Irish
High Court directs auction of deposits/ assets of Anglo Irish Bank and Irish Nationwide Building Society; Anglo reports loss of €17.6bn in 2010
By Finfacts Team
Feb 8, 2011 - 3:55 PM

The High Court today directed that an auction of the deposits and corresponding assets of Anglo Irish Bank and Irish Nationwide Building Society can take place immediately. Anglo Irish Bank said it expects to report a loss of €17.6bn in  2010.

Earlier Tuesday, the Minister for Finance applied to the court under Part 2 of the Credit Institutions (Stabilisation) Act 2010, which was passed into law last December.

Today's move is the commencement of a process for restructuring in accordance with the provisions of the EU/IMF Programme of Financial Support for Ireland.

 The direction orders from the High Court in respect of Anglo Irish Bank Corporation Limited (Anglo) and Irish Nationwide Building Society (INBS) are to:

(i) Enable the National Treasury Management Agency (NTMA) to begin a process, in accordance with EU State aid rules, to transfer deposits and assets held by both institutions to a third-party credit institution or institutions; and
(ii) Take the initial steps to implement the restructuring plan for Anglo and INBS as submitted to the European Commission for approval at the end of January this year.

These orders facilitate the Minister’s plan to restructure the two institutions which is in accordance with the provisions of the EU/IMF Programme of Financial Support for Ireland.

The direction orders were granted by the High Court under the Credit Institutions (Stabilisation) Act 2010.

Auction process

The NTMA said it will immediately commence an auction process to invite interested, fully- licensed financial institutions to tender for Anglo and INBS deposits. It is intended that this process will conclude as quickly as possible.

Restructuring plan

The NTMA said the initial steps to implement the restructuring plan for Anglo and INBS will involve the deposit transfer process and the preparation of the INBS and Anglo loan books for their orderly work out in a manner which minimises losses. The process will also involve the amalgamation of Anglo and INBS into a merged entity regulated by the Central Bank of Ireland.

The direction orders begin the process of restructuring Anglo and INBS as envisaged in the restructuring plan in a manner that benefits from necessary legal protections and is recognised in other EU Member States.

Depositors

The NTMA said deposits will be transferred in a seamless manner and no action is required by depositors. It said it should be noted that the position of depositors in Anglo and INBS remains fully secure and that any transfer will take place, and be accepted by another credit institution, on the basis of the existing terms and conditions. Depositors will also continue to have full access to their funds both during and after the auction process.

Staff

The NTMA says the position of employees in the business areas of Anglo and INBS that will be affected by the transfer of deposits will be safeguarded in accordance with applicable employment legislation.

Depositors will continue to have full access to their funds during and after the auction process.

Anglo

Anglo said today it expects to report a loss of €17.6bn in  2010.

In a trading update, the bank said this would include a loss of €11.5bn on assets transferred to the National Asset Management Agency and €7.8bn set aside to cover other loan losses.

The nationalised bank said it expects to transfer another €1.1bn of loans to NAMA. It said it had received State support of €29.3bn over the past two years.

Anglo said it employed just under 1,300 people at the end of 2010, down 16% from a year earlier.

When the loan losses are excluded, the nationalised bank made an operating profit of €1.8bn, mainly due to a buyback of some of its subordinated bonds.