Scope for Anglo Irish Bank to become a ‘business bank’ very slim

An objective cited for bailing out Anglo Irish Bank and committing €22 billion to date is that Anglo would become a business bank in due course.  But, of course, AIB and Bank of Ireland will also need to become business banks, even if operating on a diminished scale.  What scope is there for all three to be ‘business banks’?

Anglo reported a loss of €12.7 billion on a loan book of €72.1 billion – all property related, including hotels and restaurants.  How realistic is the proposition that a bank where the average remuneration by employee is over €88,000 per annum but where the loss per employee exceeds €7.5 million become a business bank?  The patron of Anglo Irish Bank since nationalisation, the Department of Finance, employs 634 civil servants whose average pay in 2010 will be €55,678

The scale of borrowing by Irish residents  in areas outside construction, property development, hotels / restaurant  and residential mortgage lending is:

 

€ Million	June 2009	Sep 2009
Agriculture and Forestry	5,341	5,210
Fishing	381	374
Manufacturing	7,821	7,559
Electricity, gas and water supply	1,015	1,100
Wholesale trade and repairs	13,236	12,965
Transport, storage and communications	3,283	3,225
Financial institutions	86,181	86,206
Education – schools and colleges	823	856
Health and social work	2,638	2,660
Community, charity, social	2,926	2,843
Personal finance for investment	2,659	2,726
Other personal finance	19,210	17,638
	€145,514	€143,362
Mortgages, property development, construction, hotels and restaurants	€240,876	€233,886
Total borrowing by Irish residents	€386,390	€377,248
	(62%)	(62%)
Anglo Irish Bank	15 Months to 31 Dec 2009	Year to 30 Sep 2008
Staff costs	€186 million	€206 million
Average number employees	1,681	1,864
Average cost per employee	€110,648	€110,515
(Loss) / Profit for period	(€12,702 million)	€664 million
(Loss) / Profit per employee	€7,560,381	€356,223