Allied Irish Bank’s losses soar in 2010

ALLIED Irish Bank is to slash more than 2,000 jobs following annual results yesterday showing that it lost a staggering €12bn (£10.6bn) pre-tax last year due to ongoing toxic property loans. The loss is a more than four-fold increase on 2009.

The bank reported an impairment rate of 28 per cent in its property and construction loans. That amounts to a cost of €7bn – up substantially on the €2.7bn cost seen in 2009.

The figures add to the woes of a lender that has already received €7.2bn in aid from the Irish government and was judged to need a further €13.3bn capital injection in recent stress tests. It is 93 per cent state-owned.

The bank saw its mortgage arrears worsen as mortgage-holders struggled to make progress on their payments: arrears jumped 214 per cent to €3bn, €188m of which is based in the UK.

As part of the Irish government’s reforms to the banking industry, Allied Irish will also undergo a dramatic operational restructuring to split its core and non-core operations. The non-core bank will manage €25bn of net loans versus €61bn in the core bank, with the former to be run down over time.

The ailing bank also saw its core tier one capital ratio plummet below the seven per cent Basel III minimum. Allied Irish recorded a ratio of only four per cent for 2010 compared to 7.9 per cent the year before.

Allied employs about 1,250 people in Britain and the majority of its redundancies are expected to be voluntary.