Essay on Best Technical Support Award

4363 Words Feb 21st, 2014 18 Pages
July 4, 2011

Anglo Irish Bank Corp. Ltd.
Primary Credit Analyst: Sean Cotten, Stockholm (46) 8-440-5928; sean_cotten@standardandpoors.com Secondary Contact: Giles Edwards, London (44) 20-7176-7014; giles_edwards@standardandpoors.com

Table Of Contents
Major Rating Factors Rationale Outlook Related Criteria And Research

www.standardandpoors.com/ratingsdirect

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876943 | 301539251

Anglo Irish Bank Corp. Ltd.
Major Rating Factors
Strengths:
• 100% ownership by the Irish government, which has provided substantial capital support. Counterparty Credit Rating
CCC/Negative/C

Weaknesses:
• Apparent reluctance of the Irish government to provide further capital support. • Potential for burden-sharing by subordinated
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However, problems mounted with the fall in the Irish and British property markets and the wholesale funding market dislocation, with a particularly sharp drop in investor confidence for Anglo's debt. After the emergence of serious corporate governance issues in late 2008 and a further weakening of Anglo's funding position, the bank was nationalized in January 2009. Since then, the board has been replaced and there has been significant management change. While management has looked to maintain Anglo, at least in part, as a viable going concern, in the third-quarter of 2010, the government decided to wind the bank down. Since 2009, Anglo has been making sizable losses. It reported a €17.7 billion loss in 2010--the largest in Irish corporate history--bringing its cumulative loss to €30.4 billion since October 2008. The 2010 result reflected a loan impairment charge of €19.3 billion, which clearly exceeded Anglo's €1.8 billion operating profit that stemmed largely from a one-time €1.6 billion gain on the repurchase of its own hybrid securities. As a result of the losses, Anglo has been heavily reliant on capital support from the Irish government. In 2010, Anglo received an additional €17 billion in the form of a promissory note from the minister for finance, bringing the total state contribution to €29.3 billion, of which €25.3 billion was paid by year-end 2010.

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