16 Jan 2009

Anglo Irish Bank to be nationalised

10:36 am on 16 January 2009

The Irish government is to nationalise the Anglo Irish Bank.

The government previously intended to pump 1.5 billion euros ($US2 billion) into the bank in return for a 75% stake and an annual dividend of 10%, but decided that recapitalisation was not the way to secure its future.

The BBC reports lack of liquidity has made it increasingly difficult for the banks to lend money to their customers.

They have been badly hit by a slump in the Irish property market which has led to a collapse in the value of investments linked to the property market.

In October the Irish government acted to shore up its financial system by guaranteeing all deposits in Irish banks and all money borrowed by the banks from other financial institutions.

Anglo Irish recently lost top executives over a secret loans fiasco.

In December the bank's chairman resigned. Sean Fitzpatrick admitting that he had transferred 87 million euros ($US114 million) out of the Dublin-based bank's accounts. Chief executive David Drumm announced his resignation shortly afterwards.