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EU clears euro1.5 bln bailout for Anglo-Irish bank

EU clears euro1.5 bln bailout for Anglo-Irish bank

EU regulators on Wednesday cleared Ireland's euro1.5 billion ($1.99 billion) bailout for Anglo Irish Bank, which had been effectively nationalized to prevent its collapse.
The European Commission said the recapitalization for the bank _ which sees the Irish state take a 75 percent stake _ was justified because the company's failure could damage the wider economy.
Anglo Irish, a specialist commercial lender, may be the ultimate boom-and-bust story of Ireland's Celtic Tiger years. The bank soared for more than a decade on the back of an unprecedented economic boom fueled by foreign investment and homegrown enthusiasm for construction and property.
However, as property prices declined and the economic downturn intensified, the lender ran into trouble. By the end of last year, Anglo's shares had lost nearly 98 percent of their value from a 2007 peak.
Anglo will repay the government euro150 million every year in exchange for the investment. It would have the option to buy back the stake at face value within the first five years, at a 25 percent premium thereafter.
The EU's executives must approve large state subsidies to companies. To limit competition problems, it insists that bailed-out banks limit executive pay and dividend payments. Banks in trouble must also submit a restructuring plan within six months of the initial rescue.
Anglo Irish Chairman Sean FitzPatrick quit last month after investigators discovered he had been hiding from shareholders his own personal loans from the bank totaling euro87 million and raising questions about lax ethical practices at the bank.


Updated : 2021-03-05 00:51 GMT+08:00