The State has pumped E4 billion of capital into the bank and, according to analysts, may be forced to sink another E6 billion in to the ailing lender. It will also transfer about E28 billion worth of loans to the National Asset Management Agency (NAMA), the state's "bad bank".

 

Moody's has downgraded the bank's subordinated debt to "junk" status pending a restructuring that the ratings agency said would most likely result in a split into a "good" and a "bad" bank.

 

Moody's said Anglo was still at an early stage of talks with the EU commission on its restructuring plan, with the most likely scenario being a further split of its remaining assets.

 

It said the non-bank would be wound down over a long period of time but it was very unlikely the whole of Anglo would be liquidated over the short or medium term because of the potential impact on the Irish sovereign.

 

Fine Gael's Enda Kenny welcomed the Taoiseach's "conversion", which he confirmed in Leaders' Questions in the Dail today, but called on Brian Cowen to adopt the rest of Fine Gael's banking strategy.

 

"I welcome the Taoiseach's indication that the Government has finally accepted Fine Gael's Good Bank/Bad Bank approach to break up Anglo Irish Bank." "As Fine Gael has consistently maintained, this is the best solution for taxpayers and the Irish economy." "However, it is regrettable that Brian Cowen and his Government are only now paying attention to the merits of Fine Gael's banking strategy. This is Fine Gael's banking policy for slow learners. "Fine Gael believes the remaining 'good' part of Anglo could become part of a third force in Irish banking, centred around EBS. Ireland's banking sector is shrinking rapidly, with mortgage holders facing a particularly bleak future. This new entity would be able to compete effectively with AIB and Bank of Ireland, and ensure that bank customers continue to have choice and competition."