Anglo Irish Bank Corp. will be broken in two as Ireland’s government seeks “finality” on the bailout of the nationalized bank and tries to calm investor concern that the cost will continue to mount.Ignoring all the nonsensical comments such as "this is a great news", "this is a good step forward", and "we have to do this for the good of the nation", one shocking point that found is the following:
Anglo Irish will be split into a so-called good bank, which will retain the lender’s deposits, and an asset recovery bank which will run down its loans over time, the Finance Ministry in Dublin said in a statement today. The central bank will determine by October how much new capital will be needed.
“In order to restore the reputation of the Irish financial system, it is essential to bring finality to the problem of Anglo Irish Bank -- our most distressed institution,” the ministry said.
Standard &Poor’s last month said Ireland may have to pump as much as 35 billion euros ($45 billion) into Anglo Irish, which collapsed last year as the country’s property market slumped. Ireland is seeking to resolve the issue as its sovereign borrowing costs soar on concern the weight of bank bailouts will cripple the nation.
“Meanwhile, Ireland is dealing with the ongoing consequences of the black hole of debt that is the nationalized Anglo Irish Bank. Last week, the company said it will probably need some €25 billion in fresh capital, equivalent to a full 19 percent of the country's GNP.
Credit rating agency Standard &Poor's has said that it believes this to be low-balling the true figure, estimating that the real cost could come to €35 billion. The vast sums have frightened markets, which worry Dublin will have trouble servicing its debt, and have made it difficult for all Irish banks to raise funds.”Now, believe what you want, but Ireland is bust, and so is Greece, Spain and soon more will follow. It's difficult to guess which one will be next, because there's just so much candidates for defaults...
The best solution would have been to let Anglo-Irish go bust, and let the lenders to take the losses, instead of spending about 20 to 30% of the GDP on a bailout...