Allied Irish Banks records £2.4bn loss as bad debts soar
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The extent of Ireland's economic woes was writ large yesterday as Allied Irish Banks (AIB) admitted that nearly a third of its total loan book is at risk and said it needed more cash.
Unveiling a €2.4bn (£2.18bn) 2009 operating loss – against an €862m profit in 2008 – the bank said it took a €5.35bn charge against bad loans during the last year.
Colm Doherty, the managing director, is considering all options to raise capital, including asset or business sales, a rights issue, a debt exchange or, as a last resort, approaching the Irish government for more capital.
Of its total loan book, 29.5 per cent, representing €39bn, are classified as "criticised", or at risk. Two-thirds of those loans are linked to the property and construction sectors.
The bursting of the Irish property bubble has been a major cause of the bank's problems. Of the criticised loans, a total of 13.5 per cent are now fully in default – meaning that the bank has taken a charge against them.
Shareholders were given little comfort for the future either. AIB said the outlook and environment remain "extremely challenging". The Irish economy is widely expected to remain in negative territory this year, with a 2.5 per cent contraction predicted. AIB said it is still facing significant uncertainties, including an EU decision on restructuring and funding costs, together with continuing questions over how much the National Asset Management Agency – effectively Ireland's bad bank which will deal with a huge portfolio of bad or risky loans – will write down the value of the €23.2bn of loans AIB is transferring into the scheme.
AIB's UK bank contributed a provision charge of €395m, or 1.91 per cent of average loans, up from €257m. Improving its capital base is a priority for the next year.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments