The Irish Independent reports that taxpayers will have to pump an estimated €210m a week into Anglo Irish Bank for the rest of the year to cover losses that will never be recovered.

The colossal impact on the economy by the bank was revealed yesterday when Anglo unveiled record six-month losses of €8.2bn. The startling figures emerged in the bank's half-year results -- the biggest loss in a six-month period by an Irish company.

Anglo chiefs warned a further €6bn loss was likely for the rest of 2010. Chief executive Mike Aynsley accepted that the losses were "horrendous", but insisted that a very quick wind-down of the bank would cost another €20bn, on top of the €25bn already earmarked for the bailout of the bank.

In an interview with the Irish Independent, Mr Aynsley said the State could not afford an immediate wind-down, saying it would be "just ripping up money for the Irish taxpayer".

Despite growing calls for the bank to be shut down, Finance Minister Brian Lenihan yesterday promised to bring "certainty and finality" to the issue of Anglo in the coming weeks -- but he refused to put a final figure on the cost of bailing it out.

However, the options open to the Government and the EU to avoid a major hit to the taxpayer are extremely limited. Any decision to immediately wind down the bank would have huge implications for our international reputation.

The country is expected to honour all the debts of a mainstream bank and this may not be possible if Anglo was shut down immediately.

Yesterday's results also revealed that:

• More state cash may be needed, depending on the discount placed on future loans going to NAMA.
• About €600m of loans that went into NAMA are worthless as they were secured on nothing more than personal guarantees.
• Deposits of €5.5bn have flowed out of the bank in just six months, with the turnover cut in half.
• The bank gave €1.1bn of fresh working capital to developers to finish off schemes and developments.
• It expects to be forced to take over more struggling businesses, like Arnotts, in Ireland, but also in the US.

It also emerged that the bank has started an investigation into potential overcharging of customers on loans given out over a five-year period.

Interest

The bank may owe up to €50m to the customers affected. An incorrect interest rate may have been applied to a large number of loans and customers may be owed between €30m and €50m by the bank, Mr Aynsley revealed.

The loans in question were given out between the late 1990s and July 2004 and Anglo may now have to pay back customers who have been affected.

Anglo Irish Bank also revealed yesterday that a key reason for its opposition to closing the bank down gradually was that leading developers would simply stop repaying their loans.

In his chairman's address, Alan Dukes said a gradual closure plan would "impede'' the bank managing its loan book.

"Borrowers would see you coming,'' said chief financial officer Maarten van Eden.

Meanwhile, it is understood loans given to Sean Quinn and his family are included in the losses announced yesterday.

The Irish Independent also reports that Anglo Irish Bank wrote down €600m worth of loans to zero when it moved them over to NAMA earlier this year, the nationalised bank has revealed.

The bank, led until December 2008 by David Drumm and Sean FitzPatrick, moved over €10.1bn of loans into NAMA during the first half of the year.

Most were severely discounted but still had some value. However, an analysis by the bank shows that €600m worth of loans were given no value at all and were effectively transferred to NAMA for free.

In fact more than €2.5bn of loans were discounted by 80pc or more, such was their poor condition.

The loans that moved to NAMA for free were secured by nothing more than personal guarantees from customers, it has emerged.

This means there were no other assets behind the loan, but the personal wealth of the borrowers.

Many of these borrowers have gone " belly up", explained chief executive Mike Aynsley, and simply no longer had the wealth the bank could call in. It is understood the number of borrowers involved in the €600m loans is relatively small.

The bank also warned yesterday that if Anglo is ordered to close over a drawn-out period, borrowers are less likely to repay their loans. "If you are in a wind-down, that gets known in the market. A borrower then sees us coming. He is going to negotiate,'' said Maarten van Eden, the bank's chief financial officer.

In fact the bank is still providing loans to developers, chiefly to finish off projects in the property arena, with €1.1bn advanced during the period. Much of the lending was previously committed to by the bank.

The Irish Times says the contentious issue of whether bondholders should bear some of the losses must again arise

Asking Anglo Irish Bank how much the nationalised lender is going to cost the State is a difficult question to pose – primarily because it’s not up to the bank. 

The bank’s fate – and the cost of that fate – rests with the European Commission, the National Asset Management Agency, the state of the property market and the ability of its big customers to repay loans.

The commission has yet to rule on whether the bank can proceed with its plan to carve out of the mess a small, viable bank with the good quality, performing loans.

Nama has purchased €16 billion of its loans, applying a discount of 55 per cent and 62 per cent on the first two tranches, but there are a further €19 billion in loans to go.

Any further declines in the property market will determine whether the State loans agency pays even less for these loans.

And then there is the tricky conundrum of what happens to Quinn Insurance, which is in administration and whose future will determine whether its shareholders, Seán Quinn and his family, can repay their €2.8 billion in loans to the State-owned bank.

Anglo is busy trying to find a solution involving a partnership with a trade buyer but there are other bidders for the company.

All these variables will determine whether the cost of propping up Anglo will exceed €25 billion – the bank’s current estimate – or drive it up towards the potential €35 billion cited by ratings agency Standard Poor’s last week.

Mike Aynsley, Anglo’s chief executive, said that €25 billion should cover the cost – if the Nama discounts don’t get any worse, there is no further decline in the commercial property market and there is no unexpected bombshell concerning Anglo’s largest clients.

