STATE-OWNED Anglo Irish Bank is assessing measures to reduce the bank’s exposure to the Quinn Group, the conglomerate controlled by businessman Seán Quinn and his family, as the bank plans its long-term restructuring.
Among the options thought to be under consideration by the bank are asset disposals and debt-for-equity swaps where the State-owned lender would take a stake in the group, which has interests in insurance, cement, hotels, glass-making and property.
The bank is also believed to be assessing the possible refinancing of part of the group’s loans to other financial institutions.
The group, however, will resist any attempts by the bank to force it to offload parts of the business as it is said to be “comfortable” with its levels of borrowings and its ability to repay them over time.
A spokesman for the group said that it was “well able to pay its debts and has no plans for any asset disposals”.
The group is in regular contact with its banks and bondholders on the performance of the business and its ability to meet its borrowings, according to sources.
The bank does not comment on issues relating to its customers.
The group has loans of more than €2.5 billion with Anglo, making it the bank’s largest borrower, in addition to its loans with a syndicate of banks and bondholders led by UK bank Barclays. Some €1.3 billion was owing to this group at the end of 2008.
This debt is due to mature in October and the group has already begun talks to refinance the loans.
It is believed the debt owing to these banks and bondholders ranks ahead of Anglo’s loans.
The group made a pretax profit of €83 million from sales of €2 billion in 2008, compared with a loss of €425 million a year earlier which was caused by the Quinn family’s heavy losses on their indirect investment in the bank.
Anglo plans to restructure itself after the transfer of €35.6 billion in loans – half its loan book – to the National Asset Management Agency, splitting itself into a good bank and a bad bank.
The lender has sought approval from the EU for the plan under which the good bank would be reinvented as a business lender and the bad bank would be run down over time as an asset management company.
The bank would seek to reduce its risk concentration to large borrowers such as the Quinn Group.
Anglo plans to finalise its restructuring with Brussels by the end of June, separate the good and bad parts financially and legally at the end of this year and operate them separately from 2012.
