Public deserve more from Anglo

Alan Dukes has had a varied career. The one-time leader of Fine Gael held positions as Minister for Agriculture, Finance and Justice during the 1980s and was Transport Minister in the so-called Rainbow administration in the 1990s. He has worked in recent years as a public affairs consultant, lobbying for clients of the public relations agency, WHPR, in and around the Dáil. He re-emerged from the PR shadows as the Department of Finance's non-executive appointment to the board of Anglo Irish and was named in recent months as the toxic bank's non-executive chairman. Last week, Dukes was up in front of the regular hearing of the Finance and Public Sector Oireachtas committee. He was with Mike Aynsley, who was appointed Anglo chief executive last year, and with Maarten Van Eden, the clear-speaking chief financial officer, who joined the bank last December. Since its nationalisation, Anglo Irish is effectively an offshoot of the Department of Finance. The bank's decisions and appointments have to be approved by the department and really big decisions about its future have to be cleared with the European Commission. Mike Aynsley, for instance, was introduced to the department by Mike Soden, the former Bank of Ireland chief executive. The pair had worked together in London and Australia when working for National Australia Bank. Aynsley's appointment signalled that Anglo Irish would not be closed down any time soon. An executive is not going to fly into Dublin for a temporary banking job. Over the three hours of the Oireachtas hearing, the public learned very little that was new. The hearing involved some fireworks and included a clash involving Dukes when Senator Shane Ross properly queried the appointment in recent weeks of non-executives to the bank who suspiciously look like banking insiders. It was the sort of question routine in Congressional hearings in the US. The appointments to the taxpayer-supported banks merit public scrutiny. Bizarrely, Dukes opted to take offence at the questioning about the appointment of non-executive insiders, an issue raised by other journalists in recent weeks, and failed to answer what were reasonable questions. Many of the problems with parliamentary committee hearings were shown in this session. Some of the questions from the TDs and senators were unstructured. Their questioning mostly involved the loans on the bank's broken balance sheet, issues repeatedly aired. Very little was asked about the other side of the balance sheet, namely the bond debt and deposits the bank owes. Some interesting questions requiring new details remained unanswered. Van Eden was the most impressive of the three Anglo representatives. He said he would have liked to tell the committee that "all the pain" had already been taken in 2009. But the bank likely faced more loan losses when the National Asset Management Agency (Nama) buys the next round of loans. Van Eden said, plainly, that when commercial property prices fall by 50 per cent, then losses on the bank's loans were inevitable. These losses were, of course, dumped onto the taxpayer. The State pumped €4bn into Anglo last year and promised to inject over €8bn in loan notes. A payment of €2bn was made in May and €8bn more will be needed to build the bank's capital reserves by the end of the year. Cumulatively, the Anglo Irish disaster, not including the bill from the reckless lending of the two main banks, AIB and Bank of Ireland, will cost the taxpayer - at a minimum - €22bn, more than two-thirds the amount the Government will collect in taxes this year. Many believe that the final bill be much greater. Chief executive Aynsley described the application the bank and the Department of Finance had made to the EC to allow it to split the remaining loan books between good and bad. He said the bank had examined the costs of closing down the operations over periods of five, 10 and 20 years as a way of minimising the costs to taxpayers. Unfortunately, said Dukes, there was no way of recovering the €22bn because the bank could never ever make profits in the future to make good that "vast" amount of money. The bank's preferred option by staying in business was to give "some value back to the taxpayer", he said. If the EC approves the new business plan, Anglo will be a tiny lender left managing up to €15bn of loans as part of a 'good bank'. The bank is currently forbidden from lending to new customers but advances loans to existing customers. Van Eden said the bank was about to start another review of its loan book to calculate the latest losses. The executives then went on to describe the dilemma for the bank. Keeping it open for a very long period would run up untold funding liabilities for the State. Closing the bank quickly, hinted Dukes, raised questions about how the Government could pay back depositors in a short period. The public learned little that was new from the Oireachtas hearing. At a minimum, taxpayers will never see the €22bn injected into Anglo again. But, worse, chairman Dukes did not want to answer for decisions taken by the bank and the Department of Finance in appointing banking insiders to the Anglo board in recent weeks.