DUBLIN (Reuters) - Anglo Irish Bank ANGIB.UL said it was no longer a systemic threat to Ireland and should be able to return some of the 29 billion euros ($41.6 billion) in capital it has received from taxpayers once it finished winding down or selling off its remaining loans.
A byword for the casino-style lending practices that obliterated the local banking sector and forced Ireland into an EU-IMF bailout, Anglo Irish Bank’s chief executive estimated on Friday that the final bill for dealing with the lender will be in a range of 25 to 28 billion euros.
“It’s no longer systemically dangerous,” CEO Mike Aynsley told reporters Friday.
“By the time we get through this we are going to be in that 25 to 28 billion euros range. I think it’s most likely going to be toward the lower end of that.”
The bank’s management, overhauled after a slew of scandals, aims to have the lender closed by 2020 after winding down or selling its loan portfolios in the United States, Britain and Ireland.
The group has chosen preferred bidders for its $9.5 billion U.S. commercial real estate loan portfolio and aims to have completed that sale, the largest in the United States in recent years, before the end of the year.
Private equity group Blackstone Group LP (BX.N) and distressed debt and equity investor Lone Star Funds are among the bidders for the portfolio, sources have told Reuters.
Including the U.S. sale, Anglo Irish will have shrunk its net loans by over three quarters to 16 billion euros by the end of the year.
“We are pretty happy with where we are at this point,” said Aynsley at a results briefing at the bank’s headquarters in Dublin.
Anglo Irish posted a net loss of 105 million euros ($150.7 million) for January through June, a fraction of the 17.65 billion euros loss generated in 2010, a national record, after the company shifted tens of billions of euros of loss-making property loans off its books and on to a state-run “bad bank.”
Anglo Irish’s provisions for the first half reached 778 million euros compared with 4.85 billion a year ago and 7.8 billion at the end of December.
Anglo Irish said it had recognized a net reduction of 601 million euros on the overall loss on the disposal of assets to the state-run National Asset Management Agency (NAMA) after the latter revalued some of the loans following due diligence.
Anglo Irish transferred 34 billion euros in assets to NAMA in 2010 and it has 300 million euros still to transfer.
Anglo is merging with much smaller Irish Nationwide Building Society IRNBS.UL and both institutions will be rebranded as Irish Bank Resolution Corporation in October.
Describing Irish Nationwide as “Ireland’s answer to subprime” Aynsley said there was a couple of billion euros of difficult loan assets to be worked through at Irish Nationwide, which has swallowed over 5 billion euros of state capital.
Following the U.S. sale, Anglo Irish will be concentrating on deleveraging its British and Irish assets.
Anglo has nearly 25 billion euros in loans in Britain and Ireland, with over 60 percent based in Ireland, which is still struggling to emerge from one of the industrialized world’s worst recessions.
“It’s going to be a longer harder road with Ireland particularly and the UK has its difficulties,” said Aynsley.
The group will decide before the end of the year whether to sell or wind down its wealth management unit, which employs around 50 people. It is talking to prospective buyers.
The bank is almost entirely reliant on emergency funding from the European Central Bank and the Irish central bank with 86 percent of its funding needs or nearly 41 billion euros coming from those sources.
($1 = 0.697 Euros)
Editing by David Cowell