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IP/09/1045

Brussels, 26 th June 2009

State aid: Commission approves recapitalisation of Anglo Irish Bank

The European Commission has approved, under EC Treaty state aid rules, an emergency recapitalisation worth €4 billion that the Irish authorities intend to grant to Anglo Irish Bank. The measure constitutes an adequate means to remedy a serious disturbance in the Irish economy while avoiding undue distortions of competition and is therefore compatible with Article 87.3.b. of the EC Treaty, as explained in the Commission's guidance on state aid to banks during the current financial crisis (see IP/08/1495 ). In particular, the measure is limited in time and contains adequate safeguards to minimise distortions of competition. The aid is approved as a temporary rescue measure and Ireland has committed to submit a restructuring plan for the bank until the end of November 2009.

On 29 May 2009 the Irish authorities announced their intention to recapitalise Anglo Irish Bank with €4 billion. On 15 June 2009, they formally notified this measure to the Commission.

The State investment occurs in the form of ordinary shares which are treated as Core Tier 1 capital for regulatory purposes. The proposed capital injection will help preserve an adequate level of Core Tier 1 capital even after further impairment. Since the Bank has been in 100% State ownership since 21 January 2009, the capital injection does not change the ownership situation of the bank. The ordinary shares will rank pari passu with existing ordinary shares held by the State. Furthermore, Anglo will use part of the proposed €4 billion recapitalisation to buy back at a significant discount certain outstanding subordinated loans it had issued in previous years, which will lead to a further increase in its Core Tier 1 capital.

The proposed measure is required as a matter of urgency to preserve the financial stability of the bank which is of systemic importance to the Irish financial markets. The proposed recapitalisation is appropriate to remedy Anglo's solvency problems and maintain confidence in the Irish financial markets. In particular, the rescue aid does not go beyond what is necessary to keep the bank afloat until an in-depth restructuring plan can be established and submitted to the Commission for its approval and it cannot be used to engage in an expansion of the bank's activities.

The non-confidential version of the decision will be made available under the case number N356/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News


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