Ahern insists Coalition not split over future of Anglo

 

Minister for Justice Dermot Ahern has said the Coalition is not at cross-purposes over the future of Anglo Irish Bank after the Green Party said it wants a “quicker wind-down” of the State-owned bank.

Green Party chairman Dan Boyle said earlier today a wind-down of State-owned Anglo Irish Bank would take between "four and five years".

He was speaking after it emerged the party has changed its official policy position on the bank.

"What we are not saying is that there can be an immediate shutdown of Anglo, that is still by far the most expensive option," said Mr Boyle.

The two Green ministers, John Gormley and Eamon Ryan, are expected to tell Government colleagues at the Cabinet meeting on Wednesday that the party no longer supports either of the options being proposed for Anglo Irish: a split into a good bank-bad bank; or the “orderly” wind-down of the institution.

Speaking this afternoon, Minister for Justice Dermot Ahern denied a suggestion that the Coalition parties were at cross purposes on Anglo.

"There is no political difficulty with the Greens, and indeed Fine Gael. We all accept and want ultimately to get the minimum exposure to the Irish taxpayer, and that is the over-riding principle," he said.

"We haven't come down on how soon it should be wound down. We're working in conjunction with the European Commission and all of the options are being looked at and we'd obviously be guided by what they'll say."

The Greens’ change of policy comes as the bank prepares to report further substantial losses tomorrow – when Anglo publishes accounts for the first half of the year – and the need for further capital on top of the €14.3 billion already pledged to the bank.

Anglo had to take a writedown of €5.1 billion on €9.25 billion of loans, representing a discount of 55 per cent, sold in its first loan transfers to the National Asset Management Agency (Nama) in May.

The bank took a further write-down of €4.2 billion this month on €6.75 billion of loans sold in the second tranche of loan transfers to the State agency, representing a higher discount of 62 per cent.

The lower value assigned to Nama loans have raised fears that the cost of Anglo could rise further.

The official Government position is that it remains in talks with the European Commission and the European Central Bank on how to resolve the Anglo Irish crisis in a manner that will minimise the cost to the taxpayer.

The Department of Finance said two options were being explored - the proposal by Anglo management to split it into a good bank and bad bank, and the orderly wind-down that would take a decade.

Mr Boyle said the higher-than-expected discount Nama has demanded on Anglo's loans showed the good bank-bad bank split might also be more costly than originally thought.

"Management in Anglo Irish are both trying to cooperate with Nama and promote this idea of a good bank which I think is dividing their attentions," Mr Boyle said.

Mr Boyle told RTÉ radio Ireland should cooperate with the European Commission and the European Central Bank to make sure a wind-down of Anglo would not endanger other Irish banks and the ability of Ireland itself to borrow.

Fine Gael's finance spokesman Michael Noonan said the party was also in favour of a wind down of Anglo. However, he criticised the Green Party over the manner in which it was addressing the Anglo issue.

"I don't think they're doing it properly," he said. "I think the Green ministers should have discussed this in private with their Fianna Fáil colleagues and announced an agreed plan."

"By doing it they way they're doing it, they're adding a political instability to the financial instability and if it's not concluded quickly they'll make matters worse rather than better," he added.

Shares in Ireland's largest banks opened lower in Dublin this morning although AIB bounced back in afternoon trading.

By 3.15 pm, shares in AIB were up 8 cent at €0.78 while Bank of Ireland was  down 3 cent at €0.74. Shares in Irish Life and Permanent, which is not covered by Nama, were down almost 2 per cent at  €1.42.

Additional reporting: Reuters