BRUSSELS (MNI) – Ireland’s government will split troubled lender
Anglo Irish bank in two parts and sell off parts of it, the Irish
government said on Wednesday.
The two parts will be a “funding bank” and an “asset recovery
bank,” the government said in a statement.
“Anglo Irish Bank has not expanded its loan book since it was
nationalised in early 2009 and this will remain the case,” the statement
said.
“It is intended that in due course the Recovery Bank will be sold
in whole or in part or that its assets will be run off over a period of
time,” the statement added.
The anti-trust arm of the European Commission will need to approve
these plans, and early signs are positive.
“I welcome the clarification by the Irish Finance Minister on what
would now be the Irish-preferred option regarding Anglo-Irish,” European
Commissioner for Competition Joaquin Almunia said in a statement.
“I view this new option positively as it would deal better with the
distortions of competition,” he added, saying that a “number of
important aspects still need to be clarified, and a new notification
received before the Commission is in a position to finalise its
assessment and to take a decision.”
Earlier Wednesday Irish bond spreads were at their widest against
German Bunds since the start of European Monetary Union, as traders
speculated that the country wouldn’t be able to manage its large budget
deficit and the problems in its banking system.
Irish bond spreads rose to +396 basis points above the benchmark
Bund — their highest level since the creation of the Euro — in early
trading on Wednesday. The cost of insuring Irish debt against default
rose 21 basis points Wednesday to 401 points, a new record high.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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