 28% until Terrible Tuesday.

    If either even read this website (or our more excitable friends on politics.ie), they might have reexamined (dare I say, stress tested) their figures. The result was that they had to tell our brilliant but hapless MoF on Terrible Tuesday that he would have to sign another 10,000,000,000.00 of promissory notes as a transfusion to our favourite vampire bank.

    Richard Bruton indulged in a little bit of schadenfreude when pointing out this lapse by the great tall one. And who could blame him? Not me anyway.

  50. @B Lu

    If I understand your position correctly, you are saying that Anglo should be wound down as soon as possible but that the mode of wind-down/restructuring should be carried out in the way that is least expensive to the tax-payer. You are largely in agreement with the stated intention and approach of the Government and the Chief Executive and Board of Anglo Irish Bank save that you would like to be afforded more information to test their analysis of which is the least expensive option.

    @V

    I think the opposition are reasonably fair about Anglo most of the time. They do over simplify sometimes but it would be naive to expect them to decline to tap the public’s visceral anger over Anglo.

  51. Presumably I am not the only one to note the Lenihan straw man technique of decrying those who call for an immediate wind-up of Anglo.

    He has persisted with this half-untruth (why dignify it with the term half-truth) since FG called nearly 500 days ago (before Xmas 2008) for Anglo to be wound down gradually in an orderly fashion.

  52. @Zhou
    Yes. Prove that its cheaper to keep alive (repeated vigorous assertion is not proof – thank god reality is not a courtroom) and then we can all go on with our business. But they wont prove it. Can they?
    Are you happy to take their word on it?

  53. @Zhou

    I thought it was government policy that Anglo should be resurrected as a business bank, lending money to smart companies ……, forming part of a third force ….. and no doubt funding some green initiatives ….

  54. @BL

    I think the DoF figures should be open to opposition scrutiny. However, the issue of how much information should be made public is a complex issue. It is further complicated by the Guarantee and contagion in the sovereign debt markets. I would be happy enough to be told that the information will be available in the future but in the meantime those who have been charged with protecting the public interest should be allowed to do so. We can’t have a plebiscite on every complex issue of governance. The Executive must be allowed to do its job. I don’t see any conspiracy.

    As for the remnants of Anglo becoming a third force, I would be delighted if something could be salvaged from Anglo to provide competition to AIB and BoI.

  55. @D Terry
    Well that would certainly seem to render the question, or at least a very large chunk of it, moot.
    (Tho’, if that is the case, it is interesting that the major point of difference between the two largest political parties on Anglo is a moot one)

  56. @Zhou

    The idea that Anglo could have be of any future use is about as well thought out as some of the recent suggestions by a UK foreign office official for the Pope’s visit.
    😉

  57. We’re coming up to a long weekend. Oftimes things get announced on Friday afternoon, late….

  58. I’d be delighted if the tooth fairy came and gave me a million dollars. But ain’t gonna happen! zhou, your trust in this government is touching but leaves me to suspect you might be touched…

  59. @MOL

    I said it was desirable. I don’t know if it is feasible! The EU Commission will likely decide that.

  60. Nah, you’re all being too pessimistic. There’re assets and a deposit book that’re probably worth about 2 bn (the 24 bn ‘good’ bank) (off the top of my head and with nothing to back it up). It would be the height of madness not to sell this off as a ‘new’ entity. But this is what happens in a liquidation (however fast or slow the liquidiser is moving). Any value is realised. A going concern bank is worth more than the sum of the assets. Probably, anyway!

  61. @Maurice

    Anger Irish Balls must be the only bank in the world to have the balls to give customers unbrellas (aka loans) when the sun shines and forgets to take them back when it rains.

  62. @On a point of information
    The government let the cat out of the bag about Anglo not being systemic to Ireland (it is very much so to Cronyland though). It was in an apparently draft, rather than as is normally done redacted, copy of Ireland’s notification to the European Commission concerning the (first) injection of €1.5bn of capital into the bank (1.5 Bn! One can only laugh – painfully – now).

    http://thestory.ie/2009/11/09/irelands-notification-to-the-european-commission/

    “Anglo Irish Bank is a focused business bank with a private banking arm. The Bank provides business banking, treasury and wealth/management services. It is NOT a universal bank and its stated strategy is NICHE rather than broad market.”

  63. About the deposit book.

    Perhaps a naive question but… Anglo are currently actively trying to attract new deposits at rates which, on the face of it, look a lot more generous than what many of it’s less zombified competitors offer. I’ve no idea how many new depositors they have attracted since they were nationalised but I know Northern Rock managed to attract new depositors in UK when they were nationalised.

    However, some of the foreign owned banks have now wound down (or in the process of winding down) their business including deposits because (amongst other reasons) the deposit rates they offered were neither sustainable nor profitable. This begs the question as to what would happen in the hypothetical situation where Anglo were to be wound down. Would they be likely to have to suspend taking new deposits or would there be a revision on the deposit rates that they are taking on new deposits ?

  64. for completeness…

    http://www.sbpost.ie/commentandanalysis/fine-gael-policy-of-default-has-few-backers-in-europe-48960.html

    Brian Lenihan:

    “….Despite some of the media commentary during the week, nothing has changed in the government’s position on Anglo Irish Bank.

    Our guiding objective from the beginning has been to minimise the cost to the taxpayer of any solution for Anglo Irish Bank. The bank is working on a plan based on an analysis of all the options available and, when finalised, this will be examined by me and my advisers. In his article, Deputy Bruton took issue with the government’s strategy on Anglo Irish Bank. Nothing new in that: far more interesting was his elaboration of what he would do with Anglo.

    Fine Gael would break up Anglo before September, when the state guarantee expires, into a new ‘good bank’ and a residual asset management company. This general approach is similar to the preferred option of Anglo’s new senior management team, which was already identified in the restructuring plan submitted to the European Commission last November.

    An interesting twist in Deputy Bruton’s plan is that he would put the bank’s bonds into the asset management company so that bondholders would ‘‘take a hit on their bad investments’’. Of course, defaulting on bondholders has been a key ingredient of Fine Gael’s approach to the banking crisis.

    However, had Deputy Bruton given Anglo’s latest published accounts even a cursory read, he would know that this proposal to default on bondholders makes no sense. The accounts show that, at the end of December last year, bondholders held about €17 billion of Anglo bonds. The bulk of these bonds were issued after the guarantee was introduced.

    Crucially, they are scheduled to be repaid before the guarantee ends in September. In essence, Deputy Bruton’s proposal is to default on bonds after September that will already have been repaid in full before September.

    Anglo’s bonds include about €2 billion in subordinated debt that does not mature until 2014 at the earliest. Unlike senior debt, subordinated bonds are part of the risk capital of the bank. I have already said that the treatment of this subordinated debt after the expiry of the guarantee will be considered as part of the process for agreeing a restructuring plan for the bank with the European Commission.

    …..

    The reality is that, if the international market lends money to a country at a 3 per cent interest rate one day, thinking the money is safe, and the country turns around the next day and tells the lender that the money is not going to be repaid, the markets will demand 16 per cent next time.

    ‘‘That’s capitalism,” as Deputy Bruton puts it – but that is not a course of action that this government can countenance.
    ….

    Deputy Bruton’s policy of default has Few backers in Europe.”

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