WRAPUP 2-Anglo Irish expects rescue bill of 25 bln euros

* Anglo sees 60-65 pct discount on next bad bank transfers

* European Commission will have final say on Anglo’s future

* Irish debt spreads still close to record highs

* Irish Life confirms EBS bid, plans to access debt mkts

(Adds comments from Finance Minister, analysts)

By Carmel Crimmins

DUBLIN, Aug 31 (BestGrowthStock) – Anglo Irish Bank said on Tuesday
the bill for its rescue should not exceed 25 billion euros ($32
billion) but investors remained sceptical after mounting losses
raised pressure on Ireland to shut down the nationalised lender.

Once the posterchild of the “Celtic Tiger” economy, the cost
of bailing out Anglo left Ireland with the biggest budget
deficit in the European Union last year, undermining the
government’s austerity drive and raising its borrowing costs.

Anglo Irish Chief Executive Mike Aynsley’s view that the
bank would not need more than the 25 billion euros previously
flagged by the government failed to soothe markets already
rattled by concerns over euro zone debt. [ID:nDUB001128]

“It’s a pretty brave comment by the management,” said one
analyst who declined to be named. “As a taxpayer I would be
somewhat relieved, and I think it would be a nice support for
the bond market, but I’m scratching my head over it.”

The premium investors demand to hold 10-year Irish bonds
(IE10YT=TWEB: ) over German Bunds was hovering close to euro-era
highs of 366 basis points on Tuesday. Irish financial stocks
(.IFIN: ) were trading down 1.45 percent.

In an analysis criticised by Irish officials, ratings agency
Standard & Poor’s estimated last week that the final cost of
purging Anglo of bad debts accumulated during the property boom
could hit 35 billion euros. [ID:nDUB003231]

Finance Minister Brian Lenihan did not put a final figure on
Anglo’s bailout but said clarity on the total cost would come
when Ireland reaches an agreement with the European Commission
on what to do with the lender.

“We must bring finality and certainty to that figure and
that is part of this exercise we are doing with the European
Commission,” he told the national broadcaster. “We have to bring
closure to this matter in a matter of weeks.” [ID:nDUB001129]


Dublin signalled on Monday that it might wind down Anglo
Irish, the worst-performing company in Irish corporate history,
after its losses and scandals made it more difficult for the
government to push through spending cuts. [ID:nLDE67T0RZ]

Anglo reported a first half loss of 8.2 billion euros after
taking an impairment charge of 4.8 billion euros and booking a
loss of 3.5 billion euros for transferring loans to NAMA,
Ireland’s state-run “bad bank”.

Anglo’s management would like to see the lender split into a
good bank/bad bank following the transfer of around 36 billion
euros worth of loans to NAMA.

But recent media reports have suggested Brussels, whose
opinion is crucial, would rather close down Anglo than keep a
substantial chunk open in a good bank/bad bank split.

Aynsley declined to comment on the EC’s views.


The escalating cost of dealing with Anglo Irish has raised
the stakes for the country’s other banks as they prepare to
refinance a wall of debt next month and wean themselves off a
government guarantee of their liabilities. [ID:nLDE67I0RG]

Irish Life, the country’s largest life insurer and fund
manager, said on Tuesday it expected debt markets would start to
thaw towards Irish banks once the sector refinances around 25
billion euros worth of redemptions next month. [ID:nLDE67T1GR]

Shares in the bancassurer were the one bright spot among
Irish financials on Tuesday after it shrank first-half losses.

Anglo has to transfer a further 20 billion euros to NAMA and
Aynsley said he expected it to be sold at a discount of 60-65
percent, matching a near-62 percent discount on the last tranche
of loans sold.
(Additional reporting by Andras Gergely and Padraic Halpin in
Dublin, Editing by Lin Noueihed)

WRAPUP 2-Anglo Irish expects rescue bill of 25 bln euros