Over half of loans in Anglo's 'good' bank to be outside Ireland

MORE THAN half of the loans that will be moved to the proposed “good” bank that State-owned Anglo Irish Bank plans to create will be outside Ireland, according to a spokesman for the bank.

Anglo plans to split €36 billion in loans remaining after transferring €36 billion to the National Asset Management Agency (Nama) between a good and bad bank.

The proposal, which has yet to be approved by the European Commission, involves the creation of a new bank with loans of between €10 billion and €15 billion, and an an asset company with impaired loans of about €20 billion which will be run down over time.

The spokesman said that, given the state of the Irish, British and US economies in which the bank was operating, less than 50 per cent of the loans to be transferred to the new good bank will be in Ireland.

“The assumption would have to be that the lower-quality portfolio would be in Ireland,” he said.

Accountants KPMG have been retained to carry out the loan-by-loan due diligence of Anglo’s non-Nama loans to determine which are to be moved to the good bank – known internally as “BankCo”.

The firm is screening the non-Nama loans to determine the best performing loans to be moved to the good bank, which Anglo hopes to establish by the end of 2011.

Chief executive Mike Aynsley said in an internal circular prepared for a management briefing that the bank had identified between €10 billion and €15 billion of performing loans that satisfy “filters” established to screen loans for the good bank.

“We cannot afford to transfer loans to BankCo that are in any way marginal and therefore have the capacity to require further State aid should they deteriorate,” he said.

Anglo had previously planned to create a good bank with between €12 billion and €15 billion in loans but Mr Aynsley told staff this month the final transfer sum could be closer to €10 billion.

The bank has recruited consultants Oliver Wyman, which has analysed loan quality at AIB and Bank of Ireland, to review Anglo’s governance, risk and supervisory systems after they assessed the bank’s overall finance structures.