Friday, May 29, 2009

What Is the Point of Anglo Irish Bank?

This from today's interim results from Anglo Irish Bank:
New lending in the period was solely to the Bank's existing customer base, primarily in Ireland and confined to amounts which were previously committed or approved to protect asset quality and reduce risk.
In other words, no new customers welcome. Would you invest €4 billion in a bank that's shut for business? Too late: if you're an Irish taxpayer you already have.

As Willem Buiter once eloquently put it, banks that won't lend money are utterly useless, like tits on a bull. Nor are Anglo alone: today's Central Bank statistics show total bank lending to households and non-financial businesses to be down by €2 billion in the year to April. If you separate out the value of outstanding loans to non-financial corporations, i.e.: businesses (table B2.1), the combined value is down 1% in March from February, and up an anaemic 1% on March 2008. The bank strike continues it seems.

Which does rather beg the question: why invest €4 billion of taxpayers money in an utterly unproductive asset, when it could be invested in a new bank which could then lend the money to businesses with the potential to grow, repay their borrowings and contribute to job and wealth creation? Or simply give the money back to the taxpayer and let them spend it more wisely and productively?

Enough with the 'transgender' banks I say.

3 comments:

  1. Gerard - from the "about us" section. I hope this answers your question.

    "Anglo Irish Bank is more than just another financial institution. Our customers deal directly with a dedicated Relationship Manager and a product specialist."

    ReplyDelete
  2. Er, unless I've missed something, the State has not yet invested the €4 billion, which requires EU consent. I would urge everyone to make it clear to EP candidates that a promise to oppose EU consent to this nonsense will help their prospects of getting your vote.

    ReplyDelete
  3. Cowen, of course, has described Anglo as of systemic importance.

    But then he has so classified Irish Nationwide as well !

    I think that deserves another !

    ReplyDelete

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