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Where does the splurge on Anglo Irish end? – Morgan

24 August, 2010

Reacting to the confirmation that the National Asset Management Agency (NAMA) has completed the transfer of the second tranche of loans from Anglo Irish Bank at a discount of 61.9%, Sinn Féin Spokesperson on Finance Arthur Morgan has questioned where the splurge on Anglo Irish will end as spiralling discounts mean higher recapitalisation needs.

Deputy Morgan also warned that the costs of Anglo could surpass the €24.3billion approved by the European Commission.

Deputy Morgan said:

“The transfer of the second tranche of loans from Anglo Irish bank to NAMA has been completed at a 61.9% discount. While NAMA are acquiring these loans at a discount, the repercussions are that higher recapitalisation needs for Anglo Irish will result in more taxpayers funds being pumped into the redundant bank.

“The spiralling discounts being applied to loans transfers will be detrimental for this State and for ordinary people as the Government’s banking strategy prescribes pouring more money into Anglo to address its capital needs.

“Where does the splurge on Anglo Irish end? The costs of keeping Anglo Irish bank open have far outweighed the benefits, and it is taxpayers who are being burdened with this burgeoning cost.

“The NAMA process prescribes a lose-lose situation for taxpayers either way: low discounts require NAMA paying more, but recapitalising less and high discounts mean NAMA pay less for loans, but pay higher recapitalisation costs. In both circumstances it is the taxpayer who is footing the bill.

“Sinn Féin warned that the dual burden of NAMA transfers and recapitalisation would result in accelerated costs, beyond those of Department projections, and sadly this is the reality of Government mismanagement of the banking crisis. The cold, harsh truth is that Anglo’s capital needs could surpass the €24.3 billion approved by the European Commission.

“The completion of the transfer of the second tranche of loans from Anglo at this higher rate needs to be taken in tandem with the prediction of Moody’s credit rating agency that, by 2011, one euro in every ten raised in taxes will go on servicing the national debt. The Irish people will be servicing the debt of banks for decades to come and it is public services, health, education and social welfare that will suffer.

“Anglo Irish needs to be taken off life support and wound up as a matter of priority. The State is being led down an endless path of debt for which there is no justification. The Minister for Finance cannot approach the Budget in December with the aim of slashing public services to compensate for keeping alive a zombie bank.” ENDS

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