Anglo Irish Bank Corporation Limited today published its Interim report for the 6-month period to March 31, 2009. It reported a loss before taxation of €4.1bn for the period, primarily driven by specific and collective lending impairment charges of €3.7bn and €0.4bn respectively. The Government is to seek EU approval to inject up to €4bn of capital into the nationalised bank, Minister for Finance Brian Lenihan said today. The bank has total impairment provisions on its balance sheet of €4.9bn and it disclosed its losses for the three year period to the end of September 2011“are likely to reach €7.5bn.”

Anglo said new lending in the six month period was only to its existing customers, mainly in Ireland, and confined to amounts which were previously committed to or approved.

It said that development lending totals €17.7bn or 24% of its loan book. Two thirds of this lending is in Ireland and covers all phases of development from unzoned land to completed units.

On the quality of its loans, Anglo said the amount of loans classified as part due but not impaired has increased to €12.9bn from €1.6bn last September. Ireland accounts for €8.6bn (67%) of the total past due amount, the UK 28% and the US 5%.

Anglo said the level of loans past due outstanding for over 90 days has increased from €1bn in September to €2.5bn and represents the highest risk element of past due.

Anglo also said that lower quality, but not past due or impaired cases amounted to €5.3bn at the end of March, up from €2.5bn in September. The bank deem these loans to have a high risk of deterioration.

Donal O’Connor, Executive Chairman of Anglo Irish Bank said: “This has been a most difficult period for Anglo Irish Bank culminating in the reporting of a pre-tax loss of €4.1bn. This is as a result of significant impairment charges on the bank’s loan portfolio following continued deterioration in the economic environment in each of our core markets and further declines in property values.

Clearly the bank made mistakes in some of the lending decisions taken in recent years, particularly in relation to property development in Ireland. Our rate of growth and risk appetite at the top of the economic cycle was imprudent and the stark evidence of this is seen in the figures announced today. We welcome the statement from the Minister for Finance confirming the Government’s decision to  provide, subject to EU approval, up to €4bn of capital and we are very grateful to the Government for this support. We also welcome the Minister’s confirmation that the bank will participate in the National Asset Management Agency as this is a fundamental assumption in our draft Business Plan.

The bank is very conscious of its responsibility to the taxpayer. The Minister’s decisions place the bank on a sound financial footing and we are determined to repay the taxpayer by creating a viable, efficient and respected bank.”

From Anglo Irish Bank's Annual Report 2006

Minister Lenihan said he recognises that the results are extremely disappointing and reflect a marked deterioration in asset quality at the bank since it was nationalised.  He has asked the board of the bank to finalise as a matter of urgency a business plan which will provide a detailed framework within which the bank, with Government support, will work through its current problems. In keeping with the decision of December 21, 2008 and following the advice of the Central Bank, the Financial Regulator, the NTMA and legal and financial advisors, the Government has decided, subject to EU approval, to provide up to €4 billion of capital to Anglo.

Lenihan said the bank is also in a position to generate further capital of its own by buying back certain outstanding subordinated loans from bondholders at a significant discount to par value. This exercise will generate profit and additional capital for the bank.

He said: “It is important to remember that this is the first time we have put money into Anglo Irish Bank although we signalled our readiness to do so last December before the Bank was nationalised.”

Anglo Irish Bank closed at 22 euro cent on the Irish Stock Exchange, on January 15, 2009 - - its last day of trading before becoming a State-owned bank. On February 21, 2007, the ISEQ index rose to an-all time high of 10,041 and the Financial sub-index rose to 18,098. Bank of Ireland closed at €18.65; Anglo Irish closed at €16.64 and AIB closed unchanged at €23.95. A year later, on February 21, 2008, AIB closed at €13.80, Anglo Irish Bank finished at €8.84, while Irish Life & Permanent closed at €10.20 and Bank of Ireland traded at €9.50. Seven issues dominate the Irish market and in recent years, overseas residents, dominated by institutions, have owned more than 60% of Irish bank shares. Ireland's biggest company CRH, accounts for about a third of Irish market capitalisation and in December 2008, foreign holders held more than 85% of the issued shares.

Reason for Support

Lenihan stated that:

“The overriding concern of the Government has been:

• to protect the economy from the wider losses that would occur in the event of the failure of the bank;
• to protect the €64 billion of customer and interbank deposits in the bank; and
• to prevent the bank becoming a systemic threat to the financial system."

Interim Results

<We operate to the highest ethical and governance standards as we aspire to be a model corporate citizen. For this reason we invest heavily in the development and training of our staff, as well as maintaining the highest levels of integrity in our relationships with our stakeholders> - - Anglo Irish Bank Annual Report 2007 Anglo Irish Bank was founded in 1964 as Dublin City Bank and became a publicly quoted company in 1971. It had about 1,800 employees when nationalised in January. In 1986 Seán FitzPatrick, a chartered accountant, became Chief Executive; Dublin City Bank merged with Anglo Irish Bank Ltd and assumed the latter's name. December 2008/January 2009 - - Chairman Seán FitzPatrick, Chief Executive David Drumm and a number of board members resigned after it emerged that FitzPatrick had taken measures over an eight-year period, to conceal details from shareholders, of an €87 million loan he took from the bank.