Anglo Irish Bank is Nationalized

Ireland’s Government has taken the ultimate route and nationalised one of its three major lenders. Anglo Irish Bank was taken into state hands on Thursday night after fears that is might collapse in the wake of the continuing economic crisis.

The Irish finance minister Brian Lenihan said in a statement: “Anglo Irish Bank is a major financial institution whose viability is of systemic importance to Ireland. Anglo has a balance sheet of some €100bn with a substantial deposit base which the State is determined to safeguard.”

The minister added that the decision had been taken after the country’s Central Bank and Financial Regulator had confirmed the lender was solvent. However, wider market perception was threatening the lender’s viability.

“The funding position of the bank has weakened and unacceptable practices that took place within it have caused serious reputational damage to the bank at a time when overall market sentiment towards it was negative,” said the statement.

“Accordingly the Government believes that the recapitalisation is not now the appropriate and effective means to secure its continued viability. Therefore the Government must move to the final and decisive step of public ownership.”

In addition, the Government said that shareholder would receive appropriate compensation. The bank will be managed via a holding company allowing it to operate commercially.

Shares in Anglo Irish Bank have been suspended. In early trading Allied Irish Banks’ shares fell €0.23, or 11.9%, to €1.71 and Bank of Ireland was down €0.037, or 4.1%, at €0.863. The Government said it was fully committed to the proposals to recapitalise these lenders it had already set out.

Source: Thomson Merger News