GOVERNMENT REACTION:MINISTER FOR Finance Brian Lenihan said the Government had put "clear blue water" between the newly-nationalised Anglo Irish Bank and the misconduct that had emerged in recent weeks.
Mr Lenihan stressed that the bank was not insolvent and he criticised the suggestion from Fine Gael that it be wound down.
“It’s a bank in which huge reputational damage has been done by the misconduct of the former chairman, and several members of his staff, who arranged this entirely concealed loan to himself,” he told RTÉ Six-One news. “That’s a very serious matter which has done a lot of damage to the Irish banking system generally, as well as to the Anglo Irish Bank.”
He said the Government had made it clear that a new board would be appointed to the bank.
“As far as the Government is concerned the new, nationalised Anglo Irish Bank has clear blue water between itself and the misconduct that emerged in recent weeks. We have done everything in our power to ensure that this bank does not fail.”
The Minister said an assessment of the bank’s bad debts had been carried out last autumn and a more detailed examination had taken place before the decision to nationalise was taken.
He said there was some exposure but he could not disclose the precise extent of it.
Anglo Irish Bank had €80 billion of deposits, he said. At present the loans were generating sufficient income to pay the deposits, to pay the interest due on deposits, and keep the bank going in the ordinary course of its business.
“That’s what’s fundamental here for the credit and reputation of Ireland around the world,” he said. “Were we to permit this bank to fail, we would be saying to depositors, to businesses, to citizens, to people in our economy and other economies, that Ireland is closed for business.”
Mr Lenihan confirmed that an assessment to establish what the bank was worth would be published.
He added that a number of inquiries would now have to take place into what had happened in Anglo Irish Bank.
He said the bank was being maintained as a going concern, “because if you indicate that it’s not you would immediately have a flight of creditors”.
Fine Gael has proposed that the bank be wound down over five to seven years with a new management team recovering whatever money is possible.
Mr Lenihan criticised this suggestion as irresponsible, saying: “It’s not a bank which is insolvent. It’s a solvent bank.”
He said the State would have to make a strategic decision as to how it used the bank for the benefit of taxpayers and the benefit of the economy.
“There is a plan. A new board will be appointed, the bank will be kept going as a going concern.”
Green Party leader and Minister for the Environment John Gormley said the Government had acted in the national interest.
“The cost of the Government not acting would have been hugely damaging to the Irish banking sector, which is the cornerstone of the Irish economy,” he said.
“The resultant damage to Ireland’s economy internationally cannot be overstated in that scenario. In the circumstances, it would have been very wrong for the Government to have failed to act.”
He said the matter was discussed in detail at a full Cabinet meeting which began at 3pm on Thursday. The Taoiseach participated via a conference phone call from Japan, according to a Government official.
A spokesman for the Green Party in Government said the party’s two Ministers had been fully briefed throughout deliberations in recent days.
Mr Gormley’s party colleague, Minister for Communications, Energy and Natural Resources Eamon Ryan, also strongly defended the Government decision in media interviews yesterday.
