The Irish Independent reports that scandal-hit Anglo Irish Bank has been barred from lending ever again after creating the majority of the country's toxic debts.

Finance Minister Brian Lenihan yesterday confirmed that the nationalised bank would be split in two, with one wing holding deposits and the other managing non-NAMA loans, which will be run down over time.

However, the Government last night admitted it did not know how long it would take to wind down Anglo, or how much it was going to cost taxpayers.

Mr Lenihan ditched Anglo's ambitions to carve a functioning niche lender out of what is left of the bank when it transfers €36bn in property loans to NAMA.

Instead, Anglo's remaining loans of about €38bn will be housed in an asset recovery bank, where they will be worked out over a period of time or sold off, while its deposits will be put into a state-backed bank, which will not lend money.

The "savings bank" will also help provide funds for the asset recovery bank, lessening the immediate burden on the State.

The permanent ban on new lending brings to an end an era of Anglo lending that led to disaster and the nationalisation of the bank in January 2009.

Anglo formed a crucial relationship with key developers, including Bernard McNamara, Treasury Holdings and Derek Quinlan.

Former chief executive David Drumm grew the bank at explosive rates during the boom by aggressively recruiting other customers, such as Sean Quinn.

The ban now means Anglo can only lend to developers in order to complete the last few Celtic Tiger projects.

The Government rejected a plan to set up a new so-called 'good bank'. Instead the new bank will only have deposits, dealing a blow to Anglo management, led by chief executive Mike Aynsley.

But Mr Aynsley last night said he would "roll with the punches" and remain with the embattled institution, despite the collapse of his plans for the bank's future.

The bank boss also revealed that the 'new' plan for Anglo would allow the bank to more vigorously chase borrowers who are not repaying loans.

But jobs may be hit by the plan. Mr Aynsley confirmed the Government's preferred option for Anglo would "absolutely" need fewer people than the proposal management had backed.

Mr Aynsley had teed himself up to run the jettisoned 'good' bank. But the Australian insisted he would "absolutely" be staying on even though the good bank would not be created.

"Myself and all the management team sat down and went through everything," he told the Irish Independent. "I haven't heard anything about anyone thinking of leaving."

The opposition last night criticised the Government for failing to give a clear timetable for the wind-down of Anglo.

But Mr Lenihan gave a stark warning of how a quick shutdown would hit the country.

"The practical reality is that the bank owes €72bn -- the bulk of it to depositors. If we let this go, we let Ireland go," he said. "We cannot contemplate that."

Mr Lenihan denied the compromise plan announced yesterday had been forced on the Coalition by the European Union.

In an obvious dig at those who said the bank could be wound down more quickly, Mr Lenihan said it wasn't possible to "pluck a figure out of the air".

DIFFICULT

Pressed on how long the wind-down would take, he would only say it was "difficult to see it going beyond 15 years".

The decision on Anglo followed months of discussions and proposals with European Commission chiefs and options put forward by Anglo management.

Mr Lenihan spent two days discussing the future of Anglo with Competition Commissioner Joaquin Almunia and European counterparts.

The final cost of the Anglo split will not be announced until October, the Government said.

The bank last week announced losses of €8.2bn and is forecast to need a bailout of at least €25bn.

Under the Government's plan, to be authorised by the European Commission, the two new banks will also be rebranded.

Fine Gael leader Enda Kenny claimed the Government's banking policy was a disaster. And the party's finance spokesman Michael Noonan said splitting the debt-ridden bank was "a fudge".

"Whatever the total call on the Irish taxpayer is going to be, it's as big today as it was yesterday. There's no relief for the taxpayer."

The Irish Independent also reports that self-employed people will be forced to file their tax returns online under plans being considered by the Revenue Commissioners.

The move to electronic filing and payments is despite the fact that the Revenue is one of the largest issuers of cheques in the State.

The proposal was criticised yesterday as a move that would cut costs for the Revenue but do little to make it easier for the self-employed and small firms.

Already large firms have to file electronically, but now the tax authorities want to extend this in phases to all those who make tax returns.

The Revenue is proposing that from next January all companies, partnerships and most of those who are self-assessed will be subject to mandatory online filing. The new rules would also apply to those registered for VAT and employers with more than five staff.

And the Revenue is proposing that by 2013, almost everyone who has to make a return will file it electronically.

Director of taxation with Chartered Accountants Ireland Brian Keegan said the move was primarily in the Revenue's interest. He said tax officials had to spend a lot of time matching tax payments received by cheque with returns filed online.

Tax practitioner Cathal Maxwell of PayLessTax.ie said many of the self-employed and small firms were used to paper- based filing and would resent being forced to file online.

A spokesperson for the Revenue defended the issuing of cheques for tax refunds, but stressed that taxpayers have the option of being paid electronically. Business lobby group ISME welcomed the move to electronic filing of tax returns.

The Irish Times reports that the Government has unveiled plans to split Anglo Irish Bank into two entities and wind them down or sell them. However, it has not disclosed the amount of funding or time periods the move will involve.

