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Anglo Irish Bank

The Anglo break-up: what the world’s papers say

Our guide to what the world’s media is saying about the break-up of Anglo Irish Bank into ‘funding’ and ‘recovery’ banks.

Here’s a selection of what the international press has had to say about yesterday’s announcement about the break-up of Anglo Irish Bank.

Daily Telegraph: ‘Ireland breaks up Anglo Irish as EMU debt jitters return

Ireland is to break up the nationalised lender Anglo Irish Bank, hoping to end a disastrous saga that has shattered confidence in Irish finance and left taxpayers with daunting debt.

Joachim Fels, chief global economist at Morgan Stanley, said strains had reached a point where “one or several governments” may soon have to tap soon the [ECB's] rescue mechanism.

“In order to restore the reputation of the Irish financial system it is essential to bring finality to the problem of Anglo Irish Bank,” [Brian Lenihan] said, without clarifying the likely cost. The EU greeted the plan as a “positive” step. Default swaps on Anglo Irish jumped 72 points to 785 basis points earlier in the day, reflecting concerns that Dublin may give in to popular pressure and walk away from the bank’s debts – as Iceland’s government did with its trio of Viking raiders.

Wall Street Journal: ‘European Crisis Flares Up in Ireland

Ireland’s troubled banking system became the latest flash point in Europe’s continuing economic crisis, as the government said it would split up the weakest of its major banks to stave off a run by depositors. [...]

Ireland’s renewed banking problems are sparking fears that the European Union’s rescue of debt-laden Greece won’t be its last. Earlier this year, the EU and the European Central Bank unveiled a raft of measures to stop the spiraling debt crisis in Greece from threatening the rest of the euro zone. [...]

The premium Ireland pays over Germany, the euro-zone benchmark, to borrow from investors in the bond market fell significantly after the bailout news, but it remains near the highest level since the euro was introduced in 1999.

Markets got a lift Wednesday from another struggling European country, when Portugal sold more than a billion euros in bonds—though the country was forced to pay sharply higher yields than it had recently. ‘Ireland Is ‘Punished’ for Honesty About Banks: Official

Ireland is being punished for coming clean about the state of the Irish banking industry, Brian Lenihan, the Irish Finance Minister told CNBC in an interview Thursday.

“We are being punished because we have exposed our dirty linen on the banking front,” Lenihan said.

“We’ve made no secret of it. Because I believe the quicker we bring that out, the quicker we bring resolution to our banking difficulties, the quicker confidence will restore and be returned to the country,” Lenihan said following the decision to split nationalised lender Anglo Irish in two and wind down its loan book. [...]

The Irish economy has stabilized well following a big drop in gross domestic product in 2009, he said. ‘Ireland’s Burial Plan for Anglo Irish Keeps Cost Question Alive

Irish Finance Minister Brian Lenihan’s plan for “finality” on the cost of bailing out Anglo Irish Bank Corp. has left one question alive: The cost.

Lenihan said yesterday that Dublin-based Anglo Irish will be split into a so-called good bank, which will retain the lender’s deposits, and an asset-recovery bank, which will run down its loans over time. The central bank will determine by October how much new capital will be needed.

“The outstanding issue is that the government gives more clarity on the ultimate recapitalization on Anglo Irish,” said Simon Barry, chief economist at Ulster Bank, a unit of Royal Bank of Scotland Group Plc. “It will be very important that this uncertainty is addressed as soon as possible.”

Ireland already pumped 22.9 billion euros ($29 billion) into Anglo Irish, which was nationalized in January 2009, and Standard & Poor’s last month said the bailout cost may eventually rise to 35 billion euros, about 10 percent more than the projected tax revenue for this year.

Also on Bloomberg: ‘Saving Ireland Becomes Lenihan’s Latin Lesson in Fight for Life

As a 12-year-old boy, Brian Lenihan learned Latin during the summer to win a place at James Joyce’s alma mater, Belvedere College in Dublin.

Almost four decades later, that 1971 spirit is evident as Ireland’s finance minister fights to save his country’s economy and its banks, while staving off pancreatic cancer.

“I don’t know how he kept going but he did,” said Mary O’Rourke, Lenihan’s aunt, Latin teacher and a former enterprise minister. “That goes back to the little boy of 12 learning Latin, a strange task and a strange language. If he sets himself a task, he’ll do it. The odyssey is beginning again.” [...]

Few places in the world were mired more quickly and deeply by the financial crisis than Ireland and few finance ministers have faced a bigger challenge than the 51-year-old Lenihan. [...]

Lenihan’s performance has been “not so great if you’re a holder of the sovereign debt or a taxpayer,” said Ciaran O’Hagan, a fixed-income strategist at Societe Generale SA in Paris. “He’s loaded the public finances with bank risk.”

New York Times: ‘Investor Fears Force Split-Up of Irish Bank

The European bank panic that rattled markets around the world last spring may have subsided, but the experience has left investors and analysts jumpy about the prospects of more Greek-style bank bailouts. [...]

The move represents a backtracking of sorts for Ireland. The government has said that it would be more expensive to close Anglo Irish, which is weighted with bad loans incurred during Ireland’s debt-fueled real estate boom, than to continue it as a smaller institution.

But a recent deposit run and a sharp rise in government bond yields to 6 percent — a level that at least one analyst called “unbearable” — have forced the government to act.

Financial Times: ‘Dublin in move to split Anglo Irish Bank

The ECB has bought between €100m and €300m of Greek, Irish and Portuguese bonds so far this week, traders said on Wednesday, as worries over the health of some highly indebted eurozone economies resurfaced.

Strategists said that the purchases were a sign that the European sovereign debt crisis was not over. [...]

Europe’s top competition watchdog, which must approve any restructuring plan for Anglo, said on Wednesday night the new proposal was an improvement on the previous plan, although it still needed further clarification on key aspects.

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