Anglo Irish to sell off its Austrian subsidiary

ANGLO IRISH Bank is to dispose of its Austrian private banking subsidiary, Anglo Irish Bank (Austria), using the proceeds to boost its capital base.

However, it will retain ownership of its Vienna-based treasury operation.

Valartis, a Swiss banking group which focuses on asset management, wealth management and investment banking, is to acquire the Austrian bank, which was acquired by Anglo Irish Bank from Royal Bank of Canada in 1995. The Austrian bank contributed 1 per cent, or €6.7 million, of Anglo's pre-tax profits of € 667 million in the six months to March 31st last.

The purchase price has not been disclosed, but is understood to be above the €76 million asset valuation placed on the Austrian bank, and is likely to be in the region of the price paid earlier this year for Anglo's Swiss private bank, Anglo Irish Bank (Suisse), which is believed to have been worth €150 million.

Anglo Irish Bank has since disclosed that it made a gain of €20 million on the sale of that bank, which had about 2.7 billion Swiss francs (€1.7 billion) in assets under management and employed more than 60 people. The Swiss bank accounted for less than 1 per cent of group profit in 2007.

Anglo Irish Bank (Austria) has assets under management of some SFr2 billion (€1.3 billion), approximately 100 employees and 3,500 customers. Following the transaction, which is expected to close in the fourth quarter of 2008, the bank will be renamed Valartis Bank Austria.

Valartis will also acquire the Austrian bank's asset management subsidiary, AIBC Anglo Irish Bank (Austria) Kapitalanlagegesellschaft, which offers 15 public investment funds. However, Anglo will retain the Vienna-based treasury department, which is a branch of its Dublin operations, and which provides short-term liquidity management, forex, interest-rate and forex-risk management and structured products.

The bank sees significant growth potential for this operation. "We are retaining our long- established Austrian branch and will further invest in its significant deposit gathering and wider treasury activities," said David Drumm, group chief executive of Anglo Irish Bank.

The divestment is part of Anglo's previously stated strategy of focusing on its core secured lending businesses in Ireland, Britain and the US, together with its complementary global treasury business and its Irish and British wealth management businesses.

In addition to the sale of its Swiss banking operation, in 2006, Anglo also disposed of its Isle of Man trust operation.

Valartis said the acquisition would enable it to expand its wealth management activities and increase the group's assets under management to a total of SFr5.5 billion (€3.4 billion).