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Julien Behal/PA Wire
AIB

AIB on target for its biggest loss EVER

Ireland’s biggest bank reports €1.7bn in losses so far this year – and needs €7.4bn of capital.

IRELAND’S BIGGEST BANK, AIB, has posted one of the biggest losses in its history, with losses of €1.7 billion post-tax losses for the first six months of the year.

The AIB Group’s interim results, released this morning, show an operating profit of €976m before provisions for bad debt were taken into account, but the bank lost €963m in the loans transferred to NAMA – and set aside a massive €2.315 billion to cover loans it doesn’t expect to get back.

The bank’s losses before tax exceeded €2bn – compared to €872m in the same period last year.

The bank confirmed that the Financial Regulator required it to generate €7.4bn in equity capital by the end of December – raising fears that more public funds could be required to keep the bank afloat.

Unsurprisingly as a result, the bank will not be paying a dividend on its shares for the moment.

The bank’s UK arms posted a loss of £55m, but its Polish subsidiary, Bank Zachodni, made a profit of €142m before its bad debt provisions, indicating that the sale of the Polish operation might be top of the agenda in its attempts to restructure.

Publishing its report, the bank described the “six months to 30 June 2010 was a very difficult period for AIB and our customers”, and admitted that a “significant level of credit losses was experiencedin the period in addition to the loss on transfer of the first tranche of loans to the National Asset Management Agency.”

The bank also said that market conditions “remained challenging” and that the banking environment made it difficult to generate income. In the short term it hoped to complete the transfer of loans to NAMA and to restructure under the guidance of the European Commission.

The bank’s executive director, Colm Doherty, told RTÉ’s Morning Ireland that the bank was in discussions to offload some of its foreign operations but said the talks remained confidential.

He conceded, however, that the bank’s restructuring will probably result in job losses.

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