Irish Republican News · January 16, 2009
[Irish Republican News]

[Irish Republican News]
IRISH REPUBLICAN NEWS: Anglo-Irish Bank: Ireland’s Enron
Anglo-Irish Bank: Ireland’s Enron
anglo.jpg

The Dublin government has been forced to nationalise Anglo-Irish Bank because of a scandal over concealed debt and the serious erosion of confidence in the bank as a result, Taoiseach Brian Cowen admitted today [Friday].

The move by the 26-County state to take over all of the bank’s operations is expected to cost the state up to 15 Billion Euros. The massive cost was seen as inevitable following revelations that the troubled bank’s financial statements could not be trusted.

However, until last week, the government apparently believed further injections of capital could sustain the bank’s operations. A meeting of the bank’s shareholders was set to consider the state’s offer of a 1.5 Billion Euro in capital investment this morning.

The collapse in the banks’ reputation follows the incredible admission last month by the Financial Regulator Patrick Neary that his office was aware that up to 87 Million Euro in debt had been actively concealed from shareholders by the bank’s directors since January 2008. Neary finally resigned last week, following Anglo’s disgraced chairman Sean Fitzpatrick and other members of the bank’s board, who resigned last month.

The banks’ chief customers were property developers, whose debts are unlikely to be repaid as a result of the global collapse in property prices.

It was announced today that the full amount of loans made involving directors is now O179m in what is emerging as an Enron-scale fraud. It is understood all of the loans were renewed periodically in order to disguise the banks’ financial condition in time for the bank’s audits.

The news was revealed this [Friday] morning by the newly-appointed chairman of the bank, Donal O’Connor, to furious shareholders who had turned up for an abortive general meeting. Shareholders are now likely to take legal action to recoup their losses from the state as well as the bank’s auditors and board.

Anglo’s ability to operate for so long on the margins and in defiance of normal banking practices is being blamed by financial experts on the traditionally “cosy” relationship between Fianna Fail, property developers and the banks.

However, the fallout is now threatening Ireland’s entire financial services industry and has further strained the credibility of Cowen’s coalition government.

Mr Cowen, who is on an official visit to Japan, gave his first public response in Tokyo this morning to the dramatic decision to nationalise Anglo.

“We have decided moving this bank into full public ownership is the right approach, is the correct decision in these circumstances,” he said.

“We are satisfied that we can see this bank continue on in its business as before,” said Mr Cowen.

When asked about the true extent of Anglo’s debts and exposure, he responded: “People have had concerns in the past but we want to move on now and the bank is in good stead and is solvent.”

Sinn Féin’s Arthur Morgan said that any nationalisation must be done for the benefit of Irish tax payers, workers and the long term health of our economy.

“There are other banks that would provide much healthier options for nationalisation.

“Given the difficulties that small and medium businesses are experiencing in accessing credit and the crisis in mortgages the Government would be far better off nationalising one of the banks that deals primarily in these markets.

“The corrupt culture of Irish banking is clear for all see. The property based lending policies, which Fianna Fáil and banking officials promoted for the benefit of their pals in property development has left our banks heavily exposed.

“Practically all of Anglo’s entire 72 billion Euro loan book was based on loans to developers.

“As the property bubble has burst not only does it seem that dodgy builders are the only ones who will benefit from nationalising Anglo but that the risks to the tax payer could be huge.”

© 2009 Irish Republican News