The disclosure that Anglo Irish Bank incurred losses of €8.2bn losses in the first six months of this year is yet more disastrous news for the Irish taxpayer and reinforces the case for an early government decision on the orderly wind-down of the bank.
Today’s figures confirm that Anglo was never of systemic importance to the Irish economy and show instead that it has become systemically destructive of Ireland’s capacity to recover and to restore its banking system.
Anglo Irish is not just the biggest bank failure in Irish economic history, either before or since independence, it has also turned out to be one of the biggest corporate failures anywhere in the world.
What is worse is that these figures represent only the first six months of 2010 and we can expect more grim news when results are published for the second half of the year.
The strategy of Brian Cowen and Brian Lenihan of drip feeding the bad news on Anglo is a strategic error which is undermining Ireland’s capacity to regain credibility in the international financial markets. It is undoing all the cuts and sacrifices endured by the Irish people to reduce the budget deficit. This is borne out by the fact that despite the praise lavished on the government by some international commentators, Ireland’s bond spreads remain extremely and unacceptably high. The result of this will be that in every budget for years to come the cost of borrowing will remain crippling high simply to bail out Anglo and the Irish banking system.
Brian Lenihan has been proven wrong on every major decision he has taken on the banking crisis and none more so than the decision to include Anglo in the blanket bank guarantee introduced in September 2008. The taxpayers were reassured at the time that this would be the cheapest bank bailout in the world. Instead it has turned out to be probably the most expensive.
The ongoing Anglo saga is corrosive to national morale and deeply damaging to our standing abroad.
The government should accept that the game is up on Anglo and commit itself to the orderly wind-down of the bank at the earliest possible date.