The Irish government said on Thursday it would nationalize Anglo Irish Bank because its viability was of systemic importance to Ireland, adding that the bank remained solvent and would continue to trade.
Under the initial bank bailout plan announced last month, the government was set to inject an initial €1.5 billion ($1.97 billion) of core tier 1 capital via preference shares, which was to give the state 75% of all voting rights in the bank. “Anglo has a balance sheet of some €100 billion with a substantial deposit base which the state is determined to safeguard,” the ministry said in a statement on Thursday.
Anglo Irish shareholders were due to vote on Friday on the earlier state bailout plan. The niche commercial lender shocked the financial industry last month when then chairman Sean FitzPatrick said he had kept shareholders in the dark about €87 million ($114 million) of loans from the bank, triggering a purge of senior management.
“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,” the government said. (Reuters)