Anglo Irish Bank, the reckless institution at the heart of Ireland's slide towards bankruptcy, has reported a preliminary 17.6 billion euro ($24 billion) loss for 2010 — by far the worst in Irish corporate history.
State-owned Anglo revealed the staggering figure Tuesday after the Dublin High Court approved a government plan to merge Anglo with another bust bank, Irish Nationwide, within weeks. The court order permits both banks to auction off their surviving deposit bases to solvent Irish banks.
Tuesday's figure dwarfed Ireland's previous figure for worst corporate loss: Anglo's mark of 12.7 billion euros ($17.3 billion) in 2009, when the government nationalized the lender to prevent its immediate collapse.
Anglo said its unofficial, unaudited 2010 results show that the bank directly wrote off 7.8 billion euros ($10.7 billion) of dud property loans to Ireland's bankrupt property speculators, the bank's major clientele.
It also was forced to record 11.5 billion euros ($15.7 billion) in other losses when it sold the bulk of its dysfunctional property-based loan book to Ireland's new state-run "bad bank," the National Asset Management Agency. That agency has been buying the toxic debts of five Dublin banks at massive discounts from their book value — a penalty ultimately being borne by Ireland's shellshocked taxpayers.
Anglo chairman Alan Dukes said the 2010 losses were roughly as expected, and suggest that Irish taxpayers' total bailout bill for Anglo won't exceed 29 billion euros ($39.5 billion), the figure announced in September by the government as it still hoped to avoid an international bailout.
Dukes said the latest figures "show that our predictions, while dire, have been pretty close to the mark."
The bank's major source for 2010 earnings, it said, came from forcing the most junior tier of its creditors, so-called "subordinated" bondholders, to accept only a small percentage of their original investments. That saved Anglo close to 1.8 billion euros ($2.5 billion).
Anglo also shed more light Tuesday on the terrifying debt dynamics that forced Ireland last year to admit defeat in its two-year struggle to save its banks without taking a global bailout of its own.
Ireland in November negotiated a potential 67.5 billion euro ($92 billion) credit line from the European Central Bank and International Monetary Fund — but only after the Frankfurt bank that runs the eurozone said it couldn't keep floating the Dublin banks, particularly Anglo, emergency loans indefinitely.
Anglo said its deposits plummeted during 2010 from 27.2 billion euros to 11.1 billion euros ($37.1 billion to $15.2 billion). At the same time, its emergency loans from the European Central Bank and Irish Central Bank nearly doubled to 45 billion euros ($61.5 billion) — about 50 percent more than all taxes collected in Ireland last year.
Anglo's desperate drive for ECB cash, to pay off exiting bondholders and depositors, accelerated throughout the summer as foreign analysts increasingly formed a view that Ireland couldn't keep funding the bailout bill without international aid.
Anglo said it plans to publish official 2010 figures by March 31 — by which time the bank itself may have ceased to exist.
The most likely bidders for the remaining depositors at Anglo and Irish Nationwide, a building society similarly destroyed by property loans gone bad, are Ireland's two healthiest banks: Irish Life & Permanent and Bank of Ireland. The government's blanket insurance scheme means no depositor will lose a penny in the transfer.
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