Belfast Telegraph

Anglo hit with loan ban over toxic debts

By Emmet Oliver and Fionnan Sheahan

Scandal-hit Anglo Irish Bank has been barred from lending ever again after creating the majority of the country's toxic debts.

The Republic's Finance Minister Brian Lenihan yesterday confirmed that the nationalised bank would be split in two, with one wing holding deposits and the other managing non-NAMA loans, which will be run down over time.

However, the Irish government last night admitted it did not know how long it would take to wind down Anglo, or how much it was going to cost Irish taxpayers.

Mr Lenihan ditched Anglo's ambitions to carve a functioning niche lender out of what is left of the bank when it transfers €36bn in property loans to NAMA.

Instead, Anglo's remaining loans of about €38bn will be housed in an asset recovery bank, where they will be worked out over a period of time or sold off, while its deposits will be put into a state-backed bank, which will not lend money.

The "savings bank" will also help provide funds for the asset recovery bank, lessening the immediate burden on the state.

The permanent ban on new lending brings to an end an era of Anglo lending that led to disaster and the nationalisation of the bank in January 2009.

Anglo formed a crucial relationship with key developers, including Bernard McNamara, Treasury Holdings and Derek Quinlan.

Former chief executive David Drumm grew the bank at explosive rates during the boom by aggressively recruiting other customers, such as Sean Quinn.

The ban now means Anglo can only lend to developers in order to complete the last few Celtic Tiger projects.

The Government rejected a plan to set up a new so-called 'good bank'.

Instead the new bank will only have deposits, dealing a blow to Anglo management, led by chief executive Mike Aynsley.

But Mr Aynsley last night said he would "roll with the punches" and remain with the embattled institution, despite the collapse of his plans.

The bank boss also revealed that the 'new' plan for Anglo would allow the bank to more vigorously chase borrowers who are not repaying loans.

But jobs may be hit by the plan. Mr Aynsley confirmed the Irish government's preferred option for Anglo would "absolutely" need fewer people than the proposal management had backed.

Mr Aynsley had teed himself up to run the jettisoned 'good' bank. But the Australian last night insisted he would "absolutely" be staying on even though the good bank would not be created. "I haven't heard anything about anyone thinking of leaving."

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