Anglo Irish Bank will need between €6 billion and €9 billion in further state investment to remain afloat, Chief Executive Mike Aynsley told the Irish Times newspaper.
He confirmed that AIB would report the biggest loss in Irish corporate history when it publishes its results for the 15 months to the end of 2009 next week. The bank will post losses of almost €12 billion after writing off bad loans.
The state, which has already given AIB €4 billion in capital, would have to spend far more, up to €35 billion, if it were to liquidate the bank, or up to €22 billion if it chose to run it down over 10 years, Aynsley, who joined the bank last September, said.
"I don't think the right thing to do is to shoot the organisation -- it just makes the hole bigger for the country and the problem bigger for the country," Aynsley said.
AIB would transfer €35.6 billion of loans to the National Asset Management Agency – about half of AIB’s loans, said Mr Aynsley.
AIB has been advised that running Anglo as a going concern would be the lowest-cost option facing the taxpayer and had the potential for the highest future return, he said. KPMG, JP Morgan and consultancy firm Bain Co, which advised on the restructuring of Northern Rock, provided advice to AIB on the issue.
Meanwhile the bank's former finance director and chief risk officer William McAteer was arrested after a search of home yesterday, he is the second Anglo Irish Bank executive is being quizzed by fraud squad officers probing alleged financial irregularities at the now nationalised lender. This is only days after Sean FitzPatrick, former Anglo Irish chief, was taken into custody following a dawn raid at his luxury home in Greystones, Co Wicklow. Earlier this month Anglo Irish Bank began legal action against Mr FitzPatrick to try to recover loans of €70million.
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