Saturday, February 28, 2009

Carlyle Group to Have Luck of the Irish?

The Carlyle Group is in a consortium looking to acquire Anglo Irish Bank. The group of investors might put $5 billion into the flagging nationalized bank. Other Irish banks aren't keen on having a deep pocketed competitor with significant government guarantees. The Irish Independent reported:

Other banks fear that the consortium could have an unfair advantage with such guarantees from the Government. They fear a private equity-owned Anglo could withdraw support from some developers, sending them into bankruptcy. This could result in massive losses at other banks exposed to these borrowers, but who do not enjoy the same Government indemnity. Analysts also point out that the proposal in its current form sees taxpayers sharing the risk but none of the upside if Anglo comes out well on the other side of the downturn.

Sources close to the consortium insist that the investors plan to hold onto Anglo for seven to 10 years, rather than try and make a quick buck.

Government guarantees and large private ownership stakes for an ethically challenged financial firm? Is this a preview for Tim Geithner's public-private partnerships? Stay tuned.

Update 8-27-11:  Anglo Irish unloaded nearly $10 billion in U.S. real estate loans to JPMorgan, Wells Fargo and PEU Lone Star.   Winning bids for the loans averaged about 80 cents on the dollar.  How much did the subperforming and nonperforming loans go for?  Is there a PPIP in their future?  Meanwhile, Anglo Irish looks at a 2020 wind down, while Bank of Ireland and Education Savings Bank live to loan another day.  Wilbur Ross is connected to both surviving institutions.  He's part of a group that bought 35% of Bank of Ireland but was rebuffed by ESB, which sold out to Allied Irish Banks.