Nationwide to 'consider all options'
Irish Nationwide's losses are "truly shocking" and the board will consider all options available when preparing a reconstruction plan for European authorities, the society's chairman Daniel Kitchen said today.
The proposal must be submitted by late next month, and is required under EU Competition rules.
Mr Kitchen said the bank was planning a return to its roots.
"This will not include a continuation of the sort of commercial lending which has brought us to this position," he told an annual general meeting today.
"The future involves a return to the traditional roots of the society as a savings and loan organisation."
He described the 2009 accounts as "abysmal", and were mainly caused by provisions against the commercial loan book. Irish Nationwide reported a loss of €2.5 billion for 2009 after writing off €2.8 billion in loans – almost one-quarter of its loan book.
"I don’t think it is an understatement to say that the losses are truly shocking, particularly in an undertaking the size of Irish Nationwide," he said.
"The board were aware that a serious capital problem existed towards the end of 2009 and, indeed, the special general meeting convened in December 2009 was to address the potential hole in the society’s capital, and to allow the Government to plug that hole."
The Government is injecting €2.7 billion into Irish Nationwide to fill the capital hole created by bad loans.
Mr Kitchen said further losses could be possible depending loans transferred to the National Asset Management Agency (Nama). The bonds received from Nama will be used to repay existing borrowings or to bolster the society’s liquidity position, he said.
Initiatives aimed at improving the corporate governance of the society have also been implemented, he said.