Anglo Irish directors step down, bank downgraded

The five remaining directors at Anglo Irish Bank have informed the bank’s chairman Donal O'Connor of their intention to step down and separately ratings agency Moody's has downgraded bank's debt rating.

In a statement, Noel Harwerth, Anne Heraty, Michael Jacob, Gary McGann and Ned Sullivan said they were resigning from the board with immediate effect.

This was to facilitate the appointment of new board members by the Minister for Finance following last week's decision to nationalise the bank, the directors said in a statement.

Former Bank of Ireland chief executive Maurice Keane has today been asked by Minister for Finance Brian Lenihan to join Anglo's board as a non-executive director.

The outgoing directors expressed their disappointment over the management of loans to the former chairman Sean FitzPatrick and re-iterated the unreserved apology offered to all stakeholders at the recent EGM.

Minister for Finance Brian Lenihan noted the resignations of the non-executive directors, other than the chairman and those appointed under the State's bank guarantee scheme.

In a statement, the Minister said he intended that the recently appointed chairman of the board, Donal O'Connor, will stay on as chairman.

Frank Daly and Alan Dukes, who were recently appointed to the board under the bank guarantee scheme, have not resigned and will also continue in their positions, Mr Lenihan said.

Mr Lenihan said that after consultation with the chairman, he had asked Maurice Keane to join the board of Anglo Irish Bank as a non-executive director after the bank is taken into public ownership.

Mr Keane is a former chief executive of the Bank of Ireland and a former member of the court of directors of Bank of Ireland.

Further announcements on appointments to other positions in Anglo Irish Bank will be made later, Mr Lenihan added.

"The day to day business of the bank will continue as normal."

Ratings agency Moody's has downgraded the long-term bank deposit rating and senior unsecured debt rating of Anglo Irish to ‘A2’ from ‘A1’ following the nationalisation of the bank last week.

In a statement Moody’s said the reason for the downgrade was an assumption that the Government ownership of the bank will be temporary and the ongoing exposure of Anglo Irish to the property and construction market.

This had created a “heightened uncertainty surrounding the long-term, unsupported viability of the bank's business model given the damage caused by recent events”, the agency said.

According to Moody’s it will be “very challenging to effect long lasting improvements to the bank's business model” and that as a result of the corporate governance issues the “bank’s franchise may be severely impacted”.

Standard & Poor's said following the nationalisation of Anglo Irish its 'A-/A-1' long and short-term counterparty credit ratings remain on “CreditWatch with negative implications”.

"Our CreditWatch placement reflects what we consider to be significant uncertainties about the future of the bank, such as the government's plans in relation to the bank's strategy, its funding plans, and capital requirements," Standard & Poor's credit analyst Claire Curtin said in a statement.

Earlier today, the Government confirmed it has removed a clause from its draft legislation to nationalise Anglo Irish Bank that would have prevented depositors with €20 million or more in the bank from withdrawing funds if their debts exceeded that figure.

It emerged yesterday the detailed legislation to nationalise Anglo Irish Bank will contain a significant change from the heads of the Bill published last week.The only way the debtor could have got around the restriction was by applying for the written consent of the bank.

However, a Department of Finance spokesman confirmed this morning that the draft legislation to be introduced tomorrow will not contain these clauses.

"The clause was inserted as a precautionary measure," the spokesman said. "The Attorney General has since advised that it is unnecessary."

Minister of State Martin Mansergh also told RTÉ's Morning Irelandhe was not aware of any legal representations made on behalf of such depositors which may have contributed to the decision.

Yesterday Minister for Finance Brian Lenihan defended the decision to nationalise Anglo Irish Bank, saying there would have been “catastrophic consequences” for banking in Ireland if it had been permitted to fail.

Elsewhere the Labour Party said this afternoon that it intends to table a series ofamendments to the legislation providing for the nationalisation of Anglo Irish Banks, which is due before the Daíl tomorrow. The proposed amendments are aimed at ensuring that there is a comprehensive investigation into the way in which the bank operated.