The Irish government is aiming to lessen the tax-payers' bail-out onus on Anglo Irish Bank by splitting the failed nationalised lender into two separate businesses, it has been announced.
Finance minister, Brian Lenihan, explained this week that the company will be split into a 'funding bank', for the holding of deposits, and an 'asset recovery bank' which will work on winding down the bank's loan book.
He said the funding bank, "will provide a secure home for Anglo's depositors and any new customers who wish to deposit their funds with it," but that the company will not be doing any new lending.
The split follows a previous call from AIB's board to divide the company in such a way that 80 per cent of the bank would be wound down, leaving a far smaller entity that could keep hold of its higher-quality assets and resume lending.
Making the announcement, Lenihan, said it would provide some stability for the future of AIB, explaining, "Resolution of this, our most distressed institution, is essential to the promotion of confidence and stability in our financial system."
The bank was nationalised in early 2009. Its first-half net loss was reported in August as being €8.21 billion, a result of rising impairments on bad loans and losses on the sale of assets to the government's National Asset Management Agency. The bank also announced it had received a further €8.58 billion capital injection, taking the total bill so far to €22.88 billion.
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