Private Equity and Anglo Irish Bank
Issued : 27 February 2009
"In these difficult economic circumstances, it must be tempting for the Government to think that anyone willing to take a distressed bank like Anglo-Irish off their hands should be encouraged to do so. However, I believe that the involvement of private equity firms in the Irish banking sector should be treated with the utmost caution<" said IBOA General Secretary, Larry Broderick.
"Generally speaking, these firms do not engage in take-overs like these for the good of anyone's health but their own. They have a very aggressive approach to making profit for themselves. They would be looking for a far greater rate of return on their investment than has been the norm in the industry - even though it is widely agreed now that excessive short-term profit-taking was a key factor in generating the current global financial crisis.
"So rather than engaging in short-term pragmatism, the Government should consider how it could used a State-owned bank like Anglo to support the establishment of a new culture in the financial services sector in this country - based on sound principles like integrity, prudence and the long-term of the business and of the economy as a whole.
"A remodelled Anglo could also be developed in a very strategic way by Government to underpin key areas of economic activity in the medium-to-long term. It is hard to see how this could be accomplished with majority shareholders whose primary focus is on providing 'get-rich-quick' opportunities for their investors" he added.
