THE FINANCIAL Regulator has extended waivers on capital rules for Anglo Irish Bank from the end of the year until April 30th, 2010, in light of the Government’s commitment to inject further capital into the State-owned bank, pending loans transfers to Nama.
The Government has already injected €4 billion in capital into Anglo since June after losses of €4.1 billion in the six months to the end of March last wiped out the bank’s capital reserves.
Last May the regulator granted the bank derogations until July 31st last from rules setting minimum capital following the Government’s decision to inject additional State capital into the bank.
The derogations have been extended twice by the regulator since then – first to the end of the year and now until next April.
Anglo said in a statement that the regulator has allowed the bank maintain a total capital ratio of 8 per cent of assets, down from its previous minimum of 9.5 per cent.
The regulator had set a higher capital requirement on Anglo due to the high-risk profile of its business based on loans secured on Irish commercial property.
The bank said that the regulator agreed to extend the derogation on October 30th last “in light of the Government’s continued support and its commitment to provide an appropriate level of capital to the bank to enable it to continue to meet its capital requirements”.
This had been agreed “at the request of the bank, on a temporary basis and in exceptional circumstances”, the bank said.
The derogation will remain in place until April or “such shorter period” if the bank’s capital ratios are restored to its earlier levels.
The extension of the derogation means that the bank can transfer loans with a face value of €28.4 billion to the National Asset Management Agency (Nama) without requiring an immediate need for further State capital to meet the shortfall on the losses incurred.
The Government is expected to have to inject several billion euro more into Anglo – possibly as much as €6 billion, according to reported estimates – following the transfer of the loans to Nama as losses on property loans at the bank have continued to increase.
Meanwhile, the Minister for Finance is expected today to assess the bank’s redundancy plan which could lead to between 200 and 500 redundancies.
