Yesterday, the Irish government announced that it has nationalized Anglo Irish Bank. The Irish government maintains that the bank remains solvent. Anglo Irish Bank is the third largest lender in Ireland and has a balance sheet of approximately €100 billion “with a substantial deposit base which the State is determined to safeguard.” Anglo Irish Bank “will continue to trade normally as a going concern, with appropriate Government support as necessary” and all “employees remain employed by the company.” The Irish government stated that the “funding position of the bank has weakened and unacceptable practices that took place within it have caused serious reputational damage to the bank at a time when overall market sentiment towards it was negative.” The Irish government confirmed that customer deposits are secure and that creditors of the bank will have their debts repaid at maturity. The government’s announcement also emphasized that “[s]hareholder rights will be respected in this process,” and that “relevant legislation outlines a process for determining compensation as appropriate.”

Separately, Anglo Irish Bank Corporation, the parent company of the bank, acknowledged that trading in the bank’s shares on the Irish Stock Exchange and the London Stock Exchange has been suspended. The extraordinary general meeting of shareholders, scheduled to be held today, will be adjourned as “the purpose of the EGM … no longer exists” as the proposals to be considered “are no longer relevant.” Recently, the Irish government had agreed to recapitalize the bank under its recapitalization plan announced last month with €1.5 billion invested in Anglo Irish Bank, but that plan is no longer “the appropriate and effective means to secure its continued viability.”