Anglo Irish Bank's chief executive has today called for an extension of the State's bank guarantee scheme and said his bank plans to sell the Arnotts department store.
The guarantee is set to expire at the end of September, and was intended to help stabilise the banking system.
From September 29th, the Government will no longer guarantee subordinated debt, covered bonds, inter-bank debt and debt with a maturity of up to 90 days held at Irish banks. However, an extension of the guarantee will apply to senior debt until the end of 2010.
Speaking on RTÉ Radio this afternoon, Mike Aynsley reiterated plans to split Anglo into a viable bank and an asset recovery company that will manage non-performing loans that are not transferred to the National Asset Management Agency. Mr Aynsley said the bank had good quality loans underpinned by good quality assets.
In a document prepared for a management briefing yesterday Mr Aynsley said the bank was sifting through its loan portfolio “loan-by-loan” to see which loans are suitable for inclusion in the new bank – known as BankCo. “It is conceivable that by the time we get through this process the final transfer amount could be closer to €10 rather than €15 billion,” he warned.
“We cannot afford to transfer loans to BankCo that are in any way marginal and therefore have the capacity to require further State aid should they deteriorate,” he said.
He acknowledged the bank was expensive from the taxpayers' point of view but said his job was to figure out the best thing to do.
"The issue is that closing a bank down like Anglo is not a matter of just closing it and all the problems going away," he said.
Anglo Irish Bank also plans to sell Arnotts to recoup some of the money it loaned to the department store, the chief executive said.
The nationalised bank has applied with Ulster Bank to take control of Arnotts. The two institutions backed the retailer's planned €750 million Northern Quarter development, which has been put on hold.
Mr Aynsley said Arnotts was an "iconic" business but that the bank should not get involved in owning it as a business and get involved in the retail sector.
"Our role as an organisation . . . is to work with that company and work with the management to put that back on an even keel and transfer it off into ownership that can effectively manage it going forward without creating further economic or employment problems," he said.
Mr Aynsley said it was in everyone's interests to work with clients and businesses, hire specialist resources when needed and put the companies back in a position where it was profitable and attracting investors.
