ANGLO IRISH Bank shares fell to a new low of 18 cent yesterday giving it a value of €140 million as international rating agency Standard & Poor's warned of the damage to the bank's reputation following the resignations of chairman Seán FitzPatrick, and chief executive David Drumm.
Mr FitzPatrick resigned last week after details emerged of his practice of moving loans worth €87 million between Anglo and Irish Nationwide Building Society. The loans were moved either side of Anglo's year-end to hide them from shareholders.
Mr Drumm resigned last Friday, saying it was appropriate he step down following the resignation of Mr FitzPatrick.
The share price fall came despite Taoiseach Brian Cowen reiterating the Government's support for the bank. The Government is effectively taking control of Anglo Irish by investing €1.5 billion for a 75 per cent stake of the voting rights.
"Anglo-Irish continues to be an important commercial entity which has served the country and customers very well down the years in terms of commercial banking," Mr Cowen told RTÉ's Morning Ireland.
"We are indicating our preparedness to make a substantial investment and we believe it will continue on and will be in a position to return that money to the taxpayer in due course."
"It's important to point out those shares will continue to trade and continue to change, hopefully upward in due course."
The Taoiseach said the important point was that "all our banks need capital adequacy ratios that are necessary for our regulatory requirements".
"This further investment of capital improves that situation even further.
"That will help send a very positive signal to stock markets," Mr Cowen said.
Standard & Poor's said in a statement: "We believe it is likely that the revelation and the loss of two significant senior management figures may have a significant impact on Anglo's standing in the marketplace."
Ratings agencies assess the final health of banks and their ratings determine the cost that banks must pay for their money.
Standard & Poor's has also maintained its long and short-term counterparty ratings on Anglo Irish Bank at "A-/A-1".
"The CreditWatch placement on Anglo reflects our continuing reservations about the long-term viability of Anglo's business model, which we consider confidence sensitive on both the asset and liability side of the balance sheet; continuing concerns regarding material asset-quality pressures arising from its concentrated loan book; and the bank's long-term funding plans."
Standard & Poor's said it planned to discuss the "asset quality, funding, and future business strategy" with Anglo's management over the coming weeks.
The incoming chairman of Anglo Irish Bank, Donal O'Connor, confirmed yesterday that he will step down as chairman of the Dublin Docklands Development Authority in order to avoid conflicts of interest.
- (Additional reporting agencies)
