AIB suffers deeper losses in 2010

Allied Irish Banks (AIB) has announced pre-tax losses of over €12bn for 2010, plunging €9.4bn deeper into the red compared with the previous year as it continues to pay the price of bad loans made to property developers leading up to the financial crisis.

The latest losses announced by the Irish bank show its underlying financial strength worsened against 2009’s pre-tax loss of €2.6bn.

Offloading bad loans made to property developers in the run-up to the financial crisis, which speculated on rising land values, underpinned the continuing woes of the Irish bank.

In 2009, the Irish government was forced to set up a “bad bank” called the National Asset Management Agency (NAMA) to take over toxic assets held by AIB and other banks.

AIB Group’s 2010 results showed the cost of transferring those assets to NAMA made up a considerable proportion of its losses, €7bn after tax.

In a statement, the Group said it passed on an €18bn portfolio of gross loans to NAMA during 2010, with another €2bn such loans outstanding to go to the agency.

AIB’s core tier 1 (CT1) ratio, the amount of capital it is required to hold onto to help protect its overall financial health against future collapse, meanwhile failed to meet standards recommended by the Basel banking committee for 2013.

The bank’s CT1 ratio was 4%, against Basel III’s target of 7%. It also fell under the 5% CT1 benchmark issued by the European Banking Authority (EBA) recently, which banks across Europe will be under pressure to start meeting as of next year.

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