The Anglo Irish Bank brand could disappear before the end of January with its deposits moving to a separate entity.
The Central Bank confirmed today it was working on a revised restructuring proposal for the nationalised lender. It said the Anglo loan book could take a number of years to wind down
The Central Bank said it was working on a proposal, agreed with other authorities during talks on the €85 billion Irish bailout package, for a revised restructuring proposal in compliance with EU competition law for Anglo Irish Bank.
“The objective is to submit and agree this by the end of January 2011; this time line has been agreed between the Irish authorities and the EU Commission,” it said in a statement today.
The Central Bank said any wind-down of the Anglo loan book would be over a multi-year period as in the current restructuring.
“These measures are designed to provide an orderly resolution for the future of Anglo in a manner that is consistent with EU competition law and agreed with the European Commission,” it added.
In an interview this afternoon, Central Bank governor Patrick Honohan said the bank was not doing any new lending business. This meant it was, in his mind, “definitely” heading towards wind down.
When questioned about a time frame for such a development, he said: “As quickly as they can do it . . . I think we're talking weeks."
"I think a deadline is being established which is early in 2011. There are so many deadlines, it could be January, but I'm not sure," he told RTÉ News at One.
He said deposits in Anglo, like those of Irish Nationwide Building Society, would be moved elsewhere and remained fully guaranteed.
Mr Honohan also said €10 billion of the bailout fund would go into the banks right away.
“It is an investment in each of the continuing banks. It brings their capital ratios up to 12 per cent at least – way above the minima in any other country in Europe,” he said. “It brings it up above that in order to provide some kind of cushion to absorb any losses.”
Mr Honohan said if there were more anticipated losses for the banks, which was possible given the weaker economic performance forecast, these could be absorbed out of this higher capital amount.
He said that if the losses were greater, consideration would be given to drawing on the €25 billion contingency fund included in the bailout package.
Mr Honohan said he would be “very disappointed” if the contingency fund had to be drawn down.
Commenting on the development, Fine Gael said the decision to close Anglo was two years and billions of euro too late.
Fine Gael communications spokesman Leo Varadkar said there was still confusion over what would happen to €6 billion in senior bonds at the bank.
"Will senior bondholders take a hit or will the financial pain, once again, be borne by the taxpayer?" he said.
