Ireland to bail out Anglo Irish again this year: PM
Ireland expects to provide more capital to nationalized Anglo Irish Bank this year on top of the 4 billion euros ($4.86 billion) paid in 2009 and 10.3 billion so far this year, Prime Minister Brian Cowen said.
The current estimate is that the overall capital requirement could be of the order of a further 8 billion euros, Cowen told parliament on Wednesday. It wasn't immediately clear if all of that sum would be provided this year.
Finance Minister Brian Lenihan, who gave Anglo 8.3 billion euros in March and another 2 billion on Monday this week, already said in March a further 10 billion could be required but did not give any timeframe.
Anglo Irish, which was nationalized last year after deposit and loan scandals and exposure to a property market crash, wants to be split into a good and a bad bank, but the option of a wind-down is also being considered in talks with the European Commission.
Cowen said an immediate liquidation of the bank, which some opposition parties are demanding, would mean a fire sale of assets and capital losses of at least 40 billion euros to the state.
If the bank was immediately wound up, the government would also need to provide 70 billion euros of cash to meet deposits, bondholders and liabilities to the European Central Bank, Cowen added.
It's a bank of systemic importance, Cowen told deputies. Even if it weren't, let's recall that Lehman Brothers is a much smaller bank in the U.S. system than this bank was in the Irish system and we know the consequences when that bank was let go to the wall.
The capital injections into Anglo Irish last year gave Ireland the biggest budget deficit in the European Union compared with the size of its economy. The bailouts this year have been done by way of a promissory note, which means actual payments will be spread out over up to 15 years.
($1=.8231 Euro)
(Reporting by Andras Gergely; Editing by Jon Loades-Carter)
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