Anglo Irish, RBS buy of Arnotts wins EU approval

DUBLIN/BRUSSELS (Reuters) - Anglo Irish Bank and Royal Bank of Scotland (RBS) have won European Union approval to buy Dublin department store Arnotts, whose struggles have highlighted the weakness of Irish retail and property markets.

Ireland’s oldest department store, established in 1843, overstretched itself by embarking on a 700 million euro (581 million pounds) project to build the Northern Quarter shopping area in central Dublin in 2006, just before the property bubble underpinning the “Celtic Tiger” boom burst.

Anglo Irish Bank and RBS’ Irish unit Ulster Bank plan to restructure Arnotts’ debt in return for taking joint control of the retailer, the European Commission said, adding the transaction would not impede competition in Europe.

“The parties’ activities do not overlap and the Commission therefore concluded that the proposed transaction would raise no competition concern,” the EU executive said in a statement.

The new owners of Arnotts, which was controlled by the Nesbitt family and also operates smaller retail stores in the Dublin area, have themselves not been immune from the Irish property crash.

Anglo Irish Bank had to be nationalised in early 2009 and its rescue is expected to cost the state at least 22 billion euros, giving Ireland the biggest budget deficit in the European Union compared to the size of its economy last year.

While in much stronger shape than Anglo Irish, Ulster Bank was highlighted last week by its parent RBS as an exception to a trend of generally lower loan impairment charges among its divisions.

The two banks said in a joint statement they expected the board to apoint Mark Schwartz, chief executive of Boston-based asset manager Palladin Capital Group, to oversee the management of Arnotts.

“Anglo Irish Bank and Ulster Bank are committed to Arnotts,” they said. “They will not be involved in the management of the company but are taking the necessary steps to ensure that the company will be run by experienced professionals.”

($1=.7531 Euro)

Editing by Karen Foster