THE DEPARTMENT of Finance has indicated that a long-term wind-down of Anglo Irish Bank may be a more attractive option than a quicker process as it would spread the cost to the taxpayer of the bank’s €25 billion debts over a longer period of time.
The view is at variance with the new policy of one of the two Coalition parties, the Greens, that Anglo should be wound down as quickly as possible.
Sources in the department signalled yesterday the attraction of lower annual costs to the taxpayer over a longer period of years as part of a wind-down, over that period, would be greater than the indicative period of 10 years for an “orderly wind-down”. It is believed that this view is also shared by some officials in the State’s financial agencies.
The bank is today expected 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 Treasury Management Agency (NTMA).
The department said that relevant authorities (Central Bank, Financial Regulator, NTMA) were actively engaged in discussions with the EU Commission concerning the future of Anglo and all of the various available options. A spokesman said that the options for resolving Anglo Irish Bank included the management’s good bank-bad bank proposal and the potential for an orderly winddown of Anglo.
“If the orderly wind-down of Anglo is selected as the most cost-effective option, then obviously the time period for this wind-down would be whatever time period minimised this cost,” said the spokesman.
However, according to sources, the view expressed by some officials is that the time period that might best minimise the cost would be a longer time period, and not the quicker time period now advocated by the Green Party through its finance spokesman Dan Boyle.
The bank’s future is expected to dominate tomorrow’s Cabinet meeting, the first one after the summer recess. Green Party Ministers are expected to inform ministerial colleagues that they now favour a quicker wind-down of the bank. The Government’s discussion with the European Commission on Anglo is also expected to conclude this month.
The two Government parties played down suggestions of divisions over strategy over dealing with the Anglo Irish Bank crisis.
Opposition parties claimed that the Greens had effected a U-turn on policy after the party signalled it now favours a quicker wind-down of the nationalised bank.
Minister for Justice Dermot Ahern said that Fianna Fáil and the Greens were not at odds about the future of the bank. He said all parties were agreed that the solution for the bank must be achieved at the least cost to the taxpayer.
Fine Gael and Labour said that the Green Party’s new policy had created further instability for Ireland.