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State appoints PwC to help run nationalised AIB

PricewaterhouseCoopers gets the AIB gig – despite having said Anglo would only cost a total of €4bn. Whoops.

Image: Niall Carson/PA Wire

THE NATIONAL TREASURY MANAGEMENT AGENCY (NTMA) has appointed accountancy firm PricewaterhouseCoopers to oversee the transition of Allied Irish Banks (AIB) from public to state control – despite PwC being the firm that told it the final cost of bailing out Anglo Irish Bank would be €4bn.

The firm – which had offered significant assistance to the state during the banking crisis in assessing the loan books of banks, and was paid almost €5m by the Central Bank for its efforts – will not, however, ultimately be involved in the running of the bank, according to an NTMA spokesman.

Instead, the spokesman said the accountants had been drafted in because of the significant extra workload the NTMA had taken on as a result of AIB being nationalised, which came as a result of the government’s commitment to give AIB up to €3bn in extra capital, as well as twice that much again before the end of the year if AIB is unable to meet the capital targets set down by the Financial Regulator.

Notably, however, PwC had suggested that a bad debt impairment charge of €4bn was considered ‘not unreasonable’ when the first recapitalisation of the country’s banks was being prepared in May 2009, as reported in today’s Irish Daily Mail.

The government last week put the final bill of the Anglo bailout at a possible €34.3bn – over eight times PwC’s original estimate.

Despite the fact that PwC’s team many only be as small as three people, the move has led opposition politicians to demand clarity from the government as to its plans on how it will manage AIB in future.

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Labour finance spokesperson Joan Burton said she had lost confidence in finance minister Brian Lenihan after the latter’s commitment that AIB would not be nationalised had turned out not to be the case.

The appointment of the PwC team comes as executive chairman Dan O’Connor and managing director Colm Doherty both prepare to step down from the bank.

About the author:

Gavan Reilly

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