Anglo Irish Bank nationalised

The Government has finally seen sense and nationalised Anglo Irish Bank. We will have to see how good a job they do of it.

The Government has today decided, having consulted with the Board of Anglo Irish Bank Corporation plc (“Anglo”), to take steps that will enable the Bank to be taken into public ownership.

This decision has been taken after consultation with the Central Bank and the Financial Regulator which has confirmed that Anglo Irish Bank remains solvent.

Anglo Irish Bank is a major financial institution whose viability is of systemic importance to Ireland. Anglo has a balance sheet of some €100bn with a substantial deposit base which the State is determined to safeguard. The Government has made clear that it will ensure its continued viability. Anglo Irish Bank will continue to trade normally as a going concern, with appropriate Government support as necessary. All Anglo employees remain employed by the company.

The funding position of the bank has weakened and unacceptable practices that took place within it have caused serious reputational damage to the bank at a time when overall market sentiment towards it was negative. Accordingly the Government believes that the recapitalisation is not now the appropriate and effective means to secure its continued viability. Therefore the Government must move to the final and decisive step of public ownership.

The Government believes that the prospects for the institution are solidly underpinned in the new structure, with the benefit of state ownership and a renewed management and Board. In the current circumstances the State is the only available potential owner.

The recently appointed Chairman of the Board, Mr. Donal O’Connor, will stay on as Chairman. Anglo will be managed on an arms length basis as a commercial entity. A new Board will be appointed having regard to the need for appropriate continuity.

Shareholder rights will be respected in this process. The relevant legislation outlines a process for determining compensation as appropriate.

All customers of Anglo Irish Bank can be assured that the full amount of their deposits and savings are further safeguarded by this action. They can also be assured that they can and should continue transacting with Anglo as normal and there is no need for customers to take any steps as a result of this announcement. Anglo Irish Bank will communicate directly with all customers in the coming days.

Information will be available on the websites of Anglo Irish Bank, the Central Bank, the Financial Regulator, and the Department of Finance. Customers with particular queries may also phone Anglo Irish Bank or the Financial Regulator.

Creditors (including bondholders) of Anglo Irish Bank can be assured that it will continue to service its obligations and will repay its debts at maturity.

The Government has prepared legislation to put this decision into effect. This will be presented to the Houses of the Oireachtas on Tuesday.

Tomorrow before the markets open, it is expected that the Irish Stock Exchange and the UK Listing Authority will announce that Anglo shares will be suspended from listing on the Stock Exchanges.

The Minister said “I would again stress that this Government decision safeguards the interest of the depositors of Anglo, and the stability of the economy, given the significance of Anglo in this regard, as already recognised by the European Commission. The bank will continue to operate as normal and depositors and creditors should continue to transact as normal.”

Customers of all financial institutions can have confidence that the wider financial system in Ireland remains well capitalised and liquid and that the Irish authorities will be proactive to ensure that their interests are protected and their deposits and debts are secure.

The Government will ensure the continued viability of all systemic financial institutions.

The Government remains fully committed to the recapitalisation proposal already announced in relation to AIB and Bank of Ireland. These plans include injection of core tier 1 capital in the form of preference shares and underwriting of further core tier 1 capital issuance.

Cowen's IMF comments

I know some readers may have thought I was joking when I said that I thought the IMF would be called in this year. I wasn’t. Ireland is essentially bankrupt. That Cowen is using it as a threat to public service unions is incidental – IMF intervention is a very real possibility.

The lads over on the pin are having a field day with this one. As Blaker says: “If you work on the basis that what politicians actually say in public tends to be quite a bit less dramatic than what is actually happening then I would suggest that we are quite a way towards this actually happening.”

I also like the way politicians talk about public sector pay cuts as if they themselves are not part of the public sector. I also like how RTE report on public sector cuts as if they themselves are not publicly funded.

Cowen should be more careful though. When news of the comments came out, the CDS on Ireland rose by 5 basis points. That’s effectively the cost to insure Irish debt. The euro also fell against the dollar on his comments. Indeed, next time Ireland goes looking to borrow money, it may be more expensive to borrow thanks to Cowen’s comment this morning.

More broadly, the euro is looking increasingly vulnerable. Spain, Italy and Greece are all facing serious problems with debt and debt ratings.

And by standards set by our former esteemed leader, Bertie Ahern, Cowen is talking down the economy. We all know what Ahern thinks of those people.

