An Irish court on Thursday ordered the transfer of deposits in troubled Anglo Irish Bank to Allied Irish Banks, a step toward winding up the biggest casualty of Ireland's banking crisis.
AIB said it paid euro3.5 billion ($4.8 billion) to acquire euro8.6 billion in deposits held by Anglo and its Isle of Man subsidiary, Anglo Irish Bank Corp. (International) PLC. The purchase price represented the difference between the total deposits and euro12 billion in bonds in the National Asset Management Agency (NAMA), the nation's "bad bank."
In a statement, AIB said the deal "represents a significant business development opportunity" and assured depositors that their funds were secure.
In a related deal, Irish Life & Permanent paid euro2.3 million for more than euro4 billion of deposits at Irish Nationwide.
Anglo and Irish Nationwide are due to be merged as part of the winding up process.
On Wednesday, IL&P announced it had agreed to sell its wholly owned subsidiary, Irish Life International Ltd. , to SEB Trygg Liv Holding AB of Sweden for euro26 million.
Some 210 employees will move from Anglo to AIB and 237 staff will transfer from Irish Nationwide to Irish Life & Permanent.
"This is a decisive step towards resolving the position of Anglo and INBS in a way that protects depositors and strengthens the banking system," Finance Minister Brian Lenihan said.
Fine Gael, the party leading in opinion polls ahead of Friday's national elections, has pledged to close Anglo Irish Bank by the end of the year.
Earlier this month, Anglo Irish Bank reported a loss of euro17.6 billion loss for 2010 _ by far the worst in Irish corporate history. It eclipsed the previous record, Anglo's loss of euro12.7 billion in 2009.
Anglo wrote off euro7.8 billion of bad loans to Ireland's bankrupt property speculators, the bank's major clientele. It recorded euro11.5 billion in other losses when it sold the bulk of its property-based loan book to NAMA.
That agency has been buying the toxic debts of five Dublin banks at massive discounts from their book value _ a penalty ultimately being borne by Ireland's taxpayers, who have invested euro29 billion in preventing Anglo from collapsing. The government has also put at least euro7.2 billion into AIB.