Ireland May Give Update on Cost of Bailing Out Anglo Irish Bank

Ireland may give an unexpected update on the cost of bailing out Anglo Irish Bank Corp., the first of the country’s lenders to be nationalized, when it publishes the results of stress tests on the rest of the nation’s banks, two people with knowledge of the talks said.

The government said in September that Anglo Irish would need between 29.3 billion euros ($41.2 billion) and as much as 34.3 billion euros. The central bank is discussing updating investors on Anglo Irish’s capital position even though the lender isn’t part of this week’s stress tests, said the people, who declined to be identified before a final decision is made.

“We assume Anglo needs 34.3 billion euros, its adverse scenario requirement,” said Emer Lang, an analyst at Dublin- based securities firm Davy, in a note to clients on March 23.

The state has already injected 29.3 billion euros into Anglo Irish, as loan losses soared after the domestic commercial real-estate bubble burst in 2007. Anglo Irish Chairman Alan Dukes said on Feb. 8 the cost of bailing out the lender will be “towards the lower end” of the 29.3 billion-euro to 34.3 billion-euro range estimated in September.

The bank generated further 1.6 billion euros of capital late last year by swapping subordinated bonds at an 80 percent discount to face value. This still leaves 3.4 billion euros that may have to be pumped into the lender, according to Davy’s Lang.

Anglo Irish posted a pretax loss of 17.6 billion euros in 2010, the largest shortfall in the nation’s history, according to unaudited figures issued on Feb. 8. The lender will publish its final audited accounts for the year on March 31.

Officials at the central bank, which is overseeing the stress tests, the finance ministry and Dublin-based Anglo Irish declined to comment.

To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.