The bank’s future has been weighing heavily on international market sentiment towards Ireland and in recent days there has been growing pressure on the Government to state its intentions.

Under the plan, revealed by Minister for Finance Brian Lenihan yesterday, a new “funding bank” or savings bank will take over Anglo’s deposits, while a new “asset recovery bank” will take over €38 billion in loans that are not being transferred to the National Asset Management Agency (Nama). Neither will trade under the Anglo name.

The Government claimed that its proposals would cost the taxpayer less than those proposed by Anglo’s management.

The initial response of the markets appeared positive but a more considered view will be given today.

“The final bill for Anglo can’t be known yet, so the financial markets will still have some concerns,” said analyst Sebastian Orsi of Merrion Capital.

Labour Party spokeswoman on finance Joan Burton insisted Mr Lenihan’s statement was “cobbled together” and had failed to clarify his intentions.

“Having spent two years insisting that Anglo must continue in its present form, the Government has finally abandoned their failed policy.

“Yet, even as they make a U-turn, the announcement has left a whole series of questions unanswered about the future of Anglo, at a time when the markets urgently require clarity from the Irish Government.”

The Government decided against Anglo management’s preferred “good bank/bad bank” option and has instead decided to wind down the bank, while seeking to protect the €54 billion it has in deposits and other funding.

The asset recovery bank will also take with it the senior and subordinated debt – this is the funding provided by investors – that is held by Anglo. The recovery bank will be run down over a period that maximises the return to the exchequer, Mr Lenihan told journalists.

He did not give a specific timeframe for this process but said: “It is very difficult to see an asset management company going beyond 15 years for example, very difficult, and it could be a shorter period.”

Mr Lenihan said the Government had estimates for the various options available to it. He said Financial Regulator Matthew Elderfield will now have to decide what the capital requirements of the two new banks will be. This should occur by October, the Minister said.

Anglo chairman Alan Dukes said it was “a pity” that the Government had decided to reject the bank’s own plan but that it was “the shareholder’s prerogative”.

The good bank plan, which earlier this year appeared to have the backing of Mr Lenihan’s department, would have involved a capital injection of €2.5 billion. The capital required under the new plan, approved by Cabinet yesterday, is expected to be considerably less because the new banks will not be engaging in new lending.

Mr Lenihan said when Mr Elderfield gave his views on the capital requirements of the new banks, this would provide as much certainty as was possible about the cost of dealing with Anglo and would “underpin financial confidence in Ireland”.

He said the level of interest that was being charged for Irish debt on the bond markets was troubling to the Government and had prompted it to bring forward the announcement of its decision on what to do with Anglo.

Mr Lenihan said the guaranteed position of depositors would remain the same as a result of the Government’s decision.

The Government’s hope is that, by establishing a State-backed savings bank, it can wind down Anglo loans while holding on to as many of the deposits as possible.

Mr Lenihan said his department had looked at the Anglo management’s plan for a good bank but decided “that that wasn’t a viable option in the current climate”.

He said the European Commission’s views on State aid were not a decisive factor in the final decision arrived at by the Government.

“Resolution of this, our most distressed financial institution, is essential to the promotion of confidence and stability in our financial system,” Mr Lenihan said.

Fine Gael spokesman on finance Michael Noonan said he wanted the plan to work but expressed concern that there were no figures in the statement from Mr Lenihan and that the decision on what to do had taken so long.

The Irish Times also reports that the European Commission is preparing new plans for pan-European rules on the taxation of business profits, measures certain to be opposed by the Government.

Documents seen by The Irish Times say new legislation on corporation tax will form part of a drive by the EU executive to revitalise the union’s internal market.

This raises the prospect of the Government being forced into a battle with the commission and powerful states such as France at a time when it needs the goodwill of the EU authorities to help weather the economic crisis.

“The commission will take steps to improve the co-ordination of national tax policies, notably by proposing a directive introducing the common consolidated corporate tax base ,” states a draft of an imminent communique from the EU executive.

The policy would not harmonise corporate tax rates. It would, however, introduce a common European formula for the calculation of tax on the profits of firms operating in more than one member state.

Dublin has often argued that this would undermine tax competition in Europe, dimming the lustre of its own 12.5 per cent corporation tax rate. One of the main arguments against a CCCTB, as it is known, is that it would reallocate tax receipts to countries in which revenues are received. This would lessen scope to maximise the profits that companies record in Ireland.

EU tax commissioner Algirdas Semeta will introduce legislative proposals early next year. He plans to brief Minister for Finance Brian Lenihan on the proposal on Monday week.

The plan was first aired in 2001. Agreement proved elusive and it was withdrawn in mid-2008 in the wake of Ireland’s rejection of the Lisbon Treaty. Now, however, the commission believes the conditions are ripe for its reintroduction.

Changes to European tax policy must be unanimously endorsed by member states before they take effect so the Government could veto the plan.

Still, Mr Semeta is prepared to invoke an “enhanced co-operation” procedure under which countries that favour a set of measures can introduce common EU rules to apply only to them. This could put non-participants at a disadvantage.

