Anglo Irish Bank broken up

The Irish government has said it
will break up the nationalised Anglo Irish Bank as part of the bank’s
resolution.

The failed lender will be split in
two – a funding bank and an asset recovery bank, the finance ministry said.

The asset recovery bank would
retain a banking licence, but would focus on managing the existing loans
inherited by Dublin when it took over the bank.

The funding bank, meanwhile, will
hold all of Anglo’s deposits and will not engage in any new lending.

“It will be a stand-alone,
regulated bank, completely separated from Anglo’s loan assets and it will be
owned directly by the Minister for Finance,” said Finance Minister Brian
Lenihan.

The deposits are guaranteed by the
Irish government.

The news comes a week after Anglo
announced the largest corporate loss in the history of the Republic of Ireland.

The bank made a record loss of $10.5
billion in the first half of 2010.

The bank got into severe difficulty
in 2008 following the sharp downturn in the Irish housing market which left it
with substantial bad debts.

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