Bank weighing up debt options

ANGLO IRISH Bank has said that it is considering various alternatives to managing its debts as part of the bank’s plans to improve its capital position.

The bank said it was considering “various liability management alternatives” on certain outstanding subordinated debt and would keep bond investors informed of any further decisions.

Anglo had been expected to announce plans to buy back debt from investors at a discount in a bid to bolster its capital after reporting a loss of €4.1 billion in the half-year to the end of March.

Executive chairman Donal O’Connor told the Oireachtas Joint Committee on Finance and the Public Service that it was considering further ways of improving its capital position, but he would not provide any further details.

The bank said in the statement that it was in consultation with the Minister for Finance, his officials and the Financial Regulator on finalising its draft business plan.

Anglo said that “given its recent financial performance”, the bank has decided not to exercise its option to redeem outstanding subordinated loan notes falling due in June 2014 on the first call date of the notes on June 25th.

“As an issuer, Anglo Irish Bank values its relationship with noteholders as important stakeholders,” the bank said.

Concerns that the Government could force losses on some investors holding up to €4.9 billion of subordinated bonds drove up Anglo’s credit defaults swap rates, a proxy measure of risk, last week.

Mr O’Connor told the committee that selling Anglo’s development loans to the Nama “bad bank” would lead to “a significant reduction” in loans and improve the capital base “at a stroke”. It would also reduce uncertainty and improve the bank’s funding, he added, as it would be paid for the loans in State bonds which the bank could then use to draw funds from the European Central Bank.