LOSSES posted by Anglo Irish Bank are the worst by any bank in the entire world, according to new data from a prestigious financial journal.
The taxpayer-owned bank’s loss in 2009 of €15bn was far bigger than those of giant US, Japanese and German banks, according to ‘The Banker’, an industry magazine listing the 25 biggest losses.
Anglo, which is hoping to split itself into a so-called ‘good’ and ‘bad’ bank, managed to lose almost more money than the two next biggest loss-makers put together, the magazine reveals.
Anglo, nationalised since January 2009, has already set a record with its 2009 loss — the largest ever posted by an Irish company.
Many experts believe such losses may never be recorded again in Irish business. And to cope with future losses, the Government is committed to pumping over €22bn into the bank.
The scale of destruction wrought by the bank is clear when compared with other banks that reported smaller losses. For example, Royal Bank of Scotland, one of the largest banks in the world, lost only a quarter of what Anglo lost last year, the survey reveals.
US lender Citigroup, once the world’s largest bank, only lost half of what Anglo lost in 2009, despite taking a massive hit during the subprime crisis. Most of the 25 banks surveyed lost money because of the subprime crisis, whereas Anglo’s losses came from property lending.
Anglo is not the only Irish bank on the list, however, with AIB posting the 11th highest losses in 2009 at $3.8bn (€3.1bn), although other Irish banks, like Bank of Ireland and Irish Nationwide, managed to avoid making it on to the list.
The only mitigation for Anglo is that the 2009 results, which set all the records, covered 15 months, rather than the standard 12. However, such is the scale of losses that even on a 12-month basis the bank would have finished up number one.
The survey, while bad news for Anglo, was good news for the industry, as it showed that most banks were on the road to recovery. For example, bank profits are now almost four times higher than they were in 2008. But profits are down on the boom years for most banks.
Banks have increased their capital levels, the money they use to protect them from losses, by 15pc. “This means they are stronger but less able to lend,” the magazine adds.
– Emmet Oliver
By Emmet Oliver
Thursday July 01 2010
Source: Irish Independent