Anglo Irish/INBS restructuring plan 2011-2020

TheStory.ie has obtained a confidential plan submitted by Anglo Irish Bank/Irish Nationwide to the European Commission, which was put together by a working group from the Department of Finance, the NTMA, the Central Bank, Anglo and INBS.

The plan, dated January 31, 2011 was submitted to the European Commission for approval and was guided by the agreement reached between the Irish authorities, the EU, the IMF and ECB in November 2010. It outlines in detail the workout plan for the IBRC entity from now until 2020, under two headline scenarios – a base and stress scenario.

  • Under the the base scenario, IBRC says it could lose €3.5bn between 2011 and 2020, while under the stress scenario it could lose €8.1 billion. The bulk of these losses would be incurred in 2011/2012. It projects a loss of at least €400m between 2016 and 2020.
  • IBRC’s residential loan book will be prepared for eventual sale, probably in 2015. A 30% haircut is expected in the stress scenario leading to a loss to the taxpayer of €300 million.
  • Under a stress scenario outlined by the bank, IBRC will need an additional €3.2bn of equity capital which will be ‘drip fed’ across the plan period. The injections are required to keep an 8% total capital ratio. This drip feeding will be done in tranches of €1.7bn, €1.3bn, €0.01bn, €0.04bn and €0.2bn.
  • IBRC will be reliant on the Central Bank/ELA funding for the duration of the plan, right up to 2020. IBRC will need €36.7bn funding from the CBI/ELA by 2015 and €15.9bn by 2019 under the base case.
  • IBRC had to fund €18bn of non-Euro exposure (out of €49bn total from CBI/ELA), which was 60% sterling and 40% US dollar
  • The total cost to the taxpayer for IBRC under the stress case is estimated at €35.8bn (this includes INBS and Anglo remember).
  • Operating costs for IBRC were €405m in 2010 (Anglo and INBS before they were merged), with projections for operating costs of between €217m and €250m in 2012. The largest savings are expected from staff reductions of 39% to 1,075. Wealth management will be sold or wound down over a period of five years.

    I intend releasing the full 66 page plan on TheStory.ie.

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