DUBLIN, Dec 8 (Reuters) - Nationalised lenders Anglo Irish Bank [ANGIB.UL] and Irish Nationwide Building Society [IRNBS.UL] will submit a joint restructuring plan to the European Commission proposing they be merged and run down over time, the Irish Times reported on Wednesday.
The plan, which must be completed by the end of March, was one of the demands the IMF, European Commission and European Central Bank made as a condition for bailing out Ireland with an 85 billion euro ($112 billion) aid package last month.
The newspaper said senior executives from both institutions met officials from the finance ministry and the National Asset Management Agency, which was set up to manage banks’ soured commercial property loans, to prepare the plan.
The Irish Times did not give a source for the story.
The plan will detail issues such as how to transfer Anglo Irish Bank’s 14 billion euros deposits and Irish Nationwide’s 4 billion elsewhere within the banking system.
The future of staff at both institutions and the fate of the building society’s 50 branches will also discussed.
The newspaper said the joint plan would explain how to handle bonds issued by NAMA in return for the purchase of loans worth 43 billion euros from the two institutions.
The Irish Times quoted Prime Minister Brian Cowen as saying Anglo Irish Bank’s deposits would be transferred out of the bank by January, but would remain within the state and that loans would be wound down over several years.
“All deposits held by Anglo Irish Bank are safe.”
Anglo Irish Bank will have about 38 billion euros of loans following the transfer of 35 billion in property and associated loans to NAMA. Irish Nationwide will have 2 billion euros in residential mortgages after transferring 8.5 billion to NAMA.
A bailout of Ireland’s crippled banking sector is costing Irish taxpayers and the IMF tens of billions of euros after lenders aggressively pursued property developers during the Celtic Tiger’s economic boom.
On Tuesday, Ireland passed the first stage of a tough austerity budget which included 6 billion euros in spending cuts and tax hikes. [ID:nLDE6B60DA] (Editing by Dan Lalor) ($1 = 0.7566 euro)