THE FINAL value of Anglo Irish Bank will be decided by a State-appointed assessor, and not by yesterdays closing stock market price, the Government has decided.
The decision to nationalise the troubled bank was taken yesterday afternoon by Minister for Finance Brian Lenihan in consultation with the Cabinet.
Attorney General Paul Gallagher said Anglo’s share price could not be the final guide to its valuation, Mr Lenihan told a press conference last night.
“The advice from the AG is that the bank might be worth less than that, or more than that. Therefore an assessment has to take place.
“The market valuation is only an estimation made by the market at a particular time. We know how stressed the markets are currently,” he said.
But he warned that Anglo may finally be judged to be worthless by the assessor, in which case shareholders would get nothing.
A wide range of factors will be taken into account before a valuation is made, including Anglos liquidity, its future, its assets and liabilities.
“If the assessor decides that the bank is worthless, then the compensation paid is nil. If the assessor decides that this was a very valuable institution, notwithstanding market sentiment, then, of course, any shareholder is entitled to some compensation,” he said.
The decision to nationalise Anglo was taken because the State has had the opportunity to monitor every development since it offered to take up a 75 per cent preference shareholding in the bank, worth €1.5 billion.
“That enabled the State to make a far more precise judgment on the part of the Regulator, the Central Bank and ourselves on what was in the best interests of the Irish State,” said Mr Lenihan.
Anglo had lost some of the €80 billion worth of deposits it had following the disclosures that former chairman, Seán FitzPatrick had hidden €87 million worth of loans, but “no run on the bank had taken place”.
The position had stabilised after Mr FitzPatrick was replaced by Donal O’Connor, but despite his “very valiant effort” nationalisation was now necessary, the Minister said.
The nationalisation of Anglo would not hurt Ireland’s international credit rating because markets had already “priced in” the earlier offer to invest €1.5 billion in preference shares.
Debtors will have to pay their bills, he said, and shareholders who owe money to Anglo will not get compensation – if such is offered – until their debts are repaid.
Fine Gael’s preference for liquidation would only have encouraged debtors to default, Mr Lenihan said.
“The clear priority for us is to collect the debts,” Mr Lenihan added.