While he declined to comment on Quinn, the family’s loans are a major problem and could add substantially to the cost of Anglo.

The meter on the bailout has reached €22.88 billion. Some €18.88 billion has come through promissory notes, or State IOUs, which, the Government says, allows it to spread the cost over a “manageable” 10 to 15 years.

As the Anglo bailout climbs, the contentious debate about whether the bondholders should bear some of the losses must again arise.

The bank had €2.4 billion in subordinated debt – funding provided by investors for a risk premium – outstanding at the end of June.

Only the dated portion of this debt (€1.7 billion) is covered under the blanket guarantee ending next month, so these investors could yet end up taking a hit on Anglo.

Maarten van Eden, chief financial officer at the bank, said that the subject of outstanding subordinated debt was “on the table” in Anglo’s restructuring discussions. It is also notable that Anglo used some of the €10.3 billion in promissory notes it held at the end of June as collateral to draw funding of €11.6 billion from the Central Bank on a special loan. The bank also provided some loans as collateral for the funding.

Incredibly, almost a third of the bank’s €87 billion balance sheet is being funded by the Central Bank and European Central Bank.

It is no surprise then why Anglo has called on the blanket guarantee – for short-term corporate deposits at least – to be extended. It wants to avoid the loss of more deposits, particularly those provided by companies with which the bank has long-standing relations.

Anglo lost €4 billion in deposits over the first six months due to competition, pricing constraints and the maturing of one-year deposit products sold in 2009.

Aynsley said that uncertainty over the future of the bank was making life difficult for Anglo.

Minister for Finance Brian Lenihan has said he is in active discussions with Brussels to bring finality to the problem of Anglo.

A ruling by the commission on the bank’s plan next month should help remove some uncertainty, but the Nama and Quinn issues will linger on for some time yet.

The Irish Times also reports that a Dublin solicitor who confessed that he gambled and lost €2.4 million of client funds on the stock exchange has been suspended from practising.

Much of the funds were destined for the Catholic Church in Dublin from a client’s estate, but Ruairi Ó Ceallaigh, who has a gambling addiction, lost large sums gambling via contracts for difference and shares, the High Court heard yesterday.

Ruairi (39) and his younger brother Cormac (37) qualified as solicitors in 2000 and 2001, and ran the Phibsboro, Dublin, firm of Seán Ó Ceallaigh Company, founded by their father in 1958, from 2003.

Cormac alerted the Law Society to problems with the firm’s accounts after Ruairi told him in late July he used €1.5 million borrowed from Allied Irish Bank in 2007 to buy shares rather than clear mortgages.

On August 18th, Ruairi admitted to gambling €2.4 million from the firm’s client account on stocks and shares. Ruairi, in court yesterday with his brother and parents, has resigned from the firm and apologised. Cormac said he had trusted his brother implicitly. While devastated by his “shameful dishonesty”, the family was determined to make restitution, with his elderly parents prepared to sell their home to help clear the deficit. The total liabilities of the firm, which employs 14 people, may exceed €4 million.

Mr Justice Peter Charleton made orders suspending Ruairi from practise, freezing his accounts and those of the firm. He also directed more information be provided before deciding the firm’s future.

While Ruairi had admitted fraudulent conduct, there was no evidence Cormac was anything but a responsible solicitor, the judge said.

The Irish Examiner reports that Kerry Group boss Stan McCarthy said yesterday a "multi-billion" euro takeover to enhance the group’s global reach in food ingredients/ flavours was a definite goal for the company.

Commenting after the group reported pre-tax profits of €162.3m for the first six months of 2010, ahead of forecasts, he stressed he was not under any pressure to make such a move in the short term.

"We don’t have to jump the gun. I’m more interested in performance than rushing a big deal," he said.

At some stage a major multi-billion deal will present itself and "I know we will be capable of doing it, it’s just a matter of when".

Kerry has also raised its earnings forecast to the "mid-teens" for the year.

Strong growth in the Asia-Pacific region were a key factor in the results which saw sales rise 6.7% to €2.4bn over the period.

Trading profit rose by 12.9% to €204m.

Earnings per share was up 19.3% to 80.2 cent on an adjusted basis and the group has signalled the payment of an 8.8 cent dividend per share, a 14.3% hike on the dividend payout.

Kerry said the improved results reflected "strong profitable growth in the first half of 2010, and by growing continuing business volumes by 5.8% on a group wide basis."

McCarthy said the Irish market looks to have stabilised.

The consumer foods business remained tough as the economic environment was affected by the poor state of the economy, which in turn made consumers more cautious.

In consumer foods overall sales in the group’s core British and Irish operations fell just short of €900m, recording growth of just 0.5%.

On a like-for-like basis trading profits rose 4.4% to €63m, while the trading margin was up 0.4% to 7.1%.

The group said continuing brand investment and a focus on value would continue to deliver results going forward.

In ingredients and flavourings, which account for nearly two-thirds of total sales, turnover in the first half rose by almost 4% to €1.8 billion, while profits were 9.3% ahead at €164m.

On the domestic front McCarthy said the group has well integrated the Breeo Foods operations, previously owned by Reox.

The Dairygold brand which came out of that stable performed well, he said.

Overall the group said the tough two years for the dairy sector were now behind them.

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