Anglo Irish Bank will keep just €24bn in loans after splitting into 'good' and 'bad' banks in a radical post-Nama downsizing later this year, the Sunday Tribune has learned.
The nationalised property lender will shrink its loan book to just a third of its peak size in its new incarnation, down from €72bn when the government took over in January 2009.
About €35bn in loans will go to Nama over the course of this year, beginning with the first large-scale transfer later this month, while €12bn of remaining bad loans will be hived off into an asset run-off vehicle in a two-to-one good bank/bad bank split.
The bank will continue its efforts to maximise the return on its non-Nama assets and will be taking stakes in borrowers' companies, especially those deemed important to the Irish economy, in loan restructuring deals.
The stripped-down business is being prepared for a likely merger with one or more of the smaller players in the market and with an eye toward refloating a more universal bank in an initial public offering within the next few years, in line with the government's plans, sources said. Mortgage lender Permanent TSB is considered a likely match after Irish Life & Permanent group finance director David McCarthy raised the possibility of a tie-up last week.
Every loan has been examined in a 'bottom up' assessment which has revealed a bankwide impairment of up to 30%.
Less than a third of assets bound for Nama were found to be performing.
'New' Anglo is expected to retain substantial capacity for property and development lending to be able to fund Nama assets coming back to market over the next decade.
It will also keep its profitable UK and US loan books for the time being, although management is believed to be willing to entertain offers for the foreign portfolios.
Several potential buyers are understood to have unsuccessfully approached the bank in the last six months with offers in the range of €0.20-€0.30 in the euro.
The Anglo board is awaiting European Commission approval for its business plan, which was submitted for compliance with state aid rules in November. The commission responded last month with a list of 101 questions Anglo and the Department of Finance need to answer to get final sign-off.
The bank wants to appoint three new directors – a lawyer, an accountant and a senior banker from outside the jurisdiction – to balance the expertise on the board. Public interest board member Frank Daly resigned from the Anglo board at the end of 2009 to take up a new position as chair of the Nama board.