STATE-OWNED ANGLO Irish Bank is expected today to report a loss for the first half of this year well in excess of the previous six-month deficit of €4.1 billion posted last year.
This would lead to Anglo setting a new Irish corporate record for a loss in a six-month period.
The bank will report the losses incurred on the transfer of the first €9.25 billion in loans sold to the National Asset Management Agency, and further losses on non-Nama loans and investments.
The loans were sold at a discount of 55 per cent, forcing the bank to take a loss of €5.1 billion.
The bank, which is led by chief executive Mike Aynsley, may also take into the six-month accounts some of the €4.2 billion in losses incurred on the second tranche of €6.75 billion in loans sold to Nama earlier this month at a discount of 62 per cent. Anglo has a further €19 billion in loans to sell to Nama.
Anglo is also expected to post losses on financial derivatives and investments today, and may need to refer to the loans due by businessman Seán Quinn and his family, totalling about €2.8 billion.
Mr Quinn has questioned whether the family would be able to repay the loans if Quinn Insurance, which is in administration and currently up for sale, was sold out of his business, Quinn Group.
Anglo has expressed an interest in taking control of Quinn Insurance with an industry buyer in an attempt to secure the repayment of the loans. The bank is one of several parties interested in buying the beleaguered insurance firm.
The bank last reported results in March when it announced a loss of €12.7 billion – the highest in Irish corporate history – for the 15-month period to the end of last year after writing off €15.1 billion on bad loans and investments, primarily due to the property crash.
Anglo previously announced a loss of €4.1 billion for the six months to the end of March 2009.
Some €10.1 billion of the impairments taken during the 15 months to December 2009 related to a 28 per cent write-down on the €36 billion in loans – half the bank’s original loan book – moving to Nama.
Anglo has so far received €14.3 billion in capital from the Government in cash and by way of promissory notes. The European Commission has approved a further €10 billion, and Central Bank governor Patrick Honohan has said the Anglo bailout will not exceed €25 billion.
Ratings agency Standard & Poor’s estimated last week that the cost of Anglo to the State could rise to €35 billion over time.
The total cost of recapitalising the banks may total €39.9 billion, including the €7 billion injected into Allied Irish Banks and Bank of Ireland, fixed income firm Glas Securities said in a research note.
Anglo wants to split the post-Nama €36 billion loan book into a good bank and bad bank, with a view to selling the good bank and running down the bad bank over time. The plan is awaiting European Commission approval.
Green Party finance spokesman Dan Boyle said Anglo could be wound down more quickly, after four to five years, and that the preferred option of a split was proving more costly than first thought.
A Department of Finance spokesman said the Government’s preference was for the option that posed the lowest cost to the State.