Bloomberg
FT
Irish Times
RTE

Update: Cowen denies it. Not surprising.

Lincoln Memorial Event lineup

Gosh, Obama sure gets the celebrities to come out and sing on January 19. (I might try to go but I imagine it will be heaving)

Musical performers scheduled for the event include Beyonce, Mary J. Blige, Bono, Garth Brooks, Sheryl Crow, Renee Fleming, Josh Groban, Herbie Hancock, Heather Headley, John Legend, Jennifer Nettles, John Mellencamp, Usher Raymond IV, Shakira, Bruce Springsteen, James Taylor, will.i.am, and Stevie Wonder. Among those reading historical passages will be Jamie Foxx, Martin Luther King III, Queen Latifah and Denzel Washington. The Rt. Reverend V. Gene Robinson will give the invocation. Rob Mathes will be the music director and arranger for the backing band, which will support all of the artists. Additional performers will be announced as they are confirmed.

Patrick Neary resigns

Finally. The head of the Financial Regulator will “retire” from January 31, 2009.

He should have fallen on his sword a long time ago.

Here is in a bizarre interview in October:

There is something odd about all of this though. Back in December, the Financial Regulator issued a statement:

The Financial Regulator became aware, following an inspection earlier this year, of matters surrounding loans from Anglo Irish Bank to Sean Fitzpatrick. While it does not appear that anything illegal took place in relation to these loans, the Financial Regulator was of the view that the practices surrounding these loans were not appropriate. As a result we continued to monitor and investigate this and as part of this process we advised Anglo Irish Bank to ensure that these loans are reported in the annual accounts for 2008.

While these matters remain under investigation, the Financial Regulator was informed today by the Board of Anglo Irish of the resignation of Sean Fitzpatrick as chairman and Mr Lar Bradshaw as director. It has welcomed the appointment of Mr Donal O’Connor as the new chairman. As these matters remain under investigation, it is not possible to comment further at this time.

But hang on a minute. Neary now says this:

I had deferred a decision about my retirement until the Report of the Committee of the Authority examining the internal communication of matters relating to loans to Directors of Anglo Irish Bank Corporation plc was concluded. So far as I am concerned, I was not advised of any such matters in early 2008 and there has been no oral, written or email escalation of these issues to me or to the Authority over the period until the matter was raised with me by the Minister on 10 December 2008.

Eh? Neary is saying he was not advised of any “such matters” until December 10. So did the Regulator know about the loans in early 2008, or did they not?

The conclusion of the report is up here

· while concerns persisted in BSD the matter was not pursued partly because a letter from Anglo went missing and partly because of the pressure on officials from the unfolding of liquidity problems in financial markets and in individual institutions;

· the Committee noted that while the pressures referred to above did not explain what occurred they are an essential part of the background;

· the issue did not surface again internally, even in Autumn 2008, when major stability and strategic issues were being addressed by the authorities including the Government;

· in relation to the particular issue of whether this matter had been mentioned to the Prudential Director and Chief Executive after a wider meeting had concluded in January 2008, the Committee was impressed with the coherence, clarity and belief in their stated recollections of the people concerned and their integrity. Nevertheless, the evidence presented to the Committee on this issue could not be reconciled by the Committee. There is no suggestion from any party that any communication – verbal or written – on this issue was made to either the Prudential Director or Chief Executive in the period (subsequent to January) to December 2008..

So the “Regulator” (as a body) knew about it. A letter went missing. People in the office of the regulator never told the chief executive about the loans…? What?

Bono to write column for NY Times

He will also do a podcast, says NY Times editorial page editor Andrew Rosenthal. The column won’t be weekly but it will be occasional. Bono noted:

Bono called the gig “an honor,” and joked that he’s “never been great with the full stops or commas.”

Ah sure, what harm. I think it’s a good move for the NY Times. What say ye?

UK U2?

The redesigned FP site is really very good. And their recently hired bloggers have been creating a stir. But what is this from Stephen Walt?

The UK has produced any number of world-class rock bands and artists: the Beatles, Stones, Kinks, Who, U-2, Sex Pistols, Van Morrison, Cream, Elvis Costello, Eurythmics, David Bowie, etc., so my generalization obviously doesn’t apply there.

I’m not sure Irish readers would be entirely happy with that. In fact many would be livid. Van the Man and Bono would not be happy.

Update: Josh Keating also spots it.