Anglo Irish Bank Posts Massive Loss Of €4.1b

Dublin-based Anglo Irish Bank has reported a massive pre-tax loss of €4.1 billion for the six month period to 31 March 2009, driven by specific and collective lending impairment charges of €3.7 billion and €0.4 billion, respectively.

The quantity and quality of the Bank's customer and market funding has deteriorated resulting in an increased reliance on support from central banks. The total regulatory capital ratio at 31 March 2009 was 8.2%, including temporary discretions and derogations granted by the Irish Financial Regulator in advance of the Government's recapitalisation of the Bank. The marked deterioration in the banks asset quality over the last six months is a result of rapidly declining property values, particularly relating to land and development assets in Ireland, combined with the worsening economic environment in each of its core markets.

Mr. Donal O’Connor, Executive Chairman of Anglo Irish Bank said: “This has been a most difficult period for Anglo Irish Bank culminating in the reporting of a pre-tax loss of €4.1 billion. This is as a result of significant impairment charges on the Bank’s loan portfolio following continued deterioration in the economic environment in each of our core markets and further declines in property values.”

“Clearly the Bank made mistakes in some of the lending decisions taken in recent years, particularly in relation to property development in Ireland. Our rate of growth and risk appetite at the top of the economic cycle was imprudent and the stark evidence of this is seen in the figures announced today,” he added.

Describing the banks’ loss as the worst in the country’s banking history, Brian Lenihan, Finance Minister, said that the government, which nationalized the bank in January 2009, plans to deposit up to €4 billion into the bank subject to European Union regulatory approval. “It is important to remember that this is the first time we have put money into Anglo Irish Bank although we signalled our readiness to do so last December before the bank was nationalised," he said in a statement.

The Irish regulator has temporarily exempted the bank from some capital requirements.