Anglo Irish Bank suffers record losses

Anglo Irish Bank on Wednesday announced record losses of €12.7bn for the 15 months to December 31 just hours after the Dublin government said it would provide a further €8.3bn of aid.

The specialist lender, which was nationalised in January 2009 after a spate of governance scandals, took a €15bn charge for losses on loans to property developers that it does not expect to recover.

The shock results come as a criminal investigation into the bank intensifies with police questioning last month both Sean FitzPatrick, the former chairman, and William McAteer, former finance director.

Separately, competition officials at the European Commission launched an investigation into the billions of euros of aid being provided by the Irish government to the stricken lender and its efforts to create a viable, ongoing business.

The move came as Brussels cleared a recapitalisation of the bank under EU state aid rules. The commission said the assistance was justified “to preserve financial stability in Ireland”. Also cleared as emergency assistance was €2.7bn of aid to the Irish Nationwide Building Society.

Under EU rules, emergency state aid can last for up to six months – and the commission is taking the start date as December 22 2009, when support was firmly promised by the Irish authorities.

However, this is the second tranche of emergency aid to Anglo Irish following a €4bn injection last year.

That means that the Irish government, which now owns the bank, needs to present Brussels with a revised plan for dealing with Anglo Irish on a longer-term basis by the end of May. Commission officials said any restructuring bank must be “profound”.

Brian Lenihan, the Irish finance minister, told parliament on Tuesday that Anglo Irish may need an additional €10bn to absorb future losses.

This came as Dublin launched its bad bank rescue plan – with €81bn of distressed loans from the five domestic lenders taken over by the National Asset Management Agency.

Anglo Irish said of its €15bn provision, €10bn was for loans destined for Nama. Anglo Irish is set to transfer €35.6bn to Nama – about half its €72.1bn loan book.

The first €10bn Anglo Irish loans were acquired by Nama for €5bn, representing a 50 per cent discount to reflect the collapse of Irish property values.

Bank of Ireland, the only Irish bank likely to avoid majority government ownership according to Brian Lenihan, Irish finance minister, on Wednesday reported a pre-tax loss of €1.8bn for the nine months to December 31. This compares with a loss of €23m for the 12 months to March 31 2009. The results include a loan loss charge of €4.5bn, including €2.2bn related to Nama.