Irish banks will offer to restructure

NATIONALISED lenders Anglo Irish and Irish Nationwide Building Society will submit a joint restructuring plan to the European Commission proposing they be merged and run down over time.

The plan, which must be completed by the end of March, was one of the demands the IMF, European Commission and European Central Bank made as a condition for bailing out Ireland with an €85bn aid package last month.

Senior executives from both institutions met officials from the finance ministry and the National Asset Management Agency (Nama), which was set up to manage banks’ soured commercial property loans, to prepare the plan. The plan will detail issues such as how to transfer Anglo Irish Bank’s 14bn deposits and Irish Nationwide’s €4bn elsewhere within the banking system.

The future of staff at both institutions and the fate of the building society’s 50 branches will also discussed.

The newspaper said the joint plan would explain how to handle bonds issued by Nama in return for the purchase of loans worth €43bn from the two institutions.

Prime Minister Brian Cowen said Anglo Irish Bank’s deposits would be transferred out of the bank by January, but would remain within the state and that loans would be wound down over several years.

Anglo Irish Bank will have about €38bn of loans following the transfer of €35bn in property and associated loans to Nama. Irish Nationwide will have €2bn in residential mortgages after transferring €8.5bn to Nama.

A bailout of Ireland’s crippled banking sector is costing Irish taxpayers and the IMF tens of billions of euros after lenders aggressively pursued property developers during the boom.