Anglo Irish failure 'would bring down Ireland'

30 September 2010

Irish finance minister Brian Lenihan has warned that the Anglo Irish bank must not be allowed to fail.

Speaking to the Financial Times, the politician said that the fresh recapitalization of the firm is necessary to prevent the possibility of an Anglo Irish collapse bringing down Ireland.

"It is systemically important not because of any intrinsic merit in the bank, but because of its size relative to the national balance sheet," he stated.

"No country could contemplate the failure of such an institution."

The recapitalization is expected to see €25.9 billion ($35.1 billion) worth of non-performing property loans moved from Anglo Irish to the National Asset Management Agency, a government body founded to hold troubled assets from the banking crisis.

It will move Ireland's fiscal deficit to around 30 per cent of GDP.

Earlier this week, European Commission president Jose Manuel Barroso unveiled plans to fine nations which do not keep their deficit below three per cent in the future.

By Claire Archer

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