The Irish Examiner reports that BP has blamed itself, other companies’ workers and a complex series of failures for the massive Gulf of Mexico oil spill and the drilling rig explosion that preceded it.

The findings were made in a 193-page internal report posted on the company’s website yesterday, even though investigators have not yet begun to fully analyse a key piece of equipment, the blowout preventer, that should have cut off the flow of oil from the ruptured well but failed.

That means BP’s report is far from the definitive ruling on the blowout’s causes, but it may provide some hint of the company’s legal strategy – spreading the blame around, between itself, rig owner Transocean, and cement contractor Halliburton – as it faces hundreds of lawsuits and possible criminal charges over the spill.

Government investigators and congressional panels are also looking into the cause.

Members of the US Congress, industry experts and workers who survived the rig explosion have accused BP’s engineers of cutting corners to save time and money on a project that was 43 days and more than $20 million (€15.7m) behind schedule at the time of the blast.

BP’s report acknowledged, as investigators have previously suggested, that its engineers and employees of Transocean misinterpreted a pressure test of the well’s integrity. It also blamed employees on the rig from both companies for failing to respond to warning signs that the well was in danger of blowing out.

Outgoing BP chief Tony Hayward, who is being replaced on October 1 by American Bob Dudley, said there was a bad cement job and a failure of a barrier at the bottom of the well that let oil and gas leak out.

Transocean has blasted BP’s report, calling it a self-serving attempt to conceal the real cause of the explosion, which it blamed on what it called "BP’s fatally flawed well design."

"In both its design and construction, BP made a series of cost-saving decisions that increased risk – in some cases, severely."

Transocean said its own investigation will be concluded when all of the evidence is in, including critical information the company has requested of BP but has yet to receive.

New Orleans attorney Scott Bickford, who represents relatives of a worker who died in the explosion and a worker who survived the blast, said he found no surprises in the report.

"My knee-jerk reaction is that there was no huge smoking gun they found that hasn’t already been discussed," he said.

Several divisions of the US government, including the Justice Department, Coast Guard and Bureau of Ocean Energy Management, Regulation and Enforcement, are also investigating the explosion.

The blowout preventer was raised from the water off the coast of Louisiana on Saturday. It was being brought to a NASA facility in New Orleans where government investigators plan to analyse it, so those conclusions were not part of BP’s report.

The oil rig explosion killed 11 workers and sent 206 million gallons of oil spewing from BP’s undersea well.

Investigators know the explosion was triggered by a bubble of methane gas that escaped from the well and shot up the drill column, expanding quickly as it burst through several seals and barriers before igniting.

But they don’t know exactly how or why the gas escaped. And they don’t know why the blowout preventer didn’t seal the well pipe at the sea bottom after the eruption, as it was supposed to.

There were signs of problems prior to the explosion, including an unexpected loss of fluid from a pipe known as a riser five hours before the explosion that could have indicated a leak in the blowout preventer.

Witness statements show rig workers talked just minutes before the blowout about pressure problems in the well.

At first, nobody seemed too worried, workers have said. Then panic set in.

Workers called their bosses to report that the well was "coming in" and that they were "getting mud back." The drilling supervisor, Jason Anderson, tried to shut down the well.

It didn’t work. At least two explosions turned the rig into an inferno.

In its report, BP defended the well’s design, which has been criticised by industry experts.

Other findings in the BP report include:

* Flammable fluids rising up the pipe toward the Deepwater Horizon rig were directed to a system that allowed gas to vent onto the rig, and that gas was then circulated by the air conditioning, heating and ventilation systems.

BP says that if the crew had directed the fluids overboard, there might have been more time to respond to the pending disaster and the consequences of the accident may have been reduced.

* BP concluded that a "more thorough review and testing by Halliburton" and "stronger quality assurance" by BP’s well team might have identified potential flaws and weaknesses in the design for the cement job.

* BP counters the concerns that were raised prior to the explosion by Halliburton over the potential for a severe gas flow problem if a BP plan was used.

Halliburton and BP were at odds over a key device, known as a centraliser, that is used as part of the process to plug a deepwater well like the oil giant was doing at the time of the disaster.

Halliburton’s well design expert testified previously he told BP officials April 15 – five days before the well blew – that fewer centralisers would cause a bigger gas flow problem. BP rejected Halliburton’s recommendation to use 21 centralisers. Instead, BP used six.

In its report yesterday, BP said the decision likely did not contribute to the cement’s failure.

In June, the House Committee on Energy and Commerce’s chairmen said it was BP that made five crucial decisions before the Deepwater Horizon well blowout that "posed a trade-off between cost and well safety."

One of those decisions: BP opted against conducting a certain kind of test of the integrity of a cement job at the well. The test would have cost more than $128,000 and taken nine to 12 hours to perform, the committee’s letter notes.

In May, senior BP drilling engineer Mark Hafle told the Coast Guard and Bureau of Ocean Energy Management investigators that BP didn’t order the test even though more than 3,000 barrels of mud had been lost while drilling, a possible warning sign.

The committee also criticised BP’s well design.

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